TIDMVEN2
RNS Number : 5792E
Ventus 2 VCT PLC
31 May 2012
Ventus 2 VCT plc
Registered No: 05667210
Annual Report and Financial Statements
for the year ended 29 February 2012
Chairman's Statement
I present the Annual Report and Financial Statements of Ventus 2
VCT plc (the "Company") for the year ended 29 February 2012. This
has been a difficult year, particularly for the Company's ordinary
share fund. However, the Board believes that, following a change of
Investment Manager and a thorough review of the asset portfolio,
the Company is now well placed to move forward positively, into the
future.
Group
The Company has a shareholding of 60% of the ordinary shares
issued by each of Redeven Energy Limited and Spurlens Rig Wind
Limited. These shareholdings constitute controlling interests
therefore these companies are subsidiaries of the Company. The
consolidated financial statements of the Company and its
subsidiaries (the "Group") are presented in this report.
Group Net Asset Value and Results
At the year end, the net asset value of the Group attributable
to equity shareholders stood at GBP24,833,000 (2011:
GBP29,099,000). The net loss of the Group attributable to the
Company's equity shareholders for the year ended 29 February 2012
was GBP3,908,000 (2011: GBP1,729,000).
Net Asset Value, Results and Dividends - Ordinary Shares
At the year end, net asset value of the ordinary share fund of
the Company attributable to equity shareholders was GBP14,427,000
or 58.8p per ordinary share (2011: GBP18,629,000 or 75.9p per
ordinary share). The revenue profit attributable to ordinary
shareholders for the year was GBP404,000 or 1.66p per ordinary
share. The capital loss attributable to ordinary shareholders for
the year was GBP4,371,000 or 17.81p per ordinary share, resulting
in a net loss to ordinary shareholders for the year of GBP3,967,000
or 16.15p per ordinary share (2011: net loss of GBP1,654,000 or
7.41p per ordinary share).
The value of investments and investments in subsidiaries held by
the ordinary share fund of the Company at 29 February 2012 was
GBP13,048,000 compared to GBP17,106,000 at 28 February 2011.
The income generated in the ordinary share fund of the Company
during the year comprised dividend income and interest earned on
loan stock and cash deposits. Total income for the year to 29
February 2012 was GBP847,000, of which GBP790,000 was derived from
loan stock. This compares to total income of GBP1,127,000 for the
year ended 28 February 2011. The impairment of the interest accrued
on the loans with the Company's waste wood biomass and low-head
run-of-river small hydro investments has had a significant impact
on the Company's income. Also, the Company has received reduced
dividends during the year compared to the previous year.
The Company has declared a final dividend of 2.30p per ordinary
share to be paid on 8 August 2012 to all ordinary shareholders on
the register as at the close of business on 13 July 2012. The
Company did not pay an interim dividend to the ordinary
shareholders. Therefore, the total annual dividend is 2.30p per
ordinary share.
Net Asset Value and Results and Dividends - "C" Shares
At the year end, the net asset value of the "C" share fund of
the Company stood at GBP10,414,000 or 91.9p per "C" share (2011:
GBP10,468,000 or 92.4p per "C" share). The revenue profit
attributable to "C" shareholders for the year was GBP226,000 or
1.99p per "C" share. The capital loss attributable to "C"
shareholders for the year was GBP167,000 or 1.48p per "C" share,
resulting in a net profit to "C" shareholders for the year of
GBP59,000 or 0.51p per "C" share (2011: net loss of GBP75,000 or
0.68p per "C" share).
The value of investments held by the "C" share fund of the
Company at 29 February 2012 was GBP8,183,000 (2011:
GBP3,960,000).
The income generated in the "C" share fund of the Company during
the year comprised interest earned on loan stock, UK treasury bills
and cash deposits. Total income for the year to 29 February 2012
was GBP442,000, of which GBP418,000 was derived from loan stock.
This compares with income generated by the "C" share fund of
GBP262,000 in the year ended 28 February 2011. The primary reason
for the increase in income is due to the Company having accrued
interest for the entire period of the year, whereas in the previous
year loans had not been in place for the entire period. Also, the
Company made an additional loan investment during the year which
has allowed the share fund to increase the income it accrues from
its loan stock investments.
The Company has declared a final dividend of 1.00p per "C" share
to be paid on 8 August 2012 to all "C" shareholders on the register
as at the close of business on 13 July 2012. The Company paid an
interim dividend of 1.00p per "C" share on 11 January 2012.
Therefore the total annual dividend will be 2.00p per "C"
share.
Investments
The Company's Investment Manager, Temporis Capital LLP,
continues to be actively engaged in managing the portfolio and in
identifying and negotiating potential investment opportunities to
invest the remaining "C" share capital.
As at 29 February 2012, the ordinary share fund of the Company
held investments in 17 companies (2011: 17 companies) with a total
value of GBP13.0 million (2011: GBP17.1 million). As at 29 February
2012, the "C" share fund held an investment in 10 companies (2011:
seven companies) with a value of GBP8.2 million (2011: GBP4.0
million).
The Investment Manager's Report provides details of the
investments held as at 29 February 2012 and as at the date of this
report. All investments are structured so as to be treated as
qualifying holdings for the purposes of Venture Capital Trust
("VCT") regulations, unless otherwise stated.
VCT Qualifying Status
The Company retains PricewaterhouseCoopers LLP to review its
compliance with VCT regulations. The Directors are satisfied that
the Company continues to fulfil the conditions for maintaining VCT
status.
Share Offer and Tender Offer
In March 2012, the Company completed a tender offer under which
ordinary shareholders were able to sell their ordinary shares to
the Company at net asset value ("NAV") provided they committed to
investing the entire proceeds of the sale in new ordinary shares
under a share offer which closed on 3 April 2012. The tender offer
was very successful, with 8,389,457 ordinary shares being tendered
at a price of 58.4p per share. This represented 38% of the ordinary
shares originally subscribed for by shareholders in the Company's
2006 share offer.
Under the share offer which closed on 3 April 2012, the Company
issued 8,274,552 new ordinary shares at an aggregate subscription
price of GBP4,925,443. This included 8,231,766 ordinary shares
subscribed for by existing ordinary shareholders with proceeds from
the sale of their ordinary shares pursuant to the tender offer.
Ordinary shareholders who subscribed for these ordinary shares will
be entitled (subject to each ordinary shareholder's personal
circumstances) to claim income tax relief of 30% on the new
ordinary shares purchased.
The tender offer and share offer have removed a meaningful
portion of prospective sellers from the secondary market and have
provided a very significant financial benefit to the ordinary
shareholders who participated. The tender offer and share offer
have established a significant pool of shareholders committed to
another five years of investment, thus increasing the longevity of
the Company and the long term stability of the Company's ordinary
shares in the secondary market.
Share Buy-backs
The Board believes that it is beneficial to the Company for it
to continue to have the flexibility to purchase its own shares in
the market. However, the Board considers it in the best interest of
all shareholders if the Directors use their authority to make share
buy-backs judiciously.
Internal audit
In order to provide greater assurance to the Board that the
internal controls and procedures of the Investment Manager are
appropriate and are being adhered to, the Board has appointed a
firm of specialist internal auditors, Roffe Swayne, to carry out a
full review of Temporis Capital LLP's internal controls in respect
of the Company. The Board anticipates receiving a report from Roffe
Swayne in June 2012. The internal controls of the Company are
further discussed in the Corporate Governance Statement below.
Outlook
The Company's new investment manager, Temporis Capital LLP, has
now been in place for over eight months, during which time the
Ventus investment management team has been reinvigorated and
reinforced. The Directors have instructed the Investment Manager to
focus new investment on the lower-risk end of the wind and small
hydro sectors. The Directors are positive about the work both
completed to date and in progress.
Having incurred losses in investments in companies involved with
landfill gas, waste-wood biomass and low-head run-of-river hydro
projects, the Company's ordinary share portfolio now consists
primarily of investments in companies owning operational wind and
conventional small hydro projects. The Investment Manager is making
good progress in investing the "C" share fund and expects to have
the "C" share fund fully invested within 12 months.
In light of the performance of the ordinary share portfolio in
the operational wind and conventional small hydro sectors, as well
as the progress of the Investment Manager in investing the "C"
share fund, the Directors have reviewed the dividend outlook for
the ordinary share fund and the "C" share fund and have updated the
Company's dividend policy. Please refer to the Directors' Report
below for a discussion of the outlook for dividends and the
Directors' intentions with respect to the ordinary shares and "C"
shares in the intermediate term.
Shareholder Communications
In accordance with the Company's commitment to environmental
sustainability and to minimise costs wherever appropriate, the
financial statements will continue to be made available through
regulated news service providers and on the Company website at
www.ventusvct.com. Any shareholder who wishes to receive
notification of reports by either email or post may request this by
contacting the Registrar.
Alan Moore
Chairman
31 May 2012
Investment Manager's Report
Temporis Capital LLP, the Company's Investment Manager, presents
its annual review of the Company's investments.
Review of Portfolio
Since taking over the investment management of the Company in
September 2011, the Investment Manager has carried out a thorough
review of all investments in the portfolio and instituted
significant changes in the management of existing investments and
the procedures for analysing and authorising new investments. The
Investment Manager has:
-- increased the staffing devoted to managing the Company's investments;
-- reorganised the management of the Company's investments by
putting in place a dedicated asset management group;
-- instituted procedures to prevent breaches of internal
controls and assure proper authorisation of all expenditures and
investments of the Company;
-- carried out a detailed analysis of the contracts, business
plans and valuation models of all investee companies;
-- updated all investee company valuations and recommended
upward and downward adjustments to valuations as appropriate.
The Investment Manager believes that all the material issues
with portfolio companies have been identified, are being properly
dealt with and are properly reflected in the valuations forming the
basis of the Company's NAV.
In line with the strategic objectives set by the Board, the
Investment Manager has begun to concentrate on building a wind and
conventional small hydro portfolio based on stable long-term income
to provide long-term predictable dividends and a stable share
price.
Wind Conditions in 2011
After two poor wind years in 2009 and 2010, average wind speeds
across the United Kingdom in the year ended 29 February 2012 were
in line with long-term averages. Wind speeds naturally vary from
year to year, but the years of 2009 and 2010 represented a
significant departure from the long term mean.
According to the UK Met Office, average wind speeds in the
British Isles in 2011 were 3% above the long-term average and 16%
above the average wind speeds in 2010. The better wind conditions
were reflected in the performance of the Company's investee
companies which own and operate wind farms. In aggregate, the
Company's investee companies had electricity production in line
with budget during the year ended 29 February 2012 compared with
being approximately 19% down on budget during the year ended 28
February 2011.
The impact of the poor wind speeds in 2009 and 2010 has
continued to impact the Company's results in the 12 months ended 29
February 2012, as there is a significant time lag between the
energy production from a wind farm and the receipt by the Company
of dividends from the investee company owning the wind farm. The
impact of the improved operating results from the wind farms
operated by investee companies will flow through to the Company's
results in the year ending 28 February 2013.
Ordinary Share portfolio
A summary of the valuations and gains and losses in the
Company's ordinary share investments held during the year is given
below.
Ordinary Voting Investment value Investment Gain/ Investment Investment
Shares rights cost (loss) value cost
Shares Loans Total Shares Loans Total Total Total
in
the
as as as as as as as year
at at at at at at at to as at as at
29 29 29 29 29 29 29 29 28 28
February February February February February February February February February February
2012 2012 2012 2012 2012 2012 2012 2012 2011 2011
% GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Operational:
Wind
Craig Wind
Farm Limited * Q 12.50% 857 346 1,203 497 341 838 259 944 838
Achairn
Energy
Limited * Q 40.40% 2,318 1,354 3,672 1,226 1,289 2,515 519 3,153 2,515
A7 Lochhead
Limited * Q 20.00% 651 125 776 569 121 690 130 646 690
Greenfield
Wind Farm
Limited * PQ 16.65% 666 1,332 1,998 666 1,332 1,998 - 1,998 1,998
Operational
companies
in the
wind sector
Broadview
Energy
Limited * Q 2.22% 450 1,800 2,250 200 1,800 2,000 (50) 2,300 2,000
Firefly
Energy
Limited * Q 50.00% - 155 155 200 160 360 (105) 300 400
Operational:
Landfill
gas
Redimo
LFG Limited * Q 50.00% - - - 1,000 - 1,000 - - 1,000
Renewable
Power Systems
(Dargan
Road) Limited Q 50.00% 705 1,178 1,883 780 1,120 1,900 181 1,702 1,900
Waste wood
biomass
PBM Power
Limited Q 25.00% - - - 574 - 574 - - 574
Sandsfield
Heat &
Power Limited Q 44.90% - - - 1,796 1,000 2,796 (2,096) 2,096 2,796
Twinwoods
Heat &
Power Limited Q 50.00% - - - 2,000 400 2,400 (2,045) 2,045 2,400
Small hydro
under
construction
Osspower
Limited 50.00% 300 55 355 300 55 355 - 355 355
Development
and
pre-planning
The Small
Hydro Company
Limited 22.50% - - - 115 534 649 (649) 579 579
Redeven
Energy
Limited
** * 60.00% 167 417 584 - 584 584 - 534 534
Spurlens
Rig Wind
Limited
*** * 60.00% - 32 32 173 69 242 (210) 198 198
Wind Power
Renewables
Limited * Q 48.00% 20 120 140 252 120 372 (116) 256 372
Olgrinmore
Limited * 17.60% - - - 68 - 68 - - 68
Total 6,134 6,914 13,048 10,416 8,925 19,341 (4,182) 17,106 19,217
--------- --------- ---------- --------- --------- ---------- --------- ----------- -----------
Q - Investment complies with VCT regulations on qualifying
holdings.
PQ - Part of the investment complies with VCT regulations on
qualifying holdings.
* - A company in which the ordinary share fund of Ventus VCT plc
has also invested. The Company and Ventus VCT plc are both managed
by Temporis Capital LLP.
** - Through development funding agreements entered into by
Redeven Energy Limited, the Company holds the right to invest in
companies which hold lease options on sites for which Redeven
Energy Limited obtains planning permission (further details are
presented below). On the Company's Statement of Financial Position,
the value attributed to Redeven Energy Limited is apportioned
between investments, in respect of the investment rights attached
to the development funding agreement and investments in
subsidiaries in respect of the Company's holding in Redeven Energy
Limited.
*** - Spurlens Rig Wind Limited is accounted for within
investments in subsidiaries on the Company Statement of Financial
Position.
Summary of Investments
Details of the valuations of the investments held by the
ordinary share fund are shown in the table above.
OPERATIONAL WIND
Each of the following investee companies owns and operates a
single wind farm:
Wind farm
capacity
(megawatts) Operational since Location
Craig Wind Farm Limited 10.0 October 2007 Scottish Borders
A7 Lochhead Limited 6.0 June 2009 Lanarkshire, Scotland
Achairn Energy Limited 6.0 May 2009 Caithness, Scotland
Greenfield Wind Farm Limited 12.3 February 2011 South
Lanarkshire, Scotland
The Company's investments in companies whose wind farms have at
least 18 months of production history (Craig Wind Farm Limited, A7
Lochhead Limited and Achairn Energy Limited) are valued using
discounted cash flow models. The values of each of these companies
increased during the year ended 29 February 2012 for two primary
reasons. Firstly, the forecast wholesale electricity prices
subsequent to the expiry of the current power purchase agreement
for each company have been increased in line with market levels.
Secondly, the underlying project debt in each company decreased
during the year. A number of corrections and refinements have been
made to the valuation models with respect to operating expenses,
maintenance reserves, discounting methodology and inflation
assumptions. However, the net impact on valuation of these
corrections and refinements was not significant.
Set out below is a brief summary of the performance of the
investee companies operating wind farms. All the companies
operating wind farms experienced good availability and achieved
electricity export roughly in line with budget which contributed to
their improved operating results.
Craig Wind Farm Limited
The electricity production of Craig Wind Farm Limited during the
year ended 29 February 2012 was 97% of budget. The Company received
dividends and mezzanine interest cash payments totalling GBP99,000
from Craig Wind Farm Limited in the year ended 29 February 2012,
representing a 11.9% cash yield on the amount invested. The value
of the Company's investment in Craig Wind Farm Limited increased by
GBP259,000 during the year ended 29 February 2012.
Achairn Energy Limited
The electricity production of Achairn Energy Limited during the
year ended 29 February 2012 was 98% of budget. The Company received
dividends and mezzanine interest cash payments totalling GBP372,000
from Achairn Energy Limited in the year ended 29 February 2012,
representing a 14.8% cash yield on the amount invested. The value
of the Company's investment in Achairn Energy Limited increased by
GBP519,000 during the year ended 29 February 2012.
A7 Lochhead Limited
The electricity production of A7 Lochhead Limited during the
year ended 29 February 2012 was 113% of budget. The Company
received dividends and mezzanine interest cash payments totalling
GBP35,000 from A7 Lochhead Limited in the year ended 29 February
2012, representing a 5.1% cash yield on the amount invested. Note
that the above-budget electricity production of A7 Lochhead Limited
during the year ended 29 February 2012 will flow through to Company
results in the year ending 28 February 2013. The value of the
Company's investment in A7 Lochhead Limited increased by GBP130,000
during the year ended 29 February 2012.
Greenfield Wind Farm Limited
Greenfield Wind Farm Limited began exporting electricity to the
grid in January 2011 and became fully operational in March 2011.
Electricity production during the year ended 29 February 2012 was
100% of budget. The Company did not receive dividends and mezzanine
interest cash payments from Greenfield Wind Farm Limited in the
year ended 29 February 2012. The Company's investment in Greenfield
Wind Farm Limited is valued at cost, as the wind farm has been
operating for less than 18 months.
OPERATIONAL COMPANIES IN THE WIND SECTOR
Broadview Energy Limited
Broadview Energy Limited is an independent renewable energy
company that develops, constructs and operates wind farms
throughout the UK. Since the year end, Broadview has completed the
sale of two operating wind farms and one wind farm in construction
(comprising 25.35 megawatts in total). The consideration received
by Broadview Energy Limited for these assets has not been made
public or disclosed to the Investment Manager. In addition to the
net cash resulting from the sale of these assets, Broadview has a
development portfolio comprised of one consented project of three
turbines (6 to 7.5 megawatts), four further projects in the
planning process (totalling approximately 40 megawatts) and several
other projects at earlier stages of the development process.
The Company's holding of ordinary shares in Broadview Energy
Limited has been valued based on the Investment Manager's estimate
of the market value of the assets sold and an estimate of the value
of the one consented wind energy project and the development
pipeline. The result of this approach is a reduction in the
valuation of the equity investment in Broadview Energy Limited from
GBP500,000 at 28 February 2011 to GBP450,000 at 29 February 2012 -
a decrease of 10%. The valuation at 28 February 2011 had been based
on the price paid by third-party investors in a capital raising by
Broadview Energy Limited in June 2010.
At 29 February 2012, the Company had a secured mezzanine loan
investment of GBP1,800,000 with Broadview Energy Limited that
accrued interest at 11% per annum. This mezzanine loan, which was
secured by one of the wind farm assets recently sold by Broadview
Energy Limited, had a final maturity date of 31 March 2024. In
connection with the sale of the wind farm asset securing this
mezzanine loan, the loan was repaid in full, including accrued
interest, on 4 May 2012. In accordance with the terms of the
mezzanine loan, Broadview Energy Limited also paid an early
repayment fee of GBP162,000.
As well as the equity investment made by the ordinary share
fund, the Company's "C" share fund had two mezzanine loans
outstanding to subsidiaries of Broadview Energy Limited, which were
also repaid in full, including accrued interest, on 4 May 2012. See
the discussion of BEGL 2 Limited and BEGL3 Limited below.
Firefly Energy Limited
Firefly Energy Limited is the parent company of a group of
trading subsidiaries that have entered into long term power
purchase agreements with customers for 41.7 megawatts of generating
capacity across five wind farm developments. The five wind farm
projects are fully operational and generating revenues. Each of the
five power purchase agreements expires on 31 March 2016. In
addition to earning a margin on the five long-term power purchase
agreements, Firefly Energy Limited also provided power purchase
agreement and management accounting services to third-party
renewable energy project operators.
Prior to the appointment of Temporis Capital LLP as Investment
Manager in September 2011, the business plan of Firefly Energy
Limited was to expand its business of providing power purchase
agreement and management accounting services to renewable energy
project operators. Subsequent to a review of the Firefly Energy
Limited business by the Investment Manager, the management of
Firefly Energy Limited has decided to discontinue the provision of
power purchase agreement and management accounting services and
instead focus on realising the maximum value from the five
long-term power purchase agreements on which the company earns a
margin. Firefly Energy Limited has closed its stand-alone office
and has reduced its on-going overheads.
The Company has a loan investment in Firefly Energy Limited
which had a balance at 29 February 2012 of GBP160,000 and which
accrues interest at 9% per annum. During the year ended 29 February
2012, Firefly Energy Limited made principal repayments of GBP40,000
on the loan in addition to payments of interest. The loan is valued
in the Company's accounts based on the discounted projected future
cash flows from the five power purchase agreement on which the
company earns a spread, net of projected administration costs. As
at 29 February 2012, the value of the loan was GBP155,000. The
loan, as valued, is projected to be paid off, with interest, by the
end of 2016. The Company also holds 50% of the ordinary shares of
Firefly Energy Limited (cost of GBP200,000) which have been written
down to nil value. During the financial year ended 29 February
2012, the Company recorded a realised write-off of GBP105,000 on
its investment in Firefly Energy Limited which is a realised
loss.
OPERATIONAL LANDFILL GAS
Redimo LFG Limited
Redimo LFG Limited operates four landfill gas electricity
generation sites in the north of England. Since taking over the
Company's investment management contract in September 2011, the
Investment Manager has devoted considerable attention and resources
to understanding Redimo LFG Limited and stabilising the operation
of the four landfill gas sites. Redimo LFG Limited is not paying
dividends to the Company and has been held in the accounts at a nil
valuation since late 2010. Given the senior debt commitments of the
Redimo LFG Limited's subsidiaries, it is highly unlikely that the
Company will recover any part of its investment in Redimo LFG
Limited therefore the loss in value in respect of this investment
is treated as a realised loss.
Renewable Power Systems (Dargan Road) Limited
Renewable Power Systems (Dargan Road) Limited operates a
landfill gas electricity generation site in Northern Ireland. The
site performed in line with expectations over the twelve months to
29 February 2012. The Company received loan interest payments
totalling GBP146,000 from Renewable Power Systems (Dargan Road)
Limited in the financial year ended 29 February 2012, representing
a 7.7% cash yield on the investment.
The investment in Renewable Power Systems (Dargan Road) Limited
is valued by applying a discount rate to the revenues the Company
expects to receive from the company. The revenue streams are finite
and so, all other things being equal, this will mean that the
holding value will fall over time as the projected revenues are
realised and paid over to the Company.
WASTE WOOD BIOMASS
PBM Power Limited
Sandsfield Heat & Power Limited
Twinwoods Heat & Power Limited
PBM Power Limited, Sandsfield Heat & Power Limited and
Twinwoods Heat & Power Limited are companies that have
constructed biomass power plants fired with waste wood. The three
companies have experienced severe operating difficulties, are not
operating and are unlikely to run again. The investments have been
written down to nil value. Since taking over the Company's
investment management contract in September 2011, the Investment
Manager has devoted considerable attention and resources to dealing
with administrative issues at the three companies, as well as to
working with the lending banks to the companies and with external
engineering consultants to analyse options for dealing with the
companies. There is no possibility of any recovery from these three
investments therefore the loss in value in respect of these
investments is a realised loss.
