TIDMISP
Investec Structured Products Calculus VCT plc
Annual Financial Report
for the year ended 29 February 2012
The full Annual Report and Accounts can be accessed via the
following websites: www.calculuscapital.com and
www.investecstructuredproducts.com or by contacting the Company Secretary on
telephone 01392 477500.
INVESTMENT OBJECTIVE
The Company's principal objectives for investors are to:
- invest in a portfolio of Venture Capital Investments and
Structured Products that will provide investment returns that are sufficient
to allow the Company to maximise annual dividends and pay an interim return
either by way of a special dividend or cash offer for shares on or before an
interim return date;
- generate sufficient returns from a portfolio of Venture Capital
Investments that will provide attractive long-term returns within a tax
efficient vehicle beyond an interim return date;
- review the appropriate level of dividends annually to take
account of investment returns achieved and future prospects; and
- maintain VCT status to enable qualifying investors to retain
their income tax relief of up to 30 per cent. on the initial investment and
receive tax-free dividends and capital growth.
Full details of the Company's investment policy can be found in the
Business Review below.
FINANCIAL REVIEW
Ordinary Share Fund
12 Months to 13 Months to
29 February 28 February
2012 2011
Total return
Total return (GBP80,000) GBP308,000
Total return per ordinary share (1.7)p 8.3p
Revenue
Net loss after tax (GBP71,000) (GBP112,000)
Revenue return per ordinary share (1.5)p (3.0)p
Dividend
Recommended final dividend 5.25p 5.25p
As at As at
29 February 28 February
2012 2011
Assets (investments valued at bid
market prices)
Net assets GBP4,501,000 GBP4,836,000
Net asset value ("NAV") per ordinary 95.0p 102.1p
share
Mid market quotation
Ordinary shares 97.5p 99.5p
Premium/(discount) to NAV 2.6% (2.5)%
C Share Fund
11 Months to
29 February
2012*
Total return
Total return (GBP33,000)
Total return per C share (1.7)p
Revenue
Net loss after tax (GBP45,000)
Revenue return per C share (2.3)p
Dividend
Recommended final dividend 4.5p
As at
29 February
2012
Assets (investments valued at bid
market prices)
Net assets GBP1,788,000
NAV per C share 92.6p
Mid market quotation
C shares 94.0p
Premium to NAV 1.5%
* The C shares were issued in three tranches, on 1 April 2011, 5 April 2011
and 4 May 2011.
CHAIRMAN'S STATEMENT
I am delighted to present your Company's results for the year ended
29 February 2012. The Investec Structured Products Calculus VCT plc is a tax
efficient listed company which aims to address shareholder needs for:
- attractive tax-free dividends;
- a clear strategy for returning capital;
- downside protection through the Structured Products portfolio and
investment in lower risk VCT qualifying companies with a high percentage of
investments in loan stock and preference shares; and
- low annual management fees.
The Company, which launched in March 2010, is a joint venture
between Investec Structured Products (part of Investec Plc) and Calculus
Capital Limited, and brings together both Managers' award winning expertise in
their respective fields of structured products and venture capital.
The net asset value per ordinary share was 95.0 pence as at 29
February 2012 compared to 102.1 pence as at 28 February 2011. This is after
paying a dividend to ordinary shareholders in 2011 of 5.25 pence per share.
The net asset value per C share was 92.6 pence as at 29 February 2012 compared
to a value immediately following close of the C share fundraising of 93.6
pence. The net asset values have subsequently risen to 95.3 pence per ordinary
share and 92.8 pence per C share as at 30 April 2012. Your Board and Managers
are encouraged by the performance of the Company to date and believe it is
well placed to make further progress in the forthcoming year.
Structured Products Portfolio
Our non-Qualifying Investments are managed by Investec Structured
Products. As at 29 February 2012, the Ordinary Share Fund held a portfolio of
eight Structured Products and the C Share Fund held a portfolio of three
Structured Products based on the FTSE 100 Index. The products differ by
duration and counterparty in order to minimise risk and create a diversified
portfolio of investments. Up to 20 per cent. of the Structured Products
portfolio of the C Share Fund will be able to be invested in other indices
besides the FTSE 100 Index.
The Structured Products portfolio is currently performing well. As
at 29 February 2012 the FTSE 100 was trading at 5,871.51. This means that
while the level of the FTSE 100 will change, if all of the Structured Products
in both the Ordinary Share Fund and C Share Fund were to mature at this level,
they would yield the maximum payoff for investors in each share fund.
Venture Capital Investments
Calculus Capital manages the portfolio of VCT Qualifying
Investments made by the Company. The overall value of the unquoted portfolio
showed a rise of GBP710,000 during the period. Several new Qualifying
Investments were made during the period on behalf of the Ordinary Share Fund
and the C Share Fund across a broad range of industries.
A detailed analysis of the new investments and the investment performance can
be found in the Investment Manager's Review that follows this statement.
Dividend
In line with our aim to provide a regular tax-free dividend stream,
the Directors are pleased to propose a final dividend of 5.25 pence per
ordinary share and 4.5 pence per C share which, subject to shareholder
approval, will be paid on 31 July 2012 to ordinary shareholders and C
shareholders on the register on 15 June 2012.
Developments Since the Year End
Since the year end, the Royal Bank of Scotland Autocall Structured
Product has matured with a total return of 110.5 (initial capital of 100 and
growth of 10.5). There was GBP50,000 held in the Ordinary Share Fund and
GBP200,000 in the C Share Fund. The Ordinary Share Fund has also sold its
GBP343,000 investment in the Nomura Bank International Structured Product which
matures on 20 February 2013 to the C Share Fund at current market value of
GBP441,875. This Product was originally bought to pay back any borrowing,
however the early sale, which was made possible by positive market
performance, has allowed for the borrowing requirement in each fund to be
reduced. The Company has used the funds to invest in new Qualifying
Investments. In April 2012, GBP175,000 and GBP75,000 were invested in Participate
Sport Limited and GBP100,000 and GBP50,000 in Secure Electrans Limited on behalf
of the Ordinary and C Share Funds respectively.
Board Changes
The Directors have reviewed the operation of the Board and
concluded that it is operating effectively. However, pressure of other
commitments has led Mark Rayward and Philip Swatman to decide to stand down as
Directors at the Annual General Meeting. The Board has decided that the
remaining four Directors (three of them independent) will constitute a Board
of adequate size, given that the Structured Products investments have been
made and the Qualifying Investment programme is well underway. I would like to
thank Mark and Philip for their wisdom and effort since the Company's launch.
Outlook
The euro zone crisis continues to be a concern for the UK economy,
which is expected to remain fragile in 2012. Access to finance for smaller UK
companies remains tight despite Government initiatives, providing an
attractive investment scenario for the Company. Your Board and Managers are
encouraged by the number of attractive investment opportunities available and
will continue to build a diversified portfolio of investments to deliver
sustained long-term performance.
Michael O'Higgins
Chairman
1 June 2012
INVESTMENT MANAGER'S REVIEW
(Qualifying Investments)
Portfolio Developments
Calculus Capital Limited manages the portfolio of Qualifying
Investments made by the Company. It is intended that approximately 75 per
cent. of the Company's funds will be invested over a three year period in a
diversified portfolio of holdings in unquoted qualifying companies.
During the year under review, the Company completed Qualifying
Investments in five unquoted companies, Terrain Energy Limited ("Terrain"),
MicroEnergy Generation Services Limited ("MicroEnergy"), Lime Technology
Limited ("Lime"), Heritage House Media Limited ("Heritage") and Viscount Safe
Custody Services Limited ("Viscount").
Terrain Energy Limited
In March 2011, the Ordinary Share Fund made a follow-on equity
investment of GBP50,000 in Terrain, and in August, the C Share Fund made a
GBP90,000 investment, of which GBP45,000 was in ordinary shares and GBP45,000 was 7
per cent. long-term loan stock. Terrain was established in October 2009 to
develop a portfolio of onshore oil and gas production and development assets,
predominantly in the UK.
Terrain acquired interests in two additional licences during the
year. The new licence interests are a 10 per cent. interest in a gas
exploration opportunity in the Larne-Lough Neagh basin in County Antrim and a
12.5 per cent. interest in an oil exploration licence at Burton on the Wolds
in the East Midlands. The main prospect at Larne is a conventional gas play
which is thought to be an extension of the Morecambe Bay gas field. 288 km of
2D seismic data has recently been obtained with the plan to drill a gas
appraisal well in 2013. Burton on the Wolds is located on the southern margin
of the Widmerpool Gulf geological basin. A well is planned for the
third/fourth quarter of 2012 to evaluate a prospect with targets at two
distinct stratigraphic levels. Of the other licence interests, Keddington is
oil producing and there are plans to convert gas also produced to electricity
on site and feed into the grid. Kirklington and Dukes Wood are due to be
brought back into production in May 2012.
Ordinary C
Share Share
2010 Fund Fund
Latest Audited GBP'000 Investment Information GBP'000 GBP'000
Results
Year ended 31 December
Turnover 271 Total cost 300 90
Income recognised in
Pre-tax loss (158) period 14 2
Net assets 1,953 Equity valuation 113 48
Valuation basis: Fair value based on
cost of investment supported by
discounted cash flow and comparable
company analysis Loan stock valuation 200 45
Total valuation 313 93
Voting rights* 2.50% 1.05%
*Other funds managed by Calculus Capital, excluding those shown
above, have combined voting rights of 19.20 per cent.
MicroEnergy Generation Services Limited
In early April 2011, GBP300,000 was invested in MicroEnergy from the
Ordinary Share Fund, of which GBP150,000 was ordinary equity and GBP150,000 was 7
per cent. long-term loan stock.
MicroEnergy is a company set up to acquire renewable,
microgeneration facilities, including (but not limited to) wind, anaerobic
digestion, hydro and micro CHP (Combined Heat and Power). The company has
entered into a contract to buy a fleet of 84 small wind turbines (<5kW)
installed on farm land in East Anglia. The portfolio will provide MicroEnergy
with sufficient scale to mitigate concerns of poor short-term performance at
any particular site. The first eighteen turbines of the fleet had been
installed by the end of the Company's financial year, with a further 21
installed since that date giving a total to date of 39. The revenues from the
fleet of installed turbines come from two sources, both of which are inflation
protected, being directly linked to RPI. First there is the Government backed
feed-in tariff ("FIT") paid by the electricity suppliers for every kilowatt of
electricity generated. Secondly there is the export tariff for any surplus
electricity not used by the site owner that is exported to the grid. Provided
electricity generation is maintained, FITs are guaranteed at 28p (inflation
linked to RPI) per kWh for 20 years.
Ordinary C
Share Share
Fund Fund
Latest Audited Results Investment Information GBP'000 GBP'000
No accounts have been
produced Total cost 300 -
Income recognised in
period 10 -
Equity valuation 150 -
Loan stock valuation 150 -
Valuation basis: Cost Total valuation 300 -
Voting rights* 8.67% -
* Other funds managed by Calculus Capital have combined voting
rights of 9.89 per cent.
Lime Technology Limited
A small additional investment of approximately GBP8,000 was invested
from the Ordinary Share Fund in Lime, a low carbon based building materials
developer, to convert warrants into shares.
The company's main product is Hembuild, a lime, hemp and linseed
based building material manufactured in panel form and used in the mainstream
construction industry. Lime has recently completed its contracts for the new
Marks & Spencer Cheshire Oaks' superstore, their largest outside Marble Arch,
and a warehouse for Kane's Foods. Lime is currently completing a contract to
build new archives for the London Science Museum. Lime's subsidiary, Hemp
Technology, which operates a fibre processing plant, has been operating
profitably since August 2011. Hemp Technology's sales of processed linseed to
the paper industry have increased from nil to an annualised rate of
approximately 5,000 tonnes since Easter 2011.
Ordinary C
Share Share
Latest Audited 2011 2010 Investment Information Fund GBP'000 Fund
Results GBP'000 GBP'000 GBP'000
Year ended 31 Oct 4 Nov
Turnover 4,507 3,726 Total cost 307 -
Pre-tax loss (2,020) (1,556) Income recognised in period 19 -
Net (liabilities)/
assets (157) 252 Equity valuation 30 -
Loan stock valuation 250 -
Valuation basis: Earnings
multiple Total valuation 280 -
Voting rights* 0.47% -
* Other funds managed by Calculus Capital have combined voting
rights of 41.86 per cent.
Heritage House Media Limited
An investment of approximately GBP125,000 and GBP63,000 was made in
Heritage on behalf of the Ordinary and C Share Funds respectively following a
corporate and financial restructuring of the business. As part of this
transaction, the Company also invested GBP1,834 and GBP917 on behalf of the
Ordinary and C Share Funds respectively to acquire 100 per cent. of the shares
in Investec SPV Limited ("Investec SPV"). Investec SPV, in turn, owns shares
and securities in Heritage which were purchased from Foresight 2 VCT plc and
Foresight 3 VCT plc.
