TIDMVEN2
RNS Number : 8392O
Ventus 2 VCT PLC
01 June 2015
Ventus 2 VCT plc
The following replaces the announcement made on 29(th) May 2015
at 09:45am, in respect of the date stated in resolution 9(iv).
Annual Report and Financial Statements
for the year ended 28 February 2015
Registered No: 05667210
Chairman's Statement
I am pleased to present the Annual Report and Financial
Statements of Ventus 2 VCT plc (the "Company") for the year ended
28 February 2015.
Although the year was characterised by wind speeds lower than
the long term average, the Company is able to announce final
dividends in line with expectations as set out in the Half-yearly
Report. This represents an increase in comparison to the prior
year's final dividends. The Company's funds have now been fully
invested and the Company's immediate focus will be on optimising
the performance of the portfolio assets. The intention remains to
make attractive, relatively low risk returns within the Venture
Capital Trust ("VCT") tax-efficient wrapper.
At the year end, the ordinary and "C" share funds were
substantially invested in companies qualifying for the purposes of
the VCT scheme. The "D" share fund had made a single qualifying
investment alongside the ordinary and "C" share funds in Bernard
Matthews Green Energy Halesworth Limited, a company constructing a
5 turbine wind farm in Suffolk. Subsequent to the year end, in
March 2015, all three share funds made equity and mezzanine loan
investments in Darroch Power Limited and Upper Falloch Power
Limited, companies which are constructing hydroelectric schemes on
the Glenfalloch Estate near Loch Lomond. These investments have
been structured to be qualifying investments and are expected to
add value to the portfolio. The ordinary share fund also holds an
interest in a company, Ben Glas Power Limited, which owns
development rights to a further hydroelectric scheme. Further
details on these companies are set out in the Investment Manager's
Report.
In the 2014 Budget it was announced that new investments in
companies benefitting from Renewable Obligation Certificates would
no longer be qualifying investments for the purposes of the VCT
scheme. This became effective with Royal Assent to the Finance Act
2014 on 17 July 2014. Furthermore, draft legislation was published
in December 2014 to exclude qualifying investment in companies that
generate electricity using anaerobic digestion or hydroelectric
power, other than when carried out by qualifying community energy
companies. It will also exclude companies benefiting from the
Government energy subsidies known as "contracts for difference"
from being qualifying investments. For that reason, this year the
Company focused on investing its remaining capital ahead of the
changes to qualifying status becoming effective.
In the Half-yearly Report for the six month period ended 31
August 2014 the Directors stated their intention to pay minimum
dividends of 4p per ordinary share and 6.25p per "C" share for the
year ended 28 February 2015. The final dividends for the year are
set out below.
The Directors anticipate a realistic target range in the medium
term beyond 28 February 2015 of 4p to 6p per ordinary share per
annum and 6p to 8p per "C" share per annum. It should be stressed
that these are intentions only, and no forecasts are intended or
should be inferred.
The Company expects the wind farm being built by Bernard
Matthews Green Energy Halesworth Limited to be completed in August
2015 and the hydroelectric schemes being built by Darroch Power
Limited and Upper Falloch Power Limited to be completed by the end
of 2015. At that point the portfolio should primarily consist of
operating companies providing a regular yield.
The Directors anticipate that once these schemes are operating,
this will be the appropriate time to consider converting the "C"
and "D" shares into ordinary shares, thereby creating a single
share fund. This is in line with the commitment which was made in
the offers for the "C" and "D" shares as their assets will be
sufficiently mature and income generating. Having a single share
fund should benefit all shareholders by creating a single more
diversified investment portfolio with an aggregated market
capitalisation which will, potentially, support better liquidity.
The "C" and "D" shares will be converted to ordinary shares at a
rate determined by the relationship between the respective Net
Asset Values of the share funds at the applicable valuation
date.
The Directors believe the outlook for the Company is now
extremely attractive given the expected yield the Company is
offering alongside the substantial tax benefits investors enjoy
from its VCT status. The Directors intend to make more regular
announcements over the coming year about the Company's performance,
strategy and future expectations.
Net Asset Value, Results and Dividends - Ordinary Shares
The net asset value of the ordinary share fund was GBP18,480,000
at 28 February 2015 or 75.8p per ordinary share (2014:
GBP17,697,000 or 72.6p per ordinary share).
The value of investments held by the ordinary share fund at 28
February 2015 was GBP16,975,000 compared to GBP16,339,000 at 28
February 2014.
The income generated in the ordinary share fund during the year
ended 28 February 2015 totalled GBP964,000, of which GBP542,000 was
derived from loan stock, GBP361,000 from dividends, GBP59,000 was
from other investment income and GBP2,000 was bank deposit
interest. This compares to total income of GBP937,000 for the year
ended 28 February 2014.
The Company proposes to declare a final dividend of 2.10p per
ordinary share to be paid on 5 August 2015 to all ordinary
shareholders on the register as at the close of business on 10 July
2015. The Company paid an interim dividend of 2.00p per ordinary
share on 14 January 2015. Therefore the total annual dividend will
be 4.10p per ordinary share.
Net Asset Value and Results and Dividends - "C" Shares
The net asset value of the "C" share fund was GBP13,908,000 at
28 February 2015 or 123.3p per "C" share (2014: GBP13,833,000 or
122.1p per "C" share).
The value of investments held by the "C" share fund at 28
February 2015 was GBP12,875,000 compared to GBP12,941,000 at 28
February 2014.
The total income of the "C" share fund for the year ended 28
February 2015 was GBP694,000, of which GBP410,000 was loan stock
interest, GBP283,000 was from dividends and GBP1,000 was bank
deposit interest. This compares with income generated by the "C"
share fund of GBP764,000 in the year ended 28 February 2014.
The Company proposes to declare a final dividend of 3.50p per
"C" share to be paid on 5 August 2015 to all "C" shareholders on
the register as at the close of business on 10 July 2015. The
Company paid an interim dividend of 3.00p per "C" share on 14
January 2015. Therefore the total annual dividend will be 6.50p per
"C" share.
Net Asset Value and Results and Dividends - "D" Shares
The net asset value of the "D" share fund was GBP1,875,000 at 28
February 2015 or 94.2p per "D" share.
The value of investments held by the "D" share fund at 28
February 2015 was GBP712,000.
The Company does not propose to declare a dividend to be paid to
"D" shareholders in respect of the year ended 28 February 2015.
Investments
The Company's Investment Manager, Temporis Capital LLP,
continues to be actively engaged in managing the portfolio to
maximise the total return to shareholders.
As at 28 February 2015, the ordinary share fund of the Company
held investments in 19 companies (2014: 17 companies) with a total
value of GBP17.0 million (2014: GBP16.3 million). The "C" share
fund held investments in 9 companies (2014: 10 companies) with a
total value of GBP12.9 million (2014: GBP12.9 million). The "D"
share fund held investments in one company with a value of
GBP712,000.
The Investment Manager's Report provides details of the
investments held as at 28 February 2015 and as at the date of this
report. All investments are structured so as to be treated as
qualifying holdings for the purposes of VCT regulations, unless
otherwise stated.
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 interests
of all shareholders if the Directors use their authority to make
share buy-backs judiciously. During the year, the Company
repurchased 25,900 "C" shares at a price of 96.5p per "C" share and
repurchased an additional 20,000 "C" shares at a price of 100p per
"C" share.
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
28 May 2015
Strategic Report
The Strategic Report has been prepared in accordance with the
requirements of Section 414A of the Companies Act 2006. Its purpose
is to inform the shareholders of the Company on key matters and
help them to assess how the Directors have performed their duty to
promote the success of the Company, in accordance with Section 172
of the Companies Act 2006.
Objectives
The Company's objective is to achieve attractive long term
investment returns to shareholders by maximising both dividend
yield and capital growth from a portfolio of investments in
companies developing or operating renewable energy projects with
installed capacities of 2 to 20 megawatts
The Company and its business model
The Company is a public limited company, incorporated in England
and listed on the London Stock Exchange. The registered address of
the Company is Berger House, 36-38 Berkeley Square, London W1J
5AE.
The Company is an investment company, as defined by Section 833
of the Companies Act 2006. The Directors consider that the Company
has conducted its affairs in a manner to enable it to comply with
Section 274 of the Income Tax Act 2007. In particular, a VCT is
required at all times to hold at least 70% by value of its
investments (as defined in the legislation) in qualifying holdings,
of which at least 30% (70% for funds raised after 5 April 2011)
must comprise eligible ordinary shares.
Temporis Capital LLP was appointed as Investment Manager of the
Company on 12 September 2011. The Company's Investment Manager
continues to be actively engaged in managing the portfolio.
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. Regular
Board meetings are held to review the investment performance
against the Company's stated investment policy and objectives, and
in doing so, monitor the performance of the Investment Manager.
Further details on other service providers are set out below.
Investment policy
To achieve its objectives, the Company's strategy has been to
focus on investing in companies developing or operating renewable
energy projects with installed capacities of 2 to 20 megawatts. The
opportunity for VCTs to make further investments in renewable
energy projects is limited given new investments in companies
benefiting from Renewable Obligation Certificates or Feed-in
Tariffs will be excluded from the VCT scheme. The Company is
focused on optimising the value of the investments it holds.
In accordance with the strategic objectives set by the Board,
the Investment Manager has continued to focus the Company's
activities on wind and hydroelectric investments generating stable
long-term income with the objective of providing predictable
dividends to shareholders. In order to improve stability of cash
returns from investee companies and enhance the predictability of
dividends to shareholders of the Company, more recent investments
are, on average, structured with lighter leverage than earlier
investments. Further information can be found in the Investment
Manager's Report.
The Investment Manager's Report provides a detailed analysis of
the portfolio held by each of the ordinary, "C" and "D" share funds
including a schedule which sets out the stage of investment and the
renewable energy technology type of the assets held by each
investee company.
Overview of the year and dividends
An overview of the Company's performance is set out in the
Chairman's Statement together with details of the dividends paid to
shareholders during the year and the final dividend declared in
respect of the year.