SMALL HYDRO UNDER CONSTRUCTION
Osspower Limited
The Company holds 50% of the ordinary shares of Osspower
Limited, which has recently completed construction of a 2 megawatt
hydro project at Allt Fionn Ghlinne in Scotland. The Allt Fionn
Ghlinne site was energised in April 2012 and commenced
commissioning tests, and exported its first electricity, during May
2012. The project is expected to be fully commissioned by June
2012, on schedule and on budget. Osspower Limited has consent for a
further three small hydro projects on the same estate as the Allt
Fionn Ghlinne project. The Investment Manager is working with the
management of Osspower Limited to develop the appropriate strategy
for financing the construction of those three projects.
Ventus 2 VCT plc entered into a cost overrun guarantee in May
2011 with the lending bank on behalf of Osspower Limited in the
amount of GBP750,000. The guarantee is in the form of a loan to be
drawn down in the event of the construction costs of this scheme
exceeding GBP7.5 million. As at the date of this report, the
Investment Manager considers the probability of the guarantee being
drawn down to be very low and the value of the liability associated
with the guarantee is considered to be insignificant at 29 February
2012. Further details are presented in note 20 of the financial
statements. The value of the Company's investment is held at cost
of investment as at 29 February 2012.
DEVELOPMENT AND PRE-PLANNING
The Small Hydro Company Limited
The Small Hydro Company Limited holds planning permission on
five low-head run-of-river small hydroelectric projects in England
and is currently assessing the strategic options for raising
further finance to construct and operate the projects. The schemes
are expected to be eligible under the Feed-In Tariff regime.
The Company holds 22.5% of the ordinary shares of The Small
Hydro Company Limited and has also provided a shareholder loan
facility of GBP534,000. Because of uncertainty about the economics
of the consented projects, uncertainty regarding the future tariff
levels and the requirement for further funding to take the projects
forward, the Company has recorded an unrealised write-down in its
investment in The Small Hydro Company Limited of GBP579,000 for the
year ended 29 February 2012, as well as a write-down of accrued
interest on the loan of GBP89,000. The unrealised write-down
represents the full amount of the Company's investment in The Small
Hydro Company Limited.
Redeven Energy Limited
Through development funding agreements entered into by Redeven
Energy Limited, the Company holds investment rights in three
companies intending to develop and operate wind farms in East
Anglia. Each of the three companies holds a lease option over a
site for which planning permission has been sought and received.
The planning permissions on the three sites total nine turbines.
The Company is working with the three development companies to
proceed with the building out of the projects as soon as
possible.
Spurlens Rig Wind Limited
Spurlens Rig Wind Limited is the developer of a six-turbine site
in the Scottish Borders which was refused for planning in December
2011. There are no plans to appeal the planning refusal, so the
proposed six-turbine project is no longer viable. As such, the
Company's holding of 60% of the ordinary shares of Spurlens Rig
Wind Limited has been written down in value to GBP32,000 as at 29
February 2012. The valuation of Spurlens Rig Wind Limited is equal
to the company's net current assets which, primarily, comprise VAT
receivable. The Spurlens Rig development team is reviewing the
options to re-apply for permission to build a smaller project on
the same site which might address the reasons for refusal.
Wind Power Renewables Limited
Wind Power Renewables Limited is a development company that has
submitted planning applications for three wind energy sites in East
Anglia. The first two applications were refused, however the third
application (for two turbines with a tip height up to 130 metres)
was approved in February 2012. As a result of the initial two
planning application refusals, the Company's investment in Wind
Power Renewables Limited was written down to GBP140,000 as at 29
February 2012.
The Company is working with the management of Wind Power
Renewables Limited to explore options for developing the site.
Olgrinmore Limited
Olgrinmore Limited was a potential two-turbine site in Caithness
which was refused in planning and is being held at nil value. The
Olgrinmore development team is reviewing the options to re-apply
for permission to build a smaller project on the same site which
might address the reasons for refusal.
The Company's investment in Olgrinmore Limited was written down
to nil value in a previous financial period. The amount by which
the company's value has been written down is considered to be a
realised loss.
"C" share portfolio
A summary of the Company's "C" share investments is given
below.
Voting Investment value Investment cost Investment Investment
"C"Shares rights value cost
Shares Loans Total Shares Loans Total Total Total
as as as as as
as at at at as at at at at as at as at
29 29 29 29 29 29 29 28 28
February February February February February February February February February
2012 2012 2012 2012 2012 2012 2012 2011 2011
% GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Operational:
Wind
Greenfield
Wind Farm
Limited * PQ 12.50% 500 1,000 1,500 500 1,000 1,500 1,500 1,500
Construction:
Wind
White Mill
Windfarm
Limited * PQ 25.00% 1,000 673 1,673 1,000 673 1,673 - -
AD Wind
Farmers
Limited * Q 50.00% 1,000 - 1,000 1,000 - 1,000 - -
Development
and
pre-planning
Ovalau
Investments
1 Limited * Q 50.00% 1,000 - 1,000 1,000 - 1,000 - -
Ovalau
Investments
2 Limited * Q 50.00% 1,000 - 1,000 1,000 - 1,000 - -
Iceni
Renewables
Limited * 50.00% 400 - 400 400 - 400 400 400
Short-term
investments
with renewable
energy
companies
Renewable
Power Systems
Limited * 0.00% - 200 200 - 200 200 350 350
BEGL 2 Limited * 0.00% - 500 500 - 500 500 500 500
BEGL 3 Limited * 0.00% - 500 500 - 500 500 500 500
EcoGen Limited * 0.00% - 410 410 - 410 410 410 410
Osspower
Limited * 0.00% - - - - - - 300 300
Total 4,900 3,283 8,183 4,900 3,283 8,183 3,960 3,960
--------- --------- ----------- --------- --------- ---------- ----------- -----------
Q - Investment complies with VCT regulations on qualifying
holdings.
PQ - Part of the investment complies with VCT regulations on
qualifying holdings.
* - A company in which the "C" share fund of Ventus VCT plc has
also invested. The Company and Ventus VCT plc are both managed by
Temporis Capital LLP.
During the year ended 29 February 2012, the Company's "C" share
fund invested GBP2,673,000 in companies that are currently
constructing wind farms and GBP2,000,000 in companies that intend
to construct wind farms on currently consented sites. The balance
of the amounts invested during the year represent short term loans
which were paid back during the year.
The investments of the "C" share fund of the Company at 29
February 2012 totalled GBP8,183,000, however GBP1,610,000 of these
investments are scheduled to be redeemed between now and the end of
the calendar year 2012. These interim investments were all made
with the intention of generating investment yields for the Company
during the "C" share investment period, as the wind portfolio is
developed. The investments are secured and accrue interest at rates
of 11% to 13% per annum. The interest on these short-term
investments has helped defray the "C" share fund's running costs
and allowed the Company to pay dividends to holders of "C"
shares.
Including the planned redemption of GBP1,610,000 of "C" share
investments between now and the end of 2012, the Company's "C"
share fund will have approximately GBP2.5 million of cash and cash
equivalents available to be invested. The Investment Manager is
continuing to source, appraise and progress suitable investments to
invest these funds and expects the "C" share funds to be
substantially invested by the end of 2012.
Summary of Investments
Details of the valuations of the investments held by the "C"
share fund are shown in the table above.
OPERATIONAL WIND
Greenfield Wind Farm Limited
Greenfield Wind Farm Limited operates a 12.3 megawatt wind farm
in South Lanarkshire, Scotland. Both the ordinary share fund and
"C" share fund have made investments in Greenfield Wind Farm
Limited. Please refer to the information about Greenfield Wind Farm
Limited in the summary of investments for the ordinary share fund
above.
WIND UNDER CONSTRUCTION
White Mill Wind Farm Limited
In July 2011, the Company completed an investment in White Mill
Wind Farm Limited, which is constructing a 14.35 megawatt wind farm
in the Cambridgeshire Fens. The Company, alongside Ventus VCT plc,
invested GBP1,000,000 for 25% of the ordinary share capital and has
provided a mezzanine loan facility of GBP672,500. The remaining 50%
of the ordinary shares are held by a subsidiary of the Co-operative
Group Limited. The wind farm will operate seven REpower MM82
turbines.
Construction of the White Mill wind farm commenced in August
2011. Construction is almost complete and the turbines are
exporting electricity as part of the commissioning tests. The site
is scheduled for takeover in June 2012.
AD Wind Farmers Limited
The Company's investment of GBP1,000,000 in AD Wind Farmers
Limited was completed in December 2011. The Company owns 50% of the
ordinary share capital of AD Wind Farmers Limited. AD Wind Farmers
Limited is an investor in Allt Dearg Wind Farmers LLP, which is
constructing a 10.2 megawatt wind farm near Lochgilphead, Scotland.
The wind farm will operate 12 Vestas V52 turbines. Construction of
the wind farm commenced in December 2011 and is currently on
schedule and on budget. The wind farm is scheduled for takeover in
December 2012.
DEVELOPMENT AND PRE-PLANNING
Ovalau Investments 1 Limited
Ovalau Investments 2 Limited
In February 2012, the Company invested GBP1,000,000 in Ovalau
Investments 1 Limited and GBP1,000,000 in Ovalau Investments 2
Limited. These two companies have been established to construct
wind farms on identified sites which have planning consent. Ovalau
Investments 1 Limited and Ovalau Investments 2 Limited are
currently in negotiations with turbine suppliers and civil works
contractors in connection with the construction of the two wind
farms.
Shareholders should note that the following investments are not
structured so as to be qualifying holdings for the purposes of the
VCT regulations.
Iceni Renewables Limited
Through Iceni Renewables Limited the Company has invested
GBP400,000 for the development of two wind energy development
projects in Scotland. The first, named Craigannet, is a six-turbine
project which was submitted for planning on 27 January 2012. The
other site is known as Merkins and was also submitted for planning
on 27 January 2012. Lomond Energy Limited is the development
manager of these sites. Determination of these planning
applications in not expected before the autumn of 2012 in either
case.
SHORT-TERM INVESTMENTS WITH RENEWABLE ENERGY COMPANIES
Renewable Power Systems Limited
In 2009, the Company's "C" share fund provided an unsecured loan
facility of GBP350,000 to Renewable Power Systems Limited, a
company which specialises in the development and operation of
energy from waste generating plants. The loan was due to be repaid
in June 2011, however the loan has been restructured to extend the
payment schedule, at the same time giving the Company security over
the assets of Renewable Power Systems Limited. The security is
shared with the "C" share fund of Ventus VCT plc, which has made a
matching loan to Renewable Power Systems Limited. The loan accrues
interest at 12% per annum. The loan, including accrued interest,
had been paid down to GBP200,000 as at 29 February 2012 and a
further GBP100,000 has been paid down since the year end. The
balance of the loan and accrued interest is scheduled to be repaid
in full by 31 July 2012.
BEGL 2 Limited and BEGL 3 Limited
As at 29 February 2012, the Company had medium term loan
facilities of GBP500,000 outstanding to each of BEGL 2 Limited and
BEGL 3 Limited. These companies were subsidiaries of Broadview
Energy Limited. BEGL 2 Limited was the development company for
Seamer, a five-turbine wind farm in Teesside currently being
constructed. BEGL 3 Limited was the development company for Low
Spinney, an operational four-turbine wind farm in Leicestershire.
The loans, together with accrued interest at the rate of 11% per
annum, were repaid in full on 4 May 2012.
EcoGen Limited
The Company has provided a loan facility of GBP410,000 to EcoGen
Limited, a developer and operator of wind energy projects. This
loan, together with a matching loan made by the "C" share fund of
Ventus VCT plc, is secured against EcoGen Limited's one-third
shareholding in Fenpower Limited, a company in which the Ventus VCT
plc ordinary share fund holds an investment. The Company and Ventus
VCT plc are both managed by Temporis Capital LLP. The loan accrues
interest at the rate of 12% per annum. The loan, together with
accrued interest, is to be repaid in full no later than 31 December
2012.
Top Ten Investments
The details of the top ten investments, by value, held by each
of the ordinary share fund and the "C" share fund at 29 February
2012 are set out in the tables below:
Ordinary Share Fund
Income
recognised
by
the Proportion
Company of Profit/
during Basis Portfolio Date Net (loss)
Share Voting the of by of latest assets/ before
Company Value Cost Holding Rights year valuation Value accounts* (liabilities) Turnover tax
GBP000 GBP000 % % GBP000 % GBP000 GBP000 GBP000
Achairn
Energy
Limited 3,672 2,515 40.40% 40.40% 198 DCF 28.14% 30/11/2010 1,383 1,215 122
Broadview
Energy
Limited 2,250 2,000 2.22% 2.22% 230 NAV 17.24% 31/12/2010 2,817 1,390 (784)
Greenfield
Windfarm
Limited
** 1,998 1,998 16.65% 16.65% 174 PRI 15.31% 31/12/2010 1,991 - (9)
Renewable
Power
Systems
(Dargan
Road) Unaudited
Limited 1,883 1,900 50.00% 50.00% 148 DCF 14.43% 31/07/2011 1,136 1,820 652
Craig
Wind Farm
Limited 1,203 838 12.50% 12.50% 50 DCF 9.22% 31/08/2011 2,247 1,492 107
A7 Lochhead
Limited 776 690 20.00% 20.00% 35 DCF 5.95% 31/03/2011 1,458 1,232 28
Redeven
Energy
Limited 584 584 60.00% 60.00% - PRI 4.48% 31/03/2011 (284) - (7)
Osspower
Limited 355 355 50.00% 50.00% 6 PRI 2.72% 31/03/2011 559 - (16)
Firefly
Energy
Limited 155 360 50.00% 50.00% 18 DCF 1.19% 31/03/2011 (179) 426 (79)
Wind Power
Renewables Unaudited
Limited 140 372 48.00% 48.00% 11 PRI 1.07% 31/03/2011 189 72 (27)
"C" Share Fund
Income
recognised Proportion
by of
the share
Company fund Date Profit/
during Basis portfolio of Net (loss)
Share Voting the of by latest Assets/ before
Company Value Cost Holding Rights year valuation value accounts* (liabilities) Turnover tax
GBP000 GBP000 % % GBP000 % GBP000 GBP000 GBP000
White
Mill Unaudited
Windfarm Dormant
Limited 1,673 1,673 25.00% 25.00% 47 PRI 20.44% 04/01/2011 1 - -
Greenfield
Wind Farm
Limited** 1,500 1,500 12.50% 12.50% 130 PRI 18.33% 31/12/2010 1,991 - (9)
AD Wind
Farmers
Limited*** 1,000 1,000 50.00% 50.00% - PRI 12.22% N/a N/a N/a N/a
Ovalau
Investments
1
Limited*** 1,000 1,000 50.00% 50.00% - PRI 12.22% N/a N/a N/a N/a
Ovalau
Investments
2
Limited*** 1,000 1,000 50.00% 50.00% - PRI 12.22% N/a N/a N/a N/a
BEGL 2 Abbreviated
Limited 500 500 0.00% 0.00% 59 PRI 6.11% 31/12/2011 1,992 N/a N/a
BEGL 3 Abbreviated
Limited 500 500 0.00% 0.00% 59 PRI 6.11% 31/12/2011 1,817 N/a N/a
Unaudited
Ecogen Abbreviated
Limited 410 410 0.00% 0.00% 52 PRI 5.01% 30/09/2011 1,351 N/a N/a
Iceni
Renewables
Limited 400 400 50.00% 50.00% - PRI 4.89% 28/02/2011 802 - (2)
Renewable
Power Unaudited
Systems Abbreviated
Limited 200 200 0.00% 0.00% 36 PRI 2.44% 31/07/2011 2,090 N/a N/a
Basis of valuation
DCF - Discounted future cash flows from the underlying business
excluding interest earned to date
NAV - The Investment Manager's estimate of the value of the
investee company's net assets.
PRI - Price of recent investment reviewed for impairment
* Accounts are audited unless specified.
** The ordinary share fund and "C" share fund have shareholdings
in Greenfield Wind Farm Limited of 16.65% and 12.50% respectively,
therefore the Company's aggregate shareholding is 29.15%.
***AD Wind Farmers Limited, Ovalau Investments 1 Limited and
Ovalau Investments 2 Limited were incorporated during the year,
therefore they have not yet produced accounts.
Valuation of Investments
It is the accounting policy of the Company to hold its
investments at fair value. In this report, the Company's
investments in investee companies which operate an asset and have
passed an initial satisfactory operational period are valued using
a discounted cash flow methodology. The key assumptions that have a
significant impact on discounted cash flow valuations for these
assets are the discount rate used, the price at which the power and
associated benefits can be sold, the amount of electricity the
investee companies' generating assets are expected to produce and
operating costs.
The fair value of the Company's investments in project companies
which have not passed an initial satisfactory operational period,
or are engaged in seeking planning permission, are determined to be
the investment cost subject to a periodic impairment review. The
Company has revised its valuation of Broadview Energy Limited as
discussed above.
Investment Policy
The Company is focused on investing in companies developing
renewable energy projects with installed capacities of two to 20
megawatts, although larger projects may also be considered. Given
the target investment size, investments will generally be in
companies developing projects initiated by specialist small-scale
developers and smaller projects which are not attractive to large
development companies and utilities.
Asset Allocation
The Investment Manager seeks, primarily, to allocate the
Company's investments in equity securities and loan stock of
companies owning renewable energy projects, primarily wind energy.
Up to 10% of net proceeds raised from the initial share offer and
the "C" share offer, respectively, may be allocated to development
funding for early stage renewable energy projects prior to planning
permissions being obtained.
The Company's policy is to maintain cash reserves of at least 5%
of net proceeds raised from the initial share offer and the "C"
share offer for the purpose of meeting operating expenses and
purchasing its shares in the market. Circumstances may arise which
would require the Company to hold less than 5% of net proceeds in
cash for a limited period of time.
In order to comply with VCT requirements, at least 70% by value
of the Company's investments are required to be comprised of
qualifying investments.
The Company typically owns 25% to 50% of the equity share
capital of each investee company and a portion of its investment in
each investee company may be in the form of loan stock.
The Company's uninvested funds are placed on deposit or invested
in short-term fixed income securities until suitable investment
opportunities are found.
Risk Diversification
The geographical focus of the portfolio is the UK and the
majority of investments made to date are in the wind sector. Funds
are invested with a range of small-scale independent developers so
project risk is not concentrated on only a few developers. The
portfolio contains projects at different stages of the asset
lifecycle, ranging from pre-planning to construction and then into
operation. Investments are also made in technologies that have no
inherent operational correlation with the performance of wind
farms. Investments are made via subscriptions for new share capital
or via loan stock instruments in order to secure a negotiated level
of return from the project. The majority of investments are made in
special purpose companies set up specifically to develop each
project and bank debt financing is non-recourse to the Company. The
Company does, nonetheless, have and intends to continue to have a
portfolio the majority of which will be wind energy assets.
The returns from projects depend on the UK Government's
continued support for renewable energy, primarily under the
Renewables Obligation and Feed-in Tariff mechanisms. The effects of
any negative change to this policy are mitigated by the UK
Government's historic practice of grandfathering financial support
mechanisms for existing assets. This risk is further mitigated by
the Company typically negotiating fixed and/or floor price
mechanisms into the power purchase agreements entered into by
project companies for the sale of their generated output.
Gearing
The Company does not intend to borrow funds for investment
purposes. However the Company is exposed to gearing through its
investee companies which typically fund the construction costs of
each project through senior bank debt finance. The Investment
Manager is involved in assisting investee companies in negotiating
the terms of this finance to ensure competitive terms are achieved.
The interest rate is typically fixed via an interest rate swap for
the duration of the bank loan so that investee companies are not
exposed to changes in market interest rates.
To the extent that borrowing should be required by the Group for
any purpose, the Directors shall restrict the borrowings of the
Group. The aggregate principal amount at any time outstanding in
respect of money borrowed by the Group shall not, without the
previous sanction of an ordinary resolution of the Company, exceed
a sum equal to 10% of the adjusted share capital and reserves of
the Company in accordance with its Articles.
Maximum Exposures
In order to gauge the maximum exposure of the funds to various
risks, the following can be used as a guide:
i) Investments in qualifying holdings
70-95% of the funds will be invested in qualifying holdings no
later than three years after the date that provisional approval by
HM Revenue & Customs of the Company's status as a VCT becomes
effective. The relevant compliance date for the initial share offer
was 1 March 2009 and for the first "C" share offer and ordinary
share "top-up" offer was 1 March 2012. The relevant compliance date
for the second "C" share offer is 1 March 2013.
For the purposes of the 70% qualifying holdings requirement,
disposals of qualifying investments for cash may be disregarded for
a period of six months. Where a VCT breaches one or more of the
requirements due to factors outside of its control, it may apply to
HM Revenue & Customs for a determination that the breach will
be disregarded for a period of 90 days while the breach is
remedied.
ii) Concentration limits
Under VCT regulations no more than 15% of the Company's total
assets should be in a single investee company at the time the
investment is made in that investee company.
iii) Investments in pre-planning projects
In accordance with the Company's investment policy, a maximum of
10% of the net funds raised from each of the initial share offer
and "C" share offer respectively may be invested in pre-planning
projects.
VCT Regulations
The Finance Bill 2012, published on 29 March 2012, contained
measures to increase certain limits on restrictions relating to VCT
Qualifying Investments in respect of investments made on or after 6
April 2012. Subject to EU State Aid approval, the Government plans
to increase the limit on number of employees from 50 to 250, the
limit on gross assets immediately prior to investment from GBP7
million to GBP15 million, the limit on gross assets immediately
after investment from GBP8 million to GBP16 million and the limit
on the amount of that can be invested in an individual company from
GBP2 million to GBP5 million. (This GBP5 million limit on the
amount of funds an investee company can receive in any 12 month
period must take into account VCT funding from all sources, as well
as EIS investment and other state-aided investment.) Other measures
in the Finance Bill 2012 include removing the annual GBP1 million
limit on the amount a VCT can invest in a Qualifying Investment and
a "disqualifying purpose" test designed to exclude companies set up
for the purpose of accessing the tax reliefs. Under the
"disqualifying purpose" test, an investment will not be a
Qualifying Investment if the investee company has been set up for
the purpose of accessing tax reliefs, although the details of how
the "disqualifying purpose" test will be implemented have not yet
been published.
Market Outlook
According to the Department of Energy and Climate Change (DECC),
approximately one-fifth of the UK's electricity generating capacity
will shut down over the next decades as old coal and nuclear power
stations close. DECC predicts that more than GBP110 billion in
investment is needed to replace this generation capacity and
upgrade the grid. In the longer term, by 2050, DECC expects
electricity demand is set to double, as the UK shifts more
transport and heating onto the electricity grid. This is likely to
create upward pressure on wholesale electricity prices in the long
term.
Although the renewable energy industry benefits from the
favourable long-term price outlook for electricity, the industry in
the UK has operated in a state of considerable political
uncertainty for the past two years. The coalition government formed
in May 2010 has made a number of policy statements and carried out
a number of renewable energy consultations over the past two years,
however relatively few new regulations have been put in place to
date. The Government has cut tariffs for solar photo-voltaic energy
and delayed the implementation of incentives for renewable heat.
There is clear disagreement within the coalition on how renewable
energy policy should be implemented, with a significant group of
Conservative back-benchers in favour of restricting the expansion
of on-shore wind energy. On the positive side, the Government has
consistently re-affirmed the concept that existing projects will
always be "grandfathered" with respect to future changes in
tariffs. Furthermore, the Government in Scotland (where a
significant portion of the Company's investments are based)
continues to provide strong support for renewables.