The Heritage business includes printed visitor attractions and
accommodation directories published under the brands Hudson's, VisitBritain,
Dream Weddings and OpenBritain and a contract publishing division providing
guidebooks for visitor attractions. The aim of the restructuring was to
position Heritage to migrate from printed directories to a digital media
offering. Although a significant start has been made on the digital media
plan, progress is behind schedule. The company's bank has given notice of the
withdrawal of overdraft facilities. We have decided against providing
additional capital to make up the shortfall, have put the business up for sale
and have written the investment down to nil.
Ordinary C
Share Share
2010 2009 Investment Fund Fund
GBP'000 GBP'000 Information GBP'000 GBP'000
Latest Audited
Results
Year ended 30 September
Net liabilities (3,639) (1,522) Total cost| 127 64
Income
recognised in
period - -
Equity valuation - -
Loan stock
valuation - -
Valuation basis: Discounted cash flow Total valuation - -
Voting rights
held directly* 2.00% 1.00%
Voting rights
held by Investec
SPV* 5.70% 2.90%
| Including the investment in Investec SPV of GBP1,834 and GBP917
respectively.
* Other funds managed by Calculus Capital, excluding those shown
above, have combined voting rights of 36.30 per cent.
Viscount Safe Custody Services Limited
Viscount is the holding company for Metropolitan Safe Deposits,
which provides safe custody services in the central London area. The Ordinary
Share Fund invested GBP190,000, of which GBP90,000 was invested as ordinary equity
and GBP100,000 as 8 per cent. long-term loan stock, and the C Share Fund
invested GBP90,000, of which GBP40,000 was ordinary equity and GBP50,000 was 8 per
cent. long-term loan stock. In a connected transaction, Viscount acquired
United Gold. United Gold was recently launched to provide private investors
with a seamless way to buy, store, insure and sell bullion.
Founded in 1983, Metropolitan is one of the oldest established
brands in the safe custody sector in London. The company currently runs two
safe custody sites in Knightsbridge and St John's Wood. These profitable
businesses provide customers with access to the vaults seven days a week.
Traditionally, this service has been provided by the clearing banks but high
street banks are fast withdrawing from such physical banking services and
Metropolitan is well placed to take advantage of these opportunities.
Providing private investors with a seamless and convenient way to buy, store
and sell bullion, primarily gold, is a logical extension of Metropolitan's
services to customers.
Ordinary C
Share Share
Latest Audited 2011 2010 Investment Fund Fund
Results GBP'000 GBP'000 Information GBP'000 GBP'000
Year ended 30 June
Turnover 1,327 1,271 Total cost 190 90
Pre-tax profit 196 210 Income
recognised in
period - -
Net assets 772 776 Equity valuation 90 40
Loan stock
valuation 100 50
Valuation basis: Earnings multiple Total valuation 190 90
Voting rights* 2.20% 1.00%
* Other funds managed by Calculus Capital, excluding those shown
above, have combined voting rights of 39.00 per cent.
Qualifying Investments
As at the year end, GBP1,222,000 had been invested on behalf of the
Ordinary Share Fund in Qualifying Investments, representing approximately 27.0
per cent. of the net funds raised. GBP243,000 had been invested in Qualifying
Investments on behalf of the C Share Fund, representing approximately 13.3 per
cent. of the net funds raised.
Developments Since the Year End
Since the year end, GBP175,000 and GBP75,000 has been invested in
Participate Sport Limited from the Ordinary Share Fund and C Share Fund
respectively. Participate is a mass participation sports event business which
owns, promotes and delivers sports events across cycling, running, triathlon
and open water swimming. Participate has, in turn, acquired Human Race to
create the UK's largest and most diverse mass participation sports events
company, delivering over 55 events to over 100,000 participants. The combined
entity is to be rebranded Human Race. A further GBP100,000 and GBP50,000 has been
invested from the two funds in Secure Electrans Limited. Secure is a payment
technology company holding key patents covering e-commerce security. British
Gas holds a stake of approximately 20 per cent. Both investments were made in
April 2012.
Outlook
Recent figures for the UK's gross domestic product (GDP) for the
first quarter of 2012 show the second consecutive quarter of decline. Smaller
companies can be a good lead indicator of underlying economic activity.
Although the outlook remains challenging, there are signs that the UK economy
may fare better in 2012 than is generally predicted and the Manager believes
that, overall, the portfolio is well-positioned to benefit from any upturn.
Calculus Capital Limited
1 June 2012
INVESTMENT MANAGER'S REVIEW
(Structured Products)
Our non-Qualifying Investments are managed by Investec Structured
Products. As at the date of this report, the Company held a portfolio of
Structured Products based on the FTSE 100 Index. The products differ by
duration and counterparty.
In line with the Company's strategy set out in the original Offer
documents, a large percentage of the initial cash raised has been used to
build a portfolio of Structured Products. The portfolio of Structured Products
has been constructed with different issuers and differing maturity periods to
minimise risk and create a diversified portfolio. The FTSE 100 Initial Index
Levels for these investments range from 4,805.75 to 5,718.13.
At the year end, the FTSE 100 closing level was 5,871.51. The total
amount to date invested in Structured Products stands at GBP2,542,980 for the
Ordinary Share Fund and GBP850,000 for the C Share Fund, representing 56.2 per
cent. and 46.7 per cent. of the net funds raised respectively. As at 29
February 2012 the Structured Products portfolio was valued at GBP3,156,172 for
the Ordinary Share Fund and GBP934,538 for the C Share Fund.
Since year end, the FTSE 100 has been volatile, causing
fluctuations in the value of the Structured Products portfolio. However, while
values may change, as at 30 April 2012 the Structured Products portfolio was
valued at GBP2,687,000 for the ordinary shares and GBP1,168,000 for the C shares.
Since the year end, both funds had their first product mature in
the middle of March 2012 - the RBS Autocall matured with a payout of 10.5 per
cent. after being invested for one year.
The original intention was to use borrowings to fund Qualifying
Investments pending maturity of some of the portfolio of Structured Products.
The Managers have managed to minimise such borrowings by the Ordinary Share
Fund by selling its GBP350,000 investment in the Nomura Bank International
Structured Product after the year end at its current fair market value of
GBP441,875 to the C Share Fund. The price this sold at allows for the C Share
Fund to gain a sizeable return in nine months, which is better than could be
had for a similar risk by investing in a primary issue but also gave a healthy
return to the Ordinary Share Fund. The cash flow improves for the Company as a
whole, as returns have been captured earlier than expected. The starting level
of the FTSE 100 for the Nomura Structured Product was 5188.43, so as long as
the Final Index Level is above this level when it matures on 20 February 2013,
the product would yield the maximum payoff.
Markets have been turbulent since the half-year report; however, 5
year swap rates are roughly the same, volatility has dropped, but the FTSE has
increased substantially. Overall this has led to an increase in the valuations
of the Structured Products portfolio.
The Investment Manager constantly reviews the portfolio of
investments to assess asset allocation and the need to realise investments.
Ordinary Share Fund Structured Products Portfolio as at 29 February 2012
Price Valuation
FTSE 100 as at as at Return/Capital
Strike Maturity Initial Index Notional Purchase 29 February 29 February at Risk
Issuer Date Date Level Investment Price Cost 2012 2012 ("CAR")|
162.5% if
FTSE100*
higher; CAR if
The Royal FTSE100 falls
Bank of by more than
Scotland plc 05/05/2010 12/05/2015 5,341.93 GBP275,000 GBP0.96 GBP264,000 GBP1.1026 GBP303,215 50%
185% if
FTSE100*
higher; CAR if
FTSE100 falls
Investec by more than
Bank plc 14/05/2010 19/11/2015 5,262.85 GBP500,000 GBP0.98 GBP489,550 GBP1.2247 GBP612,332 50%
185% if
FTSE100*
Abbey higher; CAR if
National FTSE100 falls
Treasury by more than
Services 25/05/2010 18/11/2015 4,940.68 GBP350,000 GBP0.99 GBP346,430 GBP1.3319 GBP466,165 50%
| Capital at Risk ("CAR") is explained in note 15.
The above investments have been designed to meet the 43.75p per ordinary share
interim return by 14 December 2015.
FTSE 100 Price Valuation
Initial as at as at Return/Capital
Strike Maturity Index Notional Purchase 29 February 29 February at Risk
Issuer Date Date Level Investment Price Cost 2012 2012 ("CAR")
137% if
FTSE100*
higher; CAR if
Nomura FTSE100 falls
Bank by more than
International 28/05/2010 20/02/2013 5,188.43 GBP350,000 GBP0.98 GBP343,000 GBP1.2471 GBP436,485 50%
134% if
FTSE100*
higher; CAR if
Morgan FTSE100 falls
Stanley by more than
International 10/06/2010 17/12/2012 5,132.50 GBP500,000 GBP1.00 GBP500,000 GBP1.2436 GBP621,800 50%
125.1% if
FTSE100*
higher; CAR if
FTSE100 falls
HSBC by more than
Bank plc 01/07/2010 06/07/2012 4,805.75 GBP500,000 GBP1.00 GBP500,000 GBP1.2223 GBP611,165 50%
Autocallable
10.5% p.a.;
The Royal CAR if FTSE
Bank of 100 falls more
Scotland 18/03/2011 20/03/2017 5,718.13 GBP50,000 GBP1.00 GBP50,000 GBP1.0637 GBP53,185 than 50%
plc**
126% if FTSE
Abbey 100* higher;
National CAR if FTSE
Treasury 100 falls more
Services** 03/08/2011 05/02/2014 5,584.51 GBP50,000 GBP1.00 GBP50,000 GBP1.0365 GBP51,825 than 50%
The above investments are aimed to provide additional return as dividends.
These investments may be sold prior to maturity if it is deemed that a greater
return can be made by Calculus Capital investing in Qualifying Investments.
C Share Fund Structured Products Portfolio as at 29 February 2012
Price Valuation
FTSE 100 as at as at Return/Capital
Strike Maturity Initial Index Notional Purchase 29 February 29 February at Risk
Issuer Date Date Level Investment Price Cost 2012 2012 ("CAR")
182% if FTSE
100* higher;
CAR if FTSE
Investec 100 falls more
Bank plc** 05/08/2011 10/03/2017 5,246.99 GBP450,000 GBP1.00 GBP450,000 GBP1.1433 GBP514,498 than 50%
The above Investec Structured Product investment in the C Share
Fund (GBP450,000) is a collateralised product. The collateral comprises a
portfolio of securities issued by each of HSBC Bank plc, Nationwide Building
Society, Santander UK plc, The Royal Bank of Scotland plc and Lloyds TSB Bank
plc, and/or cash and/or UK government debt. Insolvency risk to Investec Bank
plc is replaced with a risk spread across these named institutions.
Price Valuation
FTSE 100 as at as at Return/Capital
Strike Maturity Initial Index Notional Purchase 29 February 29 February at Risk
Issuer Date Date Level Investment Price Cost 2012 2012 ("CAR")
Autocallable
The Royal 10.5% p.a.;
Bank of CAR if FTSE
Scotland 100 falls more
plc** 18/03/2011 20/03/2017 5,718.13 GBP200,000 GBP1.00 GBP200,000 GBP1.0637 GBP212,740 than 50%
126% If FTSE
Abbey 100* higher;
National CAR if FTSE
Treasury 100 falls more
Services** 03/08/2011 05/02/2014 5,584.51 GBP200,000 GBP1.00 GBP200,000 GBP1.03065 GBP207,300 than 50%
The above investments target an average return of 9.58 per cent. per annum.
These investments may be sold prior to maturity if it is deemed that a greater
return can be made by Calculus Capital by investing in Qualifying Investments.
* The Final Index Level is calculated using `averaging', meaning that we take
the average of the closing levels of the FTSE 100 on each Business Day over
the 2 - 6 months of the Structured Product term (the length of the averaging
period may differ for each Structured Product). The use of averaging to
calculate the return can reduce adverse effects of a falling market or sudden
market falls shortly before maturity. Equally, it can reduce the benefits of
an increasing market or sudden market rises shortly before maturity.