Investment portfolio
A summary of the investment portfolio of each share fund is set
out in the Chairman's Statement. The Investment Manager's Report
provides details of the investments held.
Key performance indicators
The Directors consider the following key performance indicators
("KPIs"), which are typical for VCTs, to best measure the Company's
performance and to provide shareholders with a summary of how the
business' objectives are pursued:
Results and
dividends
For the year
ended
28 February
2015 Ordinary Shares "C" Shares "D" Shares Total
Pence
Pence per Pence
per share share per share
GBP000 (1) GBP000 (1) GBP000 (1) GBP000
Revenue profit
attributable
to equity
shareholders 642 2.63 524 4.64 (18) (1.05) 1,148
Capital gain
attributable
to equity
shareholders 1,054 4.33 218 1.93 (38) (2.19) 1,234
--------------------- -------------- --------------------- ------- ------------------------------ --------------
Net gain
attributable
to equity
shareholders 1,696 6.96 742 6.57 (56) (3.24) 2,382
Dividends paid
during
the year (913) (3.75) (622) (5.50) - - (1,535)
--------------------- -------------- --------------------- ------- ------------------------------ -------------- ------------------------
Total movement
in
equity
shareholders'
funds 783 3.21 120 1.07 (56) (3.24) 847
===================== ============== ===================== ======= ============================== ============== ========================
% % % %
Ongoing
charges ratio
(2) 3.58% 3.12% 3.09% 3.36%
===================== ============== ===================== ======= ============================== ============== ========================
Ordinary Shares "C" Shares "D" Shares Total
Pence
Pence per Pence
GBP000 per share GBP000 share GBP000 per share GBP000
As at 28
February
2015
Net asset
value (3) 18,480 75.8 13,908 123.3 1,875 94.2 34,263
===================== ============== ===================== ======= ============================== ============== ========================
Total
shareholder
return (4) 22,788 98.0 15,379 136.3 1,875 94.2 40,042
===================== ============== ===================== ======= ============================== ============== ========================
(1) The "per share" value is determined in respect of the
weighted average number of shares in issue during the period,
except in respect of the dividends paid in the period, which is
based on the number of shares eligible to receive dividends at the
time the dividends were paid.
(2) The on-going charges ratio represents the Company's total
operating expenditure during the period (excluding investment
costs) as a percentage of the net asset value of the Company at the
period end.
The total annual running costs cap is set out in Note 3 to the
Financial Statements.
(3) The "per share" value is determined in respect of the number
of shares in issue at the period end, except in respect of the
dividends paid, which is based on the number of shares eligible to
receive dividends at the time the dividends were paid.
(4) The total shareholder return represents the net asset value
at period end plus the cumulative dividends paid since
incorporation.
Principal Risks and Uncertainties
Under the Financial Conduct Authority's Disclosure and
Transparency Rules, the Directors are required to identify those
material risks to which the Company is exposed and take appropriate
steps to mitigate those 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. The Directors do not
expect that the risks and uncertainties presented will change
significantly over the current financial year.
-- Failure to meet and maintain the investment requirements for
compliance with HMRC VCT regulations may result in the Company
losing its status as a VCT
The Board mitigates this risk by regularly reviewing investment
management activity and each new investment with appropriately
qualified advisers and, typically, by obtaining pre-approval from
HMRC for each qualifying investment.
-- Inadequate control environment at service providers may lead
to inaccurate reporting or misappropriation of assets
This risk is mitigated 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 internal auditor, Roffe Swayne, to report directly to
the Board in respect of the Company's internal controls undertaken
by the Investment Manager on behalf of the Company.
-- Non-compliance with the Listing Rules of the Financial
Conduct Authority, Companies Act legislation and other applicable
regulations may result in termination of the Company's Stock
Exchange listing or other sanctions.
This risk is mitigated by employing external advisers fully
conversant with applicable statutory and regulatory requirements
who report regularly to the Board on the Company's compliance.
-- Reliance on the UK Government's continued support for the
renewable energy sector and the risk of adverse changes in the
application of government policies particularly in respect of the
renewable energy sector and tax legislation.
The future level of Government-mandated support for renewables
has important implications for the industry and could impact the
value of investments the Company has made in companies developing
and operating renewable projects. However, the Directors believe
that any future reductions in renewable energy tariffs should not
impact any existing investments in companies operating renewable
energy assets, as the UK Government has a consistent history of
grandfathering financial support mechanisms for existing projects
and has a long term commitment to the renewable energy sector.
Investment management, administration and performance fees
Temporis Capital LLP, the Investment Manager of the Company,
also provides other management and administrative services to the
Company. Temporis Capital LLP also provided similar services to
Ventus VCT plc and Temporis Capital Renewable Infrastructure EIS
Fund during the financial year. The principal terms of the
investment management agreement are set out in note 3 of the
Financial Statements.
The Directors evaluated the performance of the Investment
Manager and agreed the continuing appointment of Temporis Capital
LLP, on the terms agreed, is in the interests of the shareholders.
Further discussion of the Investment Manager performance is within
the Corporate Governance Statement.
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 received an annual fee of GBP16,818 plus VAT. The
company secretarial services are terminable by either party giving
not less than six months' notice in writing.
VCT monitoring status
The Company appointed Robertson Hare LLP to advise on its
compliance with the taxation requirements relating to VCTs.
The Board is satisfied that the Company is compliant with VCT
rules as at the year end and at the date of this report.
Additional disclosures required by the Companies Act 2006
The Company had no employees during the year and the Company has
three non-executive Directors, all of whom are male.
The Company, being an externally managed investment company with
no employees, has no specific policies in relation to environmental
matters, social, community and human rights issues. The purpose of
the Company is 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.
In respect of the Bribery Act the Investment Manager believes
there are no reasons or circumstances which could be foreseen in
which any of the third party service providers might fall foul of
the Bribery Act. The Investment Manager has detailed procedures in
place covering the giving, receiving, authorising and recording of
gifts and hospitality by staff of the Investment Manager.
For and on behalf of the Board
Paul Thomas
Director
28 May 2015
Investment Manager's Report
In line with the strategic objectives set by the Board, the
Investment Manager has continued to focus the Company's activities
on renewable energy investments generating stable long-term income
with the objective of providing predictable dividends to
shareholders.
Ordinary share portfolio
A summary of the ordinary share fund's investment valuations as
at 28 February 2015 and gains and losses during the year ended 28
February 2015 is given below.
Voting Investment value Investment cost Investment Investment
rights value cost
Gain/
Shares Loans Total Shares Loans Total (loss) Total Total
in the
as year
as at as at as at as at as at at as at to as at as at
28 28 28 28 28 28 28 28 28 28
February February February February February February February February February February
2015 2015 2015 2015 2015 2015 2015 2015 2014 2014
% GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Operational
wind
Achairn Energy
Limited * Q 40.40% 2,647 1,388 4,035 1,226 1,289 2,515 165 3,868 2,515
A7 Lochhead
Limited * Q 20.00% 736 - 736 568 - 568 (98) 956 690
Greenfield
Wind Farm
Limited * PQ 16.65% 1,434 1,350 2,784 665 1,252 1,917 (186) 3,026 1,973
Biggleswade
Wind
Farm Limited * Q 7.00% 309 285 594 86 264 350 (18) 612 350
Eye Wind Power
Limited ** Q 35.09% 1,885 - 1,885 1,480 - 1,480 287 1,800 1,682
Bernard
Matthews
Green Energy
Weston
Limited * Q 50.00% 971 - 971 500 - 500 433 538 500
Bernard
Matthews
Green Energy
Pickenham
Limited * Q 50.00% 694 - 694 500 - 500 158 536 500
Wind under
construction
Bernard
Matthews
Green Energy
Halesworth
Limited ** Q 10.07% 536 - 536 351 - 351 120 416 351
Operational
companies
in the wind
sector
Firefly Energy
Limited * Q 50.00% - 83 83 200 104 304 1 82 304
Operational
landfill
gas
Renewable Power
Systems
(Dargan Road)
Limited Q 50.00% 639 1,181 1,820 780 1,064 1,844 4 1,872 1,900
Operational
small
hydro
Osspower Limited 50.00% 2,635 - 2,635 300 - 300 466 2,223 355
Small hydro
under
construction
Darroch Power
Limited * Q 50.00% 125 - 125 2 - 2 123 - -
Upper Falloch
Power
Limited * Q 50.00% 63 - 63 2 - 2 61 - -
Ben Glas Power
Limited * Q 50.00% 2 - 2 2 - 2 - - -
Development
and
pre-planning
BEL Holdco
Limited *** 1.91% 2 - 2 200 - 200 (102) 410 200
BEL
Acquisition
Limited * 1.91% 10 - 10 10 - 10 - - -
Realised
investments
Redimo LFG
Limited * 0.00% - - - - - - - - 1,000
PBM Power Limited 0.00% - - - - - - - - 574
Sandsfield Heat &
Power Limited Q 44.90% - - - 1,796 1,000 2,796 - - 2,796
The Small Hydro Company
Limited 22.50% - - - 115 - 115 - - 115
Redeven Energy
Limited * 50.00% - - - - 130 130 - - 130
Total 12,688 4,287 16,975 8,783 5,103 13,886 1,414 16,339 15,935
---------------------------- --------- --------- --------- ----------- --------- --------- ----------- --------- ----------- -----------
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 Ventus VCT plc has also invested (or in
which Ventus VCT plc had invested prior to the investment being
realised). The Company and Ventus VCT plc are managed by Temporis
Capital LLP.
** A company in which Ventus VCT plc and Temporis Capital
Renewable Infrastructure EIS Fund have also invested. The Company,
Ventus VCT plc and Temporis Capital Renewable Infrastructure EIS
Fund are managed by Temporis Capital LLP.
*** During the year, the Company exchanged its holding in
Broadview Energy Limited for an identical holding in BEL Holdco
Limited, a company which holds 100% of the ordinary shares of
Broadview Energy Limited.