DECC currently has ten open consultations relating to energy
policy and regulation as well as 17 closed consultations for which
the Government has not published a response. The most important of
these consultations for the Company is the consultation on the ROC
(Renewable Obligation Certificate) banding levels, which was closed
for public consultation on 12 January 2012. The consultation
document proposed that the level of support for new onshore wind
projects be reduced from the current level of 1 ROC per
megawatt-hour to 0.9 ROCs per megawatt-hour effective 1 April 2013.
The general view in the renewable energy industry is that the
proposed level of 0.9 ROCs per megawatt-hour will take effect as
proposed on 1 April 2013, however this is not yet confirmed. This
change, if implemented, would reduce revenues from wind farms by
approximately 5%, but would not apply to projects commissioned
before 1 April 2013. It would have no impact on any existing wind
farms operated by the Company's investee companies. The Investment
Manager's analysis of any future investments by the Company will
take into account the level of ROCs expected to be available for
projects operated by investee companies. Because the Company's
target returns remain unchanged, any changes in ROC banding for
onshore wind will be reflected in the price the Company will pay
for future investments.
The other DECC consultation of particular interest to the
Company is the consultation on the comprehensive review of
non-photo voltaic feed-in tariffs which closed on 26 April 2012.
The consultation document proposed tariff levels, tariff digression
rates and rules around pre-accreditation and site definition that
will have an impact on the Company's investments in the small hydro
sector. The Investment Manager believes that the proposed changes
will not have a negative impact on any current or proposed
investments, but will create much-needed clarity for investors in
the small hydro sector. Note that the Company does not invest in
companies that derive a substantial part of their income from wind
energy feed-in tariffs, as such investments would not be qualifying
investments under the VCT regulations. However, the Company can
invest in companies that derive a substantial part of their income
from hydroelectric feed-in tariffs, as such investments are
qualifying investments under the VCT regulations.
On 22 May 2012, the UK Government published draft electricity
market reform legislation. The stated goals of the draft
legislation are "keeping the lights on, keeping consumers' energy
bills down and creating cleaner electricity to help tackle climate
change". The draft legislation proposes to radically reform the
electricity market to attract the GBP110 billion required to build
new low-carbon capacity. The proposed law is meant to encourage the
development of a balanced portfolio of renewable generation
capacity, new nuclear generation capacity and carbon capture and
storage (CCS) and to ensure that these technologies can compete in
the market-place. Key elements of the proposed reforms include:
-- revenue support for low-carbon generation by way of a feed-in
tariff with contracts for difference (CfDs) to stabilise returns
for generators at a fixed price
-- a capacity market to reduce the likelihood of future
blackouts by ensuring sufficient reliable generating capacity to
meet demand at an affordable cost
-- an emissions performance standard to prevent construction of
new coal plants with emissions above a certain level
-- a carbon price floor of GBP16 per tonne of CO2 (2009 prices)
in 2013, rising to GBP30 per tonne of CO2 by 2020 (2009
prices).
The draft electricity market legislation contains provisions for
the Renewable Obligation to be phased out and replaced by CfDs for
all renewable energy generation capacity brought on line after 31
March 2017. The Government has published an implementation roadmap
describing in general terms how the transition from ROCs to CfDs
will take place. The Government has stated its intention that
renewable energy generators will have a choice between the ROC
regime and the CfD regime for capacity brought on line from 1 April
2014 until 31 March 2017, but that no new generation will be
accredited for ROCs after 31 March 2017. A renewable energy project
is entitled to earn ROCs for 20 years, so the ROC system will not
end completely until 31 March 2037.
The Government has acknowledged that gas will continue to play
an important role in the transition to a low-carbon economy by
providing generation flexibility and helping to maintain security
of supply.
The Government has stated that it expects the provisions in the
reform package to begin taking effect in 2014. Despite the
publication of the draft legislation, there is still considerable
uncertainty within the electricity industry about how the reform
will actually develop. Recent developments in the nuclear sector,
where RWE and E.ON have announced their withdrawal from the sector
in the UK, will impact the implementation of the reform. The one
thing that is clear, however, is that electricity market reform
will have a significant impact on the renewable energy sector.
The Localism Act 2011, which became law in November 2011 has
resulted in a significant shift in planning decision-making power
to the local level. The law establishes a presumption in favour of
sustainable development, which should be viewed as positive for the
renewable energy industry. Generally, schemes that benefit local
communities will be favoured.
Wholesale electricity prices have been reasonably stable in
recent months. The Company has relatively little exposure to
short-term wholesale electricity prices, as its investee companies
sell their electricity output pursuant to power purchase agreements
with wholesale electricity prices that are fixed over the medium
term.
Turbine prices (primarily denominated in Euros) have remained
relatively stable over the past year after declining in the
2008-2010 period, however there has recently been a tightening in
the UK market as developers rush to have wind projects built and
commissioned prior to 1 April 2013, as ROCs for onshore wind are
expected to be reduced by 10% for projects commissioned after that
date (see above). The Investment Manager believes this tightening
of the turbine market will be temporary, as orders for turbines to
be commissioned prior to 1 April 2013 must be placed within the
next month or so. On the positive side, the recent strengthening of
Sterling against the Euro has lowered the cost of acquiring
turbines for UK operators.
The banking market for renewable energy projects has contracted
considerably in the past year. Availability of senior debt finance
has contracted for renewable energy projects of 5 to 20 megawatts,
which is the typical size range for investee companies of the
Company. No new banks have entered the sector over the last year,
lending margins and arrangement fees have widened and repayment
periods have shortened. Although the trends in the debt market have
made it more difficult to finance renewable energy projects, the
shortage and cost of senior debt may create an opportunity for the
Company to invest greater amounts of equity in companies with lower
leverage (which will be facilitated by the recent changes in the
VCT rules removing the annual GBP1 million limit on the amount a
VCT can invest in a portfolio company). Existing investments of the
Company are not impacted by the current lending environment for
renewable energy projects.
Temporis Capital LLP
Investment Manager
31 May 2012
Directors' Report
The Directors present their Annual Report and the audited
Financial Statements for the year ended 29 February 2012.
Business review
The business review has been prepared in accordance with the
requirements of Section 417 of the Companies Act 2006 and best
practice. The purpose of the review is to provide shareholders with
a summary of the business objectives of the Company, the board's
strategy to achieve those objectives, the risks faced, the
regulatory environment and the key performance indicators (KPIs)
used to measure performance.
The Company's business objectives are set out in the Investment
Policy in the Investment Manager's Report.
Principal activities and status
The Company is an investment company, as defined by Section 833
of the Companies Act 2006. The Company received approval as a
Venture Capital Trust from HM Revenue & Customs for the year
ended 28 February 2011. The Directors consider that the Company has
conducted its affairs in a manner to enable it to continue to
comply with Section 274 of the Income Tax Act 2007. The Company is
a public limited company, incorporated in England and listed on the
London Stock Exchange. The registered address of the Company is The
Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU.
The Company has no employees other than the Directors.
The Company's business during the year and future developments
are reviewed in the Chairman's Statement and the Investment
Manager's Report.
Companies Act 2006 disclosures: environmental matters
The Board recognises the requirement under Section 417(5) of the
Companies Act 2006 to detail information about environmental
matters (including the impact of the Company's business on the
environment). It is the specific purpose of the Company to invest
in companies that develop and operate assets which generate energy
from renewable sources. Through its investment policy, the Company
is committed to mitigating the impact of climate change by
contributing to the transition to a low carbon economy and a
cleaner environment.
Key performance indicators of the Group
Results and dividends
For the year
ended
29 February
2012 Ordinary Shares "C" Shares Total
Pence Pence
per share per share
GBP000 (1) GBP000 (1) GBP000
Revenue profit
attributable
to equity shareholders 404 1.66 226 1.99 630
Capital loss
attributable
to equity shareholders (4,371) (17.81) (167) (1.48) (4,538)
--------------------- ----------- ---------------------- ----------- ---------
Net loss attributable
to equity shareholders (3,967) (16.15) 59 0.51 (3,908)
Dividends paid
during the
year (245) (1.00) (113) (1.00) (358)
--------------------- ----------- ---------------------- ----------- ---------
Total movement
in equity shareholders'
funds (4,212) (17.15) (54) (0.49) (4,266)
===================== =========== ====================== =========== =========
For the year
ended
29 February
2012 Ordinary Shares "C" Shares Total
Pence Pence
per share per share
GBP000 (1) GBP000 (1) GBP000
% % %
Total expense
ratio (2) 3.20% 3.31% 3.25%
==================== ==================== =======
Ordinary Shares "C" Shares Total
Pence
Pence per
GBP000 per share GBP000 share GBP000
As at 29
February
2012
Net asset
value
(3) 14,419 58.8 10,414 91.9 24,833
=================== ============================= =================== ======= =======================
Total
shareholder
return (4) 15,971 69.7 10,527 92.9 26,498
=================== ============================= =================== ======= =======================
Key performance indicators of the Company
Results and dividends
For the year
ended 29
February
2012 Ordinary Shares "C" Shares Total
Pence Pence
per share per share
GBP000 (1) GBP000 (1) GBP000
Revenue profit
attributable
to equity
shareholders 420 1.72 226 1.99 646
Capital loss
attributable
to equity
shareholders (4,377) (17.84) (167) (1.48) (4,544)
--------------------- ----------------------------- ---------------------- ----------------------------- --------------------------
Net loss
attributable
to equity
shareholders (3,957) (16.12) 59 0.51 (3,898)
Dividends paid
during the
year (245) (1.00) (113) (1.00) (358)
--------------------- ----------------------------- ---------------------- ----------------------------- --------------------------
Total movement
in equity
shareholders'
funds (4,202) (17.12) (54) (0.49) (4,256)
===================== ============================= ====================== ============================= ==========================
% % %
Total expense
ratio (2) 3.20% 3.31% 3.25%
===================== ============================= ====================== ============================= ==========================
Ordinary Shares "C" Shares Total
Pence Pence
GBP000 per share GBP000 per share GBP000
As at 29
February
2012
Net asset
value
(3) 14,427 58.8 10,414 91.9 24,841
===================== ============================= ====================== ============================= ==========================
Total
shareholder
return (4) 15,979 69.7 10,527 92.9 26,506
===================== ============================= ====================== ============================= ==========================
(1) The "per share" value is determined in respect of the
weighted average number of shares in issue during the year, except
in respect of the dividends paid in the year, which is determined
on the basis of the number of shares eligible to receive dividends
at the time the dividends were paid.
(2) The total expense ratio represents the total operating
expenditure during the year (excluding irrecoverable VAT and
investment costs) as a percentage of the net asset value of the
Company at year end.
(3) The "per share" value is determined in respect of the number
of shares in issue at year end.
(4) The total shareholder return represents the net asset value
of the Company at year end plus the cumulative dividends paid by
the Company since incorporation.
The performance of the Company is reviewed in the Investment
Manager's Report, including the Company's compliance with HM
Revenue & Customs VCT regulations. The Company's prospects are
considered in the Outlook section of the Chairman's Statement.
Principal risks
Other than the inherent risks associated with investment
activities, which are discussed in the Investment Manager's Report,
the risks described below are those which the Directors consider to
be material:
-- Failure to meet and maintain the investment requirements for
compliance with HM Revenue & Customs VCT regulations.
The Board mitigates this risk by regularly reviewing investment
management activity with appropriately qualified advisers and by
obtaining pre-approval from HM Revenue & Customs for each
qualifying investment.
-- Inadequate control environment at service providers.
The Board mitigates this risk by only appointing service
providers of a high standing under agreements that set out their
responsibilities and by obtaining assurances from them that all
exceptions have been reported to the Board. In addition, the Board
has appointed an independent external party, Roffe Swayne, to
report directly to the Board in respect of the Company's internal
controls.
-- Non-compliance with the Listing Rules of the Financial
Services Authority, Companies Act Legislation, HM Revenue &
Customs VCT regulations and other applicable regulations.
The Board mitigates this risk by employing external advisers
fully conversant with applicable statutory and regulatory
requirements who report regularly to the Board on the Company's
compliance.
Going concern
The Company's major cash outflows are within the Company's
control (namely investments and dividends) or are reasonably
predictable (namely the operating expenses). The Company is able to
forecast cash inflows comprising proceeds from investments to a
reasonable degree. The Board has a reasonable expectation that the
Company is able to continue in operational existence for a period
of at least twelve months from the date of this report. The
Directors have concluded that it is appropriate to continue to
adopt the going concern basis in preparing the accounts.
The liquidity risks and details of the Company's policy for
managing its financial risks are shown in note 19. The Company's
investment activities are described in the Investment Manager's
Report and its performance is reviewed in the Directors'
Report.
Share capital
Authorised share capital
At 29 February 2012, the Company had authorised share capital of
GBP12,500,000 in total which was represented by 30 million ordinary
shares of 25p each and 20 million "C" shares of 25p each being 60%
and 40% of the Company's authorised share capital respectively. At
the general meeting held on 8 March 2012 the authorised share
capital was increased to GBP17,500,000 by the creation of
20,000,000 Ordinary Shares of 25p each.
Allotted, called and fully paid up shares
As at 29 February 2012, the Company had allotted, called and
fully paid up shares in two share funds, of which 24,537,560 shares
were ordinary shares of 25p each and 11,329,107 were "C" shares of
25p each. These shares represented 68% and 32% of the Company's
issued share capital respectively.
Authority to allot
At the general meeting held on 8 March 2012 the Directors were
authorised to allot relevant securities (within the meaning of
section 551 of the Companies Act 2006) up to a maximum aggregate
nominal amount of GBP5,000,000. This authority expires on 8 March
2017.
Disapplication of pre-emption rights
At the general meeting held on 8 March 2012 the Directors were
empowered to allot equity securities for cash (further to the
authority referred to above) without first offering such securities
to existing shareholders in proportion to their shareholdings -
such power being limited to the allotment of securities only in
certain, defined circumstances. This power expires on 8 March
2017.
Authority to repurchase shares
At the Annual General Meeting ("AGM") held on 27 July 2011 the
Company renewed its authority to repurchase up to 14.99% of its own
issued ordinary share capital and up to 14.99% of its own issued
"C" share capital.
Rights and restrictions attaching to shares and powers of the
Board of Directors
As set out in the Company's Articles of Association, subject to
the provisions of the Companies Act 2006 and to any special rights
conferred to the holders of any other shares, any share may be
issued with or have attached to it such rights and restrictions as
the Company may by ordinary resolution decide or, if no such
resolution has been passed so far as the resolution does not make
specific provision, as the Board may decide. The business of the
Company shall be managed by the Board of Directors which may
exercise all the powers of the Company, subject to the provisions
of the Companies Act 2006, the Memorandum of Association of the
Company, the Company's Articles of Association and any special
resolution of the Company. Copies of the Articles of Association
can be obtained by Companies House in the UK or by writing to the
Company Secretary.
Share premium account cancellation
Further to the passing of a special resolution at a general
meeting on 22 December 2011, on 8 February 2012 the Company
cancelled its share premium accounts by court order and created
distributable special reserves which the Company may use to
purchase its own shares and other corporate purposes. By this
action the Company increased the special reserve of the ordinary
share fund from GBP7,803,000 to GBP15,693,000 and created a special
reserve of the "C" share fund of GBP7,874,000.
Tender offer and offer for issue of ordinary shares
On 3 February 2012, the Company published a Circular in respect
of (i) a Tender Offer to purchase up to 14,000,000 ordinary shares
from existing shareholders and (ii) an Offer for the issue of up to
GBP10,000,000 of ordinary shares of 25p each of the Company.
On 30 March 2012 a total of 8,273,796 ordinary shares were
purchased for cancellation at a price of 58.4p per ordinary share
and a total of 8,118,280 ordinary shares of 25p each in the Company
were allotted in respect of the shares tendered for cancellation at
a price of 61.6p per ordinary share.
On 3 April 2012 a total of 115,661 ordinary shares were
purchased for cancellation at a price of 58.4p per ordinary share
and a total of 113,486 ordinary shares of 25p each in the Company
were allotted in respect of the shares tendered for cancellation at
a price of 61.6p per ordinary share. In addition, a total of 42,786
ordinary shares were allotted at a price of 61.6p per ordinary
share under the offer for issue of ordinary shares.
Following the cancellation and allotments described above, the
issued share capital of the Company is 24,422,655 ordinary shares
and 11,329,107 "C" shares.
CREST
The Company's ordinary shares are available for trading in
CREST, the settlement system for uncertified stocks and shares.
Dividends
The Company did not declare an interim dividend in respect of
the ordinary share fund in order to protect the Company's cash
resources. The Directors recommend a final dividend of 2.30p per
ordinary share to be paid on 8 August 2012 to ordinary shareholders
on the register on 13 July 2012. As there was no interim dividend
paid to ordinary shareholders, the total dividend for the year is
2.30p per ordinary share.
The Company paid an interim dividend of 1.00p per "C" share on
11 January 2012 to all "C" shareholders on the register as at the
close of business on 9 December 2011. This was the first dividend
paid to "C" shareholders. The Company has declared a final dividend
of 1.00p per "C" share to be paid on 8 August 2012 to all "C"
shareholders on the register as at the close of business on 13 July
2012. The total dividend for the year is therefore 2.00p per "C"
share.
Note 9 of the Financial Statements gives details of the
dividends declared and paid in the current year and prior year.
In light of the performance of the ordinary share portfolio in
the operational wind and hydro sectors, the directors intend to pay
a minimum dividend of 3.5p per ordinary share per annum for the
next three years. It should be stressed that this is an intention
only, and no forecast is intended or is to be inferred.
The losses on the waste-wood biomass investments and Redimo LFG
Limited have had a material negative impact on the net asset value,
as well as on the long-term dividend outlook. Below-normal wind
speeds in the UK in 2009 and 2010 have further impacted the
dividend. In light of the non-wind losses in the portfolio, the
long-term dividend objective has been revised downward to 4p to 6p
per ordinary share per annum. If wind speeds in the UK in the
coming years are consistent with historical long-term averages, the
Board believes the revised target range of 4p to 6p per ordinary
share per annum can be reached within 3 to 4 years while
maintaining the net asset value of the ordinary share fund at or
above the current level. It should be stressed that this is an
objective only, and no forecast is intended or is to be
inferred.
The Board expects the "C" share fund to be able to pay an annual
dividend of 3p to 4p per share per annum for the next two years. It
should be stressed that this is an intention only, and no forecast
is intended or is to be inferred. The Board should be in a position
to comment on the achievability of the longer term dividend
objective after the "C" share fund's portfolio is fully
invested.
The Company is able to pay dividends from special reserves as
these are distributable reserves. Also, a recent change to the
Companies Act 2006 allows investment companies to pay dividends
from realised capital profits. The Board has tabled resolutions to
be put to shareholders at the forthcoming AGM to approve the
cancellation of the share premium account of the ordinary share
fund to create special reserves and an amendment to the Company's
Articles of Association which will allow the Company to take
advantage of the recent change in the law which allows investment
companies to distribute realised capital profits when sufficient
distributable reserves are available (see the notes to Resolutions
8 and 9 of the notice of AGM below respectively).
Directors and their interests
The Directors who held office during the year and their
interests in the Company were as follows:
29 February 29 February 28 February 28 February
2012 2012 2011 2011
Ordinary "C" Shares Ordinary "C" Shares
Shares Shares
Alan Moore (Chairman) 16,061 10,400 16,061 10,400
Paul Thomas 10,284 5,200 10,284 5,200
Colin Wood 10,284 5,200 10,284 5,200
Under the terms of the Tender Offer the Directors of the Company
undertook the following transactions: Alan Moore, Paul Thomas and
Colin Wood each sold 10,284 Ordinary shares in the Company at a
price of 58.40p per Ordinary share and were each allotted 10,090
Ordinary shares in the Company at a price of 61.60p per Ordinary
share on 30 March 2012.
All the Directors are non-executives and all are independent,
except Paul Thomas who is Chairman of the Investment Committee of
the Investment Manager.
In accordance with the Company's Articles of Association and the
Financial Reporting Council's UK Corporate Governance Code and the
Listing Rules of the Financial Services Authority, Paul Thomas and
Colin Wood will retire at the AGM and being eligible, will offer
themselves for re-election. As both Mr Thomas and Mr Wood have
acted in the interests of the Company throughout the period of
their appointment and demonstrated commitment to their roles, the
Board recommends they be re-elected at the AGM.
Biographical information on the Directors is shown below. The
terms of the Directors' appointment and replacement are set out in
the Corporate Governance Statement.
Substantial interests
As at 29 February 2012 and the date of this report, the Company
was aware that Pershing Nominees and Heartwood Nominees held 3.13%
and 3.31%, respectively, of the shareholding and voting rights of
the Company's ordinary share capital and that Chase Nominees
Limited held 3.52% of the shareholding and voting rights of the
Company's "C" share capital. The Company was not aware of any other
individual shareholding exceeding 3% or more of the voting rights
attached to the Company's ordinary or "C" share capital.
Investment management, administration and performance fees
Temporis Capital LLP was appointed as Investment Manager of the
Company on 12 September 2011 and provides management and other
administrative services to the Company. Temporis Capital LLP also
provided similar services to Ventus VCT plc during the financial
year. The principal terms of the investment management agreement
are set out in note 3 of the Financial Statements.
Until 12 September 2011 the Company's Investment Manager was
Climate Change Capital Limited.
Company Secretary
The City Partnership (UK) Limited has been appointed to provide
company secretarial services to the Company as set out in the
company secretarial services agreement. For these services the
Company Secretary receives an annual fee of GBP15,750 plus VAT. The
company secretarial services agreement is for an initial period of
three years from 1 February 2009, terminable thereafter by either
party giving not less than six months' notice in writing.
VCT monitoring status
The Company retains PricewaterhouseCoopers LLP to advise on its
compliance with the taxation requirements relating to VCTs.
Financial instruments
The Company's financial instruments comprise investments in
unquoted companies, government securities, cash, trade and other
receivables and trade and other payables. Further details are set
out in note 19 of the Financial Statements.
Supplier payment policy
The Company's payment policy is to agree terms of payment before
business is transacted and to settle accounts in accordance with
those terms. During the year, all suppliers were paid within the
terms agreed. The creditor days as at 29 February 2012 were 5 days
(2011: 6 days).
Directors' statement as to disclosure of information to the
Auditor
The Directors who were in office on the date of approval of
these Financial Statements have confirmed that, as far as they are
aware, there is no relevant audit information of which the Auditor
is unaware. Each of the Directors has confirmed that they have
taken all the steps that they ought to have taken as Directors in
order to make themselves aware of any relevant audit information
and to establish that it has been communicated to the Auditor.
Auditor
A resolution to re-appoint PKF (UK) LLP as the Auditor of the
Company will be proposed at the forthcoming AGM.
Details of the non-audit services provided to the Company by the
Auditor are set out in note 4 of the Financial Statements.
Annual General Meeting
Enclosed with this Annual Report and Financial Statements is the
Notice of Annual General Meeting ("AGM") of the Company (or any
adjournment thereof) to be convened for Tuesday, 24 July 2012 at
12.30pm. A copy of the Notice is set out at the end of this
announcement (the "Notice"). A Form of Proxy for use in connection
with the AGM has been issued with this document.
The business of the meeting is outlined below:
Resolution 1 - Annual Report and Financial Statements
The Directors are required to present to the AGM the Annual
Report and Financial Statements for the financial year ended 29
February 2012.