** These investments were purchased in the 2011-2012 financial year.
Investec Structured Products
1 June 2012
INVESTMENT PORTFOLIO
AS AT 29 FEBRUARY 2012
Ordinary Share Fund
Net assets % of net assets
Structured Products 71%
Unquoted - loan stock 16%
Unquoted - ordinary and preference 8%
shares
Unquoted - liquidity funds 4%
Net current assets 1%
100%
Sector % of portfolio
Structured Products 72%
Unquoted - Qualifying Investments 24%
Unquoted - other non-Qualifying 4%
100%
Investments
Nature of Book Cost Valuation % of Net % of
Company Business GBP'000 GBP'000 Assets Portfolio
Structured
Products
Investec Bank plc Banking 490 612 14% 14%
The Royal Bank of
Scotland plc Banking 314 356 8% 8%
Abbey National
Treasury Services Banking 396 518 11% 12%
Nomura Bank
International Banking 343 437 10% 10%
Morgan Stanley
International Banking 500 622 14% 14%
HSBC Bank plc Banking 500 611 14% 14%
Total Structured
Products 2,543 3,156 71% 72%
Qualifying
Investments
Terrain Energy Onshore oil
Limited and gas
production 300 313 7% 7%
Lime Technology
Limited Construction 307 280 6% 6%
Heritage House Publishing and
Media Limited* media services 127 - - -
Viscount Safe Safe
Custody Services depository
Limited services 190 190 4% 4%
MicroEnergy
Generation
Services Limited Energy 300 300 7% 7%
Total Qualifying
Investments 1,224 1,083 24% 24%
Other
non-Qualifying
Investments
Fidelity Liquidity
Fund Liquidity fund 81 81 2% 2%
Goldman Sachs
Liquidity Fund Liquidity fund 50 50 1% 1%
Scottish Widows
Liquidity Fund Liquidity fund 65 65 1% 1%
Total Other
non-Qualifying
Investments 196 196 4% 4%
Total Investments 3,963 4,435 99% 100%
Net Current Assets
less Creditors due
after one year 66 1%
Net Assets 4,501 100%
* Included in the cost is GBP1,834 invested in Investec SPV.
C Share Fund
Net assets % of net assets
Structured Products 53%
Unquoted - loan stock 5%
Unquoted - ordinary and preference 5%
shares
Unquoted - liquidity funds 32%
Net current assets 5%
100%
Sector % of portfolio
Structured Products 55%
Unquoted - Qualifying Investments 11%
Unquoted - other non-Qualifying 34%
100%
Investments
Nature of Book Cost Valuation % of Net % of
Company Business GBP'000 GBP'000 Assets Portfolio
Structured
Products
Investec Bank plc| Banking 450 515 29% 30%
The Royal Bank of
Scotland plc Banking 200 213 12% 13%
Abbey National
Treasury Services Banking 200 207 12% 12%
Total Structured
Products 850 935 53% 55%
Qualifying
Investments
Terrain Energy Onshore oil
Limited and gas
production 90 93 5% 6%
Heritage House Publishing and
Media Limited* media services 64 - - -
Viscount Safe Safe
Custody Services depository
Limited services 90 90 5% 5%
Total Qualifying
Investments 244 183 10% 11%
Other
non-Qualifying
Investments
Fidelity Liquidity Liquidity fund 251 251 14% 15%
Fund
Goldman Sachs
Liquidity Fund Liquidity fund 100 100 6% 6%
Scottish Widows
Liquidity Fund Liquidity fund 222 222 12% 13%
Total Other
non-Qualifying
Investments 573 573 32% 34%
Total Investments 1,667 1,691 95% 100%
Net Current Assets
less Creditors due
after one year 97 5%
Net Assets 1,788 100%
| This is a collateralised product, and the credit risk is equally
spread across five counterparties: HSBC Bank plc, Nationwide Building Society,
Santander UK plc, The Royal Bank of Scotland plc and Lloyds TSB Bank plc.
*Included in the cost is GBP917 invested in Investec SPV.
BOARD OF DIRECTORS
Michael O'Higgins (Chairman)*
Kate Cornish-Bowden*
John Glencross
Steve Meeks*
Mark Rayward (Audit Committee Chairman)*
Philip Swatman*
* independent of the Investment Managers
INVESTMENT MANAGERS
Calculus Capital
Calculus Capital Limited is the Venture Capital Investments
portfolio manager (VCT Qualifying Investments).
Investec Structured Products
Investec Structured Products (a trading name of Investec Bank plc)
is the Structured Products portfolio manager (non VCT Qualifying Investments).
BUSINESS REVIEW
Activities and status
The Company is registered as a public limited company and
incorporated in England and Wales with registration number 07142153. Its
shares have a premium listing and are traded on the London Stock Exchange.
The Company carries on business as a venture capital trust ("VCT")
and its affairs are conducted in a manner to satisfy the conditions to enable
it to obtain approval as a venture capital trust under sections 258-332 of the
Income Tax Act 2007 ("ITA 2007"). Details of the Company's investment policy
are set out below.
On incorporation, the Company was an investment company under
section 833 of the Companies Act 2006. On 18 May 2011 investment company
status was revoked by the Company. This was done in order to allow the Company
to pay dividends to shareholders using the special reserve (a distributable
capital reserve), which had been created on the cancellation of the share
premium account on 20 October 2010.
During the year, the Company acquired 100 per cent. of the shares
in Investec SPV Limited. As set out in the Investment Manager's Review
(Qualifying Investments), Investec SPV owns shares and securities in Heritage
which were acquired on behalf of the Ordinary Share Fund and the C Share Fund.
The Company has not prepared consolidated accounts and has accounted for
Investec SPV as an investment on the grounds that its results are immaterial
to the Company and control is intended to be temporary because the subsidiary
has been acquired and held exclusively with a view to its subsequent disposal
in the near future.
This Business Review should be read in conjunction with the
Chairman's Statement, the Investment Managers' Reviews and the portfolio
analysis.
Performance
The Board reviews performance by reference to a number of key
performance indicators ("KPIs") and considers that the most relevant KPIs are
those that communicate the financial performance and strength of the Company
as a whole:
- total return per share
- net asset value per share
- share price and discount/premium to net asset value
Further KPIs are those which show the Company's position in
relation to the VCT tests which it is required to meet in order to meet and
maintain its VCT status. These tests are set out in the full Annual Report and
Accounts. The Company has received provisional approval as a VCT from HM
Revenue & Customs.
The financial performance of the Company is set out below:
Year Ended Period Ended
29 February 2012 28 February 2011
Ordinary Share Fund
Fair value portfolio GBP4.4m GBP4.5m
valuation
Total return (after tax) (GBP80,000) GBP308,000
Total return per ordinary
share (1.7)p 8.3p
NAV per ordinary share 95.0p 102.1p
Ordinary share price 97.5p 99.5p
Ordinary share price
premium/(discount) to NAV 2.6% (2.5)%
C Share Fund
Fair value portfolio
valuation GBP1.7m n/a
Total return (after tax) (GBP33,000) n/a
Total return per C share (1.7)p n/a
NAV per C share 92.6p n/a
C share price 94.0p n/a
C share price premium to NAV 1.5% n/a
Dividend
The Directors are recommending a final dividend of 5.25p per
ordinary share and 4.5p per C share. Subject to approval by shareholders at
the Annual General Meeting, these dividends will be paid on 31 July 2012 to
shareholders on the register on 15 June 2012.
Share capital
An offer for subscription for C ordinary shares of 1p each ("C shares")
was launched in January 2011. A total of 1,931,095 C shares with an
aggregate nominal value of GBP19,311 and a total consideration of GBP1,931,095
were issued during the year, as follows:
- 1,644,826 C shares at 100p per share on 1 April 2011
- 187,679 C shares at 100p per share on 5 April 2011
- 98,590 C shares at 100p per share on 4 May 2011
At the year end and at the date of this report, the issued share
capital comprised 4,738,463 ordinary shares (representing 71.05 per cent. of
total voting rights) and 1,931,095 C shares (representing 28.95 per cent. of
total voting rights). No shares were held in Treasury.
The ordinary shares and C shares have equal voting rights, and at
general meetings of the Company, holders are entitled to one vote on a show of
hands and on a poll to one vote for every share held.
There are no restrictions concerning the transfer of securities in
the Company; no special rights with regard to control attached to securities;
no agreements between holders of securities regarding their transfer known to
the Company; and no agreements which the Company is party to that might affect
its control following a successful takeover bid.
The authority to issue or buy back the Company's shares and
amendment of the Company's Articles of Association require a relevant
resolution to be passed by shareholders. At the Annual General Meeting held on
30 June 2011, the Directors were granted authority to allot shares up to an
aggregate nominal amount of GBP206,700. They were also authorised to issue
shares for cash (without rights of pre-emption applying) (i) up to GBP100,000 of
each class of share by way of offer for subscription and (ii) up to 10 per
cent. of each class of share for general purposes and to buy back up to 14.99
per cent. of each of the ordinary and C shares in issue. The Board's proposals
for the renewal of the authorities to issue and buy back shares are detailed
in the full Annual Report and Accounts.
Investment policy
It is intended that approximately 75 per cent. of the monies raised
by the Company will be invested within 60 days in a portfolio of Structured
Products. The balance will be used to meet initial costs and invested in cash
or near cash assets (as directed by the Board) and will be available to invest
in Venture Capital Investments and to fund ongoing expenses.
In order to qualify as a VCT, at least 70 per cent. of the
Company's assets must be invested in Venture Capital Investments within
approximately three years. Thus there will be a phased reduction in the
Structured Products portfolio and corresponding build up in the portfolio of
Venture Capital Investments to achieve and maintain this 70 per cent.
threshold along the following lines:
Average Exposure Year 1 Year 2 Year 3 Year 4 Year 5 Year 6+
per Year
Structured
Products and
cash/near cash 85% 75% 35% 25% 25% 0%
Venture Capital
Investments 15% 25% 65% 75% 75% 100%
Note: the investment allocation set out above is only an estimate
and the actual allocation will depend on market conditions, the level of
opportunities and the comparative rates of returns available from Venture
Capital Investments and Structured Products.
The combination of Venture Capital Investments and the Structured
Products will be designed to produce ongoing capital gains and income that
will be sufficient to maximise both annual dividends for the first five years
from funds being raised and an interim return by an interim return date by way
of a special dividend or cash tender offer for shares. After the interim
return date, unless Investec Structured Products are requested to make further
investments in Structured Products, the relevant fund will be left with a
portfolio of Venture Capital Investments managed by Calculus Capital with a
view to maximising long-term returns. Such returns will then be dependent,
both in terms of amount and timing, on the performance of the Venture Capital
Investments, but with the intention to source exits as soon as possible.
The portfolio of Structured Products will be constructed with
different issuers and differing maturity periods to minimise risk and create a
diversified portfolio. The Structured Products may also be collateralised
whereby notes are issued by one issuer (such as Investec Bank plc) but with
the underlying investment risk being linked to more than one issuer (as
approved by the Board) reducing insolvency risks, creating diversity and
potentially increasing returns for shareholders. If the Company invests in a
collateralised Structured Product, the amount of the exposure to an underlying
issuer will be taken into account when reviewing investments for
diversification. The maximum exposure to any one issuer (or underlying issuer)
will be limited, in aggregate, to 15 per cent. of the assets of the Company at
the time of investment. Structured Products can and may be sold before their
maturity date if required for the purposes of making Venture Capital
Investments and Investec Structured Products have agreed to make a market in
the Structured Products, should this be required by the Company.
The intention for the portfolio of Venture Capital Investments is
to build a diverse portfolio of primarily established unquoted companies
across different industries. In order to generate income and where it is felt
it would enhance shareholder return, investments may be structured to include
loan stock and/or redeemable preference shares as well as ordinary equity. It
is intended that the amount invested in any one sector and any one company
will be no more than approximately 20 per cent. and 10 per cent. respectively
of the Venture Capital Investments portfolio (in both cases at the date of the
investment).
The Board and its Managers review the portfolio of investments on a
regular basis to assess asset allocation and the need to realise investments
to meet the Company's objectives or maintain VCT status. Where investment
opportunities arise in one asset class which conflicts with assets held or
opportunities in another asset class, the Board will make the
investment/divestment decision.
Under its Articles, the Company has the ability to borrow a maximum
amount equal to 25 per cent. of the gross assets of the Company. The Board
will consider borrowing if it is in the shareholders' interests to do so. In
particular, because the Board intends to minimise cash balances, the Company
may borrow on a short-term to medium-term basis (in particular, against
Structured Products) for cashflow purposes and to facilitate the payment of
dividends and expenses in the early years.
The Company will not vary the investment objective or the
investment policy, to any material extent, without the approval of
shareholders. The Company intends to be a generalist VCT investing in a wide
range of sectors.
Risk diversification
The Board controls the overall risk of the Company. Calculus
Capital will ensure the Company has exposure to a diversified range of Venture
Capital Investments from different sectors. Investec Structured Products will
ensure the Company has exposure to a diversified range of Structured Products.
The Board believes that investment in these two asset classes provides further
diversification.
Co-investment policy
Calculus Capital has a co-investment policy between its various
funds whereby investment allocations are generally offered to each party in
proportion to their respective funds available for investment, subject to: (i)
a priority being given to any of the funds in order to maintain their tax
status; (ii) the time horizon of the investment opportunity being compatible
with the exit strategy of each fund; and (iii) the risk/reward profile of the
investment opportunity being compatible with the target return for each fund.