A discussion of each investment follows:
OPERATIONAL WIND
Each of the following investee companies owns and operates a
single wind farm (or, in the case of Bernard Matthews Green Energy
Weston Limited and Bernard Matthews Green Energy Pickenham Limited,
owns an interest in a limited liability partnership that owns and
operates a single wind farm):
Wind farm
capacity
(megawatts) Operational since Location
Achairn Energy Limited 6.0 May 2009 Caithness, Scotland
A7 Lochhead Limited 6.0 June 2009 Lanarkshire, Scotland
Greenfield Wind Farm Limited 12.3 March 2011 Lanarkshire, Scotland
Biggleswade Wind Farm Limited 20.0 December 2013 Bedfordshire
Eye Wind Power Limited 6.8 April 2014 Suffolk
Bernard Matthews Green Energy
Weston Limited 4.0 April 2014 Norfolk
Bernard Matthews Green Energy
Pickenham Limited 4.0 April 2014 Norfolk
The Company's investments in the above companies are valued
using discounted cash flow models. The aggregate value of the above
seven companies increased by 3.2% during the year ended 28 February
2015. Eye Wind Power Limited, Bernard Matthews Green Energy Weston
Limited and Bernard Matthews Green Energy Pickenham Limited (all
three of which were valued at cost as at 28 February 2014) were
valued on a discounted cash flow basis in accordance with the
Company's valuation policy for investments in companies with
operating renewable energy assets as at 28 February 2015. All have
increased in value having completed construction and are now fully
operational.
During the year ended 28 February 2015, the aggregate
electricity output of the above seven companies was 87% of budget
and each company except Achairn Energy Limited experienced
satisfactory availability. The shortfall against budget was due to
wind speeds in the UK being below the long term averages during the
summer and autumn of 2014, as well as poor availability for Achairn
Energy Limited. Set out below is a brief summary of the performance
of the investee companies' operating wind farms.
Achairn Energy Limited
The electricity production of Achairn Energy Limited during the
year ended 28 February 2015 was 75% of budget. This shortfall was
due in significant part to one of the three turbines at Achairn
being out of service from September 2014 to April 2015. The Company
received dividends and mezzanine interest cash payments totalling
GBP124,000 from Achairn Energy Limited in the year ended 28
February 2015, representing a 4.9% cash yield on the cost of
investment. In addition to mezzanine interest income, the Company
recognised a valuation gain of GBP165,000 on its investment in
Achairn Energy Limited in the year ended 28 February 2015 due
primarily to the repayment of the underlying senior debt in the
company.
A7 Lochhead Limited
The electricity production of A7 Lochhead Limited during the
year ended 28 February 2015 was 95% of budget. The Company received
dividends and mezzanine interest cash payments totalling GBP219,000
from A7 Lochhead Limited in the year ended 28 February 2015,
representing a 37.8% cash yield on the average cost of the
investment. A7 Lochhead Limited also repaid GBP121,000 of mezzanine
loan principal to the Company during the year, reducing the balance
of the mezzanine loan to nil. The Company recognised a valuation
loss of GBP98,000 on its investment in A7 Lochhead Limited in the
year ended 28 February 2015. This valuation decrease was primarily
due to a large dividend which reduced the cash held by A7 Lochhead
Limited, resulting in an unusually high cash yield on the
investment in the year ended 28 February 2015
Greenfield Wind Farm Limited
The electricity production of Greenfield Wind Farm Limited
during the year ended 28 February 2015 was 91% of budget. The
Company's ordinary share fund received dividends and mezzanine
interest cash payments totalling GBP264,000 from Greenfield Wind
Farm Limited in the year ended 28 February 2015, representing a
13.7% cash yield on the average cost of the investment. Greenfield
Wind Farm Limited also repaid GBP55,000 of mezzanine loan principal
to the Company's ordinary share fund during the year. The Company's
ordinary share fund recognised a valuation loss of GBP186,000 on
its investment in Greenfield Wind Farm Limited in the year ended 28
February 2015 due primarily to a downward revision of 4.6% in the
projected long-term energy yield for the wind farm.
The Company's "C" share fund also holds an investment in
Greenfield Wind Farm Limited as discussed below.
Biggleswade Wind Farm Limited
The electricity production of Biggleswade Wind Farm Limited
during the year ended 28 February 2015 was 88% of budget. The
Company's ordinary share fund received dividends and mezzanine
interest cash payments totalling GBP55,000 from Biggleswade Wind
Farm Limited in the year ended 28 February 2015, representing a
15.6% cash yield on the cost of investment. The Company's ordinary
share fund recognised a valuation loss of GBP18,000 on its
investment in Biggleswade Wind Farm Limited in the year ended 28
February 2015 due to adjustments in assumptions related to
projected cash flows.
The Company's "C" share fund also holds an investment in
Biggleswade Wind Farm Limited as discussed below.
Eye Wind Power Limited
The Eye Airfield wind farm became fully operational in April
2014. The wind farm was completed ahead of schedule and under
budget. In July 2015, Eye Wind Power Limited paid to the Company's
ordinary share fund GBP26,000 of mezzanine loan interest and
GBP203,000 of mezzanine loan principal, reducing the balance of the
mezzanine loan to nil. The Company's ordinary share fund recognised
a valuation gain of GBP287,000 on its investment in Eye Wind Power
Limited in the year ended 28 February 2015 because the investment,
having been held at cost as at 28 February 2014, has been revalued
on a discounted cash flow basis in line with the Company's
accounting policy.
As discussed below, the Company's "C" share fund held a
mezzanine debt investment in Eye Wind Power Limited which was
repaid in full during the year ended 28 February 2015.
Bernard Matthews Green Energy Weston Limited
The Weston Airfield wind farm (in which Bernard Matthews Green
Energy Weston Limited holds a partnership interest) became fully
operational in April 2014. The wind farm was completed ahead of
schedule and under budget. The Company received no cash income from
Bernard Matthews Green Energy Weston Limited in the year ended 28
February 2015. The Company recognised a valuation gain of
GBP433,000 on its investment in Bernard Matthews Green Energy
Weston Limited in the year ended 28 February 2015 because the
investment, having been held at cost as at 28 February 2014, has
been revalued on a discounted cash flow basis in line with the
Company's accounting policy.
As discussed below, the Company's "C" share fund holds an
investment in Weston Airfield Investments Limited, which is Bernard
Matthews Green Energy Weston Limited's partner in the Weston
Airfield wind farm.
Bernard Matthews Green Energy Pickenham Limited
The North Pickenham Airfield wind farm (in which Bernard
Matthews Green Energy Pickenham Limited holds a partnership
interest) became fully operational in April 2014. The wind farm was
completed ahead of schedule and under budget. The Company received
no cash income from Bernard Matthews Green Energy Pickenham Limited
in the year ended 28 February 2015. The Company recognised a
valuation gain of GBP158,000 on its investment in Bernard Matthews
Green Energy Pickenham Limited in the year ended 28 February 2015
because the investment, having been held at cost as at 28 February
2014, has been revalued on a discounted cash flow basis in line
with the Company's accounting policy.
As discussed below, the Company's "C" share fund holds an
investment in North Pickenham Energy Limited, which is Bernard
Matthews Green Energy Pickenham Limited's partner in the North
Pickenham Airfield wind farm.
WIND UNDER CONSTRUCTION
Bernard Matthews Green Energy Halesworth Limited
Bernard Matthews Green Energy Halesworth Limited is constructing
a 10.25 megawatt wind farm at the Upper Holton Airfield near
Halesworth, Suffolk. The wind farm will operate five Senvion MM82
2.05 megawatt turbines. The wind farm is scheduled to be
operational in August 2015. The investment of the Company's
ordinary share fund in Bernard Matthews Green Energy Halesworth
Limited is held at GBP536,000, which is based on the price per
share paid by new investors in the company (including the Company's
"C" and "D" share funds) in July 2014.
The Company's "C" and "D" share funds also hold an investment in
Bernard Matthews Green Energy Halesworth Limited as discussed
below.
OPERATIONAL COMPANY IN THE WIND SECTOR
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. Firefly
Energy Limited earns a margin on the five long-term power purchase
agreements.
The Company has a loan investment in Firefly Energy Limited
which had a principal amount outstanding as at 28 February 2015 of
GBP104,000. The loan is valued in the Company's accounts based on
the discounted projected future cash flows from the five power
purchase agreements on which the company earns a spread, net of
projected administration costs. As at 28 February 2015, the value
of the loan was GBP83,000, reflecting a valuation gain of GBP1,000
in the year ended 28 February 2015. The loan, as valued, is
projected to be paid off by the end of 2016. The Company also holds
50% of the ordinary shares of Firefly Energy Limited (cost of
GBP200,000) which was written down to nil value in a prior year.
The Company received no cash income or loan repayments from Firefly
Energy Limited in the year ended 28 February 2015.
OPERATIONAL LANDFILL GAS
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 during the year ended 28
February 2015. The third of its five generators came offline and
was sold during the year as the volume of gas at the site reduced.
The Company received loan interest payments of GBP146,000 from
Renewable Power Systems (Dargan Road) Limited in the year ended 28
February 2015, representing a 7.8% cash yield on the cost of the
investment. The Company recognised a valuation gain of GBP4,000 on
its investment in Renewable Power Systems (Dargan Road) Limited in
the year ended 28 February 2015.
OPERATIONAL SMALL HYDRO
Osspower Limited
The Company's ordinary share fund holds 50% of the ordinary
shares of Osspower Limited, which owns and operates a 1.999
megawatt hydroelectric project at Allt Fionn Ghlinne in Scotland
that commenced operations in June 2012. The electricity production
of the Allt Fionn plant during the year ended 28 February 2015 was
108% of budget.
On 22 May 2014, Osspower Limited repaid a GBP5,990,000 senior
loan with The Co-operative Bank plc secured by the Allt Fionn
project as well as three further consented but unconstructed hydro
projects on the same estate as the Allt Fionn project, thereby
discharging the Co-operative Bank's security over these assets.
Simultaneously, Osspower Limited obtained a GBP7 million loan from
Gravis Capital Partners ("GCP") secured solely by the Allt Fionn
hydroelectric project.