Resolution 2 - To declare a final dividend
The final dividend cannot exceed the amount recommended by the
Directors and can only be paid after the members at a general
meeting have approved it. The Directors recommend a final dividend
of 2.30p per ordinary share to ordinary shareholders and 1.00p per
"C" share to "C" shareholders, payable on 8 August 2012 to those
shareholders registered at the close of business on 13 July 2012,
which will bring the total dividend for the year to 2.30p per
ordinary share and 2.00p per "C" share.
Resolution 3 - Directors' Remuneration Report
Under Regulation 11 and Schedule 8 of the Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations 2008, the
Company is required to produce a Directors' Remuneration Report for
each relevant financial year and to seek shareholder approval for
that report at the AGM. The Directors' Remuneration Report is set
out below.
Resolution 4 - Re-election of Director
Mr Paul Thomas retires in accordance with Listing Rule 15.2.13A
and, being eligible, offers himself for re-election.
Resolution 5 - Re-election of Director
Mr Colin Wood retires by rotation in accordance with the
Company's Articles of Association and, being eligible, offers
himself for re-election.
Resolution 6 - Re-appointment of Auditor
This resolution proposes that PKF (UK) LLP be re-appointed as
Auditor of the Company.
Resolution 7 - Remuneration of the Auditor
This resolution proposes that the Directors be authorised to set
the Auditor's remuneration.
Resolution 8 - Cancellation of Share Premium Account
The Companies Act 2006 provides that a public company may only
pay dividends out of distributable profits and may only purchase
its own shares out of distributable profits or out of the proceeds
of a fresh issue of shares made for the purpose of the purchase. In
order to give the Company flexibility to pay regular and
predictable dividends and to operate a share buy-back programme,
the Board believes it is appropriate for the Company to cancel the
share premium account of the ordinary share fund and transfer the
cancelled amount to the ordinary share fund special reserve. The
share premium account of the ordinary share fund was cancelled in
February 2012, however this share premium account has recently
increased pursuant to the Company's recent ordinary share offer.
This resolution does not concern the share premium account of the
"C" share fund, as this share premium account was cancelled and
transferred to the "C" share fund special reserve in February
2012.
Resolution 9 - Amendment of Articles of Association to remove
prohibition against distributing capital profits
The Company is an investment company under Section 833 of the
Companies Act 2006. The original provisions of the Companies Act
2006 regarding investment companies, which were in force up until 5
April 2012, required the Company's Articles of Association to
prohibit it from distributing capital profits. This prohibition in
the Company's Articles of Association is contained in Article 119,
the only purpose of which is to prohibit the Company from
distributing capital profits in accordance with the original
investment company regulations. Following amendments to the
Companies Act 2006 which took effect on 6 April 2012, investment
companies are no longer required to be prohibited by their articles
from distributing capital profits. As such, Article 119 now places
an unnecessary restriction on the Company. The Board believes it is
appropriate to amend the Articles of Association to delete Article
119. This will allow the Company the flexibility to distribute
realised capital profits if and when sufficient distributable
reserves are available.
Resolution 10 - Purchase of shares by the Company
This resolution, which will be proposed as a special resolution,
will, if passed, authorise the Company to purchase in the market up
to 3,660,956 ordinary shares and 1,698,233 "C" shares, representing
14.99% of the current issued share capital of each class, at a
minimum price of 25p per share, exclusive of any expenses, of not
more than an amount equal to the higher of (a) 105% of the average
of the middle market prices shown in the quotations for a share in
The London Stock Exchange Daily Official List for the five business
days immediately preceding the day on which that share is
purchased; and (b) the amount stipulated by Article 5(1) of the
Buy-back and Stabilisation Regulation 2003. This authority will be
effective until the earlier of the date of the AGM of the Company
to be held in 2013 and the date which is 18 months after the date
on which this resolution is passed (unless the authority is
previously revoked, varied or extended by the Company in general
meeting). The Board believes that it is beneficial to the Company
for it to continue to have the flexibility to purchase in the
market its own shares. However, the Board considers it in the best
interests of all shareholders if the Directors use their authority
to make share buy-backs judiciously. This resolution seeks
authority from the shareholders for the Company to be authorised to
do so when considered appropriate by the Directors. This resolution
would renew the authority granted to the Directors at the last AGM
of the Company. The minimum and maximum prices to be paid for the
shares are stated in the Notice. Repurchases of shares will be made
at the discretion of the Board and will only be made in the market
at prices below the prevailing net asset value ("NAV") per share as
and when market conditions are appropriate. Any shares which are
repurchased in this way may be cancelled or held as treasury
shares, which may then be cancelled or sold for cash, as determined
by the Board. The Directors consider that this authority is in the
interests of shareholders as a whole, as the repurchase of shares
at a discount to the underlying NAV enhances the NAV of the
remaining shares. The Directors are aware that the secondary market
for the shares of VCT companies can be illiquid and that shares may
trade at a discount to their NAV. The Company has established
special reserves out of which it may fund share buy-backs.
Action to be taken
Shareholders have been issued with a Form of Proxy for use in
connection with the AGM. Shareholders are requested to complete the
Form of Proxy in accordance with the instructions printed on it and
to return it to the Company's Registrar, Capita Registrars, PXS, 34
Beckenham Road, Beckenham, Kent, BR3 4TU not less than 48 hours
before the time of the AGM (excluding any time which is not part of
a working day). Completion and return of a Form of Proxy will not
preclude shareholders from attending and voting at the AGM in
person should they subsequently decide to do so.
Recommendation
The Directors believe that all of the resolutions are in the
best interests of the Company and its shareholders as a whole and,
accordingly, unanimously recommend that you vote in favour of the
resolutions, as they intend to do in respect of their own
beneficial holdings of shares.
By order of the Board
The City Partnership (UK) Limited
Secretary
31 May 2012
Directors' Remuneration Report
This report has been prepared by the Directors in accordance
with the requirements of the Companies Act 2006 and the Large and
Medium-sized Company and Groups (Accounts and Reports) Regulations
2008. An ordinary resolution to approve the report will be proposed
at the AGM to be held on Tuesday, 24 July 2012.
Remuneration policy
The Board comprises three Directors, all of whom are
non-executive. The Board does not have a separate Remuneration
Committee, as the Company has no employees, other than the
non-executive Directors.
The Board considers that Directors' fees should reflect the time
commitment required and the high level of responsibility borne by
Directors and should be broadly comparable to those paid by similar
companies. It is not considered appropriate that Directors'
remuneration should be performance-related, and none of the
Directors are eligible for bonuses, pension benefits, share
options, long-term incentive schemes or other benefits in respect
of their services as non-executive Directors of the Company. The
total remuneration of non-executive Directors has not exceeded the
GBP100,000 per annum limit set in the Articles of Association of
the Company.
No Director has a contract of service with the Company. All of
the Directors have been provided with letters of appointment. The
Articles of Association provide that Directors shall retire and
offer themselves for re-election at the first AGM after their
appointment and at least every three years thereafter. A Director's
appointment will continue unless terminated by the Company by
giving three months written notice; it may also be terminated in
certain other circumstances.
Directors' fees (audited information)
The following fees were paid to individual Directors in respect
of the year ended 29 February 2012 with comparative figures for the
year ended 28 February 2011:
29 February 28 February
2012 2011
GBP GBP
Alan Moore (Chairman) 25,000 19,805
Paul Thomas 20,000 16,647
Colin Wood 20,000 16,647
Aggregate emoluments 65,000 58,448
============ ============
None of the Directors received any other remuneration during the
year. As of 13 July 2010, the Chairman's fees were increased from
GBP20,000 to GBP25,000 per year and the other directors' fees were
increased from GBP15,000 to GBP20,000 per year. The increase in
fees was considered to be appropriate as the number of directors
was reduced from four to three. Alan Moore was appointed Chairman
on 13 July 2010, therefore was the Chairman for only part of the
year ended 28 February 2011.
Company performance
Due to the positioning of the Company in the market as a
specialist VCT investing in companies that will develop, construct
and operate small on-shore UK renewable energy projects, the
Directors consider that, currently, there is no suitable company or
index that can be identified for comparison. However, in order to
comply with Directors' Remuneration Report Regulations 2002, the
FTSE 100 Index has been used as a comparative.
Total shareholder return on ordinary shares
The graph demonstrates the change in value, in terms of Share
Price Total Return(1) and NAV Total Return(2) , based on GBP100
invested in ordinary shares on the date they were listed on the
London Stock Exchange (10 March 2006) over the period to 29
February 2012 compared with the total return attributable to GBP100
invested in companies comprising the FTSE 100 Index over the same
period. The graph shows there had been a reduction in shareholder
value during the year in respect of the total shareholder return
based on NAV, which is representative of the net downward
revaluation of investments as detailed in the Investment Manager's
Report. The graph also demonstrates the discount to NAV of the
share price of the ordinary shares as the total shareholder return
based on share price is lower than that based on NAV.
Total shareholder return on "C" shares
The graph demonstrates the change in value, in terms of Share
Price Total Return(1) and NAV Total Return(2) , based on GBP100
invested in "C" shares on the date they were listed on the London
Stock Exchange (24 March 2009) over the period to 29 February 2012
compared with the total return attributable to GBP100 invested in
companies comprising the FTSE 100 Index over the same period. There
was slight increase in shareholder value during the year in respect
of the total shareholder return based on NAV, which is attributable
to the revenue profit generated by the share fund's
investments.
(1) Share Price Total Return is the return attributable to the
share price of the shares held assuming that dividends paid in
respect of those shares were immediately reinvested in shares at
the market price as at the date the dividends were paid.
(2) NAV Total Return is the net asset value of the shares held
plus the cumulative dividends paid to those shares over the period
in which they were held.
By order of the Board
The City Partnership (UK) Limited
Secretary
31 May 2012
Corporate Governance Statement
The Board of Ventus 2 VCT plc has considered the principles and
recommendations of the AIC Code of Corporate Governance ("AIC
Code") by reference to the AIC Corporate Governance Guide for
Investment Companies ("AIC Guide"). The AIC Code, as explained by
the AIC Guide, addresses all the principles set out in the UK
Corporate Governance Code, as well as setting out additional
principles and recommendations on issues that are of specific
relevance to member companies of the AIC.
The Company has complied with the recommendations of the AIC
Code and the relevant provisions of the UK Corporate Governance
Code, except as set out below.
The UK Corporate Governance Code includes provisions relating
to:
-- the role of the chief executive
-- executive directors' remuneration
-- the need for an internal audit function.
For the reasons set out in the AIC Guide, and as explained in
the UK Corporate Governance Code, the Board considers the first two
provisions are not relevant to the position of the Company, being
an externally managed investment company. The Company has therefore
not reported further in respect of the first two provisions. Also,
the Company does not comply with the AIC Code in its recommendation
that the Board appoints a senior independent director. However, the
Board considers that as the directors are few in number the Company
does not require a senior independent director. Following the
breach of internal control within the previous Investment Manager
reported in last year's annual report the Board has decided to
appoint an independent external party, Roffe Swayne, to undertake
an internal audit of the processes and procedures in place within
the current Investment Manager.
Board of Directors
For the year ended 29 February 2012 the Board consisted of three
Directors, all of whom are non-executive. The Board ensures that it
has the appropriate balance of skills, experience, length of
service and knowledge of the Company amongst its Directors.
Biographical information on the Directors, is shown below.
Independence
In accordance with the Listing Rules of the Financial Services
Authority, the Board has reviewed the independence of each Director
and of the Board as a whole. Directors withdrew from discussions
concerning their individual status.
Mr Thomas is also the Chairman of the Investment Committee of
the Investment Manager and is therefore not considered to be
independent. No Directors of the Company are directors of another
company managed by the Investment Manager. The Board believes that
each Director, with the exception of Mr Thomas, has demonstrated
that he is independent in character and judgement and independent
of the Investment Manager and therefore, that Mr Moore and Mr Wood
are each considered independent.
Directors' responsibilities
The Board meets at least quarterly and is in regular contact
with the Investment Manager between these meetings. There were a
number of ad-hoc meetings, including meetings related to the
approval of the Half-yearly Report and the Interim Management
Statements. The number of meetings of the Board and the Audit
Committee held during the year and the attendance of the Directors
is shown in the table below:
Board Meetings Audit Committee
Meetings
Held Attended Held Attended
Alan Moore (Chairman) 15 15 4 4
Paul Thomas 15 15 4 4
Colin Wood 15 12 4 4
All the Directors are equally responsible under the law for the
proper conduct of the Company's affairs. In addition, the Directors
are responsible for ensuring that the policies and operations are
in the best interests of all the Company's shareholders and that
the best interests of creditors and suppliers to the Company are
properly considered.
The AIC Code states that the Board should have a formal schedule
of matters specifically reserved to it for decision, to ensure that
it has firm direction and control of the Company. The schedule of
matters reserved to it includes the general investment strategy of
the Company and the performance of the Company. The terms and
conditions of appointment of non-executive Directors are available
upon written application to the Company Secretary.
All Directors have direct access to the Company Secretary and
independent advisers at the Company's expense provided prior
clearance has been obtained from the Board. The Company Secretary
is responsible to the Board for ensuring that Board and Committee
procedures are followed and for compliance with applicable rules
and regulations. The Company Secretary is also responsible to the
Board for ensuring the timely delivery of information and reports
and that the statutory obligations of the Company are met.
When Directors have concerns that cannot be resolved about the
running of the Company or a proposed action, they are asked to
ensure that their concerns are recorded in the Board minutes. On
resignation, a Director who has any such concerns is encouraged to
provide a written statement to the Chairman, for circulation to the
Board.
Directors appointed by the Board to fill a vacancy are required
to submit to election at the next annual general meeting. At each
AGM of the Company one third of the Directors shall retire from
office and being eligible, be proposed for re-election. The
Directors to retire will be those who have been longest in office
or, in the case of those who were appointed or reappointed on the
same day, will be (unless they otherwise agree) determined by lot.
The Company may by ordinary resolution remove any Director before
his period of office has expired. In addition, as Mr Thomas is the
Chairman of the Investment Committee of the Investment Manager, he
is subject to re-election under Listing Rule 15.2.13A, and will
therefore offer himself for re-election at the AGM and annually
thereafter.
In accordance with the AIC Code, the Company has in place
directors' and officers' liability insurance.
Upon joining the Board, new Directors will receive a full,
formal and tailored induction. As the Company has no major
shareholders, it is considered unnecessary to provide shareholders
with the opportunity to meet new non-executive Directors at a
specific meeting other than the AGM.
The performance of the Board, Audit Committee and individual
Directors has been evaluated through an assessment process led by
the Chairman who also considered the independence of the Directors
and concluded that it considered all Directors, with the exception
of Paul Thomas, for reasons mentioned above, to be independent.
The Directors seek to ensure that the Board has an appropriate
balance of skills, experience and length of service. The
biographies of the Directors shown below demonstrate the range of
investment, commercial and professional experience that they
contribute. The size and composition of the Board and Audit
Committee is considered adequate for the effective governance of
the Company. While the Board recognises the benefits of gender
diversity, the priority in appointing new Directors to the Board is
to identify the candidate with the best range of skills and
experience to complement existing Directors.
Audit Committee
The Audit Committee comprises Colin Wood, Alan Moore and Paul
Thomas. Colin Wood is Chairman of the Audit Committee. Alan Moore,
Chairman of the Company, has been appointed to the Audit Committee
in view of the small size of the Board. The Committee meets at
least three times a year to review the audit plan, the Half-yearly
Report and Annual Financial Statements before submission to the
Board. The roles and responsibilities of the Audit Committee,
including reviewing the Company's internal controls, risk
management systems and monitoring auditor independence, are set out
in written terms of reference and are available on the Company's
website www.ventusvct.com. The Audit Committee has primary
responsibility for making recommendations on the appointment,
reappointment and removal of the external Auditor.
The Audit Committee reviews the nature and extent of non-audit
services provided by the Company's external Auditor and ensures
that the Auditor's independence and objectivity is safeguarded.
The re-appointment of PKF (UK) LLP as the Company's Auditor was
approved by shareholders at the AGM held on 27 July 2011. The Board
recommended the services of PKF (UK) LLP to the shareholders in
view of the firm's extensive experience in auditing Venture Capital
Trusts.
During the year under review, the Company's external Auditor
also provided tax compliance services and a review of the
half-yearly report. The Board believes that the appointment of the
Auditors to supply these services was in the interest of the
Company due to their knowledge of the Company and the VCT sector.
The Auditor was, therefore, in a position to provide a greater
efficiency of service compared to other potential providers of
these services. The Board is satisfied that the fees charged and
work undertaken did not affect the Auditor's objectivity as the
proportion of the fees earned from the Company for other services
was relatively small in relation to the audit fees. Also, the tax
services were provided by a separate team and did not involve
undertaking any internal review or management role nor did these
services create any self review conflict over the preparation of
the information reported in the accounts.
Nomination and Remuneration Committees
To date, no Nomination or Remuneration Committees have been
established. The establishment of a Nomination Committee is not
considered necessary as the appointment of new Directors and
recommendations for the re-election of Directors are matters
considered by the Board. Matters relating to remuneration of
Directors, all of whom are non-executive, are considered by the
Board and any Director is excluded from meetings whose purpose is
the setting of his own remuneration.
Internal control
In accordance with the AIC Code, the Board has established an
ongoing process for identifying, evaluating and managing the
significant risks faced by the Company which accords with the
Turnbull guidance. The Board acknowledges that it is responsible
for the Company's system of internal control and financial
reporting. Internal control systems are designed to provide
reasonable, but not absolute, assurance against material
misstatement or loss. The Board has delegated, contractually to
third parties, the investment management, the custodial services
(which include safeguarding the Company's assets), the day-to-day
accounting, company secretarial and administration requirements and
the registration services. Each of these contracts was entered into
after full and proper consideration by the Board of the quality and
cost of services offered.
There is an ongoing process for identifying, evaluating and
managing the significant risks faced by the Company, which has been
in place for the period under review and up to the date of approval
of the accounts. This process is regularly reviewed by the Board.
As discussed above the Company has appointed an independent
external party, Roffe Swayne, to undertake an internal audit of the
processes and procedures in place at the current Investment
Manager. Roffe Swayne is expected to report to the Audit Committee
in June 2012. The Board will continue to monitor and review the
risk management process on a regular basis.
The Company has a clearly defined investment policy and process.
Investment decisions are made by the Investment Manager, after
approval has been received from the Investment Committee of the
Investment Manager. In certain circumstances investment decisions
are referred to the Board for approval after due consideration of
the recommendations of the Investment Committee of the Investment
Manager. The Board performs regular reviews of the Company's
performance in respect of the investments and other assets,
liabilities, revenue and expenditure.
The Audit Committee reviews each of the Company's half-yearly
and annual reports, interim management statements and associated
announcements. The Audit Committee regularly reviews management
accounts information to make comparisons to budget. The Audit
Committee also regularly reviews the internal controls adopted and
implements appropriate policies to deal with operational risks. The
findings of the external Auditor in respect of internal controls
and financial reporting are discussed at Audit Committee meetings
and appropriate recommendations are made to the Board.
The principal features of the internal control systems which the
Investment Manager has in place in respect of the Company's
financial reporting include:
-- authorisation limits over expenditure incurred by the Company;
-- segregation of duties between the analysis of investment
valuations, review of the assumptions made in valuing investments
and the recording of these valuations in the accounting
records;
-- bank reconciliations are carried out on a regular basis; and
-- review by the Audit Committee of financial information prior to its publication.
Appointment of the new Investment Manager
Given the significant breach of internal controls within the
Company's former Investment Manager, Climate Change Capital
Limited, and the uncertainties concerning resourcing of the
investment management team (which were disclosed in last year's
annual report), the Board considered that it was in the best
interest of shareholders to appoint a new Investment Manager as
soon as was possible. The Board attended presentations from the
senior management of Temporis Capital LLP and reviewed the firm's
protocols. The Board made the decision to appoint Temporis Capital
LLP as Investment Manager knowing the key employees of the former
Investment Manager, whom the Board wished to retain, would be
transferred to Temporis Capital LLP. The change of Investment
Manager was made with effect from 12 September 2011, with the
agreement of Climate Change Capital Limited, at no cost to the
Company.
Performance of the Investment Manager
The primary focus of regular Board meetings is to review the
investment performance against the Company's stated investment
policy and objectives. In doing so, the Board assesses the
performance of the Investment Manager and considers whether the
arrangements made between the Company and the Investment Manager
are appropriate and in the interests of shareholders. The Board
completed a formal assessment of the performance of the current
Investment Manager and in the opinion of the Directors, the
continuing appointment of the Investment Manager, on the terms
agreed, is in the interests of the shareholders. The Directors are
satisfied that the Investment Manager will continue to manage the
Company's investment programme in a way which will enable the
Company to achieve its objectives.
Going concern
The Directors are required to consider the going concern status
of the Company and prepare the Financial Statements on the going
concern basis unless it is inappropriate to presume that the
Company will continue in business. The going concern status of the
Company is discussed in the Directors' Report above.
Listing Rules disclosures: DTR 7.2.6
The Company has two classes of shares, ordinary and "C" shares,
which carry no right to fixed income. Details of the Company's
share capital, including the number of shares authorised and
allotted, are set out in the Directors' Report above.
At a general meeting of the Company, on a show of hands, every
member who is present in person and entitled to vote shall have one
vote and on a poll every member who is present in person or by
proxy and entitled to vote shall have one vote for every share
held.
Any profits of each share fund which the Company may determine
to distribute in respect of any financial year shall be distributed
among the shareholders pro rata according to the amounts paid up or
credited as paid up on the shares held.
The capital and assets of the Company on a winding-up or other
return of capital shall be applied in repaying to the shareholders
the amounts paid up or credited as paid up on such shares and
subject thereto shall belong to and be distributed according to the
number of such shares held.
The identity of each of the shareholders with a significant
holding as at the year end and the date of this report, including
details of the size and nature of their holding, is disclosed in
the Substantial Interests section of the Directors' Report.
As at the year end and date of this report the Company had no
immediate or ultimate controlling parties and there were no shares
in issue carrying special rights with regard to control of the
Company.
In accordance with the Company's Articles of Association,
subject to the provisions of the Companies Act 2006 and to any
special rights conferred on the holders of any other shares, any
shares may be issued with or have attached to them such rights and
restrictions as the Company may by ordinary resolutions decide or,
if no such resolution has been passed or so far as the resolution
does not make specific provision, as the Board may decide.
There are no shares in issue which hold special rights.
The Company may by ordinary resolution appoint any person who is
willing to act as a Director, either to fill a vacancy or as an
additional Director. Each Director is to be appointed by separate
resolution.
The Company may by special resolution make amendment to the
Company's Articles of Association.
The powers of the Company's Directors in relation to the Company
issuing or buying back its own shares are set out in the Director's
Report.
Relations with shareholders
The Company communicates with shareholders and solicits their
views where it is appropriate to do so. All shareholders are
welcome at the AGM, which provides a forum for shareholders to ask
questions of the Directors and to discuss with them issues
affecting the Company. The Board is also happy to respond to any
written queries made by shareholders during the course of the year.
Shareholders may write to the Board of Ventus 2 VCT plc at the
following address: c/o The City Partnership (UK) Limited, Thistle
House, 21 Thistle Street, Edinburgh, EH2 1DF.
The Board as a whole approves the Chairman's Statement which
forms part of the Annual and Half-yearly Reports to shareholders in
order to ensure that they present a balanced and understandable
assessment of the Company's position and future prospects. Notice
of the AGM accompanies this Annual Report, which is sent to
shareholders a minimum of 20 working days before the meeting.