The terms of the investments may differ between the parties. In the event of
any conflicts between the parties, the issues will be resolved at the
discretion of the independent directors, designated members and committees. It
is not intended that the Company will co-invest with directors or members of
the Calculus Capital management team (including family members).
In respect of the Venture Capital Investments, funds attributable
to separate share classes will co-invest (i.e. pro rata allocation per fund,
unless one of the funds has a pre-existing investment where the incumbent fund
will have priority, or as otherwise approved by the Board). Any potential
conflict of interest arising will be resolved on a basis which the Board
believes to be equitable and in the best interests of all shareholders. A
co-investment policy is not considered necessary for the Structured Products.
Policy on Qualifying Investments
Calculus Capital follows a disciplined investment approach which
focuses on investing in more mature unquoted companies where the risk of
capital loss is reduced and prospects for exit enhanced, typically by the cash
generative characteristics and/or strong asset bases of the investee
companies. Calculus Capital, therefore, intends to:
- Invest in a diversified portfolio from a range of different
sectors.
- Focus on companies which are cash generative and/or with a strong
asset base.
- Structure investments to include loans and preference shares
where it is felt this would enhance shareholder return.
- Invest in companies which operate in sectors with a high degree
of predictability and a defensible market position.
- Invest in companies which can benefit both from the capital
provided by Calculus Capital but also from the many years of operating and
financial experience of the Calculus Capital team.
It is intended that the Venture Capital Investments portfolio will
be spread across a number of investments and the amount invested in any one
sector and any one company will be no more than approximately 20 per cent. and
10 per cent. respectively (in both cases at the date of investment).
VCT regulation
The Company's investment policy is designed to ensure that it will
meet, and continue to meet, the requirements for approved VCT status from HM
Revenue & Customs. Amongst other conditions, the Company may not invest more
than 15 per cent. (by value at the time of investment) of its investments in a
single company and must have at least 70 per cent. by value of its investments
throughout the period in shares or securities in qualifying holdings, of which
30 per cent. by value must be ordinary shares which carry no preferential
rights ("eligible shares"). For funds raised from 6 April 2011, the
requirement for 30 per cent. to be invested in eligible shares was increased
to 70 per cent.
Principal risks and uncertainties facing the Company
The Company is exposed to a variety of risks. The principal
financial risks and the Company's policies for managing these risks and the
policy and practice with regard to financial instruments are summarised in
note 15 to the Accounts.
The Board has also identified the following additional risks and
uncertainties:
Loss of approval as a venture capital trust and other regulatory
breaches
The Company has received provisional approval as a VCT under ITA
2007. Failure to meet and maintain the qualifying requirements for VCT status
could result in the loss of tax reliefs previously obtained, resulting in
adverse tax consequences for investors, including a requirement to repay the
income tax relief obtained, and could also cause the Company to lose its
exemption from corporation tax on chargeable gains.
The Board receives regular updates from the Managers and financial
information is produced on a monthly basis. The Board has appointed an
independent adviser to monitor and advise on the Company's compliance with the
VCT rules.
The Company is subject to compliance with the Companies Act 2006,
the rules of the UK Listing Authority and ITA 2007. A breach of any of these
could lead to suspension of the listing of the Company's shares on the London
Stock Exchange and/or financial penalties, with the resulting reputational
implications.
Venture Capital Investments
There are restrictions regarding the type of companies in which the
Company may invest and there is no guarantee that suitable investment
opportunities will be identified.
Investment in unquoted companies, AIM-traded and PLUS
Markets-traded companies involves a higher degree of risk than investment in
companies traded on the main market of the London Stock Exchange. These
companies may not be freely marketable and realisations of such investments
can be difficult and can take a considerable amount of time. There may also be
constraints imposed upon the Company with respect to realisations in order to
maintain its VCT status which may restrict the Company's ability to obtain the
maximum value from its investments.
Calculus Capital has been appointed to manage the Qualifying
Investments portfolio, and has extensive experience of investing in this type
of investment. Regular reports are provided to the Board.
Risks attaching to investment in Structured Products
Structured Products are subject to market fluctuations and the
Company may lose some or all of its investment. In the event of a long-term
decline in the FTSE 100 Index, or, in the case of the C Share Fund, in such
other index as this fund may be invested, there will be no gains from the
Structured Products. In the event of a fall in the relevant index of more than
50 per cent. at any time during the Structured Product term, and where the
Final Index Level is below the Initial Index Level, there will be losses on
the Structured Products.
There may not be a liquid market in the Structured Products and
there may never be two competitive market makers, making it difficult for the
Company to realise its investment. Risk is increased further where there is a
single market maker who is also the issuer of the Structured Product. Investec
Structured Products has agreed to make a market in the Structured Products,
should this be required by the Company.
Factors which may influence the market value of Structured Products
include interest rates, changes in the method of calculating the relevant
underlying index from time to time and market expectations regarding the
future performance of the relevant underlying index, its composition and such
Structured Products.
Investec Structured Products has been appointed to manage the
Structured Products portfolio for its expertise in these types of financial
products. Restrictions have been agreed with Investec Structured Products
relating to approved counterparties and maximum exposure to any one
counterparty.
Liquidity/marketability risk
Due to the holding period required to maintain up-front tax
reliefs, there is a limited secondary market for VCT shares and investors may
therefore find it difficult to realise their investments. As a result, the
market price of the shares may not fully reflect, and will tend to be at a
discount to, the underlying net asset value. The level of discount may also be
exacerbated by the availability of income tax relief on the issue of new VCT
shares. The Board recognises this difficulty, and has taken powers to buy back
shares, which could be used to enable investors to realise investments.
Changes to legislation/taxation
Changes in legislation or tax rates concerning VCTs in general, and
Venture Capital Investments and qualifying trades in particular, may limit the
number of new Venture Capital Investment opportunities, and thereby adversely
affect the ability of the Company to achieve or maintain VCT status, and/or
reduce the level of returns which would otherwise have been achievable.
Engagement of third party advisers
The Company has no employees and relies on services provided by
third parties. The Board has appointed Calculus Capital as Investment Manager
of the Qualifying Investments portfolio and Investec Structured Products as
Investment Manager of the Structured Products portfolio. Capita Sinclair
Henderson Limited provides administration, accounting and company secretarial
services, and Investec Wealth & Investments (formerly known as Rensburg
Sheppards) acts as custodian.
C shares versus ordinary shares
The assets relating to the C shares are managed and accounted for
separately from the assets attributable to the ordinary shares. However, a
number of company regulations and VCT requirements are assessed at company
level and, therefore, the performance of one fund may impact adversely on the
other. The Board monitors both the performance of each separate fund as well
as requirements at a company level to reduce the risk of this occurring.
Future developments
The Directors believe that the Company is well placed to make
progress during 2012 and are encouraged by the number of attractive investment
opportunities available.
Corporate social responsibility
The Company has no employees and the Board is comprised entirely of
non-executive Directors. Day to day management of the Company's business is
delegated to the Investment Managers (details of the respective management
agreements are set out in the full Annual Report and Accounts) and the Company
itself has no environmental, social or community policies. In carrying out its
activities and in relationships with suppliers, the Company aims to conduct
itself responsibly, ethically and fairly.
The full Annual Report and Accounts contain the following statements regarding
responsibility for the Accounts.
DIRECTORS' RESPONSIBILTY STATEMENT
Statement of Directors' Responsibilities in respect of the Annual
Report and the Accounts
The Directors are responsible for preparing the Annual Report and
the Accounts in accordance with applicable law and regulations.
Company law requires the Directors to prepare Accounts for each
financial year. Under that law they have elected to prepare the Accounts in
accordance with United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable laws). Under company law the
Directors must not approve the Accounts unless they are satisfied that they
give a true and fair view of the state of affairs and profit or loss of the
Company for that period.
In preparing these Accounts, the Directors are required to:
- select suitable accounting policies and then apply them
consistently;
- make judgments and estimates that are reasonable and prudent;
- state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and explained in the
Accounts; and
- prepare the Accounts on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's transactions and
disclose with reasonable accuracy at any time the financial position of the
Company and enable them to ensure that the Accounts comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Directors' Report (including Business Review),
Directors' Remuneration Report and Corporate Governance Statement that comply
with that law and those regulations, and for ensuring that the Annual Report
includes information required by the Listing Rules of the Financial Services
Authority.
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 Accounts are published on the www.calculuscapital.com website,
which is a website maintained by one of the Company's Investment Managers,
Calculus Capital Limited. The maintenance and integrity of the website
maintained by Calculus Capital Limited is, so far as it relates to the
Company, the responsibility of Calculus Capital Limited. The work carried out
by the Auditor does not involve consideration of the maintenance and integrity
of this website and accordingly, the Auditor accepts no responsibility for any
changes that have occurred to the Accounts since they were initially presented
on the website. Visitors to the website need to be aware that legislation in
the United Kingdom covering the preparation and dissemination of the Accounts
may differ from legislation in their jurisdiction.
We confirm that to the best of our knowledge:
- the Accounts, prepared in accordance with 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 Annual Report includes a fair review of the development and
performance of the business and the position of the Company together with a
description of the principal risks and uncertainties that it faces.
On behalf of the Board
Michael O'Higgins
Chairman
1 June 2012
NON-STATUTORY ACCOUNTS
The financial information set out below does not constitute the
Company's statutory accounts for the year ended 29 February 2012 and the
period ended 28 February 2011 but is derived from those accounts. Statutory
accounts for 2011 have been delivered to the Registrar of Companies, and those
for 2012 will be delivered in due course. The Auditor has reported on those
accounts; their report was (i) unqualified, (ii) did not include a reference
to any matters to which the Auditor drew attention by way of emphasis without
qualifying their report and (ii) did not contain a statement under Section 498
(2) or (3) of the Companies Act 2006. The text of the Auditor's report can be
found in the Company's full Annual Report and Accounts at
www.calculuscapital.com.
INCOME STATEMENT
for the year ended 29 February 2012
Year Ended 29 February 2012 Period Ended 28 February 2011
Revenue Capital Revenue Capital
Return Return Total Return Return Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Ordinary Share Fund
Investment holding gains 8 - 26 26 - 446 446
Income 2 48 - 48 20 - 20
Investment management fee 3 (12) (35) (47) (9) (26) (35)
Other operating expenses 4 (107) - (107) (123) - (123)
(Loss)/profit on ordinary activities
before taxation (71) (9) (80) (112) 420 308
Taxation on ordinary activities 5 - - - - - -
(Loss)/profit on ordinary activities
after taxation (71) (9) (80) (112) 420 308
Return per ordinary share - basic 7 (1.5)p (0.2)p (1.7)p (3.0)p 11.3p 8.3p
C Share Fund
Investment holding gains 8 - 24 24
Income 2 7 - 7
Investment management fee 3 (4) (12) (16)
Other operating expenses 4 (48) - (48)
(Loss)/profit on ordinary activities
before taxation (45) 12 (33)
Taxation on ordinary activities 5 - - -
(Loss)/profit on ordinary activities
after taxation (45) 12 (33)
Return per C share - basic 7 (2.3)p 0.6p (1.7)p
The total column of these statements represents the Income
Statement of the Ordinary Share Fund and C Share Fund.
Year Ended 29 February 2012 Period Ended 28 February 2011
Revenue Capital Revenue Capital
Return Return Total Return Return Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Total
Investment holding gains 8 - 50 50 - 446 446
Income 2 55 - 55 20 - 20
Investment management fee 3 (16) (47) (63) (9) (26) (35)
Other operating expenses 4 (155) - (155) (123) - (123)
(Loss)/profit on ordinary activities (116) 3 (113) (112) 420 308
before taxation
Taxation on ordinary activities 5 - - - - - -
(Loss)/profit on ordinary activities (116) 3 (113) (112) 420 308
after taxation
Return per ordinary share - basic 7 (1.5)p (0.2)p (1.7)p (3.0)p 11.3p 8.3p
Return per C share - basic 7 (2.3)p 0.6p (1.7)p
The total column of this statement represents the Company's Income Statement.
The supplementary revenue return and capital return columns are
both prepared in accordance with the Association of Investment Companies'
("AIC") Statement of Recommended Practice ("SORP").
No operations were acquired or discontinued during the year.
All items in the above statements derive from continuing
operations.
There were no recognised gains or losses other than those passing
through the Income Statement.