Subsequent to the release of The Co-operative Bank's security
over the consented but unconstructed projects, three new companies
(Darroch Power Limited, Upper Falloch Power Limited and Ben Glas
Power Limited) were formed by the shareholders of Osspower Limited
with identical ownership percentages as Osspower Limited, and
certain assets and rights of the three unconstructed projects were
transferred from Osspower Limited to these companies. Darroch Power
Limited, Upper Falloch Power Limited and Ben Glas Power Limited
will each own, construct and operate one of the projects.
In March 2015, Darroch Power Limited and Upper Falloch Power
Limited raised new capital from investors including the ordinary,
"C" and "D" shares of the Company and the ordinary, "C" and "D"
shares of Ventus VCT plc. As part of this capital raise, the
Company's ordinary share fund retained carried interests of 10% in
Darroch Power Limited and 10% in Upper Falloch Power Limited. The
hydro projects owned by Darroch Power Limited and Upper Falloch
Power Limited are currently under construction and expected to be
operational by the end of 2015. The shareholders of Ben Glas Power
Limited are currently engaged in a process to sell the company.
The commissioning of the hydro projects owned by Darroch Power
Limited and Upper Falloch Power Limited, along with the sale of Ben
Glas Power Limited, will result in Osspower Limited recovering
development costs relating to the three projects totalling
GBP1,870,000.
During the year ended 28 February 2015, Osspower Limited repaid
its shareholder loan to the Company's ordinary share fund of
GBP55,000 along with accrued interest of GBP26,000. Osspower
Limited also paid GBP90,000 in arrangement fees to the Company's
"C" share fund in respect of a loan which had been provided by the
"C" share fund in 2011. The arrangement fees had been recognised as
income in a previous financial period and were outstanding for
payment as at 28 February 2014. As at 28 February 2015, the Company
held its investment in Osspower Limited at a value of GBP2,635,000
which takes into account the discounted present value of expected
cash flows from the recovery of the development costs on the
projects owned by Darroch Power Limited, Upper Falloch Power
Limited and Ben Glas Power Limited discussed above.
SMALL HYDRO UNDER CONSTRUCTION
Darroch Power Limited
As at 28 February 2015, the Company's ordinary share fund held
50% of the ordinary shares of Darroch Power Limited at an
investment cost of GBP1,500. In March 2015, investors includingthe
ordinary, "C" and "D" shares of the Company and the ordinary, "C"
and "D" shares of Ventus VCT plcinvested GBP1,000,000 to acquire
80% of the ordinary shares of Darroch Power Limited, leaving the
Company's ordinary share fund with an 11.5% holding (including the
10% carried interest referred to above). The ordinary share fund
made an equity investment of GBP18,000 and advanced a mezzanine
loan of GBP46,000.
The Company's investment in Darroch Power Limited as at 28
February 2015 is held at a valuation of GBP125,000, which is based
on the price per share paid by investors in the March 2015
financing round.
Upper Falloch Power Limited
As at 28 February 2015, the Company's ordinary share fund held
50% of the ordinary shares of Upper Falloch Power Limited at an
investment cost of GBP1,500. In March 2015, investors includingthe
ordinary, "C" and "D" shares of the Company and the ordinary, "C"
and "D" shares of Ventus VCT plcinvested GBP500,000 to acquire 80%
of the ordinary shares of Upper Falloch Power Limited, leaving the
Company's ordinary share fund with an 11% holding (including the
10% carried interest referred to above). The ordinary share fund
made an equity investment of GBP6,000 and advanced a mezzanine loan
of GBP15,000.
The Company's investment in Upper Falloch Power Limited as at 28
February 2015 is held at a valuation of GBP63,000, which is based
on the price per share paid by investors in the March 2015
financing round.
Ben Glas Power Limited
The Company's ordinary share fund holds 50% of the ordinary
shares of Ben Glas Power Limited at an investment cost of GBP1,500.
As discussed above, the shareholders of Ben Glas Power Limited are
currently engaged in a
process to sell the company. Ben Glas Power Limited is valued at cost.
DEVELOPMENT AND PRE-PLANNING
BEL Holdco Limited
BEL Holdco Limited is the parent company of Broadview Energy
Limited ("Broadview"), an independent renewable energy company that
formerly developed, constructed and operated wind farms in the UK.
Having disposed of its operating and consented wind projects,
Broadview carried out a reorganisation in January 2014 with the
objective of returning cash to its shareholders. In connection with
this reorganisation, all the shareholders of Broadview, including
the Company, exchanged their holdings in Broadview for identical
holdings in BEL Holdco Limited. Subsequent to this exchange, BEL
Holdco Limited sold Broadview to BEL Acquisition Limited (see
below) in exchange for nominal cash plus deferred consideration.
Broadview's assets consisted of five wind development projects
(four of which had been rejected in planning and were being
appealed and one of which had yet to be submitted for planning),
along with a limited amount of working capital. Upon successful
consent of any of the five wind development projects, BEL
Acquisition Limited will pay deferred consideration to BEL Holdco
Limited. As the final step in its reorganisation, BEL Holdco
entered voluntary liquidation so that the cash in Broadview could
be distributed to shareholders.
During the year ended 28 February 2015, BEL Holdco Limited
distributed GBP306,000 to the Company. This return of cash
represents a 1.53 times multiple on the Company's GBP200,000
investment in Broadview made in December 2008.
Since the acquisition of Broadview by BEL Holdco Limited, all
four of the wind development projects under appeal have been
rejected by the Secretary of State for Communities and Local
Government, and the fifth project is still in planning. As at 28
February 2015 the Company's remaining interest in BEL Holdco
Limited is valued at GBP2,000, which is based on the Investment
Manager's estimate of the cash in BEL Holdco Limited still to be
distributed pursuant to its reorganisation.
BEL Acquisition Limited
BEL Acquisition Limited is a wind farm development company. It
was incorporated in May 2014 for the purpose of acquiring Broadview
from BEL Holdco Limited (see above). As discussed above, the four
appeals have been rejected by the Secretary of State for
Communities and Local Government and the remaining project is still
in planning. BEL Acquisition Limited also earns income from
providing asset management services to wind farms.
During the year ended 28 February 2015, the Company acquired
2.0% of the ordinary shares of BEL Acquisition Limited at a cost of
GBP10,000. The Company's investment in BEL Acquisition Limited is
held at cost.
REALISED INVESTMENTS
Redimo LFG Limited
Redimo LFG Limited operated four landfill gas electricity
generation sites in the north of England. The investment was
written off and treated as a realised loss in a prior year. Redimo
LFG Limited was dissolved on 22 November 2014.
PBM Power Limited and Sandsfield Heat & Power Limited
PBM Power Limited and Sandsfield Heat & Power Limited were
companies that constructed waste wood biomass power plants which
experienced severe operating difficulties. Both investments were
written off and treated as realised losses in a prior year. PBM
Power Limited was dissolved on 5 November 2014. Sandsfield Heat
& Power Limited is currently in administration and is expected
to go into liquidation in due course.
The Small Hydro Company Limited
The Small Hydro Company Limited developed five low-head
run-of-river small hydroelectric projects in England which were
ultimately not economic to build out. The investment was written
off and treated as a realised loss in a prior year. The Small Hydro
Company Limited entered into members' voluntary liquidation on 17
March 2014.
Redeven Energy Limited
Redeven Energy Limited is a wind farm development company
through which the Company, jointly with Ventus VCT plc, held
investment rights in three successfully-consented wind farm
developments at three sites in East Anglia: Weston Airfield, North
Pickenham Airfield and Upper Holton Airfield. The development
rights in these wind farms have been transferred to the relevant
project companies into which the Company and Ventus VCT plc have
invested further funds, leaving Redeven Energy Limited with no
remaining significant assets or liabilities as at 28 February 2015.
The project companies that have built out or are building out the
three wind farms are owned by the Company and by Ventus VCT plc and
are described elsewhere in this report.
"C" share portfolio
A summary of the "C" share fund's investment valuations as at 28
February 2015 and gains and losses during the year ended 28
February 2015 is given below.
Voting Investment value Investment cost Investment Investment
rights value cost
Gain/
Shares Loans Total Shares Loans Total (loss) Total Total
in the
as as as as as year
as at as at at at at at at to as at as at
28 28 28 28 28 28 28 28 28 28
February February February February February February February February February February
2015 2015 2015 2015 2015 2015 2015 2015 2014 2014
% GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Operational
wind
Greenfield
Wind Farm
Limited * PQ 12.50% 1,076 1,013 2,089 500 939 1,439 (141) 2,271 1,480
White Mill
Windfarm
Limited * PQ 25.00% 2,521 342 2,863 1,000 318 1,318 (47) 2,910 1,318
AD Wind
Farmers
Limited * Q 50.00% 1,215 - 1,215 1,000 - 1,000 46 1,169 1,000
Biggleswade
Wind Farm
Limited * Q 21.50% 1,900 1,753 3,653 527 1,623 2,150 (107) 3,760 2,150
Eye Wind
Power
Limited ** Q 0.00% - - - - - - - 500 500
Weston
Airfield
Investments
Limited * Q 50.00% 1,544 - 1,544 1,000 - 1,000 544 1,000 1,000
North
Pickenham
Energy
Limited * Q 50.00% 1,179 - 1,179 1,000 - 1,000 179 1,000 1,000
Wind under
construction
Bernard
Matthews
Green Energy
Halesworth
Limited ** Q 5.64% 300 - 300 300 - 300 - 301 301
Development
and
pre-planning
Blawearie
Wind
Limited * 50.00% 32 - 32 32 - 32 - 30 30
--------------
Realised
investments
Iceni
Renewables
Limited * 50.00% - - - 400 18 418 - - 418
Total 9,767 3,108 12,875 5,759 2,898 8,657 474 12,941 9,197
-------------------------- --------- --------- --------- ---------- --------- --------- ---------- --------- ----------- -----------
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 Ventus VCT plc has also invested (or in
which Ventus VCT plc had invested prior to the investment being
realised). The Company and Ventus VCT plc are managed by Temporis
Capital LLP.