A separate resolution is proposed at the AGM on each
substantially separate issue. The Registrar collates the proxy
votes, and the results (together with the proxy forms) are
forwarded to the Company Secretary immediately prior to the AGM. In
order to comply with the UK Corporate Governance Code, proxy votes
are announced at the AGM, following each vote on a show of hands,
except in the event of a poll being called. The notice of the next
AGM can be found at the end of these Financial Statements. A proxy
form in respect of this meeting has been issued to shareholders
separately.
For and on behalf of the Board
Alan Moore
Chairman
31 May 2012
Directors' Information
The Company's Board comprises three Directors, two of whom are
independent of the Manager. The Directors operate in a
non-executive capacity and are responsible for overseeing the
investment strategy of the Company. The Directors have wide
experience of investment in both smaller growing companies and
larger quoted companies. Information about the Directors is
presented below:
Alan Moore OBE - Chairman
Alan Moore has more than 40 years' experience in the UK
electricity industry, beginning his career
with the Central Electricity Generating Board. From 1998 to
2004, he was the Managing Director
of National Wind Power (now RWE Innogy), at the time one of the
largest developers and owners of renewable power assets in the UK.
Until 2010, for eight years he was Co-Chairman of the UK
Government's Renewables Advisory Board. He is a past Chairman of
the British Wind Energy Association (now called RenewableUK). He is
also a non-executive director of Partnerships for Renewables
Limited. He was recently appointed an Adjunct Professor at Imperial
College, London. He has been a member of the Board since January
2006.
Paul Thomas
Paul Thomas is Managing Director of Private Investor Capital
Limited, the London-based independent private equity firm that
invests in transactions of up to GBP5 million in growing, unquoted
UK businesses. He has over 25 years of private equity experience,
including 19 years with ECI Partners LLP, the London based
midmarket buy-out house, where he was Managing Director until
retiring in 2003. During his time with ECI, the firm made over 100
equity investments in transactions ranging in size from GBP500,000
to GBP25 million, deploying capital of more than GBP200 million.
Previously, he was with Price Waterhouse for 6 years, latterly in
corporate finance. He is a physics graduate and a Chartered
Accountant. He is Chairman of the Ventus funds' Investment
Committee of the Investment Manager and has been a member of the
Board since January 2006.
Colin Wood
Colin Wood spent 27 years as a civil servant in the Scottish
Office before retiring from a senior position in the Scottish
Executive in 2001. He is an economics graduate and from 1993 to
1998, he was Senior Economic Adviser and Head of the Economics and
Statistics Unit at the Scottish Office Industry Department, where
he was responsible for providing economic advice on a range of
issues including energy markets and the environment. He is a
Director of The Century Building Society in Edinburgh. He has been
a member of the Board since January 2006.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Directors'
Report, the Directors' Remuneration Report and the Financial
Statements in accordance with applicable law and regulations. They
are also responsible for ensuring that the Annual Report includes
information required by the Listing Rules of the Financial Services
Authority.
Company law requires the Directors to prepare Financial
Statements for each financial year. Under that law the directors
are required to prepare the Group financial statements in
accordance with International Financial Reporting Standards
("IFRSs") as adopted by the European Union and have elected to
prepare the Parent Company Financial Statements in accordance with
those standards. Under company law the Directors must not approve
the Financial Statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Company and the
Group and of the profit or loss of the Group for that period.
In preparing these Financial Statements the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgments and accounting estimates that are reasonable and prudent;
-- state whether the Financial Statements have been prepared in
accordance with IFRSs as adopted by the European Union; and
-- prepare the Financial Statements on the going concern basis
unless it is inappropriate to presume that the Company and the
Group will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions, to disclose with reasonable accuracy at any time the
financial position of the Company and to enable them to ensure that
the Financial Statements comply with the Companies Act 2006 and
Article 4 of the IAS Regulation. They are also responsible for
safeguarding the assets of the Company and the Group and hence for
taking reasonable steps for the prevention and detection of fraud
and other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of the Financial Statements and other
information included in annual reports may differ from legislation
in other jurisdictions.
The Directors confirm, to the best of their knowledge:
-- that the Group Financial Statements, which have been prepared
in accordance with IFRSs as adopted by the European Union, give a
true and fair view of the assets, liabilities, financial position
and profit or loss of the Group; and
-- that the management report included within the Chairman's
Statement, Investment Manager's Report and Directors' Report
includes a fair review of the development and performance of the
business and the position of the Company and the undertakings
included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they
face.
The names and functions of all the Directors are stated in the
Directors' Information above.
For and on behalf of the Board
Paul Thomas
Director
31 May 2012
Directors and Advisers
Directors Investment Manager
Alan Moore OBE Temporis Capital LLP
Paul Thomas Berger House
Colin Wood 36-38 Berkeley Square
London
W1J 5AE
Company Secretary Principal Banker
The City Partnership (UK) Limited HSBC Bank plc
Thistle House 60 Queen Victoria Street
21 Thistle Street London
Edinburgh EC4N 4TR
EH2 1DF
Auditor VCT Taxation Adviser
PKF (UK) LLP PricewaterhouseCoopers LLP
Farringdon Place 1 Embankment Place
20 Farringdon Road London
London WC2N 6RH
EC1M 3AP
Solicitors Broker
Berwin Leighton Paisner LLP Matrix Corporate Capital LLP
Adelaide House One Vine Street
London Bridge London
London W1J 0AH
EC4R 9HA
Howard Kennedy LLP Registrars and Registered Office
19 Cavendish Square Capita Registrars
London The Registry
W1A 2AW 34 Beckenham Road
Beckenham
Kent
BR3 4TU
Independent Auditor's Report
to the members of Ventus 2 VCT plc
We have audited the financial statements of Ventus 2 VCT PLC for
the year ended 29 February 2012 which comprise the Group Statement
of Comprehensive Income, the Group and Parent Company Statements of
Financial Position, the Group and Parent Company Statements of
Changes in Equity, the Group and Parent Company Statements of Cash
Flows and the related notes. The financial reporting framework that
has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the European Union and, as regards the Parent Company Financial
Statements, as applied in accordance with the provisions of the
Companies Act 2006.
This report is made solely to the Company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of Directors and auditor
As explained more fully in the Statement of Directors'
Responsibilities, the Directors are responsible for the preparation
of the Financial Statements and for being satisfied that they give
a true and fair view. Our responsibility is to audit and express an
opinion on the Financial Statements in accordance with applicable
law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's
Ethical Standards for Auditors.
Scope of the audit of the Financial Statements
An audit involves obtaining evidence about the amounts and
disclosures in the Financial Statements sufficient to give
reasonable assurance that the Financial Statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the Group's and the Parent Company's circumstances
and have been consistently applied and adequately disclosed; the
reasonableness of significant accounting estimates made by the
Directors; and the overall presentation of the Financial
Statements. In addition, we read all the financial and
non-financial information in the Annual Report to identify material
inconsistencies with the audited Financial Statements. If we become
aware of any apparent material misstatements or inconsistencies we
consider the implications for our report.
Opinion on Financial Statements
In our opinion:
-- the Financial Statements give a true and fair view of the
state of the Group's and the Parent Company's affairs as at 29
February 2012 and of the Group's loss for the year then ended;
-- the Group Financial Statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
-- the Parent Company Financial Statements have been properly
prepared in accordance with IFRSs as adopted by the European Union
as applied in accordance with the provisions of the Companies Act
2006; and
-- the Financial Statements have been prepared in accordance
with the requirements of the Companies Act 2006 and, as regards the
group financial statements, Article 4 of the IAS Regulation.
Opinion on other matters prescribed by the Companies Act
2006
In our opinion:
-- the part of the Directors' Remuneration Report to be audited
has been properly prepared in accordance with the Companies Act
2006;
-- the information given in the Directors' Report for the
financial year for which the Financial Statements are prepared is
consistent with the Financial Statements; and
-- the information given in the Corporate Governance Statement
in compliance with rules 7.2.5 and 7.2.6 in the Disclosure Rules
and Transparency Rules sourcebook issued by the Financial Services
Authority (information about internal control and risk management
systems in relation to financial reporting processes and about
share capital structures) is consistent with the Financial
Statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you
if, in our opinion:
-- adequate accounting records have not been kept by the Parent
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the Parent Company Financial Statements and the part of the
Directors' Remuneration Report to be audited are not in agreement
with the accounting records and returns; or
-- certain disclosures of Directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit; or
-- a corporate governance statement has not been prepared by the company.
Under the Listing Rules we are required to review:
-- the Directors' statement, set out in the Directors' Report,
in relation to going concern; and
-- the part of the Corporate Governance Statement relating to
the Company's compliance with the nine provisions of the UK
Corporate Governance Code specified for our review; and
-- certain elements of the report to the shareholders by the board on Directors' remuneration.
Rosemary Clarke (Senior statutory auditor)
for and on behalf of PKF (UK) LLP, Statutory auditor
London, UK
31 May 2012
Group Statement of Comprehensive Income
for the year ended 29 February 2012
Ordinary Shares "C" Shares Total
---------------------------- --------------------------- ----------------------------
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Realised
loss on
investments 9 - (4,249) (4,249) - - - - (4,249) (4,249)
Net unrealised
gain on
investments 9 - 444 444 - - - - 444 444
Income 2 847 - 847 442 - 442 1,289 - 1,289
Investment
management
fees 3 (63) (189) (252) (65) (194) (259) (128) (383) (511)
Other
expenses 4 (253) (675) (928) (94) (65) (159) (347) (740) (1,087)
-------- -------- -------- -------- -------- ------- -------- -------- --------
Loss before
taxation 531 (4,669) (4,138) 283 (259) 24 814 (4,928) (4,114)
Taxation 6 (137) 49 (88) (57) 92 35 (194) 141 (53)
Loss and
total
comprehensive
income 394 (4,620) (4,226) 226 (167) 59 620 (4,787) (4,167)
-------- -------- -------- -------- -------- ------- -------- -------- --------
Attributable
to:
The Company's
equity
shareholders 404 (4,371) (3,967) 226 (167) 59 630 (4,538) (3,908)
Non-controlling
interest (10) (249) (259) - - - (10) (249) (259)
-------- -------- -------- -------- -------- ------- -------- -------- --------
Loss and
total
comprehensive
income
for the
year 394 (4,620) (4,226) 226 (167) 59 620 (4,787) (4,167)
======== ======== ======== ======== ======== ======= ======== ======== ========
Return
per share
Basic
and diluted
return
per share
(p) 8 1.66 (17.81) (16.15) 1.99 (1.48) 0.51
The Group has only one class of business and derives its income
from investments made in the UK.
The total column of this statement represents the Group's
Statement of Comprehensive Income, prepared in accordance with the
recognition and measurement principles of International Financial
Reporting Standards as adopted by the European Union. The revenue
and capital columns shown above constitute supplementary
information prepared under the Statement of Recommended Practice
"Financial Statements of Investment Trust Companies and Venture
Capital Trusts" 2009 ("SORP") published by the Association of
Investment Companies.
The accompanying notes set out below form an integral part of
these Financial Statements.
Group Statement of Comprehensive Income
for the year ended 28 February 2011
Ordinary Shares "C" Shares Total
---------------------------- --------------------------- ----------------------------
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Realised
loss on
investments 9 - (268) (268) - - - - (268) (268)
Net unrealised
loss on
investments 9 - (1,284) (1,284) - - - - (1,284) (1,284)
Income 2 1,127 - 1,127 262 - 262 1,389 - 1,389
Investment
management
fees 3 (118) (354) (472) (64) (190) (254) (182) (544) (726)
Impairment
charge - (530) (530) - - - - (530) (530)
Merger Cost (31) - (31) - - - (31) - (31)
Other expenses 4 (154) (42) (196) (83) - (83) (237) (42) (279)
-------- -------- -------- -------- -------- ------- -------- -------- --------
Loss before
taxation 824 (2,478) (1,654) 115 (190) (75) 939 (2,668) (1,729)
Taxation 6 (90) 90 - (24) 24 - (114) 114 -
Loss and
total comprehensive
income 734 (2,388) (1,654) 91 (166) (75) 825 (2,554) (1,729)
-------- -------- -------- -------- -------- ------- -------- -------- --------
Attributable
to:
The Company's
equity shareholders 734 (2,388) (1,654) 91 (166) (75) 825 (2,554) (1,729)
Return per
share
Basic and
diluted
return per
share (p) 8 3.29 (10.70) (7.41) 0.84 (1.52) (0.68)
The Group has only one class of business and derives its income
from investments made in the UK.
The total column of this statement represents the Group's
Statement of Comprehensive Income, prepared in accordance with the
recognition and measurement principles of International Financial
Reporting Standards as adopted by the European Union. The revenue
and capital columns shown above constitute supplementary
information prepared under the Statement of Recommended Practice
"Financial Statements of Investment Trust Companies and Venture
Capital Trusts" 2009 ("SORP") published by the Association of
Investment Companies.
The loss and total comprehensive income for the year is wholly
attributable to the owners of the Company.
The accompanying notes set out below form an integral part of
these Financial Statements.
Group Statement of Financial Position
as at 29 February 2012
As at 29 February As at 28 February
2012 2011
Reclassified*
Ordinary "C" Ordinary "C"
Shares Shares Total Shares Shares Total
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Non-current assets
Investments 9 12,599 8,183 20,782 16,374 3,960 20,334
Development wind
assets 11 - - - 293 - 293
Trade and other
receivables 12 37 47 84 1,373 103 1,476
12,636 8,230 20,866 18,040 4,063 22,103
--------- -------- -------- --------- -------- --------
Current assets
Trade and other
receivables 12 2,014 531 2,545 614 175 789
Cash and cash equivalents 13 622 1,685 2,307 664 6,254 6,918
2,636 2,216 4,852 1,278 6,429 7,707
--------- -------- -------- --------- -------- --------
Total assets 15,272 10,446 25,718 19,318 10,492 29,810
--------- -------- -------- --------- -------- --------
Current liabilities
Trade and other
payables 14 (231) (32) (263) (197) (24) (221)
Net current assets 2,405 2,184 4,589 1,081 6,405 7,486
--------- -------- -------- --------- -------- --------
Financial liabilities 15 (763) - (763) (372) - (372)
--------- -------- -------- --------- -------- --------
Net assets 14,278 10,414 24,692 18,749 10,468 29,217
========= ======== ======== ========= ======== ========
Share capital 16 6,134 2,832 8,966 6,134 2,832 8,966
Share premium - - - 7,890 7,874 15,764
Special reserve 15,693 7,874 23,567 7,803 - 7,803
Capital reserve
- realised (9,367) (437) (9,804) (1,755) (270) (2,025)
Capital reserve
- unrealised 1,399 - 1,399 (1,842) - (1,842)
Revenue reserve 560 145 705 401 32 433
--------- -------- -------- --------- -------- --------
Equity attributable
to equity holders 14,419 10,414 24,833 18,631 10,468 29,099
Non-controlling
interests (141) - (141) 118 - 118
--------- -------- -------- --------- -------- --------
Total equity 14,278 10,414 24,692 18,749 10,468 29,217
========= ======== ======== ========= ======== ========
Basic and diluted
net asset value
per share (p) 17 58.8 91.9 75.9 92.4
* The Group Statement of Financial Position as at 28 February
2011 has been adjusted to reflect the reclassification of
development wind assets to trade and other receivables. These
adjustments are further explained in notes 11 and 12 of the
financial statements.
Approved by the Board and authorised for issue on 31 May
2012.
Paul Thomas
Director
The accompanying notes set out below form an integral part of
these Financial Statements.
Ventus 2 VCT plc. Registered No: 05667210
Company Statement of Financial Position
as at 29 February 2012
As at 29 February As at 28 February
2012 2011
Ordinary "C" Ordinary "C"
Shares Shares Total Shares Shares Total
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Non-current assets
Investments 9 12,599 8,183 20,782 16,374 3,960 20,334
Investments in
subsidiaries 10 449 - 449 732 - 732
Trade and other
receivables 12 37 47 84 570 103 673
13,085 8,230 21,315 17,676 4,063 21,739
--------- -------- -------- --------- -------- --------
Current assets
Trade and other
receivables 12 1,258 531 1,789 510 175 685
Cash and cash equivalents 13 608 1,685 2,293 630 6,254 6,884
1,866 2,216 4,082 1,140 6,429 7,569
--------- -------- -------- --------- -------- --------
Total assets 14,951 10,446 25,397 18,816 10,492 29,308
--------- -------- -------- --------- -------- --------
Current liabilities
Trade and other
payables 14 (197) (32) (229) (187) (24) (211)
Net current assets 1,669 2,184 3,853 953 6,405 7,358
--------- -------- -------- --------- -------- --------
Financial liabilities 15 (327) - (327) - - -
--------- -------- -------- --------- -------- --------
Net assets 14,427 10,414 24,841 18,629 10,468 29,097
========= ======== ======== ========= ======== ========
Equity attributable
to equity holders
Share capital 16 6,134 2,832 8,966 6,134 2,832 8,966
Share premium - - - 7,890 7,874 15,764
Special reserve 15,693 7,874 23,567 7,803 - 7,803
Capital reserve
- realised (9,373) (437) (9,810) (1,755) (270) (2,025)
Capital reserve
- unrealised 1,399 - 1,399 (1,842) - (1,842)
Revenue reserve 574 145 719 399 32 431
--------- -------- -------- --------- -------- --------
Total equity 14,427 10,414 24,841 18,629 10,468 29,097
========= ======== ======== ========= ======== ========
Basic and diluted
net asset value
per share (p) 17 58.8 91.9 75.9 92.4
Approved by the Board and authorised for issue on 31 May
2012.
Paul Thomas
Director
The accompanying notes set out below form an integral part of
these Financial Statements.
Ventus 2 VCT plc. Registered No: 05667210
Group Statement of Changes in Equity
for the year ended 29 February 2012
Capital Capital Non-
Share Share Special reserve reserve Revenue controlling
capital premium reserve realised unrealised reserve interests Total
Ordinary
Shares GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 March
2011 6,134 7,890 7,803 (1,755) (1,842) 401 118 18,749
Cancellation
of share
premium
account - (7,890) 7,890 - - - -
Transfers
of unrealised
losses on
investments
to realised
losses on
investments - - - (2,797) 2,797 - - -
Loss and total
comprehensive
income for
the year - - - (4,815) 444 404 (259) (4,226)
Dividends
paid in the
year - - - - - (245) - (245)
-------------- ---------- -------- ------------- ----------- -------- ------------ ---------
At 29 February
2012 6,134 - 15,693 (9,367) 1,399 560 (141) 14,278
-------------- ---------- -------- ------------- ----------- -------- ------------ ---------
Capital Capital Non-
Share Share Special reserve reserve Revenue controlling
capital premium reserve realised unrealised reserve interests Total
"C" Shares GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 March
2011 2,832 7,874 - (270) - 32 - 10,468
Cancellation
of share
premium
account - (7,874) 7,874 - - - - -
Profit and
total
comprehensive
income for
the year - - - (167) - 226 - 59
Dividends
paid in the
year - - - - - (113) - (113)
-------------- ---------- -------- ------------- ----------- -------- ------------ ---------
At 29 February
2012 2,832 - 7,874 (437) - 145 - 10,414
-------------- ---------- -------- ------------- ----------- -------- ------------ ---------
Capital Capital Non-
Share Share Special reserve reserve Revenue controlling
capital premium reserve realised unrealised reserve interests Total
Total GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 March
2011 8,966 15,764 7,803 (2,025) (1,842) 433 118 29,217
Cancellation
of share
premium
account - (15,764) 15,764 - - - - -
Transfers
of unrealised
losses on
investments
to realised
losses on
investments - - - (2,797) 2,797 - - -
Loss and total
comprehensive
income for
the year - - - (4,982) 444 630 (259) (4,167)
Dividends
paid in the
year - - - - - (358) - (358)
-------------- ---------- -------- ------------- ----------- -------- ------------ ---------
At 29 February
2012 8,966 - 23,567 (9,804) 1,399 705 (141) 24,692
============== ========== ======== ============= =========== ======== ============ =========
The accompanying notes set out below form an integral part of
these Financial Statements.
Group Statement of Changes in Equity
for the year ended 28 February 2011
Capital Capital Non-
Share Share Special reserve reserve Revenue controlling
capital premium reserve realised unrealised reserve interests Total
Ordinary
Shares GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 March
2010 3,071 658 7,803 (651) (558) 33 - 10,356
Shares issued
in the year 3,063 7,232 - - - - - 10,295
Change in
equity
arising
from
acquisition
of
subsidiaries - - - - - 2 118 120
Loss and total
comprehensive
income for
the year - - - (1,104) (1,284) 734 - (1,654)
Dividends
paid in the
year - - - - - (368) - (368)
--------- --------- --------- ------------- ------------ --------- ------------ --------------
At 28 February
2011 6,134 7,890 7,803 (1,755) (1,842) 401 118 18,749
--------- --------- --------- ------------- ------------ --------- ------------ --------------
Capital Capital Non-
Share Share Special reserve reserve Revenue controlling
capital premium reserve realised unrealised reserve interests Total
"C" Shares GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 March
2010 1,731 4,813 - (104) - (59) - 6,381
Shares issued
in the year 1,101 3,303 - - - - - 4,404
Issue costs - (242) - - - - - (242)
Loss and total
comprehensive
income for
the year - - - (166) - 91 - (75)
--------- --------- --------- ------------- ------------ --------- ------------ --------------
At 28 February
2011 2,832 7,874 - (270) - 32 - 10,468
--------- --------- --------- ------------- ------------ --------- ------------ --------------
Capital Capital Non-
Share Share Special reserve reserve Revenue controlling
capital premium reserve realised unrealised reserve interests Total
Total GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 March
2010 4,802 5,471 7,803 (755) (558) (26) - 16,737
Shares issued
in the year 4,164 10,535 - - - - - 14,699
Issue costs - (242) - - - - - (242)
Change in
equity
arising
from
acquisition
of
subsidiaries - - - - - 2 118 120
Loss and total
comprehensive
income for
the year - - - (1,270) (1,284) 825 - (1,729)
Dividends
paid in the
year - - - - - (368) - (368)
--------- --------- --------- ------------- ------------ --------- ------------ --------------
At 28 February
2011 8,966 15,764 7,803 (2,025) (1,842) 433 118 29,217
========= ========= ========= ============= ============ ========= ============ ==============
The accompanying notes set out below form an integral part of
these Financial Statements.