The notes form an integral part of these Accounts.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the year ended 29 February 2012
Share Capital Capital
Share Premium Special Reserve Reserve Revenue
Capital Account Reserve Realised Unrealised Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Ordinary Share Fund
For the year ended 29 February 2012
1 March 2011 47 752 3,729 (26) 446 (112) 4,836
Cancellation of share premium - (747) 747 - - - -
Expenses on share issue - (5) (1) - - - (6)
Unrealised net increase in value of - - - - 26 - 26
investments
Management fee allocated to capital - - - (35) - - (35)
Revenue return on ordinary activities - - - - - (71) (71)
after tax
Dividend paid - - (249) - - - (249)
Closing balance 47 - 4,226 (61) 472 (183) 4,501
For the period to 28 February 2011
1 February 2010 - - - - - - -
Unrealised net increase in value of - - - - 446 - 446
investments
Management fee allocated to capital - - - (26) - - (26)
Revenue return on ordinary activities - - - - - (112) (112)
after tax
Issue of redeemable non-voting shares 50 - - - - - 50
Redemption of redeemable non-voting (50) - - - - - (50)
shares
Increase in share capital in issue 47 4,740 - - - - 4,787
Expenses on share issues - (259) - - - - (259)
Cancellation of share premium - (3,729) 3,729 - - - -
28 February 2011 47 752 3,729 (26) 446 (112) 4,836
Share Capital Capital
Share Premium Special Reserve Reserve Revenue
Capital Account Reserve Realised Unrealised Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
C Share Fund
For the year ended 29 February 2012
1 March 2011 - - - - - - -
Increase in share capital in issue 19 1,912 - - - - 1,931
Cancellation of share premium - (1,802) 1,802 - - - -
Expenses on share issue - (110) - - - - (110)
Unrealised net increase in value of - - - - 24 - 24
investments
Management fee allocated to capital - - - (12) - - (12)
Revenue return on ordinary activities - - - - - (45) (45)
after tax
Closing balance 19 - 1,802 (12) 24 (45) 1,788
Share Capital Capital
Share Premium Special Reserve Reserve Revenue
Capital Account Reserve Realised Unrealised Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Total
For the year ended 29 February 2012
1 March 2011 47 752 3,729 (26) 446 (112) 4,836
Increase in share capital in issue 19 1,912 - - - - 1,931
Cancellation of share premium - (2,549) 2,549 - - - -
Expenses on share issue - (115) (1) - - - (116)
Unrealised net increase in value of - - - - 50 - 50
investments
Management fee allocated to capital - - - (47) - - (47)
Revenue return on ordinary activities - - - - - (116) (116)
after tax
Dividend paid - - (249) - - - (249)
Closing balance 66 - 6,028 (73) 496 (228) 6,289
For the period to 28 February 2011
1 February 2010 - - - - - - -
Unrealised net increase in value of - - - - 446 - 446
investments
Management fee allocated to capital - - - (26) - - (26)
Revenue return on ordinary activities - - - - - (112) (112)
after tax
Issue of redeemable non-voting shares 50 - - - - - 50
Redemption of redeemable non-voting (50) - - - - - (50)
shares
Increase in share capital in issue 47 4,740 - - - - 4,787
Expenses on share issues - (259) - - - - (259)
Cancellation of share premium - (3,729) 3,729 - - - -
28 February 2011 47 752 3,729 (26) 446 (112) 4,836
The notes form an integral part of these Accounts.
BALANCE SHEET
as at 29 February 2012
29 February 2012 28 February 2011
Note GBP'000 GBP'000
Ordinary Share Fund
Fixed assets
Investments designated at fair
value through profit or loss 8 4,435 4,488
Current assets
Debtors 9 119 214
Cash at bank and on deposit 28 326
147 540
Creditors: amount falling due
within one year
Creditors 10 (66) (176)
(66) (176)
Net current assets 81 364
Non-current liabilities
IFA trail commission (15) (16)
Total net assets 4,501 4,836
Capital and reserves
Called-up share capital 11 47 47
Share premium account - 752
Special reserve 4,226 3,729
Capital reserve - realised (61) (26)
Capital reserve - unrealised 472 446
Revenue reserve (183) (112)
Equity shareholders' funds 4,501 4,836
Net asset value per ordinary
share - basic 12 95.0p 102.1p
29 February 2012
Note GBP'000
C Share Fund
Fixed assets
Investments designated at fair value through
profit or loss 8 1,691
Current assets
Debtors 9 51
Cash at bank and on deposit 104
155
Creditors: amount falling due within one year
Creditors 10 (48)
(48)
Net current assets 107
Non-current liabilities
IFA trail commission (10)
Total net assets 1,788
Capital and reserves
Called-up share capital 11 19
Share premium account -
Special reserve 1,802
Capital reserve - realised (12)
Capital reserve - unrealised 24
Revenue reserve (45)
Equity shareholders' funds 1,788
Net asset value per C share - basic 12 92.6p
29 February 2012 28 February 2011
Note GBP'000 GBP'000
Total
Fixed assets
Investments designated at fair
value through profit or loss 8 6,126 4,488
Current assets
Debtors 9 170 214
Cash at bank and on deposit 132 326
302 540
Creditors: amounts falling due
within one year
Creditors 10 (114) (176)
(114) (176)
Net current assets 188 364
Non-current liabilities
IFA trail commission (25) (16)
Total net assets 6,289 4,836
Capital and reserves
Called-up share capital 66 47
Share premium account - 752
Special reserve 6,028 3,729
Capital reserve - realised (73) (26)
Capital reserve - unrealised 496 446
Revenue reserve (228) (112)
Equity shareholders' funds 6,289 4,836
Net asset value per ordinary
share - basic 12 95.0p 102.1p
Net asset value per C share -
basic 12 92.6p
The notes form an integral part of these Accounts.
These Accounts were approved by the Board of Directors and were
authorised for issue on
1 June 2012 and were signed on its behalf by:
Michael O'Higgins
Chairman
Registered No. 07142153 England & Wales
CASH FLOW STATEMENT
for the year ended 29 February 2012
Year Ended Period Ended
29 February 28 February
2012 2011
Note GBP'000 GBP'000
Ordinary Share Fund
Operating activities
Investment income received 24 7
Deposit interest received 2 6
Investment management fees (46) (24)
Other cash payments (104) (169)
Cash expended from operations 13 (124) (180)
Cash flow from investing activities
Purchase of investments (755) (4,042)
Sale of investments 855 -
Net cash flow from investing 80 (4,042)
activities
Net cash flow before financing (44) (4,222)
Cash flow from financing activities
Redeemable non-voting shares issued - 50
Redemption of redeemable non-voting - (50)
shares
Shares issued - 4,787
Expenses on share issues (5) (239)
Net cash flow from financing (5) 4,548
activities
Equity dividend paid (249) -
(Decrease)/increase in cash at bank
and on deposit (298) 326
Year Ended
29 February
2012
Note GBP'000
C Share Fund
Operating activities
Investment income received 4
Investment management fees (12)
Other cash payments (79)
Cash expended from operations 13 (87)
Cash flow from investing activities
Purchase of investments (2,594)
Sale of investments 928
Net cash flow from investing (1,666)
activities
Net cash flow before financing (1,753)
Cash flow from financing activities
Shares issued 1,931
Expenses on share issues (74)
Net cash flow from financing 1,857
activities
Increase in cash at bank and on 104
deposit
Year Ended Period Ended
29 February 28 February
2012 2011
Note GBP'000 GBP'000
Total
Operating activities
Investment income received 28 7
Deposit interest received 2 6
Investment management fees (58) (24)
Other cash payments (183) (169)
Cash expended from operations 13 (211) (180)
Cash flow from investing activities
Purchase of investments (3,369) (4,042)
Sale of investments 1,783 -
Net cash outflow from investing (1,586) (4,042)
activities
Net cash outflow before financing (1,797) (4,222)
Cash flow from financing activities
Redeemable non-voting shares issued - 50
Redemption of redeemable non-voting - (50)
shares
Shares issued 1,931 4,787
Expenses on share issues (79) (239)
Net cash inflow from financing 1,852 4,548
activities
Equity dividend paid (249) -
(Decrease)/increase in cash at bank
and on deposit (194) 326
The notes form an integral part of these Accounts.
NOTES TO THE ACCOUNTS
1. Accounting Policies
Basis of accounting
These Accounts cover the 12 month period 1 March 2011 to 29
February 2012, and have been prepared under the historical cost convention,
except for the valuation of financial assets at fair value through profit or
loss, in accordance with UK Generally Accepted Accounting Practice ("UK
GAAP").
In determining the analysis of total income and expenses as between
capital return and revenue return, the Directors have followed the guidance
contained in the AIC SORP, as revised in 2009, and on the assumption that the
Company maintains VCT status.
The Company has not prepared consolidated accounts and has
accounted for its subsidiary, Investec SPV, as an investment on the grounds
that its results are immaterial to the Company and control is intended to be
temporary because the subsidiary has been acquired and held exclusively with a
view to its subsequent disposal in the near future.
The Company's Accounts are presented in Sterling.
Investments at fair value through profit or loss
The Company aims to invest in portfolios of Structured Products and
Venture Capital Investments that will provide sufficient total returns to
allow the Company to pay annual dividends and provide long-term capital
returns for investors. As a result, all investments held by the Company are
designated, upon initial recognition, as held at fair value through profit or
loss, in accordance with Financial Reporting Standard 26 Financial
Instruments: Recognition and Measurement'. The Company manages and evaluates
the performance of these investments on a fair value basis in accordance with
its investment strategy, and information about the portfolio is provided
internally on this basis to the Board. Fair value is the amount for which an
asset can be exchanged between knowledgeable, willing parties in an arm's
length transaction. Investments held at fair value through profit or loss are
initially recognised at cost, being the consideration given and excluding
transaction or other dealing costs associated with the investment, which are
expensed and included in the capital column of the Income Statement.
Subsequently, investments are measured at fair value, with gains and losses on
investments recognised in the Income Statement and allocated to capital. All
purchases and sales of investments are accounted for on trade date basis.
For investments actively traded in organised financial markets,
fair value is generally determined by reference to quoted market bid, or last,
prices, depending on the convention of the exchange on which the investment is
quoted, at the close of business on the Balance Sheet date.
Structured Products are valued by reference to the FTSE 100 Index,
with mid prices for the Structured Products provided by the product issuers.
An adjustment is made to these prices to take into account any bid/offer
spreads prevalent in the market at each valuation date. These spreads are
either determined by the issuer or recommended by the Structured Products
Manager, Investec Structured Products (a trading name of Investec Bank plc).
Returns are linked to the FTSE 100 Index by way of a fixed return
that is payable as long as the Final Index Level is no lower than the Initial
Index Level (Final Index Level and Initial Index Level being the closing (or
average closing) level of the FTSE 100 Index at the end of the relevant Index
Calculation Period (being the relevant period over which the Initial and Final
Index Levels are determined in accordance with the terms of the Structured
Product) for a Structured Product). All of the investments in Structured
Products in respect of the Ordinary Share Fund and C Share Fund (to the extent
that the latter invests in FTSE 100 linked Structured Products) will either be
capital protected or capital at risk on a one-to-one basis where the FTSE 100
Index falls by more than 50 per cent. and the Final Index Level is below the
Initial Index Level. If the FTSE 100 Index does fall by more than 50 per cent.
at any time during the investment period and fails to recover at maturity, the
capital will be at risk on a maximum one-to-one basis (i.e. if the FTSE 100
Index falls by more than 50 per cent. during the investment period and on
maturity is down 25 per cent., capital within that Structured Product will be
reduced by 25 per cent.).
The majority of the Structured Products are designed to produce
capital appreciation.
Unquoted investments are valued using an appropriate valuation
technique so as to establish what the transaction price would have been at the
Balance Sheet date. Such investments are valued in accordance with the
International Private Equity and Venture Capital Association ("IPEVCA")
guidelines. Primary indicators of fair value are derived from earnings
multiples, recent arm's length market transactions, net assets or, where
appropriate, at cost for recent investments or the discounted cash flow
valuation as at the previous reporting date.
Income
Dividends receivable on equity shares are recognised as revenue on
the date on which the shares or units are marked as ex-dividend. Where no
ex-dividend date is available, the revenue is recognised when the Company's
right to receive it has been established.
Interest receivable from fixed income securities is recognised
using the effective interest rate method. Interest receivable on bank deposits
is included in the Accounts on an accruals basis.
The gains and losses arising on investments in Structured Products
are allocated between revenue and capital according to the nature of each
Structured Product. This is dependent on the extent to which the return on the
Structured Product is capital or revenue based.
Other revenue is credited to the revenue column of the Income
Statement when the Company's right to receive the revenue has been
established.
Expenses
All expenses are accounted for on an accruals basis. Expenses are
charged to the Income Statement as follows:
- expenses, except as stated below, are charged to the revenue
column of the Income Statement;
- expenses incurred on the acquisition or disposal of an investment
are taken to the capital column of the Income Statement;
- expenses are charged to the capital column of the Income
Statement where a connection with the maintenance or enhancement of the value
of the investments can be demonstrated. In this respect management fees have
been allocated 75 per cent. to the capital column and 25 per cent. to the
revenue column of the Income Statement, being in line with the Board's
expected long-term split of returns, in the form of capital gains and revenue
respectively, from the investment portfolio of the Company; and
- expenses associated with the issue of shares are deducted from
the share premium account. Annual IFA trail commission covering a five year
period since share allotment has been provided for in the Accounts as, due to
the nature of the Company, it is probable that this will be payable. The
commission is apportioned between current and non-current liabilities.