** A company in which Ventus VCT plc and Temporis Capital
Renewable Infrastructure EIS Fund have also invested. The Company,
Ventus VCT plc and Temporis Capital Renewable Infrastructure EIS
Fund are managed by Temporis Capital LLP.
A discussion of each investment follows:
OPERATIONAL WIND
Each of the following investee companies owns and operates a
single wind farm (or, in the case of AD Wind Farmers Limited,
Weston Airfield Investments Limited and North Pickenham Energy
Limited owns an interest in a limited liability partnership that
owns and operates a single wind farm):
Wind farm
capacity
(megawatts) Operational since Location
Greenfield Wind Farm Limited 12.3 March 2011 Lanarkshire,
Scotland
White Mill Windfarm Limited 14.35 August 2012 Cambridgeshire
AD Wind Farmers Limited 10.2 December 2012 Argyll and Bute,
Scotland
Biggleswade Wind Farm Limited 20.0 December 2013
Bedfordshire
Weston Airfield Investments Limited 4.0 April 2014 Norfolk
North Pickenham Energy Limited 4.0 April 2014 Norfolk
The Company's investments in the above companies are valued
using discounted cash flow models. The aggregate value of the above
six companies increased by 3.6% during the year ended 28 February
2015. This increase was primarily due to Weston Airfield
Investments Limited and North Pickenham Energy Limited (both of
which were valued at cost as at 28 February 2014) being valued on a
discounted cash flow basis in accordance with the Company's
valuation policy for investments in companies with operating
renewable energy assets.
During the year ended 28 February 2015, the aggregate
electricity output of the above six companies was 91% of budget and
each company experienced satisfactory availability. The shortfall
against budget was due to wind speeds in the UK being below the
long term averages during the summer and autumn of 2014. Set out
below is a brief summary of the performance of the investee
companies' operating wind farms.
Greenfield Wind Farm Limited
The electricity production of Greenfield Wind Farm Limited
during the year ended 28 February 2015 was 91% of budget. The
Company's "C" share fund received dividends and mezzanine interest
cash payments totalling GBP198,000 from Greenfield Wind Farm
Limited in the year ended 28 February 2015, representing a 13.7%
cash yield on the cost of the investment. Greenfield Wind Farm
Limited also repaid GBP41,000 of mezzanine loan principal to the
Company's "C" share fund during the year. The Company's "C" share
fund recognised a valuation loss of GBP141,000 on its investment in
Greenfield Wind Farm Limited in the year ended 28 February 2015 due
primarily to a downward revision of 4.6% in the projected long-term
energy yield for the wind farm.
The Company's ordinary share fund also holds as investment in
Greenfield Wind Farm Limited as discussed above.
White Mill Windfarm Limited
The electricity production of White Mill Windfarm Limited during
the year ended 28 February 2015 was 85% of budget. The Company
received dividends and mezzanine interest cash payments totalling
GBP141,000 from White Mill Windfarm Limited in the year ended 28
February 2015, representing a 10.7% cash yield on the cost of
investment. The Company recognised a valuation loss of GBP47,000 on
its investment in White Mill Limited in the year ended 28 February
2015 due primarily to adjustments in assumptions related to
projected cash flows.
AD Wind Farmers Limited
AD Wind Farmers Limited is an investor in Allt Dearg Wind
Farmers LLP. The electricity production of Allt Dearg Wind Farmers
LLP during the year ended 28 February 2015 was 106% of budget. The
Company received no dividends from AD Wind Farmers Limited in the
year ended 28 February 2015.
The investment in AD Wind Farmers Limited is valued by applying
a discount rate to the dividends it is projected to pay to the
Company over time. As AD Wind Farmers Limited is unleveraged and as
its profit participation in Allt Dearg Wind Farmers LLP has a fixed
term, the value of the Company's investment in AD Wind Farmers
Limited will generally decrease each year as the remaining term of
the Company's profit participation reduces. However, in the year
ended 28 February 2015, the Company recognised a valuation gain of
GBP46,000 on its investment in AD Wind Farmers Limited due to cash
built up in the company which was not (but could have been)
distributed as dividends during the year.
Biggleswade Wind Farm Limited
Biggleswade wind farm became fully operational in December 2013.
The wind farm was completed ahead of schedule and on budget. The
electricity production of Biggleswade Wind Farm Limited Farm during
the year ended 28 February 2015 was 88% of budget. The Company's
"C" share fund received dividends and mezzanine interest cash
payments totalling GBP336,000 from Biggleswade Wind Farm Limited in
the year ended 28 February 2015, representing a 15.6% cash yield on
the cost of investment. The Company's "C" share fund recognised a
valuation loss of GBP107,000 on its investment in Biggleswade Wind
Farm Limited in the year ended 28 February 2015 due to adjustments
in assumptions related to projected cash flows.
The Company's ordinary share fund also holds an investment in
Biggleswade Wind Farm Limited as discussed above.
Weston Airfield Investments Limited
The Weston Airfield wind farm (in which Weston Airfield
Investments Limited holds a partnership interest) became fully
operational in April 2014. The wind farm was completed ahead of
schedule and under budget. The Company received no cash income from
Weston Airfield Investments Limited in the year ended 28 February
2015. The Company recognised a valuation gain of GBP544,000 on its
investment in Weston Airfield Investments Limited in the year ended
28 February 2015 because the investment, having been held at cost
as at 28 February 2014, has been revalued on a discounted cash flow
basis in line with the Company's accounting policy.
As discussed above, the Company's ordinary share fund holds an
investment in Bernard Matthews Green Energy Weston Limited, which
is Weston Airfield Investments Limited's partner in the Weston
Airfield wind farm.
North Pickenham Energy Limited
The North Pickenham Airfield wind farm (in which North Pickenham
Energy Limited holds a partnership interest) became fully
operational in April 2014. The wind farm was completed ahead of
schedule and under budget. The Company received no cash income from
North Pickenham Energy Limited in the year ended 28 February 2015.
The Company recognised a valuation gain of GBP179,000 on its
investment in North Pickenham Energy Limited in the year ended 28
February 2015 because the investment, having been held at cost as
at 28 February 2014, has been revalued on a discounted cash flow
basis in line with the Company's accounting policy.
As discussed above, the Company's ordinary share fund holds an
investment in Bernard Matthews Green Energy Pickenham Limited,
which is North Pickenham Energy Limited's partner in the North
Pickenham Airfield wind farm.
WIND UNDER CONSTRUCTION
Bernard Matthews Green Energy Halesworth Limited
Bernard Matthews Green Energy Halesworth Limited is constructing
a 10.25 megawatt wind farm at the Upper Holton Airfield near
Halesworth, Suffolk. The wind farm will operate five Senvion MM82
2.05 megawatt turbines. The wind farm is scheduled to be
operational in August 2015. In July 2014, the Company's "C" share
fund made an equity investment of GBP300,000 in Bernard Matthews
Green Energy Halesworth Limited in July 2015. The investment is
held at cost.
The Company's ordinary and "D" share funds also hold an
investment in Bernard Matthews Green Energy Halesworth Limited as
discussed above and below.
DEVELOPMENT AND PRE-PLANNING
Blawearie Wind Limited
Blawearie Wind Limited is developing a wind farm in the Scottish
Borders. The project is in the pre-planning phase. During the year
ended 28 February 2015, the Company invested a further GBP2,500 in
Blawearie Wind Limited, taking the cost of the investment for the
Company's "C" share fund to GBP32,500.
REALISED INVESTMENTS
Iceni Renewables Limited
Iceni Renewables Limited is a company established to develop two
potential wind farms in Scotland. The first project, Craigannet (up
to six turbines), was submitted for planning in January 2012,
appealed for non-determination in August 2012 and then refused by
the Scottish Government in November 2012. The second site, Merkins
(up to ten turbines), was submitted for planning in January 2012
and turned down by West Dunbartonshire Council in October 2013. The
Investment Manager believes there is no prospect of Iceni
Renewables Limited obtaining value from either site. As such, the
Company's investment in Iceni Renewables Limited was written down
to nil value during the year ended 28 February 2014 and was
considered to be a realised loss.
Eye Wind Power Limited
The Company's "C" share fund held a mezzanine debt investment in
Eye Wind Power Limited of GBP500,000, which was repaid in full
during the year ended 28 February 2015.
INVESTMENTS MADE SINCE THE YEAR END
Darroch Power Limited
Darroch Power Limited is constructing a hydroelectric scheme on
the Glenfalloch Estate near Loch Lomond. In March 2015, the
Company's "C" share fund invested GBP53,000 in the equity of
Darroch Power Limited for a shareholding of 4.22% and has advanced
a mezzanine loan of GBP133,000.
The Company's ordinary and "D" share funds also hold an
investment in Darroch Power Limited as discussed above and
below.
Upper Falloch Power Limited
Upper Falloch Power Limited is also constructing a hydroelectric
scheme on the Glenfalloch Estate near Loch Lomond. In March 2015,
the Company's "C" share fund invested GBP17,000 in the equity of
Upper Falloch Limited for a shareholding of 2.79% and has advanced
a mezzanine loan of GBP90,000.
The Company's ordinary and "D" share funds also hold an
investment in Upper Falloch Power Limited as discussed above and
below.
"D" share portfolio
The "D" share offer closed on 30 May 2014 having raised net
proceeds of GBP1.93 million. The "D" share fund made one investment
during the year ended 28 February 2015, which is discussed
immediately below. In March 2015, the "D" share fund made an
investment of GBP644,000 in Darroch Power Limited and an investment
of GBP374,000 in Upper Falloch Power Limited. Darroch Power Limited
and Upper Falloch Power Limited are both constructing hydroelectric
projects which are scheduled to be operational by the end of 2015.
The "D" share fund is now fully invested.