Company Statement of Changes in Equity
for the year ended 29 February 2012
Capital Capital
Share Share Special reserve reserve Revenue
capital premium reserve realised unrealised reserve Total
Ordinary
Shares GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 March
2011 6,134 7,890 7,803 (1,755) (1,842) 399 18,629
Cancellation
of share
premium account - (7,890) 7,890 - - - -
Transfers
of unrealised
losses on
investments
to realised
losses on
investments - - - (2,797) 2,797 - -
Loss and
total comprehensive
income for
the year - - - (4,821) 444 420 (3,957)
Dividends
paid in the
year - - - - - (245) (245)
--------- ---------- --------- ---------- ------------ --------- ---------
At 29 February
2012 6,134 - 15,693 (9,373) 1,399 574 14,427
--------- ---------- --------- ---------- ------------ --------- ---------
Capital Capital
Share Share Special reserve reserve Revenue
capital premium reserve realised unrealised reserve Total
"C" Shares GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 March
2011 2,832 7,874 - (270) - 32 10,468
Cancellation
of share
premium account - (7,874) 7,874 - - - -
Profit and
total comprehensive
income for
the year - - - (167) - 226 59
Dividends
paid in the
year - - - - - (113) (113)
--------- ---------- --------- ---------- ------------ --------- ---------
At 29 February
2012 2,832 - 7,874 (437) - 145 10,414
--------- ---------- --------- ---------- ------------ --------- ---------
Capital Capital
Share Share Special reserve reserve Revenue
capital premium reserve realised unrealised reserve Total
Total GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 March
2011 8,966 15,764 7,803 (2,025) (1,842) 431 29,097
Cancellation
of share
premium account - (15,764) 15,764 - - - -
Transfers
of unrealised
losses on
investments
to realised
losses on
investments - - - (2,797) 2,797 - -
Loss and
total comprehensive
income for
the year - - - (4,988) 444 646 (3,898)
Dividends
paid in the
year - - - - - (358) (358)
--------- ---------- --------- ---------- ------------ --------- ---------
At 29 February
2012 8,966 - 23,567 (9,810) 1,399 719 24,841
========= ========== ========= ========== ============ ========= =========
All amounts presented in the Statement of Changes in Equity are
attributable to equity holders. The reserves available for
distribution comprise the revenue reserve. The special reserve may
be used to fund buy-backs of shares as and when it is considered by
the Board to be in the interests of the shareholders.
The accompanying notes set out below form an integral part of
these Financial Statements.
Company Statement of Changes in Equity
for the year ended 28 February 2011
Capital Capital
Share Share Special reserve reserve Revenue
capital premium reserve realised unrealised reserve Total
Ordinary
Shares GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 March
2010 3,071 658 7,803 (651) (558) 33 10,356
Shares issued
in the year 3,063 7,232 - - - - 10,295
Loss and
total comprehensive
income for
the year - - - (1,104) (1,284) 734 (1,654)
Dividends
paid in the
year - - - - - (368) (368)
--------- --------- --------- ---------- ------------ --------- --------
At 28 February
2011 6,134 7,890 7,803 (1,755) (1,842) 399 18,629
--------- --------- --------- ---------- ------------ --------- --------
Capital Capital
Share Share Special reserve reserve Revenue
capital premium reserve realised unrealised reserve Total
"C" Shares GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 March
2010 1,731 4,813 - (104) - (59) 6,381
Shares issued
in the year 1,101 3,303 - - - - 4,404
Issue costs - (242) - - - - (242)
Loss and
total comprehensive
income for
the year - - - (166) - 91 (75)
--------- --------- --------- ---------- ------------ --------- --------
At 28 February
2011 2,832 7,874 - (270) - 32 10,468
--------- --------- --------- ---------- ------------ --------- --------
Capital Capital
Share Share Special reserve reserve Revenue
capital premium reserve realised unrealised reserve Total
Total GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 March
2010 4,802 5,471 7,803 (755) (558) (26) 16,737
Shares issued
in the year 4,164 10,535 - - - - 14,699
Issue costs - (242) - - - - (242)
Loss and
total comprehensive
income for
the year - - - (1,270) (1,284) 825 (1,729)
Dividends
paid in the
year - - - - - (368) (368)
--------- --------- --------- ---------- ------------ --------- --------
At 28 February
2011 8,966 15,764 7,803 (2,025) (1,842) 431 29,097
========= ========= ========= ========== ============ ========= ========
All amounts presented in the Statement of Changes in Equity are
attributable to equity holders. The reserves available for
distribution comprise the revenue reserve. The special reserve may
be used to fund buy-backs of shares as and when it is considered by
the Board to be in the interests of the shareholders.
The accompanying notes set out below form an integral part of
these Financial Statements.
Group Statement of Cash Flows
for the year ended 29 February 2012
Year ended 29 Year ended 28
February 2012 February 2011
Reclassified
Ordinary "C" Ordinary "C"
Shares Shares Total Shares Shares Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cash flows from
operating activities
Investment income
received 683 113 796 751 14 765
Deposit interest
received 2 25 27 2 34 36
Investment management
fees paid (252) (259) (511) (443) (254) (697)
Other cash payments (538) (116) (654) (482) (118) (600)
--------------- ------------- -------- --------- -------- -------------
Net cash used in
operations (105) (237) (342) (172) (324) (496)
Taxes (paid)/ received (4) 4 - - - -
Net cash outflow
from operating
activities (109) (233) (342) (172) (324) (496)
--------------- ------------- -------- --------- -------- -------------
Cash flows from
investing activities
Purchases of development
wind assets (49) - (49) (33) - (33)
Purchases of investments (70) (5,298) (5,368) (1,572) (4,010) (5,582)
Proceeds from investments 40 1,075 1,115 850 375 1,225
Net cash outflow
from investing
activities (79) (4,223) (4,302) (755) (3,635) (4,390)
--------------- ------------- -------- --------- -------- -------------
Cash flows from
financing activities
Dividends paid (245) (113) (358) (368) - (368)
Loan financing 391 - 391 40 - 40
"C" shares issued - - - - 3,960 3,960
"C" share issue
costs - - - - (242) (242)
Cash received on
acquisition of
net assets from
Ventus 3 VCT plc - - - 639 - 639
Stamp duty on shares
issued to acquire
net assets of Ventus
3 VCT plc - - - (22) - (22)
Payments to meet
Ventus 3 VCT plc
costs - - - (62) - (62)
Net cash inflow/
(outflow) from
financing activities 146 (113) 33 227 3,718 3,945
--------------- ------------- -------- --------- -------- -------------
Net decrease in
cash and cash equivalents (42) (4,569) (4,611) (700) (241) (941)
Cash and cash equivalents
at the beginning
of the year 664 6,254 6,918 1,364 6,495 7,859
--------------- ------------- -------- --------- -------- -------------
Cash and cash equivalents
at the end of the
year 622 1,685 2,307 664 6,254 6,918
=============== ============= ======== ========= ======== =============
The accompanying notes set out below form an integral part of
these Financial Statements.
Company Statement of Cash Flows
for the year ended 29 February 2012
Year ended 29 Year ended 28
February 2012 February 2011
Ordinary "C" Ordinary "C"
Shares Shares Total Shares Shares Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cash flows from
operating activities
Investment income
received 683 113 796 751 14 765
Deposit interest
received 2 25 27 2 34 36
Investment management
fees paid (252) (259) (511) (443) (254) (697)
Other cash payments (408) (116) (524) (449) (118) (567)
--------- -------- -------- --------- -------- --------
Net cash (used
in)/ generated
from operations 25 (237) (212) (139) (324) (463)
Taxes (paid)/ received (4) 4 - - - -
Net cash (outflow)/
inflow from operating
activities 21 (233) (212) (139) (324) (463)
--------- -------- -------- --------- -------- --------
Cash flows from
investing activities
Purchases of investments (165) (5,298) (5,463) (1,632) (4,010) (5,642)
Proceeds from investments 40 1,075 1,115 850 375 1,225
Net cash outflow
from investing
activities (125) (4,223) (4,348) (782) (3,635) (4,417)
--------- -------- -------- --------- -------- --------
Cash flows from
financing activities
Dividends paid (245) (113) (358) (368) - (368)
Loan financing 327 - 327 - - -
"C" shares issued - - - - 3,960 3,960
"C" share issue
costs - - - - (242) (242)
Cash received on
acquisition of
net assets from
Ventus 3 VCT plc - - - 639 - 639
Stamp duty on shares
issued to acquire
net assets of Ventus
3 VCT plc - - - (22) - (22)
Payments to meet
Merger costs - - - (62) - (62)
Net cash inflow/
(outflow) from
financing activities 82 (113) (31) 187 3,718 3,905
--------- -------- -------- --------- -------- --------
Net decrease in
cash and cash equivalents (22) (4,569) (4,591) (734) (241) (975)
Cash and cash equivalents
at the beginning
of the year 630 6,254 6,884 1,364 6,495 7,859
--------- -------- -------- --------- -------- --------
Cash and cash equivalents
at the end of the
year 608 1,685 2,293 630 6,254 6,884
========= ======== ======== ========= ======== ========
The accompanying notes set out below form an integral part of
these Financial Statements.
Notes to the Financial Statements
for the year ended 29 February 2012
1. Accounting policies
Accounting convention
The Financial Statements of the Company and the Group have been
prepared in accordance with International Financial Reporting
Standards ("IFRS"), to the extent that they have been adopted by
the European Union and with those parts of the Companies Act 2006
applicable to companies under IFRS.
The Financial Statements have been prepared on the historical
cost basis, as modified for the measurement of certain financial
instruments at fair value through profit or loss. The principal
accounting policies adopted are set out below. Where presentational
guidance set out in the Statement of Recommended Practice
"Financial Statements of Investment Trust Companies and Venture
Capital Trusts" 2009 ("SORP") is consistent with the requirements
of IFRS, the Directors have sought to prepare the Financial
Statements on a basis compliant with the recommendations of the
SORP.
On publishing the Company Financial Statements here together
with the Group Financial Statements the Company is taking advantage
of the exemption in section 408 of the Companies Act 2006 not to
present its individual Statement of Comprehensive Income and
related notes that form part of these approved financial
statements.
Changes in accounting policy and disclosure
The accounting policies adopted are consistent with those of the
previous financial year, with the exception of the reclassification
of the Group Statement of Financial Position as at 28 February 2011
as explained further in notes 11 and 12.
Standards and interpretations have been issued which will be
effective for future reporting periods but have not been early
adopted in these Financial Statements. These include IFRS 9, IAS
12, IFRS 10, IFRS 11, IFRS 12, IFRS 13, IAS 27, IAS 28, IAS 19,
IAS1, IFRS 7/IAS 2 and IFRIC 20.
Basis of consolidation
The Group financial statements consolidate the financial
statements of the Company and its subsidiaries (the companies over
which it exercises control) made up to the end of the financial
period. The Company is deemed to have control where it has the
power to govern the financial and operating policies of an investee
company so as to obtain benefits from its activities. In the
Company's financial statements investments in subsidiaries are
accounted for as "fair value through profit or loss" investments in
accordance with the Company's valuation policy. The Company's
shareholding in its subsidiaries is held by the ordinary share
fund.
Business combinations
Newly acquired or newly established businesses are recognised in
the Group Financial Statements from the date of acquisition, which
is the date that the Company achieved control over the business
acquired and are subsequently de-recognised from the date that
control ceases.
The Company accounts for business combinations using the
acquisition method of accounting, with the identifiable assets and
liabilities of acquired entities measured at their fair value at
the time of acquisition. Identifiable intangible assets are
recognised where they can be separated or arise from a contractual
right, and their fair value can be reliably measured.
The difference between the fair value of previously held equity
stakes of the business acquired and the fair value of the
identifiable assets and liabilities is recognised as goodwill or
negative goodwill at the date of acquisition. Goodwill is not
amortised but is tested for impairment annually and whenever
impairment indicators require. Negative goodwill is recognised
immediately in the Statement of Comprehensive Income.
Impairment testing
The carrying amount of the Group's and the Company's assets,
other than those assets held at fair value through profit and loss,
are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be
recoverable. If there is evidence of impairment, the recoverable
amount, being the higher of the fair value less costs to sell and
the value in use of the asset, is estimated to determine the extent
of any such impairment. For goodwill and other intangible assets
with an indefinite life or which are not ready for use, the test
for impairment is carried out annually.
Income
Income on investments is stated on an accruals basis, by
reference to the principal outstanding and at the effective
interest rates applicable.
Where contractual arrangements in loan agreements allow for
interest payments to be deferred and the timing of receipt of
interest income may not be determined with reasonable certainty,
the accrued interest is not presented as revenue in the Statement
of Comprehensive Income but is added to the carrying value of the
loan investment. Interest receivable on cash and non-equity
investments is accrued to the end of the period. No tax is withheld
at source on interest income.
Dividend income from investments is recognised when the
shareholders' rights to receive payment have been established,
which is normally the ex-dividend date.
Expenses
All expenses are accounted for on an accruals basis. In respect
of the analysis between revenue and capital items presented within
the Statement of Comprehensive Income, all expenses have been
presented as revenue items except when expenses are split and
charged partly as capital items where a connection with the
maintenance or enhancement of the value of the investments held can
be demonstrated. The investment management fee has been allocated
25% to revenue and 75% to capital, in order to reflect the
Directors' expected long-term view of the nature of the investment
returns of the Company.
Expenses are allocated between the ordinary and "C" share funds
on the basis of the number of shares in issue during the period,
except expenses which are directly attributable to a particular
share fund.
Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from profit before tax as reported in
the Statement of Comprehensive Income because it excludes items of
income or expense that are taxable or deductible in other periods
and it further excludes items that are never taxable or deductible.
The Company's liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the
balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets or liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
recognised for all taxable temporary differences and deferred tax
assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible
temporary differences can be utilised.
Due to the Company's status as a Venture Capital Trust, no
provision for deferred taxation is required in respect of any
realised or unrealised appreciation in the Company's
investments.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates enacted or
substantively enacted at the balance sheet date. Deferred tax is
charged or credited in the Statement of Comprehensive Income,
except when it relates to items charged or credited directly to
equity, in which case the deferred tax is also dealt with in
equity.
Development wind assets
Costs incurred in the pre-planning consent phase of the
development of a wind farm scheme are capitalised as intangible
assets and recognised as development wind assets. Costs associated
with the pre-planning phase of the wind farm development include
options over land leases, planning application costs and
environmental impact studies. These costs may be incurred directly
or comprise part of the fair value attributed to a controlling
interest in a business acquired. The capitalised costs are not
amortised until the asset is substantially complete and available
for its intended use, until which time the asset is subject to an
annual impairment test.
When a consented wind farm scheme begins construction, the
carrying value of the project is transferred to property, plant and
equipment as assets under construction.
Financial Instruments
Financial assets and financial liabilities are recognised on the
Company's Statement of Financial Position when the Company has
become a party to the contractual provisions of each
instrument.
Trade and other receivables
Trade and other receivables are initially recognised at fair
value. They are subsequently measured at their amortised cost using
the effective interest method less any provision for impairment. A
provision for impairment is made where there is objective evidence
(including counterparties with financial difficulties or in default
on payments) that amounts will not be recovered in accordance with
original terms of the agreement. A provision for impairment is
established when the carrying value of the receivable exceeds the
present value of the future cash flows discounted using the
original effective interest rate. The carrying value of the
receivable is reduced through the use of an allowance account and
any impairment loss is recognised in the Statement of Comprehensive
Income.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and at bank and
other short-term deposits held by the Company with maturities of
less than three months. These short-term deposits are classified
under cash equivalents as they meet the definition in IAS 7 "Cash
Flow Statements" of a short-term highly liquid investment that is
readily convertible into known amounts of cash and subject to
insignificant risk of change in value.
Financial liabilities and equity
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a
residual interest in the assets of the Company after deducting all
of its liabilities.
Loans, trade and other payables
Trade and other payables are initially recognised at fair value
and subsequently at amortised cost using the effective interest
method.
Equity instruments
Equity instruments issued by the Company are recorded at the
proceeds received amount, net of direct issue costs.
Special reserve
The special reserve was created by approval of the High Court to
cancel the Company's share premium account in respect of the shares
issued. The special reserve may be used to fund buy-backs of shares
as and when it is considered by the Board to be in the interests of
the shareholders.
Capital reserve - realised
This reserve includes gains and losses compared to cost on the
realisation of investments and expenses, together with the related
taxation effect, allocated to this reserve in accordance with the
above policy on expenses.
Capital reserve - unrealised
This reserve includes increases and decreases in the valuation
of investments held at fair value.
Investments
As the Company's business is investing in financial assets with
a view to profiting from their total return in the form of
interest, dividends and increases in fair value, all investments,
including investments in subsidiaries, are designated as "fair
value through profit or loss" on initial recognition. A financial
asset is designated within this category if it is acquired, managed
and evaluated on a fair value basis in accordance with the
Company's documented investment policy. In the year of acquisition,
investments are initially measured at cost, which is considered to
be their fair value. Thereafter, the investments are measured at
subsequent reporting dates on a fair value basis in accordance with
IFRS. Gains or losses resulting from revaluation of investments are
taken to the capital account of the Statement of Comprehensive
Income.
Investments in unquoted companies and equity based derivatives
are valued in accordance with International Private Equity and
Venture Capital Valuation Guidelines, using the most appropriate
valuation methodology as determined by the Board. Where there has
been a recent arm's length transaction between knowledgeable,
willing parties, the "price of recent investment" methodology is
used to determine the value of the investment. In the absence of a
recent market transaction, unquoted investee companies with
renewable energy generating plant constituting a substantial
portion of their assets and which have proved stable operational
performance for an acceptable period of time are valued using the
discounted future cash flows from the underlying business,
excluding interest accrued in the accounts to date. The period of
time to assess stable operational performance will vary depending
on the nature of the renewable energy technology that the investee
company uses, but is typically between 6 and 18 months following
completion of the construction phase. Investments in unquoted
companies which have not demonstrated stable operational
performance will be valued using the "price of recent investment"
methodology, reviewed for impairment. Notwithstanding the above,
the Board may determine that an alternative methodology should be
used where this more appropriately reflects the fair value of an
investment.
When an investee company has gone into receivership or
liquidation or where there is no reasonable prospect of the
investment recovering its value, the investment cost, although
physically not disposed of, is treated as being realised.
The Company has taken the exemption, available to venture
capital organisations under IAS 28 Investments in Associates and
IAS 31 Interests in Joint Ventures, from equity accounting for
investments where it has significant influence or joint
control.
The majority of money held pending investment is invested in
financial instruments with same day or two-day access and as such
is treated as cash and cash equivalents.
Key assumptions and key sources of estimation uncertainty
The preparation of the financial statements requires the
application of estimates and assumptions which may affect the
results reported in the financial statements. Estimates, by their
nature, are based on judgement and available information. The
estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying value of assets and liabilities
are those used to determine the fair value of assets which are
designated as "fair value through profit or loss".
The key assumptions that have a significant impact on fair value
in the discounted cash flow valuations are the discount factor
used, the price at which the power and associated benefits can be
sold and the amount of electricity the investee companies'
generating assets are expected to produce. The discount factor
applied to the cash flows is regularly reviewed by the Investment
Committee of the Investment Manager to ensure it is set at the
appropriate level. The Investment Committee and the Board will also
give consideration to the specific performance characteristics of
the particular type of generating technology being used. The price
at which the output from the generating assets is sold is a factor
of both wholesale electricity prices and government subsidies. The
selling price is often fixed in the medium term under power
purchase agreements. For periods outside the term of these
agreements the assumed future prices are estimated using external
third party forecasts which take the form of specialist consultancy
reports. Specifically commissioned external consultant reports are
also used to estimate the expected electrical output from the
investee company's generating assets taking into account their type
and location. All of these key assumptions are reviewed regularly
by the Investment Committee of the Investment Manager and the
Board.
Dividends payable
Dividends payable are recognised as distributions in the
financial statements when the Company's liability to make payment
has been established.
Segmental Reporting
The Directors consider that the Company has engaged in a single
operating segment as reported to the chief operating decision maker
which is that of investing in equity and debt. The chief operating
decision maker is considered to be the Board.
2. Income
Group
Year ended 29 February 2012
Ordinary
Shares "C" Shares Total
GBP000 GBP000 GBP000
Income from investments
Loan stock interest 790 418 1,208
Dividend income 55 - 55
---------- ----------- -------
845 418 1,263
Other income
UK treasury bill
income - 6 6
Bank deposit interest 2 18 20
847 442 1,289
========== =========== =======
Group
Year ended 28 February 2011
Ordinary
Shares "C" Shares Total
GBP000 GBP000 GBP000
Income from investments
Loan stock interest 696 227 923
Dividend income 428 - 428
---------- ----------- -------
1,124 227 1,351
Other income
UK treasury bill
income - 24 24
Bank deposit interest 3 11 14
1,127 262 1,389
========== =========== =======
The income recognised by the Group was wholly derived from the
Company's activities.
3. Investment management fees
Group
Year ended 29 February
2012
Ordinary
Shares "C" Shares Total
GBP000 GBP000 GBP000
Investment management
fees 252 259 511
========= =========== =======
Year ended 28 February
2011
Ordinary
Shares "C" Shares Total
GBP000 GBP000 GBP000
Investment management
fees 472 254 726
========= =========== =======
The Investment Manager is entitled to an annual fee equal to
2.5% of the Company's net asset value ("NAV"). This fee is
exclusive of VAT and is paid quarterly in advance. The fee covers
the provision by the Investment Manager of investment management
services as well as all accounting and administrative services
together with the additional annual trail commission payable to
authorised financial intermediaries. Total annual running costs are
in aggregate capped at 3.6% of NAV (excluding the Investment
Manager's performance-related incentive fee, any irrecoverable VAT,
Merger costs and investment costs), with any excess being borne by
the Investment Manager.
The Investment Manager will receive a performance-related
incentive fee subject to the Company achieving certain defined
targets. No incentive fee will be payable until the Company has
provided a cumulative return to investors in the form of growth in
NAV plus payment of dividends ("the Return") of 60p per share.
Thereafter, the incentive fee, which is payable in cash, is
calculated as 20% of the amount by which the Return in any
accounting period exceeds 7p per share. The incentive fee is
exclusive of VAT.
Temporis Capital LLP was appointed as Investment Manager on 12
September 2011 and Climate Change Capital Limited's appointment as
Investment Manager was terminated on the same day with no notice
period. The investment management agreement with Temporis Capital
LLP may be terminated on 12 months' notice, given at any time after
12 September 2014. The terms of the new Investment Management
Agreement remain substantially the same as previous agreement.
Temporis Capital LLP agreed to waive investment management fees
payable by the Company's ordinary share fund in the amount of
GBP530,000 from 12 September 2011 until the end of the period over
which such amount would have otherwise accrued. Therefore the
amount paid to Temporis Capital LLP during the year in respect of
net asset value attributable to ordinary shareholders was nil when
it would otherwise have been GBP203,000 had the investment
management fees not been waived.
The amount paid to Temporis Capital LLP, during the year in
respect of the net assets attributable to the "C" shareholders was
GBP128,000.
During the year, the amount paid to the previous Investment
Manager, Climate Change Capital Limited, in respect of net asset
value attributable to ordinary shareholders was GBP252,000 and the
amount paid to the previous Investment Manager in respect of the
net assets attributable to the "C" shareholders was GBP131,000.
4. Other expenses
Group
Year ended 29 February
2012
Ordinary
Shares "C" Shares Total
GBP000 GBP000 GBP000
Revenue expenses:
Directors' remuneration
(note 5) 45 20 65
Fees payable to the
Company's Auditor for:
- Audit of the Company's
Annual Financial Statements 18 8 26
- The auditing of accounts
of associates of the
Company pursuant to
legislation 13 - 13
- Other services relating
to taxation 2 1 3
- Other services pursuant
to legislation 8 3 11
Legal and professional
fees 37 10 47
Other revenue expenses 130 52 182
--------- ----------- -------
253 94 347
Capital expenses:
Development funding
costs 279 - 279
Impairment of development
wind assets 342 - 342
Investment costs 54 65 119
928 159 1,087
========= =========== =======
Group
Year ended 28 February
2011
Ordinary
Shares "C" Shares Total
GBP000 GBP000 GBP000
Directors' remuneration
(note 5) 38 20 58
Fees payable to the
Company's Auditor for:
- Audit of the Company's
Annual Financial Statements 17 10 27
- Other services relating
to taxation 2 1 3
- Other services pursuant
to legislation 5 3 8
Legal and professional
fees 13 6 19
Other expenses 79 43 122
--------- ----------- -------
154 83 237
Capital expenses:
Investment costs 42 - 42
196 83 279
========= =========== =======
The audit of the Company's annual accounts includes an
additional amount charged in respect of prior year overrun. Other
services relating to taxation were in respect of tax services
provided by the Company's Auditor relating to corporation tax
compliance. Other services pursuant to legislation provided by the
Company's Auditor related to the review of the Half-yearly
Report.