Expenses incurred by the Company in excess of the agreed cap,
currently 3 per cent. of the gross amount raised from the offer for
subscription of ordinary shares and C shares respectively for the 2009/2010,
2010/2011 and 2011/2012 tax years (excluding irrecoverable VAT, annual trail
commission and performance incentive fees), can be clawed back from Investec
Structured Products until the interim return date of the relevant share issue.
Any claw back is treated as a credit against the expenses of the Company.
Investment management and performance fees
Calculus Capital, as Investment Manager of the VCT qualifying
portfolio, receives an annual investment management fee of an amount
equivalent to 1.0 per cent. of the net assets of the respective share fund.
Investec Structured Products, as Investment Manager of the
Structured Products portfolio, does not receive any annual management fees
from the Company. Investec Structured Products is entitled to an arrangement
fee from the providers of Structured Products as detailed in note 16.
The Investment Managers will each receive a performance incentive
fee payable in cash of an amount equal to 10 per cent. of dividends and
distributions paid (including the relevant distribution being offered) to
holders of ordinary shares over and above 105 pence per ordinary share (this
being a 50 per cent. return on an initial net investment of 70 pence per
ordinary share taking into account upfront income tax relief) provided holders
of ordinary shares have received or been offered an interim return of at least
70 pence per share for payment on or before 14 December 2015. Such performance
incentive fees will be paid within 10 business days of the date of payment of
the relevant dividend or distribution.
For C shares, Investec Structured Products and Calculus Capital
will be entitled to performance incentive fees as set out below:
- 10 per cent. of C Shareholder Proceeds in excess of 105p up to
and including Proceeds of 115p per C share, such amount to be paid within ten
business days of the date of payment of the relevant dividend or distribution
pursuant to which a return of 115p per C share is satisfied; and
- 10 per cent. of C Shareholder Proceeds in excess of 115p per C
share, such amounts to be paid within ten business days of the date of payment
of the relevant dividend or distribution.
Provided in each case that C shareholders have received or been
offered the C Share Interim Return of at least 70p per C share on or before 14
March 2017 and at least a further 45p per C share having being received or
offered for payment on or before the 14 March 2019.
Capital reserve
The capital return component of the return for the year is taken to
the non-distributable capital reserves within the Reconciliation of Movements
in Shareholders' Funds.
Special reserve
The special reserve was created by the cancellation of the Ordinary
Share Fund's share premium account on 20 October 2010. A further cancellation
of the share premium account occurred on 23 November 2011 for both the
Ordinary Share Fund and C Share Fund. The special reserve is a distributable
reserve created to be used by the Company inter alia to write off losses, fund
market purchases of its own ordinary and C shares, make distributions and/or
for other corporate purposes.
The Company was formerly an investment company under section 833 of
the Companies Act 2006. On 18 May 2011 investment company status was revoked
by the Company. This was done in order to allow the Company to pay dividends
to shareholders using the special reserve.
Taxation
Deferred tax is recognised in respect of all timing differences
that have originated but not reversed at the Balance Sheet date where
transactions or events that result in an obligation to pay more tax in the
future have occurred at the Balance Sheet date. This is subject to deferred
tax assets only being recognised if it is considered more likely than not that
there will be suitable profits from which the future reversals of the
underlying timing differences can be deducted. Timing differences are
differences between the Company's taxable profits and its results as stated in
the Accounts.
Deferred tax is measured at the average tax rates that are expected
to apply in the periods in which the timing differences are expected to
reverse, based on tax rates and laws that have been enacted or substantially
enacted by the Balance Sheet date. Deferred tax is measured on a
non-discounted basis.
No taxation liability arises on gains from sales of fixed asset
investments by the Company by virtue of its Venture Capital Trust status.
However, the net revenue (excluding UK dividend income) accruing to the
Company is liable to corporation tax at the prevailing rates.
Dividends
Dividends to shareholders are accounted for in the period in which
they are paid or approved in general meetings. Dividends payable to equity
shareholders are recognised in the Reconciliation of Movements in
Shareholders' Funds when they are paid, or have been approved by shareholders
in the case of a final dividend and become a liability of the Company.
2. Income
Year Ended Period Ended
29 February 28 February
2012 2011
GBP'000 GBP'000
Ordinary Share Fund
UK unfranked loan stock interest 44 14
Liquidity fund interest 2 -
Bank interest 2 6
48 20
Total income comprises:
Interest 48 20
48 20
C Share Fund
UK unfranked loan stock interest 4
Liquidity fund interest 3
7
Total income comprises:
Interest 7
7
Total
UK unfranked loan stock interest 48 14
Liquidity fund interest 5 -
Bank interest 2 6
55 20
Total income comprises:
Interest 55 20
55 20
3. Management Fee
Year Ended Period Ended
29 February 2012 28 February 2011
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Ordinary Share
Fund
Investment
management fee 12 35 47 9 26 35
C Share Fund
Investment
management fee 4 12 16
Total
Investment
management fee 16 47 63 9 26 35
No performance fee was paid during the year.
4. Other Expenses
Year Ended Period Ended
29 February 28 February
2012 2011
GBP'000 GBP'000
Ordinary Share Fund
Directors' fees 60 73
Secretarial and accounting fees 57 60
Auditor's remuneration
- audit services 17 17
- interim review - 11
- reporting accountant on launch - 8
- reporting accountant on issue of ordinary - 6
shares
- tax services 3 4
Other 51 129
Clawback of expenses in excess of 3% cap (81) (185)
107 123
C Share Fund
Directors' fees 20
Secretarial and accounting fees 19
Auditor's remuneration
- audit services 6
- tax services 1
Other 51
Clawback of expenses in excess of 3% cap (49)
48
Year Ended Period Ended
29 February 28 February
2012 2011
GBP'000 GBP'000
Total
Directors' fees 80 73
Secretarial and accounting fees 76 60
Auditor's remuneration
- audit services 23 17
- interim review - 11
- reporting accountant on launch - 8
- reporting accountant on issue of ordinary - 6
shares
- tax services 4 4
Other 102 129
Clawback of expenses in excess of 3% cap (130) (185)
155 123
Further details of Directors' fees can be found in the Directors' Remuneration
Report in the full Annual Report and Accounts.
5. Taxation
Year Ended 29 February 2012 Period Ended 28 February 2011
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Ordinary Share Fund
(Loss)/profit on ordinary activities
before tax (71) (9) (80) (112) 420 308
Theoretical tax at UK Corporation Tax
rate of 26.5% (2011: 28%) (19) (2) (21) (31) 118 87
Timing differences: Loss not
recognised, carried forward 19 - 19 31 - 31
Effects of non-taxable gains - 2 2 - (118) (118)
Tax on (loss)/profit for the period - - - - - -
C Share Fund
(Loss)/profit on ordinary activities
before tax (45) 12 (33)
Theoretical tax at UK Corporation Tax
rate of 26.5% (12) 3 (9)
Timing differences: Loss not
recognised, carried forward 12 - 12
Effects of non-taxable gains - (3) (3)
Tax on (loss)/profit for the period - - -
Total
(Loss)/profit on ordinary activities
before tax (116) 3 (113) (112) 420 308
Theoretical tax at UK Corporation Tax
rate of 26.5% (2011: 28%) (31) 1 (30) (31) 118 87
Timing differences: Loss not
recognised, carried forward 31 - 31 31 - 31
Effects of non-taxable gains - (1) (1) - (118) (118)
Tax on (loss)/profit for the period - - - - - -
At 31 December 2011, the Ordinary Share Fund and C Share Fund had
GBP241,103 (28 February 2011: GBP136,328) and GBP57,680 respectively (Company:
GBP298,783 (28 February 2011: GBP136,328)) of excess management expenses to carry
forward against future taxable profits.
The deferred tax asset of GBP59,070 (28 February 2011: GBP35,786) and
GBP14,132 for the Ordinary Share Fund and C Share Fund respectively (Company:
GBP73,202 (28 February 2011: GBP35,786)) has not been recognised due to the fact
that it is unlikely the excess management expenses will be set off in the
foreseeable future.
6. Dividends
Year Ended Period Ended
29 February 28 February
2012 2011
GBP'000 GBP'000
Ordinary Share Fund
Declared and paid: 5.25p per ordinary share
in respect of the period ended 28 February
2011 (2011: nil) 249 -
Proposed final dividend: 5.25p per ordinary
share in respect of the year ended 29
February 2012 249 249
C Share Fund
Proposed final dividend: 4.5p per C share in
respect of the year ended 29 February 2012 87
The proposed dividends are subject to approval by shareholders at the
forthcoming Annual General Meeting and have not been included as a liability
in these Accounts.
7. Return per Share
Year Ended Period Ended
29 February 2012 28 February 2011
Revenue Capital Total Revenue Capital Total
pence pence pence pence pence pence
Return per
ordinary share (1.5) (0.2) (1.7) (3.0) 11.3 8.3
Return per C (2.3) 0.6 (1.7)
share
Ordinary Share Fund
Revenue return per ordinary share is based on the net revenue loss
on ordinary activities after taxation of GBP71,000 (28 February 2011: GBP112,000)
and on 4,738,463 ordinary shares (28 February 2011: 3,721,530), being the
weighted average number of ordinary shares in issue during the year.
Capital return per ordinary share is based on the net capital loss
for the year of GBP9,000 (28 February 2011: gain of GBP420,000) and on 4,738,463
ordinary shares (28 February 2011: 3,721,530), being the weighted average
number of ordinary shares in issue during the year.
Total return per ordinary share is based on the total loss on
ordinary activities after taxation of GBP80,000 (28 February 2011: gain of
GBP308,000) and on 4,738,463 ordinary shares (28 February 2011: 3,721,530),
being the weighted average number of ordinary shares in issue during the year.
C Share Fund
Revenue return per C share is based on the net revenue loss on
ordinary activities after taxation of GBP45,000 and on 1,919,142 C shares, being
the weighted average number of C shares in issue since their first allotment
during the year.
Capital return per C share is based on the net capital gain for the
year of GBP12,000 and on 1,919,142 C shares, being the weighted average number
of C shares in issue since their first allotment during the year.
Total return per C share is based on the total loss for the year of
GBP33,000 and on 1,919,142 C shares, being the weighted average number of C
shares in issue since their first allotment during the year.
8. Investments
Year Ended 29 February 2012
Structured
Product Unquoted Other
Investments Investments Investments Total
GBP'000 GBP'000 GBP'000 GBP'000
Ordinary Share Fund
Opening bookcost 2,443 549 1,050 4,042
Opening unrealised appreciation 439 7 - 446
Opening valuation 2,882 556 1,050 4,488
Movements in year:
Purchases at cost 100 675 1 776
Sales proceeds - - (855) (855)
Increase/(decrease) in unrealised
appreciation 174 (148) - 26
Movements in year 274 527 (854) (53)
Closing valuation 3,156 1,083 196 4,435
Closing bookcost 2,543 1,224 196 3,963
Closing unrealised
appreciation/(depreciation) 613 (141) - 472
3,156 1,083 196 4,435
Unquoted investments include unquoted shares valued at GBPnil in the
Company's subsidiary, Investec SPV. These shares cost GBP1,834, resulting in an
unrealised loss of GBP1,834.
C Share Fund
Movements in year:
Purchases at cost 850 244 1,501 2,595
Sales proceeds - - (928) (928)
Increase/(decrease) in
unrealised appreciation 85 (61) - 24
Closing valuation 935 183 573 1,691
Closing bookcost 850 244 573 1,667
Closing unrealised
appreciation/(depreciation) 85 (61) - 24
935 183 573 1,691
Unquoted investments include unquoted shares valued at GBPnil in the
Company's subsidiary, Invested SPV. The shares cost GBP917, resulting in an
unrealised loss of GBP917.
Year Ended 29 February 2012
Structured
Product Unquoted Other
Investments Investments Investments Total
GBP'000 GBP'000 GBP'000 GBP'000
Total
Opening bookcost 2,443 549 1,050 4,042
Opening unrealised 439 7 - 446
appreciation
Opening valuation 2,882 556 1,050 4,488
Movements in year:
Purchases at cost 950 919 1,502 3,371
Sales proceeds - - (1,783) (1,783)
Increase/(decrease) in
unrealised appreciation 259 (209) - 50
Movements in year 1,209 710 (281) 1,638
Closing valuation 4,091 1,266 769 6,126
Closing bookcost 3,393 1,468 769 5,630
Closing unrealised
appreciation/(depreciation) 698 (202) - 496
4,091 1,266 769 6,126
Note 15 provides a detailed analysis of investments held at fair
value through profit and loss in accordance with Financial Reporting Standard
29 'Financial Instruments: Disclosures'.
During the year the Company incurred no transaction costs on
purchases in respect of ordinary shareholder activities or C shareholder
activities.