WIND UNDER CONSTRUCTION
Bernard Matthews Green Energy Halesworth Limited
Bernard Matthews Green Energy Halesworth Limited is constructing
a 10.25 megawatt wind farm at the Upper Holton Airfield near
Halesworth, Suffolk. The wind farm will operate five Senvion MM82
2.05 megawatt turbines. The wind farm is scheduled to be
operational in August 2015. In July 2014, the Company's "D" share
fund made an equity investment of GBP712,000 in Bernard Matthews
Green Energy Halesworth Limited in July 2015. The investment is
held at cost.
The Company's ordinary and "C" share funds also hold an
investment in Bernard Matthews Green Energy Halesworth Limited as
discussed above.
INVESTMENTS MADE SINCE THE YEAR END
Darroch Power Limited
Darroch Power Limited is constructing a hydroelectric scheme on
the Glenfalloch Estate near Loch Lomond. In March 2015, the
Company's "D" share fund invested GBP319,000 in the equity of
Darroch Power Limited for a shareholding of 25.50% and has advanced
a mezzanine loan of GBP325,000.
The Company's "C" and "D" share funds also hold an investment in
Darroch Power Limited as discussed above.
Upper Falloch Power Limited
Upper Falloch Power Limited is also constructing a hydroelectric
scheme on the Glenfalloch Estate near Loch Lomond. In March 2015,
the Company's "D" share fund invested GBP185,000 in the equity of
Upper Falloch Limited for a shareholding of 29.58% and has advanced
a mezzanine loan of GBP189,000.
The Company's "C" and "D" share funds also hold an investment in
Upper Falloch Power Limited as discussed above.
Top 10 Investments
The details of the top ten investments, by value, held by each
of the ordinary share fund, the "C" share fund and the "D" share
fund at 28 February 2015 are set out in the tables below:
Ordinary Share Fund
Income
recognised Proportion
by the of share
Company Basis fund Date of Net
Voting during the of portfolio latest assets/ Profit/
Company Value Cost Shareholding rights year Value by value accounts (liabilities) Turnover (loss)
GBP000 GBP000 % % GBP000 % GBP000 GBP000 GBP000
Achairn
Energy
Limited 4,035 2,515 40.40% 40.40% 213 DCF 23.8% 30/11/2013 966 1,385 19
Greenfield
Wind Farm
Limited 2,784 1,917 16.65% 16.65% 263 DCF 16.4% 31/12/2013 1,952 - 270
Osspower
Limited 2,635 300 50.00% 50.00% 2 DCF 15.5% 31/03/2014 1,226 1,450 573
Eye Wind
Power
Limited 1,885 1,480 35.09% 35.09% 8 DCF 11.1% 28/02/2014 2,419 11 (25)
Renewable
Power
Systems
(Dargan
Road)
Limited 1,820 1,844 50.00% 50.00% 143 DCF 10.7% 31/07/2014 674 802 45
Bernard
Matthews
Green
Energy
Weston
Limited 971 500 50.00% 50.00% - DCF 5.7% 31/03/2014 1,042 58 43
A7 Lochhead
Limited 736 568 20.00% 20.00% 213 DCF 4.3% 31/03/2014 1,802 1,826 451
Bernard
Matthews
Green
Energy
Pickenham
Limited 694 500 50.00% 50.00% - DCF 4.1% 31/03/2014 996 - (3)
Biggleswade
Wind Farm
Limited 594 350 3.50% 3.50% 49 DCF 3.5% 30/06/2014 2,014 2,768 811
Bernard
Matthews
Green
Energy
Halesworth
Limited 536 351 10.07% 10.07% - PRI 3.2% 30/06/2014 60 - (41)
"C" Share Fund
Income
recognised Proportion
by the of share
Company Basis fund Date Net
Voting during the of portfolio of latest assets/ Profit/
Company Value Cost Shareholding rights year Value by value accounts (liabilities) Turnover (loss)
GBP000 GBP000 % % GBP000 % GBP000 GBP000 GBP000
Biggleswade
Wind Farm
Limited 3,653 2,150 21.50% 21.50% 301 DCF 28.4% 30/06/2014 2,014 2,768 811
White Mill
Windfarm
Limited 2,863 1,318 25.00% 25.00% 162 DCF 22.2% 31/12/2013 2,637 3,138 284
Greenfield
Wind Farm
Limited 2,089 1,439 12.50% 12.50% 197 DCF 16.2% 31/12/2013 1,952 - 270
Weston
Airfield
Investments
Limited 1,544 1,000 50.00% 50.00% - DCF 12.0% 31/03/2014 2,004 - (1)
AD Wind
Farmers
Limited 1,215 1,000 50.00% 50.00% - DCF 9.4% 30/09/2013 2,074 96 74
North
Pickenham
Energy
Limited 1,179 1,000 50.00% 50.00% - DCF 9.2% 31/03/2014 2,004 - (1)
Bernard
Matthews
Green
Energy
Halesworth
Limited 300 300 5.64% 5.64% 13 PRI 2.3% 30/06/2014 60 - (41)
Blawearie
Wind
Limited 32 32 50.00% 50.00% - PRI 0.2% 30/04/2014 47 - (1)
"D" Share Fund
Income
recognised Proportion
by the of share
Company Basis fund Date Net
Voting during the of portfolio of latest assets/ Profit/
Company Value Cost Shareholding rights year Value by value accounts (liabilities) Turnover (loss)
GBP000 GBP000 % % GBP000 % GBP000 GBP000 GBP000
Bernard
Matthews
Green
Energy
Halesworth
Limited 712 712 13.37% 13.37% - PRI 100% 30/06/2014 60 - (41)
Basis of valuation
DCF Discounted future cash flows from the underlying business
excluding interest earned to date
PRI Price of recent investment reviewed for impairment
The ordinary share fund and the "C" share fund have
shareholdings in Greenfield Wind Farm Limited of 16.65% and 12.5%
respectively, therefore the Company's aggregate shareholding is
29.15%.
The ordinary share fund and the "C" share fund have
shareholdings in Biggleswade Wind Farm Limited of 3.5% and 21.5%
respectively, therefore the Company's aggregate shareholding is
25.0%.
The ordinary share fund, the "C" share fund and the "D" share
fund have shareholdings in Bernard Matthews Green Energy Halesworth
Limited of 10.07%, 5.64% and 13.37% respectively, therefore the
Company's aggregate shareholding is 29.08%.
Valuation of Investments
It is the accounting policy of the Company to hold its
investments at fair value. The Company's investments in investee
companies which operate renewable energy assets 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, 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 price of investment subject to a periodic impairment
review.
Investment Policy
The Company is focused on investing in companies developing
renewable energy projects with installed capacities of up to 20
megawatts, although investments in companies developing 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 to allocate the Company's
investments in equity securities and loan stock of companies owning
renewable energy projects, primarily wind energy and hydroelectric.
Up to 10% of net proceeds raised from share offers may be allocated
to companies developing early stage renewable energy projects prior
to planning permissions being obtained.
The Company together with Ventus VCT plc has an allocation
agreement in place with the Investment Manager. The allocation
agreement prescribes the allocation of investments between the two
companies and their share funds in accordance with the ratio of
available funds in each share fund, subject to adjustment in
consideration of maintaining the VCT status of both companies,
concentration risk, expected timing of realisations and projected
dividend profiles.
The Company's policy is to maintain cash reserves of at least 5%
of net proceeds raised from share offers 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.
Risk Diversification
The geographical focus of the Company's 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 made via subscriptions for new
share capital, acquiring existing 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.
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 debt which is non-recourse to the
Company. 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 for the duration of the loan so that investee companies are
not exposed to changes in market interest rates.
To the extent that borrowing should be required by the Company
for any purpose, the Directors will restrict the borrowings of the
Company. The aggregate principal amount at any time outstanding in
respect of money borrowed by the Company will 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 Company to various
risks, the following can be used as a guide:
i) Investments in qualifying holdings
Under VCT regulations, at least 70% of the Company's funds
should be invested in qualifying holdings. When there is an issue
of new shares, the 70% requirement does not apply to the new funds
raised for any accounting periods which end earlier than three
years from the date of allotment of the new shares.
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 any requirement due to
factors outside of its control, it may apply to HMRC 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 share offers may be invested in
companies developing pre-planning projects.
VCT Regulations
Under the current VCT regulations, new investments in renewable
energy companies that benefit from Renewable Obligation
Certificates ("ROCs") or Feed-in Tariffs are excluded as qualifying
investments for VCTs. As such, the Company is limited in its
ability to make further investments in accordance with the
Investment Policy. These restrictions do not affect any of the
Company's existing investments.
Market Overview
In light of the current VCT regulations with respect to
qualifying investments, as described above, the Company will have
limited opportunities, if any, to make further new investments in
renewable energy companies. Therefore, the discussion in this
section relates primarily to the potential impact of policy and
market developments on future income from current investments.
Under the Energy Act 2013, the Renewables Obligation ("RO") is
planned to be phased out and replaced by Contracts for Difference
("CfD") for all renewable energy generation capacity brought on
line after 31 March 2017. Up until 31 March 2017, renewable energy
generators will have a choice between the RO regime and the CfD
regime, but no new generation will be accredited for ROCs after 31
March 2017. A renewable energy project is entitled to earn ROCs (or
an equivalent subsidy) for 20 years, so the RO regime will not end
completely until 31 March 2037.
All existing wind farms operated by the Company's investee
companies will continue to receive ROCs (or an equivalent subsidy)
for 20 years from the date they commenced operations. The
hydroelectric projects operated by the Company's investee companies
will also receive the relevant Feed-in Tariff for 20 years from the
date they commenced operations Both the ROC and Feed-in Tariff are
indexed to the Retail Price Index.
Although the Conservative Party manifesto for the 2015 general
election included a pledge to end subsidies for new onshore wind
farms, the details of the implementation of this pledge have not
been disclosed. In any case this will have no impact on existing
assets operated by portfolio companies of the Company. There is
broad cross-party support in the UK for the concept that existing
projects will always be "grandfathered" with respect to future
changes in tariffs. Furthermore, the Scottish Government (where a
significant portion of the Company's investments are based)
continues to provide strong support for renewables.