The investment costs incurred by the ordinary share fund during
the year were incidental to the Company's investments in the
investee companies that were developing waste wood biomass
generators. The investment costs incurred by the "C" share fund
during the year were in respect of the preparation of a planning
application for an investment which did not proceed and incidental
legal costs incurred in respect of investments and prospective
investments. The investment costs incurred during the prior year
were in respect of a planning application for an investment which
did not proceed.
5. Directors' remuneration
Group
Year ended 29 February
2012
Ordinary
Shares "C" Shares Total
GBP000 GBP000 GBP000
A Moore 17 8 25
P Thomas 14 6 20
C Wood 14 6 20
Aggregate emoluments 45 20 65
========= ======================= ======================
Group
Year ended 28 February
2011
Ordinary
Shares "C" Shares Total
GBP000 GBP000 GBP000
D Pinckney 3 2 5
A Moore 13 7 20
P Thomas 11 6 17
C Wood 11 5 16
Aggregate emoluments 38 20 58
========= ======================= ======================
Further details regarding Directors' remuneration are disclosed
in the Directors' Remuneration Report above.
The Group had no employees other than the Directors.
6. Taxation
Group
Year ended 29 February
2012
Ordinary "C"
Shares Shares Total
GBP000 GBP000 GBP000
(a) Tax charge/ (credit)
for the year
Current UK corporation tax:
Charged to revenue reserve 137 57 194
Credited to capital reserve (49) (92) (141)
88 (35) 53
(b) Factors affecting the tax charge/ (credit) for the year
(Loss)/ profit before taxation (3,515) 24 (3,491)
Tax credit calculated on loss before taxation at the applicable rate of 26% (914) 6 (908)
Effect of:
UK dividends not subject
to tax (14) - (14)
Capital losses not subject
to tax 827 - 827
Non-deductible revenue expenses 6 - 6
Non-deductible investment
costs 14 17 31
Tax losses brought forward - (58) (58)
Tax losses attributable to
subsidiaries 169 - 169
88 (35) 53
Group
Year ended 28 February 2011
Ordinary "C"
Shares Shares Total
GBP000 GBP000 GBP000
(a) Tax charge/ (credit)
for the year
Current UK corporation tax:
Charged to revenue reserve 90 24 114
Credited to capital reserve (90) (24) (114)
- - -
(b) Factors affecting the tax charge/ (credit) for the year
Loss before taxation (1,654) (75) (1,729)
Tax credit calculated on loss before taxation at the applicable rate of 21% (347) (16) (363)
Effect of:
UK dividends not subject
to tax (90) - (90)
Capital losses not subject
to tax 325 - 325
Non-deductible impairment
charge 111 - 111
Non-deductible merger costs 7 - 7
Non-deductible investment
costs 9 - 9
Tax losses brought forward (15) (31) (46)
Unrecognised deferred tax
asset - 47 47
- - -
No provision for deferred taxation has been made on potential
capital gains due to the Company's current status as a VCT under
section 274 of the ITA and the Directors' intention to maintain
that status. The Company intends to continue to meet the conditions
required to maintain its status as a VCT for the foreseeable
future.
7. Dividends
Ordinary Shares 2012 2011
GBP000 GBP000
Amounts recognised as distributions to ordinary shareholders in the year:
Previous year's final dividend of 1.00p per ordinary share (2011: nil) 245 -
Current year's interim dividend of nil per ordinary share (2011: 1.50p) - 368
245 368
The Directors recommend a final dividend of 2.30p per ordinary
share (2011: 1.00p) to be paid on 8 August 2012 to all ordinary
shareholders on the register as at the close of business on 13 July
2012. The proposed final dividend is subject to approval by the
shareholders at the AGM and has not been included as a liability in
these Financial Statements.
Ordinary Shares 2012 2011
GBP000 GBP000
Subject to approval of the final dividend, the total dividend to be paid to ordinary shareholders
in respect of the financial year is set out below:
Interim dividend for the year ended 29 February 2012 of nil per ordinary share (2011: 1.50p) - 368
Proposed final dividend for the year ended 29 February 2012 of 2.30p per ordinary share (2011:
1.00p) 562 245
562 613
"C" Shares 2012 2011
GBP000 GBP000
Amounts recognised as distributions to "C" shareholders in the year:
Previous year's final dividend of nil per "C" share (2011: nil) - -
Current year's interim dividend of 1.00p per "C" share (2011: nil) 113 -
113 -
The Directors recommend a final dividend of 1.00p per "C" share
(2011: nil) to be paid on 8 August 2012 to all "C" shareholders on
the register as at the close of business on 13 July 2012. The
proposed final dividend is subject to approval by the shareholders
at the AGM and has not been included as a liability in these
Financial Statements.
"C" Shares 2012 2011
GBP000 GBP000
Subject to approval of the final dividend, the total dividend to be paid to "C" shareholders
in respect of the financial year is set out below:
Interim dividend for the year ended 29 February 2012 of 1.00p per "C" share (2011: nil) 113 -
Proposed final dividend for the year ended 29 February 2012 of 1.00p per "C" share (2011:
nil) 113 -
226 -
8. Basic and diluted return per share
Group
For the year ended 29 February 2012 Ordinary Shares "C" Shares
Revenue return for the year p per share 1.66 1.99
Based on:
Revenue return for the year GBP'000 404 226
Weighted average number of shares in issue number of shares 24,537,560 11,329,107
Capital gain/(loss) for the year p per share (17.81) (1.48)
Based on:
Capital gain/(loss) for the year GBP'000 (4,371) (167)
Weighted average number of shares in issue number of shares 24,537,560 11,329,107
Net profit/(loss) for the year p per share (16.15) 0.51
Based on:
Net gain/(loss) for the year GBP'000 (3,967) 59
Weighted average number of shares in issue number of shares 24,537,560 11,329,107
Group
For the year ended 28 February 2011 Ordinary Shares "C" Shares
Revenue return for the year p per share 3.29 0.84
Based on:
Revenue return for the year GBP'000 734 91
Weighted average number of shares in issue number of shares 22,322,435 10,919,208
Capital gain/(loss) for the year p per share (10.70) (1.52)
Based on:
Capital gain/(loss) for the year GBP'000 (2,388) (166)
Weighted average number of shares in issue number of shares 22,322,435 10,919,208
Net profit/(loss) for the year p per share (7.41) (0.68)
Based on:
Net profit/(loss) for the year GBP'000 (1,654) (75)
Weighted average number of shares in issue number of shares 22,322,435 10,919,208
There is no difference between the basic return per ordinary
share and the diluted return per ordinary share or between the
basic loss per "C" share and the diluted loss per "C" share because
no dilutive financial instruments have been issued.
9. Investments
Group and Company Ordinary Shares "C" Shares Total
Year ended
29 February 2012 Shares Loan stock Total Shares Loan stock Total Shares Loan stock Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Opening position
Opening cost 10,242 8,242 18,484 900 3,060 3,960 11,142 11,302 22,444
Opening unrealised
(losses)/gains (2,233) 391 (1,842) - - - (2,233) 391 (1,842)
Closing realised
losses (266) (2) (268) - - - (266) (2) (268)
Opening fair value 7,743 8,631 16,374 900 3,060 3,960 8,643 11,691 20,334
During the year
Purchases at cost - 70 70 4,000 1,298 5,298 4,000 1,368 5,368
Disposal proceeds - (40) (40) - (1,075) (1,075) - (1,115) (1,115)
Realised losses (2,546) (1,703) (4,249) - - - (2,546) (1,703) (4,249)
Unrealised
gains/(losses) 937 (493) 444 - - - 937 (493) 444
Closing fair value 6,134 6,465 12,599 4,900 3,283 8,183 11,034 9,748 20,782
Closing position
Closing cost 10,242 8,272 18,514 4,900 3,283 8,183 15,142 11,555 26,697
Closing realised
losses (5,904) (1,410) (7,314) - - - (5,904) (1,410) (7,314)
Closing unrealised
gains/(losses) 1,796 (397) 1,399 - - - 1,796 (397) 1,399
Closing fair value 6,134 6,465 12,599 4,900 3,283 8,183 11,034 9,748 20,782
During the year unrealised losses of GBP2,797,000 were
transferred to realised losses in respect of investments held by
the ordinary share fund at the year end but considered unlikely to
recover in value as noted in the Investment Manager's Report.
Group and Company Ordinary Shares "C" Shares Total
Non-current
Year ended
28 February 2011 Shares Loan stock Total Shares Loan stock Total Shares Loan stock Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Opening position
Opening cost 5,345 3,647 8,992 - 325 325 5,345 3,972 9,317
Opening unrealised
(losses)/gains (611) 53 (558) - - - (611) 53 (558)
Opening fair value 4,734 3,700 8,434 - 325 325 4,734 4,025 8,759
During the year
Investments transferred from
Ventus 3 VCT plc 4,891 3,879 8,770 - - - 4,891 3,879 8,770
Purchases at cost 406 1,166 1,572 900 3,110 4,010 1,306 4,276 5,582
Disposal proceeds (400) (450) (850) - (375) (375) (400) (825) (1,225)
Realised losses (266) (2) (268) - - - (266) (2) (268)
Unrealised (losses)/gains (1,622) 338 (1,284) - - - (1,622) 338 (1,284)
Closing fair value 7,743 8,631 16,374 900 3,060 3,960 8,643 11,691 20,334
Closing position
Closing cost 10,242 8,242 18,484 900 3,060 3,960 11,142 11,302 22,444
Closing realised losses (266) (2) (268) - - - (266) (2) (268)
Closing unrealised
(losses)/gains (2,233) 391 (1,842) - - - (2,233) 391 (1,842)
Closing fair value 7,743 8,631 16,374 900 3,060 3,960 8,643 11,691 20,334
The shares held by the Group and Company are in unquoted UK
companies and equity based derivatives. The Investment Manager's
Report above provides details in respect of the Company's
shareholding in each investment together with details of loans
issued.
Through development funding agreements entered into by Redeven
Energy Limited, the Company holds the right to invest in companies
which hold lease options on sites for which Redeven Energy Limited
obtains planning permission. The Investment Manager's Report
provides further details in respect of this investment. The value
of the ordinary share fund's investments in shares includes the
value attributed to Redeven Energy Limited, which derives from the
value of the investment rights attached to the development funding
agreements.
Under IFRS 7, the Company is required to report the category of
fair value measurements used in determining the value of its
investments, to be disclosed by the source of inputs, using a
three-level hierarchy:
-- Quoted prices (unadjusted) in active markets for identical
assets or liabilities (Level 1);
-- Those involving inputs other than quoted prices included in
Level 1 that are observable for the asset or liability, either
directly (as prices) or indirectly (derived from prices) (Level 2);
and
-- Those with inputs for the instrument that are not based on
observable market data (unobservable inputs) (Level 3).
As at 29 February 2012, each of the Company's investments held
was valued using inputs which are considered to be Level 3 inputs
and a reconciliation of the movements is in the table above.
The Board has considered the key assumptions which may affect
the results reported in the financial statements and the Company is
further required to disclose the effect of changing one or more
inputs with reasonable alternative assumptions where a significant
change to the fair value measurement would result.
The key assumptions that have a significant impact on the
valuations are valued using the discounted future cash flows are
the discount factor used, the price at which power and associated
benefits may be sold and the level of electricity the investee
companies' generating assets are likely to produce.
The Board has determined that a reasonable alternative
assumption may be made in respect of the discount factors applied;
the sensitivity of the value of the portfolio to the application of
an increase or decrease in discount factors is set out below.
The investment portfolio has been reviewed for the effect of
alternative valuation inputs, namely the sensitivity of the total
value of all investments to a 1% increase or decrease in the
discount factors applied to the valuation models which have been
valued using the discounted future cash flows from the underlying
business. The application of the upside alternative discount factor
would have resulted in the total value of all investments having
been GBP496,000 or 3.8% higher. The application of the downside
alternative discount factor would have resulted in the total value
of all investments having been GBP439,000 or 3.4% lower.
The future price at which power and associated benefits may be
sold is estimated using forecasts produced by third party industry
experts and, in the case of the wind energy assets, the energy
yield is determined by wind yield analyses also prepared by third
party industry experts. The Directors do not believe there are
reasonable alternative assumptions available for these inputs at
the current time.
10. Investments in subsidiaries The details of the Company's subsidiary undertakings are set out below both of which are held by the ordinary share fund only:
Portion of Portion of
Subsidiary undertaking Country of incorporation voting rights voting rights Principal activity
As at As at
29 February 2012 28 February 2011
Management of planning
applications for wind
Redeven Energy Limited England 60% 60% farms
Spurlens Rig Wind Limited England 60% 60% Wind farm development
Ordinary Shares
Year ended 29 February 2012 Shares Shareholder loans Total
GBP000 GBP000 GBP000
Opening position
Opening cost and fair value 174 558 732
During the year
Purchases at cost - 95 95
Realised loss (174) (204) (378)
Closing fair value - 449 449
Closing position
Closing cost 174 653 827
Closing realised losses (174) (204) (378)
Closing fair value - 449 449
Ordinary Shares
Year ended 28 February 2011 Shares Shareholder loans Total
GBP000 GBP000 GBP000
During the year
Investments held by the Company becoming subsidiaries by virtue of the Merger 87 249 336
Investments transferred from Ventus 3 VCT plc 87 249 336
Purchases at cost - 60 60
Closing fair value 174 558 732
Closing position
Closing cost 174 558 732
Closing fair value 174 558 732
During the year, both Redeven Energy Limited and Spurlens Rig
Wind Limited changed their accounting year ends to 29 February in
order to coincide with the Group's financial year end.
11. Development wind assets Development wind assets comprise capitalised costs incurred in the pre-planning phase of the development of wind farm schemes. The development wind assets are held by one of the Company's subsidiary undertakings which is held by the ordinary share fund only. The carrying value of the Group's development wind assets has been adjusted in respect of the prior periods to account for a reclassification to trade and other receivables in respect of recoverable development funding costs incurred by Redeven Energy Limited as this company does not hold the investment rights in projects directly (refer to note 12). The development wind assets held by Spurlens Rig Wind Limited were impaired during the year as the planning application submitted by this company was rejected.
Year ended 29 February 2012 Ordinary Shares
GBP000
Opening position
Gross carrying amount 1,096
Opening value 1,096
Reclassification to trade and other receivables (803)
Opening value (reclassified) 293
During the year
Purchases at cost 49
Impairment charges (342)
Closing value -
Closing position
Gross carrying amount 342
Accumulated impairment (342)
Closing value -
Year ended 28 February 2011 Ordinary Shares
GBP000
Opening position
Gross carrying amount -
Opening value -
During the year
Assets acquired or recognised through business combinations 1,006
Purchases at cost 90
Reclassification to trade and other receivables (803)
Closing value 293
Closing position
Gross carrying amount 293
Closing value (reclassified) 293
12. Trade and other receivables
The carrying value of the Group's trade and other receivables as
at 28 February 2011 has been adjusted to take account of a
reclassification from development wind assets to other receivables
in respect of development funding costs incurred by the Company's
subsidiary, Redeven Energy Limited, as this company does not hold
the investment rights in the projects directly (refer to note
11).
Group
Year ended 29 February 2012
Ordinary Shares "C" Shares Total
GBP000 GBP000 GBP000
Non-current assets
Accrued interest income 37 47 84
37 47 84
Current assets
Accrued interest income 1,187 483 1,670
Other receivables 760 8 768
Corporation tax - 34 34
Prepayments 67 6 73
2,014 531 2,545
Company
Year ended 29 February 2012
Ordinary Shares "C" Shares Total
GBP000 GBP000 GBP000
Non-current assets
Accrued interest income 37 47 84
37 47 84
Current assets
Accrued interest income 1,187 483 1,670
Other receivables 4 8 12
Corporation tax - 34 34
Prepayments 67 6 73
1,258 531 1,789
Group
As at 28 February 2011
Reclassified
Ordinary Shares "C" Shares Total
GBP000 GBP000 GBP000
Non-current assets
Accrued interest income 570 103 673
Balance prior to reclassification 570 103 673
Other receivables reclassified from development wind assets 803 - 803
1,373 103 1,476
Current assets
Accrued interest income 493 122 615
Other receivables 111 48 159
Prepayments 10 5 15
614 175 789
Company
As at 28 February 2011
Ordinary Shares "C" Shares Total
GBP000 GBP000 GBP000
Non-current assets
Accrued interest income 570 103 673
570 103 673
Current assets
Accrued interest income 493 122 615
Other receivables 7 48 55
Prepayments 10 5 15
510 175 685
Included in accrued interest income is loan stock interest
totalling GBP84,000 (2011: GBP673,000) which is due after more than
one year, which represents non-current assets. The Directors
consider that the carrying amount of trade and other receivables
approximates to their fair value.
13. Cash and cash equivalents
Group Ordinary Shares "C" Shares Total
Treasury Treasury Treasury
Cash Bills Total Cash Bills Total Cash Bills Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
As at 1 March 2011 664 - 664 1,058 5,196 6,254 1,722 5,196 6,918
Net (decrease)/ increase (42) - (42) 627 (5,196) (4,569) 585 (5,196) (4,611)
As at 29 February 2012 622 - 622 1,685 - 1,685 2,307 - 2,307
Company Ordinary Shares "C" Shares Total
Treasury Treasury Treasury
Cash Bills Total Cash Bills Total Cash Bills Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
As at 1 March 2011 630 - 630 1,058 5,196 6,254 1,688 5,196 6,884
Net (decrease)/increase (22) - (22) 627 (5,196) (4,569) 605 (5,196) (4,591)
As at 29 February 2012 608 - 608 1,685 - 1,685 2,293 - 2,293
Group Ordinary Shares "C" Shares Total
Treasury Treasury Treasury
Cash Bills Total Cash Bills Total Cash Bills Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
As at 1 March 2010 1,364 - 1,364 2,497 3,998 6,495 3,861 3,998 7,859
Net
(decrease)/increase (700) - (700) (1,439) 1,198 (241) (2,139) 1,198 (941)
As at 28 February
2011 664 - 664 1,058 5,196 6,254 1,722 5,196 6,918
Company Ordinary Shares "C" Shares Total
Treasury Treasury Treasury
Cash Bills Total Cash Bills Total Cash Bills Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
As at 1 March 2010 1,364 - 1,364 2,497 3,998 6,495 3,861 3,998 7,859
Net (decrease)/increase (734) - (734) (1,439) 1,198 (241) (2,173) 1,198 (975)
As at 28 February 2011 630 - 630 1,058 5,196 6,254 1,688 5,196 6,884
Cash and cash equivalents comprise bank balances and cash held
by the Company including UK treasury bills. The carrying amount of
these assets approximates to their fair value.
14. Trade and other payables
Group
As at 29 February 2012
Ordinary Shares "C" Shares Total
GBP000 GBP000 GBP000
Corporation tax 87 - 87
Trade payables 14 - 14
Other payables 41 7 48
Accruals 89 25 114
231 32 263
Company
As at 29 February 2012
Ordinary Shares "C" Shares Total
GBP000 GBP000 GBP000
Corporation tax 87 - 87
Trade payables 14 - 14
Other payables 7 7 14
Accruals 89 25 114
197 32 229
Group
As at 28 February 2011
Ordinary Shares "C" Shares Total
GBP000 GBP000 GBP000
Corporation tax 4 (4) -
Trade payables 17 - 17
Other payables 10 8 18
Accruals 166 20 186
197 24 221
Company
As at 28 February 2011
Ordinary Shares "C" Shares Total
GBP000 GBP000 GBP000
Corporation tax 4 (4) -
Trade payables 17 - 17
Other payables - 8 8
Accruals 166 20 186
187 24 211
The Directors consider that the carrying amount of trade and
other payables approximates to their fair value.
15. Financial liabilities
Group
As at 29 February 2012
Ordinary Shares
GBP000
Shareholder loans 436
Loan from Temporis Capital LLP 327
763
Company
As at 29 February
2012
Ordinary Shares
GBP000
Loan from Temporis Capital LLP 327
327
Group
As at 28 February 2011
Ordinary Shares
GBP000
Shareholder loans 372
372
The Group's shareholder loans are provided by Ventus VCT plc to
the Company's subsidiaries, Redeven Energy Limited and Spurlens Rig
Wind Limited respectively.
As at 29 February 2012 the Company's ordinary share fund had a
loan outstanding in the amount of GBP327,000 to Temporis Capital
LLP, the investment manager. This loan is interest-free, to be
repaid by the Company' ordinary share fund over the period of time
that the waived investment management fees referred to in note 3
would otherwise have been charged.
16. Share capital
Group and Company Ordinary Shares "C" Shares Total
Number of shares of Number of shares of Number of shares of
Authorised 25p each GBP000 25p each GBP000 25p each GBP000
At 1 March
2011 30,000,000 7,500 20,000,000 5,000 50,000,000 12,500
At 29 February
2012 30,000,000 7,500 20,000,000 5,000 50,000,000 12,500
Ordinary Shares "C" Shares Total
Allotted, called up Number of shares of Number of shares of Number of shares of
and fully paid 25p each GBP000 25p each GBP000 25p each GBP000
At 1 March
2011 24,537,560 6,134 11,329,107 2,832 35,866,667 8,966
At 29 February
2012 24,537,560 6,134 11,329,107 2,832 35,866,667 8,966
Group and Company Ordinary Shares "C" Shares Total
Number of shares of Number of shares of Number of shares of
Authorised 25p each GBP000 25p each GBP000 25p each GBP000
At 1 March
2010 30,000,000 7,500 20,000,000 5,000 50,000,000 12,500
At 28 February
2011 30,000,000 7,500 20,000,000 5,000 50,000,000 12,500
Ordinary Shares "C" Shares Total
Allotted, called up Number of shares of Number of shares of Number of shares of
and fully paid 25p each GBP000 25p each GBP000 25p each GBP000
At 1 March
2010 12,287,249 3,071 6,924,686 1,731 19,211,935 4,802
Allotted, called
up and fully
paid during
the year 12,250,311 3,063 4,404,421 1,101 16,654,732 4,164
At 28 February
2011 24,537,560 6,134 11,329,107 2,832 35,866,667 8,966
At 29 February 2012, the Company had two classes of shares which
carry no right to fixed income. The rights and obligations
attaching to the Company's shares are set out in the Directors'
Report above.
17. Basic and diluted net asset value per share
The calculation of Group's net asset value per ordinary share of
58.8p as at 29 February 2012 (2011: 75.9p) is based on the net
asset value attributable to equity holders of GBP14,419,000 (2011:
GBP18,631,000) divided by 24,537,560 ordinary shares in issue at
that date (2011: 24,537,560 ordinary shares). The "C" share fund
did not hold investments in subsidiaries at 29 February 2012.
The calculation of Company's net asset value per ordinary share
of 58.8p as at 29 February 2012 (2011: 75.9p) is based on net
assets of GBP14,427,000 (2011: GBP18,629,000) divided by 24,537,560
ordinary shares in issue at that date (2011: 24,537,560 ordinary
shares). The net asset value per "C" share of 91.9p as at 29
February 2012 (2011: 92.4p) is based on net assets of GBP10,414,000
(2011: GBP10,468,000) divided by 11,329,107 "C" shares in issue at
that date (2011: 11,329,107 "C" shares).