Investec SPV was incorporated on 29 November 2011. As at 29
February 2012, Investec SPV had share capital of GBP2,751 and deficit and net
loss of GBP2,751 (note: this essentially values Investec SPV at GBPnil).
9. Debtors
Year Ended Period Ended
29 February 28 February
2012 2011
GBP'000 GBP'000
Ordinary Share Fund
Prepayments and accrued income 38 29
Clawback of expenses in excess of 3% cap 81 185
119 214
C Share Fund
Prepayments and accrued income 2
Clawback of expenses in excess of 3% cap 49
51
Total
Prepayments and accrued income 40 29
Clawback of expenses in excess of 3% cap 130 185
170 214
10. Creditors
Year Ended Period Ended
29 February 28 February
2012 2011
GBP'000 GBP'000
Ordinary Share Fund
IFA trail commission 5 4
Management fees 11 10
Audit fees 14 17
Directors' fees 9 13
Administration fees 5 10
Other creditors 22 122
66 176
C Share Fund
IFA trail commission 2
Management fees 4
Audit fees 6
Directors' fees 4
Administration fees 2
Other creditors 30
48
Total
IFA trail commission 7 4
Management fees 15 10
Audit fees 20 17
Directors' fees 13 13
Administration fees 7 10
Other creditors 52 122
114 176
11. Share Capital
29 February 2012 28 February 2011
Number GBP'000 Number GBP'000
Ordinary Share Fund
1 March 2011 4,738,463 47 20 -
Shares issued in year - - 4,738,443 47
4,738,463 47 4,738,463 47
C Share Fund
1 March 2011 - -
Shares issued in year 1,931,095 19
1,931,095 19
An offer for subscription for C shares of 1p each was launched in
January 2011 and the shares were issued in April and May 2011.
Under the Articles of Association, a resolution for the
continuation of the Company as a Venture Capital Trust will be proposed at the
Annual General Meeting falling after the tenth anniversary of the last
allotment (from time to time) of shares in the Company and thereafter at
five-yearly intervals.
12. Net Asset Value per Share
29 February 28 February
2012 2011
Ordinary Share Fund
Net asset value per ordinary share 95.0p 102.1p
The basic net asset value per ordinary share is based on net assets
(including current period revenue) of GBP4,501,000 (28 February 2011:
GBP4,836,000) and on 4,738,463 ordinary shares (28 February 2011: 4,738,463),
being the number of ordinary shares in issue at the end of the year.
C Share Fund
Net asset value per C share 92.6p
The basic net asset value per C share is based on net assets
(including current period revenue) of GBP1,788,000 and on 1,931,095 C shares,
being the number of C shares in issue at the end of the year.
13. Reconciliation of Net Profit before Tax to Cash Expended from Operating
Activities
Year Ended Period Ended
29 February 28 February
2012 2011
GBP'000 GBP'000
Ordinary Share Fund
(Loss)/gain on ordinary activities before (80) 308
taxation
Gains on investments (26) (446)
Income reinvested (1) -
Decrease/(increase) in debtors 95 (214)
(Decrease)/increase in creditors (112) 172
Cash expended from operating activities (124) (180)
The movement in creditors shown above does not agree with the
movement shown in the Balance Sheet principally because of the effect of the
short-term liability for trail commission of GBP5,000 (2011: GBP4,000) included in
creditors at the year end, which is not part of operating activities.
C Share Fund
Loss on ordinary activities before taxation (33)
Gains on investments (24)
Income reinvested (1)
Increase in debtors (51)
Increase in creditors 22
Cash expended from operating activities (87)
The movement in creditors shown above does not agree with the
movement shown in the Balance Sheet principally because of the effect of the
short-term liability for trail commission of GBP2,000 included in creditors at
the year end and the short-term liability for share issue expenses of GBP23,000
which are not part of operating activities.
Year Ended Period Ended
29 February 28 February
2012 2011
GBP'000 GBP'000
Total
(Loss)/gain on ordinary activities before (113) 308
taxation
Gains on investments (50) (446)
Income reinvested (2) -
Decrease/(increase) in debtors 44 (214)
(Decrease)/increase in creditors (90) 172
Cash expended from operating activities (211) (180)
The movement in creditors shown above does not agree with the
movement shown in the Balance Sheet principally because of the effect of the
short-term liability for trail commission of GBP7,000 (2011: GBP4,000) included in
creditors at the year end and the short-term liability for share issue
expenses of GBP23,000 which are not part of operating activities.
14. Financial Commitments
At 29 February 2012 the Company did not have any financial
commitments which had not been accrued for.
15. Financial Instruments
The Company's objective is to produce ongoing capital gains and
income that will provide investment returns sufficient to maximise annual
dividends and to fund a special dividend or cash offer in year 6 sufficient to
bring distributions per share to 70p.
In order to qualify as a VCT, at least 70 per cent. of the
Company's investments must be invested in Venture Capital Investments within
approximately three years of the relevant funds being raised. Thus, there will
be a phased reduction in the Structured Products portfolio and corresponding
build up in the portfolio of Venture Capital Investments to achieve and
maintain this 70 per cent. threshold along the following lines:
Average Exposure
per Year Year 1 Year 2 Year 3 Year 4 Year 5 Year 6+
Structured
Products and
cash/near cash
assets 85% 75% 35% 25% 25% 0%
Venture Capital
Investments 15% 25% 65% 75% 75% 100%
As at 29 February 2012, the Company's investment portfolio
comprised 67 per cent. Structured Products and 21 per cent. Qualifying
Investments, by market value. This is split 71 per cent. and 24 per cent. for
the ordinary share portfolio and 55 per cent. and 11 per cent. for the C share
portfolio.
The Company's financial instruments comprise securities and cash
and liquid resources that arise directly from the Company's operations.
The principal risks the Company faces in its portfolio management
activities are:
- Market price risk
- Credit risk
- Liquidity risk
The Company does not have exposure to foreign currency risk.
With many years experience of managing the risks involved in
investing in Structured Products and Venture Capital Investments respectively,
both the Investec Structured Products team and the Calculus Capital team,
together with the Board, have designed the Company's structure and its
investment strategy to reduce risk as much as possible. The policies for
managing these risks are summarised below and have been applied throughout the
period under review.
a) Market price risk
Structured Products
The return and valuation of the Company's investments in Structured
Products is currently linked to the FTSE 100 Index by way of a fixed return
that is payable as long as the Final Index Level is no lower than the Initial
Index Level.
All of the current investments in Structured Products will either
be capital protected or capital at risk on a one-to-one basis where the FTSE
100 Index falls by more than 50 per cent. and the Final Index Level is below
the Initial Index Level. If the FTSE 100 Index does fall by more than 50 per
cent. at any time during the investment period and fails to recover at
maturity, the capital will be at risk on a maximum one-to-one basis (Capital
at Risk ("CAR")) (e.g if the FTSE 100 Index falls by more than 50 per cent.
during the investment period and on maturity is down 25 per cent., capital
within that Structured Product will be reduced by 25 per cent.). The tables in
the Investment Manager's Review (Structured Products) above provides details
of the Initial Index Level at the date of investment and the maturity date for
each of the Structured Products. As at 29 February 2012, the FTSE 100 Index
closed at 5,871.5. As at 30 May 2012 being the last practicable date prior to
the publication of these Accounts, the Index had decreased 9.8 per cent. to
close at 5,297.3.
The Final Index Level is calculated using 'averaging', meaning that
the average is taken of the closing levels of the FTSE 100 on each Business
day over the last two to six months of the Structured Product plan term (the
length of the averaging period differs for each plan).
The Investment Manager of the Structured Products portfolio and the
Board review this risk on a regular basis and the use of averaging to
calculate the return can reduce adverse effects of a falling market or sudden
market falls shortly before maturity. Equally, it can reduce the benefits of
an increasing market or sudden market rises shortly before maturity.
As at 29 February 2012, the Company's investments in Structured
Products were valued at GBP4,091,000 (Ordinary Share Fund: GBP3,156,000; C Share
Fund: GBP935,000). A 10 per cent. increase in the level of the FTSE 100 Index at
29 February 2012, given that all other variables remained constant, would have
increased net assets by GBP234,000 (Ordinary Share Fund: GBP168,000; C Share Fund:
GBP66,000). A 10 per cent. decrease would have reduced net assets by GBP358,000
(Ordinary Share Fund: GBP247,000; C Share Fund: GBP111,000). A 10 per cent.
increase would increase the investment management fee due to Calculus Capital
by GBP2,343 (Ordinary Share Fund: GBP1,676; C Share Fund: GBP667); a 10 per cent.
decrease would reduce the fee by GBP3,580 (Ordinary Share Fund: GBP2,475; C Share
Fund: GBP1,105).
In recent years, the performance of the FTSE 100 Index has been
volatile and the Directors consider that an increase or decrease in the
aggregate value of investments by 10 per cent. or more is reasonably possible.
Qualifying Investments
Market risk embodies the potential for losses and includes interest
rate risk and price risk.
The management of market price risk is part of the investment
management process. The portfolio is managed in accordance with policies in
place as described in more detail in the Chairman's Statement and Investment
Manager's Review (Qualifying Investments).
The Company's strategy on the management of investment risk is
driven by the Company's investment objective as outlined above. Investments in
unquoted companies, AIM-traded and PLUS Markets-traded companies, by their
nature, involve a higher degree of risk than investments in the main market.
Some of that risk can be mitigated by diversifying the portfolio across
business sectors and asset classes.
Interest is earned on cash balances and money market funds and is
linked to the banks' variable deposit rates. The Board does not consider
interest rate risk to be material. Interest rates do not materially impact
upon the value of the Qualifying Investments. The main risk arising on the
loan stock instruments is credit risk. The Company does not have any interest
bearing liabilities.
As required by Financial Reporting Standard 29 'Financial
Instruments: Disclosures' (the "Standard") an analysis of financial assets and
liabilities, which identifies the risk of the Company's holding of such items,
is provided. The Company's financial assets comprise equity, loan stock, cash
and debtors. The interest rate profile of the Company's financial assets is
given in the table below:
As at 29 February 2012 As at 28 February 2011
Fair Value Cash Flow Fair Value Cash Flow
Interest Interest Interest Interest
Rate Rate Rate Rate
Risk Risk Risk Risk
GBP'000 GBP'000 GBP'000 GBP'000
Ordinary Share Fund
Loan stock 700 - 450 -
Money market funds - 196 - 1,050
Cash - 28 - 326
700 224 450 1,376
C Share Fund
Loan stock 95 -
Money market funds - 573
Cash - 104
95 677
Total
Loan stock 795 - 450 -
Money market funds - 769 - 1,050
Cash - 132 - 326
795 901 450 1,376
The variable rate is based on the banks' deposit rate, and applies
to cash balances held and the money market funds. The benchmark rate which
determines the interest payments received on interest bearing cash balances is
the Bank of England base rate, which was 0.5 per cent. as at 29 February 2012.
Any movement in interest rates is deemed to have an insignificant
effect on the Structured Products.
b) Credit risk
Structured Products
The failure of a counterparty to discharge its obligations under a
transaction could result in the Company suffering a loss. In its role as the
Investment Manager of the Structured Products portfolio and to diversify
counterparty risk, Investec Structured Products will only invest in Structured
Products issued by approved issuers. In addition, the maximum exposure to any
one counterparty (or underlying counterparty) will be limited to 15 per cent.
of the assets of the Company at the time of investment.
Credit risk is the risk that the counterparty to a financial
instrument will fail to discharge an obligation or commitment that it has
entered into with the Company. The Investment Manager has in place a
monitoring procedure in respect of counterparty risk which is reviewed on an
ongoing basis. The carrying amount of financial assets best represents the
maximum credit risk exposure at the Balance Sheet date.
Qualifying Investments
Where an investment is made in loan stock issued by an unquoted company, it is
made as part of an overall equity and debt package. The recoverability of the
debt is assessed as part of the overall investment process and is then
monitored on an ongoing basis by the Investment Manager who reports to the
Board on any recoverability issues.
Credit risk arising on transactions with brokers relates to
transactions awaiting settlement. Risk relating to unsettled transactions is
considered to be small due to the short settlement period involved and the
high credit quality of the brokers used. The Board monitors the quality of
service provided by the brokers used to further mitigate this risk.
All the assets of the Company which are traded on AIM or PLUS
Markets are held by Investec Wealth & Investments, the Company's custodian.
Bankruptcy or insolvency of the custodian may cause the Company's rights with
respect to securities held by the custodian to be delayed or limited. The
Board and the Investment Manager monitor the Company's risk by reviewing the
custodian's internal control reports.