Wholesale electricity prices in the UK have trended down in the
past year, falling by approximately 10% in 2014. This has had a
limited impact on the Company, as investee companies generally sell
their electricity output pursuant to power purchase agreements
("PPAs") with wholesale electricity prices that are fixed over the
medium- to long-term. It has recently become more difficult to
enter into PPAs with a fixed-price term of greater than three
years, which could have an impact on the ability of investee
companies to enter into long-term PPAs when the current PPAs
expire. The Investment Manager works closely with investee
companies to manage wholesale electricity price risk and is
actively investigating the replacement of PPAs of certain investee
companies that are expiring within the next year.
The banking market for renewable energy projects has improved in
the past year. There is increased availability of senior bank debt
for renewable energy projects of all sizes. Lending margins and
arrangement fees have narrowed, however banks are still generally
unable to lend over as long a term as they did prior to 2009. The
improvement in the lending market may provide the opportunity for a
limited number of investee companies to refinance their existing
senior debt on more attractive terms, although in many cases the
potential savings do not justify the cost of refinancing. The
Investment Manager is assisting certain investee companies in
considering the advisability of re-financing.
Temporis Capital LLP
Investment Manager
28 May 2015
DIRECTORS' REPORT
The Directors present their Annual Report and the audited
Financial Statements for the year ended 28 February 2015.
Dividends
The Company paid an interim dividend of 2.00p per ordinary share
on 14 January 2015 to all ordinary shareholders on the register as
at the close of business on 12 December 2014. The Directors
recommend a final dividend of 2.10p per ordinary share to be paid
on 5 August 2015 to ordinary shareholders on the register on 10
July 2015. The total dividend for the year is therefore 4.10p per
ordinary share.
The Company paid an interim dividend of 3.00p per "C" share on
14 January 2015 to all "C" shareholders on the register as at the
close of business on 12 December 2014. The Directors recommend a
final dividend of 3.50p per "C" share to be paid on 5 August 2015
to all "C" shareholders on the register as at the closed of
business on 10 July 2015. The total dividend for the year is
therefore 6.50p per "C" share. Note 7 of the Financial Statements
gives details of dividends declared and paid in the current year
and prior year.
The Company is able to pay dividends from special reserves as
these are distributable reserves. Also, the Companies Act 2006 now
allows investment companies to pay dividends from realised
profits.
Going concern
The Company's major cash flows are within the Company's control
(namely investment additions 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, having reviewed the Company's cash
flow forecast for the next 18 months, has a reasonable expectation
that the Company is able to continue in operational existence for a
period of at least 12 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 showing in note 16. The Company's
investment activities are described in the Investment Manager's
Report and its performance is reviewed in the Director's
Report.
Future developments of the Company are discussed in detail in
the business model and investment policy section of the Strategic
Report.
Directors
The Directors of the Company during the year under review were
Alan Moore, Paul Thomas and Colin Wood. Biographical information on
the Directors is shown below. The terms of the Directors'
appointment and replacement are set out in the Corporate Governance
Statement. All of the Directors are non-executives and all are
independent, except Paul Thomas who is Chairman of the Ventus
Funds' 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 Conduct Authority, Paul Thomas and
Alan Moore will retire at the annual general meeting ("AGM") and
being eligible, will offer themselves for re-election. As both Mr
Thomas and Mr Moore 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.
Share capital
Authorised share capital
At 28 February 2015, the Company had authorised share capital of
GBP22,500,000 in total which was represented by 50 million ordinary
shares of 25p, 20 million "C" shares of 25p each and 20 million "D"
shares of 25p each being 56%, 22% and 22% of the Company's
authorised share capital respectively.
Allotted, called and fully paid up shares
As at 28 February 2015, the Company had allotted, called and
fully paid up shares in three share funds, of which 24,392,655
shares were ordinary shares of 25p each, 11,329,107 were "C" shares
of 25p each and 1,990,767 were in "D" shares of 25p each. These
shares represented 65%, 30% and 5% of the Company's issued share
capital respectively. The Company holds 45,900 "C" shares in
treasury, which were bought during the year.
Authority to allot
At the general meeting held on 18 December 2013 the Directors
were authorised to allot relevant securities (in accordance with
Section 551 of the Companies Act 2006) up to a maximum aggregate
nominal amount of GBP5,000,000. Renewal of the authority to allot
shares will be voted on at AGM of the Company to be held on 21 July
2015.
Disapplication of pre-emption rights
At the general meeting held on 18 December 2013 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. Renewal of the authority to
disapply pre-emption rights will be voted on at the AGM to be held
on 21 July 2015.
Authority to repurchase shares
At the AGM held on 29 July 2014 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.
At the general meeting held on 18 December 2013 the Company was
authorised to repurchase up to 10% of the "D" shares in issue
following the offer for "D" shares. Renewal of these authorities
will be voted on at the AGM to be held on 21 July 2015.
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 on 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 or 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 from Companies House in the UK or by writing to the
Company Secretary.
"D" Share Offer
On 5 April 2014 and on 3 June 2014 the Company allotted
1,613,328 and 377,439 "D" Ordinary shares under a joint offer with
Ventus VCT plc. The joint offer closed following the allotment on 3
June 2014.
CREST
The Company's shares are available for trading in CREST, the
settlement system for uncertified stocks and shares.
Substantial interests
As at 28 February 2015 and at the date of this report, the
Company was aware of the following shareholders that held
beneficial interests and voting rights exceeding 3% of the voting
rights attached to the Company's share capital
Percentage of shares held
Shareholders at 28 February 2015 and
the date of this report
-------------------------------- --------------------------
Hargreaves Lansdown (Nominees) 3.48%
The Company is not aware of any other beneficial interest
exceeding 3% of the voting rights attached to the Company's share
capital.
Financial instruments
The Company's financial instruments comprise investments in
unquoted companies and cash, trade and other receivables and trade
and other payables. Further details, including details about risk
management, are set out in note 16 of the Financial Statements.
Events after the year end
Significant events which have occurred after the year end are
detailed in note 15 of the Financial
Statements.
Global Greenhouse Gas Emissions
The Company has no direct greenhouse gas emissions to report
from its operations, being an externally managed investment
company. 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.
Accountability and Audit
The statement of directors' responsibilities is set out below.
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 BDO 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 of the Company (or any adjournment
thereof) to be convened for 21 July 2015 at 12.30pm (the "Notice").
A copy of the Notice is set out at the end of this report. A Form
of Proxy for use in connection with the AGM has been issued with
this report.
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 28
February 2015.
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 2.10p per ordinary share to the holders of ordinary shares and
3.50p per "C" share to the holders of "C" shares, payable on 5
August 2015 to those shareholders registered at the close of
business on 10 July 2015, which will bring the total dividend for
the year to 4.10p per ordinary share and 6.50p per "C" share.
Resolution 3 - Directors' Remuneration Report
Under The Large and Medium-sized Companies and Groups (Accounts
and Reports) (Amendments) Regulations 2013, 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.
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 Alan Moore retires in accordance with the AIC Code, and being
eligible, offers himself for re-election.
Resolution 6 - Re-election of Director
Mr Colin Wood retires in accordance with the AIC Code, and being
eligible, offers himself for re-election.
Resolution 7 - Re-appointment of Auditor
This resolution proposes that BDO LLP be re-appointed as Auditor
of the Company.
Resolution 8 - Remuneration of the Auditor
This resolution proposes that the Directors be authorised to set
the Auditor's remuneration.
Resolution 9 - 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 3,656,459 ordinary shares, 1,691,353 "C" shares and 298,415 "D"
shares, representing 14.99% of the current issued share capital of
each class, at a minimum price of 25p per share and a maximum
price, exclusive of any expenses, for 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 2016 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.
Resolution 10 - Authority to allot shares
If passed, this ordinary resolution gives the Directors the
authority to issue shares in the capital of the
Company and to grant rights to subscribe for or to convert any
security into shares in the Company up to an aggregate nominal
amount of GBP6,250,000. This authority will expire on the
conclusion of the AGM of the Company to be held in 2016 (unless
renewed, varied or revoked by the Company in general meeting). As
at the date of this document, the Directors are not intending to
issue any shares.
Resolution 11 - Disapply pre-emption rights
If this special resolution is passed, the Directors will be
empowered to allot or make offers to or agreements to allot equity
securities (which expression shall have the meaning ascribed to it
in Section 560(1) of the Companies Act) for cash pursuant to the
authority given in resolution 10 above, as if Section 561(1) of the
Act did not apply to such allotment, provided that the power given
by this resolution shall expire on the conclusion of the AGM of the
Company to be held in 2016 (unless renewed, varied or revoked by
the Company in general meeting).
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). Shareholders who have elected to receive
correspondence by email are requested to complete the Form of Proxy
online through the web proxy voting portal on the Capita Registrars
website. 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
28 May 2015
DIRECTORS' REMUNERATION REPORT
Statement by the Chairman
This Directors' Remuneration Report has been prepared by the
Directors in accordance with the requirements of the Companies Act
2006 and the Large and Medium-sized Companies and Groups (Accounts
and Reports) Regulations 2008. This Directors' Remuneration Report
includes the Directors' Remuneration Policy Report and the
Directors' Annual Report on Remuneration. Changes in legislation,
which became effective in the first financial year beginning on or
after 1 October 2013, require that quoted companies may only pay
remuneration to Directors in accordance with a remuneration policy
which has been approved by shareholders.
Details of the Company's Directors' Remuneration Policy are
shown below together with an explanation of changes made to fees
during the year and the reason for the changes.
Under the Companies Act 2006, certain disclosures provided in
this report are required to be audited. Where disclosures have been
audited they have been indicated as such.
Directors' Remuneration Policy Report
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
Board considers that the level of remuneration should be sufficient
to attract and retain Directors of appropriate experience to
oversee the Company and should be adjusted, appropriately, for the
level of work and responsibility required as well as for
inflation.
The total remuneration of non-executive Directors should not
exceed the GBP100,000 per annum limit set out in the Articles of
Association of the Company which may not be changed without seeking
shareholder approval at a general meeting.
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. A Director's appointment may
also be terminated in certain other circumstances.