18. Events subsequent to year end
At a general meeting held on 8 March 2012 the authorised share
capital was increased from GBP12,500,000 to GBP17,500,000 by the
creation of 20,000,000 new ordinary shares.
On 30 March 2012, in accordance with the terms of the Tender
Offer and Offer proposed in a circular dated 3 February 2012 and
subsequently approved by shareholders on 8 March 2012, a total of
8,273,796 ordinary shares were purchased for cancellation at a
price of 58.4p per ordinary share and a total of 8,118,280 ordinary
shares of 25p each in the Company were allotted in respect of the
shares tendered for cancellation at a price of 61.6p per ordinary
share.
On 3 April 2012 a total of 115,661 ordinary shares were
purchased for cancellation at a price of 58.4p per ordinary share
and a total of 113,486 ordinary shares of 25p each in the Company
were allotted in respect of the shares tendered for cancellation at
a price of 61.6p per ordinary share. In addition, a total of 42,786
ordinary shares were allotted at a price of 61.6p per ordinary
share under the offer for issue of ordinary shares.
Ordinary shareholders who participated in the Tender Offer were
obliged to participate in the Share Offer under which they received
additional ordinary shares in the Company equal to 3.5% of the
amount subscribed with the proceeds from the Tender Offer.
Following the cancellation and allotments described above, the
issued share capital of the Company is 24,422,655 ordinary shares
and 11,329,107 "C" shares.
Since the year end, Renewable Power Systems Limited has repaid a
further GBP100,000 of loan principal together with interest accrued
to 30 April 2012.
On 4 May 2012, Broadview Energy Limited repaid GBP1,800,000 plus
accrued interest of GBP778,000 and a prepayment fee of GBP162,000.
On the same day, BEGL 2 Limited and BEGL 3 Limited each repaid
GBP500,000 plus accrued interest of GBP100,000 to the Company's "C"
share fund. These repayments represent full repayments of the
loans.
19. Financial instruments and risk management
The Group's financial instruments comprise investments in
unquoted companies, cash and cash equivalents, trade and other
receivables and trade and other payables. The investments in
unquoted companies and UK treasury bills are categorised as "fair
value through profit or loss" and the other financial instruments
are initially recognised at fair value and subsequently at
amortised cost. The main purpose of these financial instruments is
to generate revenue and capital appreciation.
The Group has not entered into any derivative transactions and
has no financial asset or liability for which hedge accounting has
been used.
The main risks arising from the Group's financial instruments
are investment risk, interest rate risk, liquidity risk and credit
risk. The Board reviews and agrees policies for managing each of
these risks, and they are summarised below in respect of the Group
and the Company. These policies have remained unchanged since the
beginning of the financial year.
Interest rate risk profile of financial assets and financial
liabilities
Financial assets
As at 29 February 2012 Group
Weighted average interest Weighted average period to
Ordinary Shares Interest rate p.a. rate p.a. maturity
GBP000 % %
At fair value through profit
or loss:
Ordinary shares 6,134 n/a n/a n/a
Loan stock 6,465 8% - 15% 12.27% 12.8 years
Loans and receivables:
Cash 622 0% - 0.56% 0.42% n/a
Accrued interest income 1,224 n/a n/a n/a
The Group's subsidiaries are held by the ordinary share fund
only.
As at 29 February 2012 Company
Weighted average interest Weighted average period to
Ordinary Shares Interest rate p.a. rate p.a. maturity
GBP000 % %
At fair value through profit
or loss:
Ordinary shares 6,134 n/a n/a n/a
Loan stock 6,914 0% - 13.5% 11.11% 11.6 years
Loans and receivables:
Cash 608 0% - 0.56% 0.43% n/a
Accrued interest income 1,224 n/a n/a n/a
As at 29 February 2012 Company
Weighted average interest Weighted average period to
"C" Shares ` Interest rate p.a. rate p.a. maturity
GBP000 % %
At fair value through profit
or loss:
Ordinary shares 4,900 n/a n/a n/a
Loan stock 3,283 11% - 13% 12.20% 6.7 years
Loans and receivables:
Cash 1,685 0% - 0.56% 0.50% n/a
Accrued interest income 530 n/a n/a n/a
As at 28 February 2011 Group
Weighted average interest Weighted average period to
Ordinary Shares Interest rate p.a. rate p.a. maturity
GBP000 % %
At fair value through profit
or loss:
Ordinary shares 7,743 n/a n/a n/a
Loan stock 8,631 0% - 15% 12.55% 12.2 years
Loans and receivables:
Cash 664 0% - 0.56% 0.26% n/a
Accrued interest income 1,063 n/a n/a n/a
The Group's subsidiaries are held by the ordinary share fund
only.
As at 28 February 2011 Company
Weighted average interest Weighted average period to
Ordinary Shares Interest rate p.a. rate p.a. maturity
GBP000 % %
At fair value through profit
or loss:
Ordinary shares 7,917 n/a n/a n/a
11.7
Loan stock 9,189 0% - 15% 11.75% years
Loans and receivables:
Cash 630 0% - 0.56% 0.26% n/a
Accrued interest income 1,063 n/a n/a n/a
As at 28 February 2011 Company
Weighted average interest Weighted average period to
"C" Shares Interest rate p.a. rate p.a. maturity
GBP000 % %
At fair value through profit
or loss:
Ordinary shares 900 n/a n/a n/a
Loan stock 3,060 10% - 13% 9.17% 5.4 years
UK treasury bills 5,196 0.50% - 0.51% 0.50% 51 days
Loans and receivables:
Cash 1,058 0% - 0.56% 0.55% n/a
Accrued interest income 225 n/a n/a n/a
The interest rates determining the weighted average interest
rates in the tables above are the contractual rates.
The impact of applying a reasonable sensitivity in interest
rates to cash on deposit is not significant.
Other than certain accrued interest income receivable amounts,
the Company's trade and other receivables did not hold a right to
interest income. Interest income is accrued on interest income
receivable amounts which have been deferred for payment by investee
companies.
Interest income earned from loan stock held by both the ordinary
share fund and "C" share fund is not subject to movements resulting
from market interest rate fluctuations as the rates are fixed,
therefore this income presents a low interest rate risk profile.
However, interest earned from loan stock remains exposed to fair
value interest rate risk when bench-marked against market
rates.
The risk from future fluctuations in interest rate movements
should be mitigated by the Company's intention to complete its
investment strategy and to hold a majority of its investments in
instruments which are not exposed to market interest rate
changes.
Financial liabilities
The Company has no guarantees or financial liabilities other
than the accruals. The Group recognises the financial liabilities
of its subsidiaries on its Statement of Financial Position, details
of which are presented in note 15. All financial liabilities are
categorised as other financial liabilities.
Currency exposure
All financial assets and liabilities are held in sterling, hence
there is no foreign currency exchange rate exposure.
Borrowing facilities
As at 29 February 2012 the Company had an outstanding loan of
GBP327,000 to Temporis Capital LLP (2011: GBPnil) as detailed in
note 15. The Group recognises the borrowings of its subsidiaries on
its statement of financial position as detailed in note 15.
Investment risk
As a VCT, it is the Company's specific business to evaluate and
control the investment risk in its portfolio of unquoted companies,
the details of which are discussed in the Investment Manager's
Report. The Group's subsidiaries do not hold investments.
Investment price risk
Investment price risk is the risk that the fair value of future
investment cash flows will fluctuate due to factors specific to an
investment. The Company aims to mitigate the impact of investment
price risk by adhering to its investment policy of risk
diversification, as described in the Investment Manager's
Report.
The sensitivity of the ordinary share fund to a 10% increase or
decrease in valuation would be an increase or decrease in the loss
before tax of the share fund of GBP1,305,000 or 33.72% (2011:
GBP1,711,000 or 103.42%) and an increase or decrease in net asset
value of the same amount or 9.04% (2011: 9.18%).
The sensitivity of the "C" share fund to a 10% increase or
decrease in valuation would be an increase or decrease in the
profit before tax of the "C" share fund of GBP818,000 or 3,409.58%
(2011: GBP396,000 or 528.00%) and an increase or decrease in net
asset value of the same amount or 7.86% (2011: 3.78%).
A 10% variable is considered to be a suitable factor by which to
demonstrate a potential change in fair value over the course of a
year. The analysis assumes no tax effect applied on the gain or
loss.
Liquidity risk
Due to the nature of the Company's investments, it is not
possible, easily, to liquidate investments in ordinary shares and
loan stock. The main cash outflows are made for investments and
dividends, which are within the control of the Company, and
operating expenses which are reasonably predictable. In this
respect, the Company may manage its liquidity risk by making
prudent forecasts in respect of realising future cash proceeds from
its investments and holding sufficient cash to enable it to fund
its obligations. The cash equivalents are held on deposit or in UK
treasury bills and are therefore readily convertible into cash.
Credit risk
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 or its subsidiaries. The
Company and its subsidiaries are exposed to credit risk through
their receivables, and through cash held on deposit with banks. The
Company is also exposed to credit risk through its investments in
loan stock.
The Investment Manager evaluates credit risk on loan stock prior
to making investments as well as monitoring ongoing exposures. Loan
stock has a fixed charge or a fixed and floating charge over the
assets of the investee company in order to mitigate the gross
credit risk. The Investment Manager regularly reviews management
accounts from investee companies and generally appoints directors
to sit on their boards in order to identify and manage the credit
risk.
Cash is held on deposit with banks which are AA rated (or
equivalent) financial institutions. Consequently, the Directors
consider that the risk profile associated with cash deposits is low
and the carrying value in the Financial Statements approximates to
fair value.
The maximum credit risk of the Group is GBP15.3 million. The
Company's maximum credit risk is GBP15.0 million (2011: GBP20.5
million) of which the ordinary share fund is exposed to GBP9.5
million (2011: GBP10.9 million) and the "C" share fund is exposed
to GBP5.5 million (2011: GBP9.6 million).
The tables below set out the amounts receivable by the Group and
the Company which were past due but not individually impaired as at
29 February 2012 and the extent to which they are past due:
Ordinary Shares Total 0 - 6 months 6 - 12 months Over 12 months
GBP000 GBP000 GBP000 GBP000
Loan 1,211 501 - 710
Accrued interest 78 29 32 17
Receivables past due 1,289 530 32 727
"C" Shares Total 0 - 6 months 6 - 12 months Over 12 months
GBP000 GBP000 GBP000 GBP000
Loan 1,610 200 - 1,410
Accrued interest 198 88 80 30
Receivables past due 1,808 288 80 1,440
The amounts past due for payment represent interest due on loan
investments. The accrued interest on these loans is expected to be
paid as the underlying generators become operational. In this
analysis, the loan principal amounts on which the interest has
accrued are included as past due.
Of the amounts past due in respect of the Company's ordinary
share fund as at 29 February 2012, GBP26,000 of interest has been
received since the year end in respect of loans with a carrying
value of GBP501,000 as at 29 February 2012. Of the amounts past due
in respect of the Company's "C" share fund as at 29 February 2012,
interest of GBP146,000 has been received in respect of loans with a
carrying value of GBP1,200,000 and loan principal amounts of
GBP1,100,000 corresponding to that carrying amount have also been
repaid to the Company.
The tables below set out the amounts receivable by the Group and
the Company which were past due but not individually impaired as at
28 February 2011 and the extent to which they were past due:
Ordinary Shares Total 0 - 6 months 6 - 12 months Over 12 months
GBP000 GBP000 GBP000 GBP000
Loan 2,961 2,961 - -
Accrued interest 183 167 14 2
Receivables past due 3,144 3,128 14 2
"C" Shares Total 0 - 6 months 6 - 12 months Over 12 months
GBP000 GBP000 GBP000 GBP000
Loan 910 910 - -
Accrued interest 16 16 - -
Receivables past due 926 926 - -
The expected timing of receipt of trade and other receivables is
presented below:
Group
Within
Ordinary Shares Total 1 year Between 1 and 2 years Over 2 years
GBP000 GBP000 GBP000 GBP000
Accrued interest income 1,224 1,187 - 37
Other receivables 760 760 - -
1,984 1,947 - 37
========
Company
Within
Ordinary Shares Total 1 year Between 1 and 2 years Over 2 years
GBP000 GBP000 GBP000 GBP000
Accrued interest income 1,224 1,187 - 37
Other receivables 4 4 - -
1,228 1,191 - 37
========
Company
Within
"C" Shares Total 1 year Between 1 and 2 years Over 2 years
GBP000 GBP000 GBP000 GBP000
Accrued interest income 530 483 47 -
Other receivables 8 8 - -
538 491 47 -
========
20. Contingencies, guarantees and financial commitments
On 31 July 2006, the Company registered a charge over its shares
in Craig Wind Farm Limited to Alliance & Leicester Commercial
Bank plc (now Santander UK plc) as security for a senior loan
facility of GBP7.6 million raised by Craig Wind Farm Limited to
finance the construction costs of the wind farm. The liability of
the Company under this charge of shares is limited to the value of
the Company's investment in shares of Craig Wind Farm Limited
including those shares acquired by the Company from Ventus 3 VCT
plc as a result of the Merger that took place on 6 May 2010.
On 2 April 2008, the Company registered a charge over its shares
in Redimo LFG Limited to Alliance & Leicester Commercial
Finance plc as security for a senior loan facility of GBP16.9
million raised by Redimo LFG Limited. The charge includes all
existing and future shares that the Company owns in Redimo LFG
Limited and therefore includes the 2,500 shares the Company
acquired on 19 December 2008 and the further 2,000 shares the
Company acquired on 18 February 2009 together with the 7,000 shares
acquired by the Company from Ventus 3 VCT plc as a result of the
Merger. The liability of the Company under this charge of shares is
limited to the value of the Company's investment in shares of
Redimo LFG Limited including those shares acquired by the Company
from Ventus 3 VCT plc as a result of the Merger. As at 29 February
2012 the Company's investment was valued at nil for the reasons
described in the Investment Manager's Report.
On 22 October 2008, the Company registered a charge over its
shares in Achairn Energy Limited to Alliance & Leicester
Commercial Finance plc (now Santander Asset Finance plc) as
security for a senior loan facility of GBP6.9 million raised by
Achairn Energy Limited to finance the construction costs of the
wind farm. The liability of the Company under this charge of shares
is limited to the value of the Company's investment in shares of
Achairn Energy Limited including those shares acquired by the
Company from Ventus 3 VCT plc as a result of the Merger.
On 28 November 2008, the Company registered a charge over its
shares in A7 Lochhead Limited to Alliance & Leicester
Commercial Finance plc (now Santander Asset Finance plc) as
security for a senior loan facility of GBP7.8 million raised by A7
Lochhead Limited to finance the construction costs of the wind
farm. The liability of the Company under this charge of shares is
limited to the value of the Company's investment in shares of A7
Lochhead Limited including those shares acquired by the Company
from Ventus 3 VCT plc as a result of the Merger.
On 28 April 2008, the Company registered a charge over its
shares in PBM Power Limited to Alliance & Leicester Commercial
Finance plc (now Santander Asset Finance plc) as security for a
senior loan facility of GBP3.8 million raised by PBM Power Limited
to finance the construction costs of the biomass generator. The
liability of the Company under this charge of shares is limited to
the value of the Company's investment in shares of PBM Power
Limited including those shares acquired by the Company from Ventus
3 VCT plc as a result of the Merger. As at 29 February 2012 the
Company's investment was valued at nil for the reasons described in
the Investment Manager's Report.
On 15 January 2010, the Company registered a charge over its
shares in Sandsfield Heat & Power Limited to The Co-operative
Bank plc as security for a senior loan facility of GBP5 million
raised by Sandsfield Heat & Power Limited to finance the
construction costs of the biomass generator. The liability of the
Company under this charge of shares is limited to the value of the
Company's investment in shares of Sandsfield Heat & Power
Limited including those shares acquired by the Company from Ventus
3 VCT plc as a result of the Merger. As at 29 February 2012 the
Company's investment was valued at nil for the reasons described in
the Investment Manager's Report.
On 15 January 2010, the Company registered a charge over its
shares in Greenfield Wind Farm Limited to The Co-operative Bank plc
as security for a senior loan facility of GBP18.3 million raised by
Greenfield Wind Farm Limited to finance the construction costs of
the wind farm. The liability of the Company under this charge of
shares is limited to the value of the Company's investment in
shares of Greenfield Wind Farm Limited including those shares
acquired by the Company from Ventus 3 VCT plc as a result of the
Merger.
On 29 July 2010, the Company registered a charge over its shares
in Twinwoods Heat & Power Limited to The Co-operative Bank plc
as security for a senior loan facility of GBP5.6 million raised by
Twinwoods Heat & Power Limited to finance the construction
costs of the waste wood biomass
plant. The liability of the Company under this charge of shares
is limited to the value of the Company's investment in shares of
Twinwoods Heat & Power Limited. As at 29 February 2012 the
Company's investment was valued at nil for the reasons described in
the Investment Manager's Report.
On 17 May 2011, the Company registered a charge over its shares
in Osspower Limited to The Co-operative Bank plc as security for a
senior loan facility of GBP6.45 million raised by Osspower Limited
to finance the construction of its first hydro scheme (Allt Fionn
Ghlinne).
The Company has provided a cost overrun guarantee of GBP750,000
to the Co-operative Bank plc on behalf of Osspower Limited. Any
sums called under this guarantee shall be payable by way of a loan
from the Company to Osspower Ltd which may be drawn down in the
event of the construction of Allt Fionn Ghlinne small hydro scheme
exceeding its budget of GBP7.5 million. In the event of cost
overrun, the loan is repayable over a term of 15 years, interest
free. The Directors consider the probability of the loan being
drawn down to be very low and the fair value of the liability
associated with the guarantee is not considered to be significant
at the year end.
On 26 July 2011, the Company registered a charge over its shares
in White Mill Windfarm Limited to The Co-operative Bank plc as
security for a senior loan facility of up to GBP15.5 million raised
by White Mill Windfarm Limited to finance the construction costs of
the wind farm. The liability of the Company under this charge of
shares is limited to the value of the Company's investment in
shares of White Mill Windfarm Limited.
The Company had no other contingencies, financial commitments or
guarantees as at 29 February 2012.
21. Related party transactions
On 12 September 2011 the Company appointed Temporis Capital LLP
as its Investment Manager. Details of the agreement with the
Investment Manager and transactions during the year are set out in
note 3 of the Financial Statements.
Ventus VCT plc is a company which is also managed by Temporis
Capital LLP and is therefore considered to be a related party. As
at 29 February 2012, the Company's ordinary share fund was owed
GBP4,384 by Ventus VCT plc and the Company's "C" share fund was
owed GBP242 by Ventus VCT plc.
The investee companies in which the Company has a shareholding
of 20% or more, as identified in the Investment Manager's Report,
are related parties. The aggregate balances at the balance sheet
date and transactions with these companies during the year are
summarised below.
Company
As at 29 February 2012
Ordinary Shares "C" shares Total
Balances GBP000 GBP000 GBP000
Investments - shares 4,827 4,900 9,727
Investments - loan stock 4,768 1,673 6,441
Accrued interest income 521 301 822
Transactions GBP000 GBP000 GBP000
Loan stock interest income 516 177 693
Dividend income 48 - 48
Company
As at 28 February 2011
Ordinary Shares "C" shares Total
Balances GBP000 GBP000 GBP000
Investments - shares 6,817 900 7,717
Investments - loan stock 7,047 1,000 8,047
Accrued interest income 540 124 664
Transactions GBP000 GBP000 GBP000
Loan stock interest income 559 124 683
Dividend income 428 - 428
There are no differences between the Group and Company related
party transactions with the exception of investments included above
totalling GBP449,000 relating to Redeven Energy Limited and
Spurlens Rig Wind Limited representing shareholder loans which are
consolidated into the Group accounts.
22. Controlling party
In the opinion of the Directors there is no immediate or
ultimate controlling party.
23. Management of capital
The Company's objective when managing capital is to safeguard
the Company's ability to continue as a going concern in order to
continue to provide returns for shareholders.
The requirements of the Venture Capital Trust regulations and
the fact that the Company has a policy of not having any
borrowings, means that there is limited scope to manage the
Company's capital structure. However, to the extent to which it is
possible, the Company can maintain or adjust its capital structure
by adjusting the amount of dividends paid to shareholders,
purchasing its own shares or issuing new shares.
The Board considers the Company's net assets to be its
capital.
The Company does not have any externally imposed capital
requirements.
There has been no change in the objectives, policies or
processes for managing capital from the previous year.
Notice of Annual General Meeting
Notice is hereby given that the AGM of Ventus 2 VCT plc will be
held at 12.30pm on Tuesday, 24 July 2012 at the offices of Howard
Kennedy LLP, 19 Cavendish Square, London, W1A 2AW for the purpose
of considering and, if thought fit, passing the following
Resolutions (of which, Resolutions 1 to 7 will be proposed as
Ordinary Resolutions and Resolutions 8 to 10 will be proposed as
Special Resolutions):
Ordinary Business
1. To receive the Company's audited Annual Report and Financial
Statements for the year ended 29 February 2012.
2. To declare a final dividend of 2.30p per ordinary share and
1.00p per "C" share in respect of the year ended 29 February
2012.
3. To approve the Directors' Remuneration Report for the year ended 29 February 2012.
4. To re-elect Mr Paul Thomas as a Director of the Company.
5. To re-elect Mr Colin Wood as a Director of the Company.
6. To re-appoint PKF (UK) LLP as Auditor of the Company to hold
office until the conclusion of the next general meeting at which
accounts are laid before the Company.
7. To authorise the Directors to determine the remuneration of the Auditor.
Special Resolutions
8. To approve the cancellation of the share premium account of the ordinary shares.
9. To approve the amendment of the Company's Articles of
Association to delete Article 119 (Distribution of Realised Capital
Profits).
10. That the Company be and is hereby generally and
unconditionally authorised to make market purchases (as defined in
section 693(4) of the Act) of ordinary shares of 25p each and "C"
shares of 25p each in the capital of the Company provided that:
(i) The maximum aggregate number of shares hereby authorised to
be purchased is an amount equal to 3,660,956 ordinary shares and
1,698,233 "C" shares, representing 14.99% of the issued share
capital of each class;
(ii) The minimum price which may be paid for a share is 25p per share;
(iii) The maximum price, exclusive of any expenses, which may be
paid for a share is an amount equal to the higher of; (a) 105% of
the average of the middle market prices shown in the quotations for
a share in The London Stock Exchange Daily Official List for the
five business days immediately preceding the day on which that
share is purchased; and (b) the amount stipulated by Article 5(1)
of the Buy-back and Stabilisation Regulation 2003;
(iv) The authority hereby conferred shall (unless previously
renewed or revoked) expire on the earlier of the AGM of the Company
to be held in 2013 and the date which is 18 months after the date
on which this resolution is passed; and
(v) The Company may make a contract or contracts to purchase its
own shares under this authority before the expiry of the authority
which will or may be executed wholly or partly after the expiry of
the authority, and may make a purchase of its own shares in
pursuance of any such contract or contracts as if the authority
conferred hereby had not expired.
By order of the Board
The City Partnership (UK) Limited
Secretary
31 May 2012
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAKSFDAXAEFF
Ventus 2 Vct (LSE:VEN2)
Historical Stock Chart
From Jun 2024 to Jul 2024
Ventus 2 Vct (LSE:VEN2)
Historical Stock Chart
From Jul 2023 to Jul 2024