As at 29 February 2012, the Company's credit risk exposure, by
credit rating of the Structured Product issuer, was as follows:
29 February 2012 28 February 2011
Credit Risk Rating
(Moody's unless otherwise % of % of
indicated) GBP'000 Portfolio GBP'000 Portfolio
Ordinary Share Fund
A1 518 11.7% - -
A2 978 22.1% 577 12.9%
Aa2 611 13.8% 580 13.0%
Aa3 - - 738 16.5%
A - (Standard & Poor's) 437 9.9% 405 9.0%
Baa3 612 13.8% 582 13.0%
3,156 71.3% 2,882 64.4%
Credit Risk Rating 29 February 2012
(Moody's unless otherwise % of
indicated) GBP'000 Portfolio
C Share Fund
A1 207 12.2%
A2 213 12.6%
Aa2 - -
Aa3 - -
A - (Standard & Poor's) - -
Baa3 515 30.5%
935 55.3%
29 February 2012 28 February 2011
Credit Risk Rating
(Moody's unless otherwise % of % of
indicated) GBP'000 Portfolio GBP'000 Portfolio
Total
A1 725 11.8% - -
A2 1,191 19.4% 577 12.9%
Aa2 611 10.0% 580 13.0%
Aa3 - - 738 16.5%
A - (Standard & Poor's) 437 7.1% 405 9.0%
Baa3 1,127 18.4% 582 13.0%
4,091 66.7% 2,882 64.4%
c) Liquidity Risk
The Company's liquidity risk is managed on an ongoing basis by the
Investment Managers. The Company's overall liquidity risks are monitored on a
quarterly basis by the Board.
The Company maintains sufficient investments in cash and readily
realisable securities to pay accounts payable and accrued expenses as they
fall due.
Structured Products
If Structured Products are redeemed before the end of the term, the
Company may get back less than the amount originally invested. The value of
the Structured Products will be determined by the price at which the
investments can actually be sold on the relevant dealing date. The Board does
not consider this risk to be significant as the planned investment periods in
Structured Products will range from six months to five and a half years and
there is a planned transition from Structured Products to Qualifying
Investments as detailed earlier in this note.
There may not be a liquid market in the Structured Products and
there may never be two competitive market makers, making it difficult for the
Company to realise its investment. Risk is increased further where there is a
single market maker who is also the issuer. The Board has sought to mitigate
this risk by only investing in approved issuers of Structured Products, and by
limiting exposure to any one issuer (or underlying issuer).
Qualifying Investments
The Company's financial instruments include investments in unlisted
equity investments which are not traded in an organised public market and
which may be illiquid. As a result, the Company may not be able to realise
quickly some of its investments at an amount close to their fair value in
order to meet its liquidity requirements, or to respond to specific events
such as deterioration in the creditworthiness of any particular issuer.
The Board seeks to ensure that an appropriate proportion of the
Company's investment portfolio is invested in cash and readily realisable
assets, which are sufficient to meet any funding commitments that may arise.
Under its Articles of Association, the Company has the ability to
borrow a maximum amount equal to 25 per cent. of its gross assets. As at 29
February 2012 the Company had no borrowings.
d) Capital management
The capital structure of the Company consists of cash held and
shareholders' equity. Capital is managed to ensure the Company has adequate
resources to continue as a going concern, and to maximise the income and
capital return to its shareholders, while maintaining a capital base to allow
the Company to operate effectively in the market place and sustain future
development of the business. To this end the Company may use gearing to
achieve its objectives. The Company's assets and borrowing levels are reviewed
regularly by the Board.
e) Fair value hierarchy
Investments held at fair value through profit and loss are valued
in accordance with IPEVCA guidelines.
The valuation method used will be the most appropriate valuation
methodology for an investment within its market, with regard to the financial
health of the investment and the IPEVCA guidelines.
As required by the Standard, an analysis of financial assets and
liabilities, which identifies the risk of the Company's holding of such items,
is provided. The Standard requires an analysis of investments carried at fair
value based on the reliability and significance of the information used to
measure their fair value. In order to provide further information on the
valuation techniques used to measure assets carried at fair value, we have
categorised the measurement basis into a "fair value hierarchy" as follows:
- Quoted market prices in active markets - "Level 1"
Inputs to Level 1 fair values are quoted prices in active markets
for identical assets. An active market is one in which transactions occur with
sufficient frequency and volume to provide pricing information on an ongoing
basis. The Company's investments in money market funds are recognised within
this category.
- Valued using models with significant observable market parameters
- "Level 2"
Inputs to Level 2 fair values are inputs other than quoted prices
included within Level 1 that are observable for the asset, either directly or
indirectly. The Company's investments in Structured Products are classified
within this category.
- Valued using models with significant unobservable market
parameters - "Level 3"
Inputs to Level 3 fair values are unobservable inputs for the
asset. Unobservable inputs may have been used to measure fair value to the
extent that observable inputs are not available, thereby allowing for
situations in which there is little, if any, market activity for the asset at
the measurement date (or market information for the inputs to any valuation
models). As such, unobservable inputs reflect the assumptions the Company
considers that market participants would use in pricing the asset. The
Company's unquoted equities and loan stock are classified within this
category. As explained in note 1, unquoted investments are valued in
accordance with the IPEVCA guidelines.
The table below shows movements in the assets measured at fair
value based on Level 3 valuation techniques for which any significant input is
not based on observable market data. During the year there were no transfers
between Levels 1, 2 or 3.
Ordinary Share Fund
Financial Assets at Fair Value through Profit or
Loss
At 29 February 2012
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Structured Products - 3,156 - 3,156
Unquoted equity - - 383 383
Money market funds 196 - - 196
Loan stock - - 700 700
196 3,156 1,083 4,435
Financial Assets at Fair Value through Profit or
Loss
At 28 February 2011
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Structured Products - 2,882 - 2,882
Unquoted equity - - 106 106
Money market funds 1,050 - - 1,050
Loan stock - - 450 450
1,050 2,882 556 4,488
C Share Fund
Financial Assets at Fair Value through Profit or
Loss
At 29 February 2012
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Structured Products - 935 - 935
Unquoted equity - - 88 88
Money market funds 573 - - 573
Loan stock - - 95 95
573 935 183 1,691
Total
Financial Assets at Fair Value through Profit or
Loss
At 29 February 2012
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Structured Products - 4,091 - 4,091
Unquoted equity - - 471 471
Money market funds 769 - - 769
Loan stock - - 795 795
769 4,091 1,266 6,126
Financial Assets at Fair Value through Profit or
Loss
At 28 February 2011
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Structured Products - 2,882 - 2,882
Unquoted equity - - 106 106
Money market funds 1,050 - - 1,050
Loan stock - - 450 450
1,050 2,882 556 4,488
The Standard requires disclosure, by class of financial
instruments, if the effect of changing one or more inputs to reasonably
possible alternative assumptions would result in a significant change to the
fair value measurement. The information used in determination of the fair
value of Level 3 investments is chosen with reference to the specific
underlying circumstances and position of the investee company. The portfolio
has been reviewed and both downside and upside reasonable possible alternative
assumptions have been identified and applied to the valuation of the unquoted
investments. Applying the downside alternatives, the value of the unquoted
investment portfolio for the Ordinary Share Fund would be GBP21,601 or 2.0 per
cent. lower, for the C Share Fund would be GBP6,211 or 3.4 per cent. lower,
and in total it would be GBP27,812 or 2.2 per cent. lower (2011: GBP8,928 or 1.6 per
cent. lower). Using the upside alternatives, the value of the unquoted
investment portfolio for the Ordinary Share Fund would be increased by GBP19,581
or 1.81 per cent., for the C Share Fund it would be increased by GBP6,900 or
3.78 per cent., and in total it would be increased by GBP26,481 or 21 per cent.
(2011: GBP8,482 or 1.5 per cent.).
16. Related Party Transactions
Investec Structured Products is a related party in respect of its
appointment as an Investment Manager to the Company and is entitled to a
performance incentive fee. Investec Structured Products will receive an
arrangement fee of 0.75 per cent. of the amount invested in each Structured
Product. This arrangement fee shall be paid to Investec Structured Products by
the issuer of the relevant Structured Product. No arrangement fee will be paid
to Investec Structured Products in respect of any decision to invest in
Investec-issued Structured Products. Investec Structured Products has agreed
not to earn an annual management fee from the Company.
As at 29 February 2012, GBP22,000 was payable by the C Share Fund
(2011: GBP81,000 by the Ordinary Share Fund) to Investec Structured Products in
relation to the initial fee of 5 per cent. of the gross funds raised pursuant
to the original ordinary share offer. In addition, GBP130,000 (2011: GBP185,000)
was owed by Investec Structured Products as claw back of costs in excess of
the agreed expenses cap of 3 per cent. (GBP81,000 to the Ordinary Share Fund and
GBP49,000 to the C Share Fund).
Calculus Capital is regarded as a related party in respect of its
appointment as an Investment Manager to the Company. For the year ended 29
February 2012, fees of GBP63,000 (2011: GBP35,000) were payable to Calculus
Capital (GBP47,000 payable by the Ordinary Share Fund and GBP16,000 by the C Share
Fund), of which GBP15,000 (2011: GBP10,000) were outstanding (GBP11,000 by the
Ordinary Share Fund and GBP4,000 by the C Share Fund) as at 29 February 2012.
Calculus Capital is also entitled to a performance incentive fee.
No incentive fee accrued to either Investment Manager during the
year (2011: GBPnil).
John Glencross is considered to be a related party due to his
position as Chief Executive and a director of Calculus Capital, one of the
Company's Investment Managers. He does not receive any remuneration from the
Company. He is a director of Terrain Energy Limited, Lime Technology Limited
and Participate Sport Limited, companies in which the Company has invested.
In the year ended 29 February 2012, Calculus Capital received an
arrangement fee of GBP4,200 (2011: GBP7,500) as a result of the Company's
investment in Terrain Energy Limited. Calculus Capital also receives an annual
fee from Terrain Energy Limited for the provision of John Glencross as a
director, as well as an annual monitoring fee which also covers the provision
of certain administrative support services. In the year ended 29 February
2012, the amount paid to Calculus Capital which was attributable to the
investment made by the Company was GBP3,542 (2011: GBP2,713) (excluding VAT).
In the year ended 29 February 2012, Calculus Capital received no
arrangement fee (2011: GBP8,233) as a result of the Company's investment in Lime
Technology Limited. Calculus Capital receives an annual fee from Lime
Technology Limited for the provision of John Glencross as a director, as well
as an annual monitoring fee. In the year ended 29 February 2012, the amount
paid to Calculus Capital which was attributable to the investment made by the
Company was GBP3,865 (2011: GBP1,626) (excluding VAT).
In the year ended 29 February 2012, Calculus Capital received an
arrangement fee of GBP5,629 (2011: GBPnil) as a result of the Company's investment
in Heritage House Media.
In the year ended 29 February 2012, Calculus Capital received an
arrangement fee of GBP9,000 (2011: GBPnil) as a result of the Company's investment
in MicroEnergy Generation Services Limited. Calculus Capital also receives an
annual monitoring fee from MicroEnergy Generation Services Limited, which also
covers the provision of certain administrative support services. In the year
ended 29 February 2012, the amount paid to Calculus Capital which was
attributable to the investment made by the Company was GBP2,833 (2011: GBPnil)
(excluding VAT).
In the year ended 29 February 2012, Calculus Capital received an
arrangement fee of GBP8,400 (2011: GBPnil) as a result of the Company's investment
in Viscount Safe Custody Services Limited. Calculus Capital also receives an
annual fee from Viscount Safe Custody Services Limited for the provision of a
Calculus Capital employee as a director, as well as an annual monitoring fee.
In the year ended 29 February 2012, the amount paid to Calculus Capital which
was attributable to the investment made by the Company was GBP220 (2011: GBPnil)
(excluding VAT).
Kate Cornish-Bowden subscribed for GBP10,000 of C shares under the
offer for subscription. 10,000 C shares were allotted to Ms Cornish-Bowden on
4 May 2011 at a price of 100p per C share.
ANNUAL GENERAL MEETING AND SEPARATE CLASS MEETINGS
The Company's Annual General Meeting will be held at the offices of
Investec Structured Products, 2 Gresham Street, London EC2V 7QP at 11.00 am on
Tuesday, 17 July 2012. It will be followed by separate class meetings of the
holders of ordinary shares and C shares.
For further information, please contact:
Investment Manager to the Structured Products Portfolio
Investec Structured Products
Gary Dale
Telephone: 020 7597 4065
Investment Manager to the Venture Capital Portfolio
Calculus Capital Limited
Susan McDonald
Telephone: 020 7493 4940
NATIONAL STORAGE MECHANISM
A copy of the Annual Report and Financial Statements will be
submitted shortly to the National Storage Mechanism ("NSM") and will be
available for inspection at the NSM, which is situated at:
www.hemscott.com/nsm.do.
ENDS
Neither the contents of the Company's website nor the contents of
any website accessible from hyperlinks on this announcement (or any other
website) is incorporated into, or forms part of, this announcement.
END
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