The date of appointment of each Director and the AGM at which he
is expected to next stand for re-election is set out below:
Date of Due date
appointment of re-election
---------------------- ------------- ----------------
10 January
Alan Moore (Chairman) 2006 AGM 2015
10 January
Colin Wood 2006 AGM 2015
10 January
Paul Thomas 2006 AGM 2015
---------------------- ------------- ----------------
Based on the current level of fees, which came into effect on 1
September 2013, the Directors' remuneration for the forthcoming
financial year would be as follows:
Year ending
28 February
2016
GBP
----------------------- -------------
Alan Moore (Chairman) 30,000
Colin Wood 25,000
Paul Thomas 25,000
-------------
Total 80,000
----------------------- -------------
It is intended that the Directors' Remuneration Policy should
remain in place until 28 February 2017. However, the Board will
consider the level of Directors' fees at least annually. Any
changes to be made to Directors' remuneration during this period
will be made in accordance with the policy stated above. Directors'
remuneration must be made in accordance with the approved policy
unless approved by a separate shareholder resolution.
Directors' Annual Report on Remuneration
During the financial year ended 28 February 2015, having
considered:
-- the additional responsibilities and workload placed on them due to regulatory changes;
-- the additional time being spent with internal and external
Auditors to ensure proper controls are in place; and
-- that until 1 September 2013 there has been no change in fees
since the inception of the Company, except in 2010 when the Ventus
Funds' boards were reorganised, and individual Directors took a cut
in overall fees earned from the Ventus Funds in order to maintain
aggregate fees for the Company at the same level
the Board resolved that is was appropriate to maintain the
Directors' fees at the same level as that which was effective from
1 September 2013.
Directors' fees (audited information)
The following fees were paid to individual Directors in respect
of the year ended 28 February 2015. The fees were paid in
accordance with the Directors' Remuneration Policy. Comparative
figures for the year ended 28 February 2014 are also presented.
Year ending Year ended
28 February 28 February
2015 2014
GBP GBP
----------------------- ------------- -------------
Alan Moore (Chairman) 30,000 27,500
Colin Wood 25,000 22,500
Paul Thomas 25,000 22,500
------------- -------------
Total 80,000 72,500
----------------------- ------------- -------------
None of the Directors received any other remuneration during the
year.
The table below shows aggregate Directors' remuneration,
aggregate shareholder dividends paid and aggregate amounts paid to
buy back the Company's own shares in the current and prior
financial years:
Year ended Year ended
---------------------------- ---------
28-Feb 28-Feb
2015 2014
GBP GBP % Change
---------------------------- ----------- ----------- ---------
Aggregate Directors'
remuneration 80,000 72,500 10.3%
Aggregate shareholder
dividends paid 1,534,000 1,342,000 14.3%
Aggregate amounts paid
to buy back the Company's
own shares 45,000 16,950 165.5%
Directors' Shareholding (audited information)
The Directors who held office during the year held the following
interests in the Company:
As at As at As at As at As at
-------------
28-Feb 28-Feb 28-Feb 28-Feb 28-Feb
-------------
2015 2015 2015 2014 2014
GBP GBP GBP GBP GBP
------------- --------- ----------- ----------- --------- -----------
Ordinary "C" shares "D" shares Ordinary "C" shares
shares shares
Alan Moore
(Chairman) 28,579 10,400 7,525 28,579 10,400
Colin Wood 20,090 5,200 nil 10,090 5,200
Paul Thomas 10,090 5,200 5,000 10,090 5,200
------------- --------- ----------- ----------- --------- -----------
There have been no changes in the beneficial interests of the
Directors between 28 February 2015 and the date of this report.
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 the Directors' Remuneration Report Regulations 2013,
the FTSE 100 Index has been used as a comparative.
[TABLE]
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 28
February 2015 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 an increase in shareholder
value during the year in respect of the total shareholder return
based on NAV, which is attributable to the profit generated by the
investments and the dividends paid to ordinary shareholders during
the year. 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 but has
reduced over the year.
The ordinary share fund's Share Price Total Return and NAV Total
Return presented in the graph do not include the effect of VCT tax
relief or income tax and capital gains tax exemptions from which
VCT shareholders may benefit. Assuming an investor had benefitted
from the initial income tax relief of 40% which was available to
investors in the tax years in which the initial offer for ordinary
shares was made, the Share Price Total Return of the ordinary share
fund would be 141%. This analysis, also, does not include the
effect of the additional benefits of income tax-free dividends or
capital gains tax exemptions which are available to VCT investors
nor does it include the tax benefits received by shareholders who
participated in the linked tender offer and ordinary share offer in
2012.
(1) Share Price Total Return is the return attributable to the
share price of the ordinary 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 ordinary
shares held plus the cumulative dividends paid on those shares over
the period in which they were held.
Total shareholder return on "C" shares
[TABLE]
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 28 February 2015
compared with the total return attributable to GBP100 invested in
companies comprising the FTSE 100 Index over the same period. There
was an increase in shareholder value during the year in respect of
the total shareholder return based on NAV, which is attributable to
the profit generated by the share fund's investments and the
dividends paid to "C" shareholders during the year. The graph also
demonstrates the discount to NAV of the share price of the "C"
shares as the total shareholder return based on share price is
lower than that based on NAV.
The "C" share fund's Share Price Total Return and NAV Total
Return presented in the graph do not include the effect of VCT tax
relief or income tax and capital gains tax exemptions from which
VCT shareholders may benefit. Assuming an investor had benefitted
from the initial income tax relief of 30% which was available to
investors in the tax years in which the initial offer for "C"
shares was made, the Share Price Total Return of the "C" share fund
would be 164%. This analysis, also, does not include the effect of
the additional benefits of income tax-free dividends or capital
gains tax exemptions which are available to VCT investors.
(1) Share Price Total Return is the return attributable to the
share price of the "C" 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 "C" shares
held plus the cumulative dividends paid to those shares over the
period in which they were held.
Voting on the Directors' Remuneration Report at the AGM
At the last AGM held on 29 July 2014, the shareholders approved
the Directors' Remuneration Report in respect of the year ended 28
February 2014. Votes representing 1.7 million shares (90.6%) were
in favour of the resolution, votes representing 118,000 shares
(6.3%) were against, and votes representing 58,000 shares (3.1%)
were withheld.
An ordinary resolution to approve this Directors' Remuneration
Report will be proposed at the forthcoming AGM.
On behalf of the Board
Paul Thomas
Director
28 May 2015
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 (the "Code"), as well as setting out
additional principles and recommendations on issues that are of
specific relevance to member companies of the AIC.
The Board considers that reporting against the principles and
recommendations of the AIC Code, and by reference to the AIC Guide
(which incorporates the Code), will provide better information to
shareholders. The Company has complied with the recommendations of
the AIC Code and the relevant provisions of the Code, except as set
out below.
The Code includes provisions relating to:
-- the role of the chief executive
-- executive directors' remuneration
-- nomination and remuneration committees.
For the reasons set out in the AIC Guide, and as explained in
the Code, the Board considers these provisions are not relevant to
the position of the Company, being an externally managed investment
company. In particular, all of the Company's day-to-day management
and administrative functions are outsourced to third parties. The
Company has therefore not reported further in respect of these
provisions. 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.
Board of Directors
For the year ended 28 February 2015 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 in the
Directors' Information below.
Independence
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. The Board is of the view that length of service will
not necessarily compromise the independence or effectiveness of
Directors where continuity and experience can be of significant
benefit to the Company and its shareholders. However, in accordance
with the AIC Code any Director who has served for more than nine
years will stand for re-election annually therefore resolutions to
re-elect all three Directors are included in the Notice of Annual
General Meeting.
Directors' responsibilities
The Board meets at least quarterly and is in regular contact
with the Investment Manager between these meetings. The Directors
also held two strategy meetings with the Investment Manager during
the year. 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:
Audit
Board Committee
Meetings Meetings
Held Attended Held Attended
----------------------- ----- --------- ----- ---------
Alan Moore (Chairman) 4 4 3 3
Paul Thomas 4 4 3 3
Colin Wood 4 4 3 2
----------------------- ----- --------- ----- ---------
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 Board has 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.
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
statutory rules and regulations and for ensuring the timely
delivery of information.
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.
The terms and conditions of appointment of non-executive
Directors are available upon written application to the Company
Secretary. Directors appointed by the Board to fill a vacancy are
required to submit to election at the next AGM by separate
resolution. 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. 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 Company may by ordinary resolution remove any Director before
his period of office has expired. As Mr Thomas is the Chairman of
the Ventus Funds' Investment Committee of the Investment Manager,
he is subject to re-election under Listing Rule 15.2.13A, and will
therefore offer himself for annual re-election at AGMs as will Mr
Moore and Mr Wood who are subject to annual re-election as
described previously.
The Company has in place directors' and officers' liability
insurance.
The performance of the Board, Audit Committee and individual
Directors has been evaluated through an assessment process led by
the Chairman. The assessment process included consideration of
performance monitoring and evaluation, strategy and corporate
issues, shareholder value and communications and governance.
Report from the 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 twice 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 and are also available upon written application
to the Company Secretary. The Audit Committee has primary
responsibility for making recommendations on the appointment,
reappointment and removal of the external Auditor.
The Audit Committee met three times this year and the Audit
Committee Chairman also held private discussions with the external
auditor without the Investment Manager present. After each meeting,
the Chairman reports to the Board on the matters discussed, on
recommendations and actions to be taken.
During the year ended 28 February 2015 the Audit Committee
discharged its responsibilities by:
-- reviewing all Financial Statements released by the Company
(including the annual and Half-yearly Report);
-- reviewing the Company's accounting policies;
-- monitoring the effectiveness of the system of internal
controls and risk management. No significant weaknesses were
identified in the year under review;
-- approving the external Auditor's plan and fees;
-- receiving a report from the external Auditor following their
detailed audit work, and discussing key issues arising from that
work;
-- reviewing its' own terms of reference; and
-- reviewing the internal audit plan and the recommendations of the internal auditors.
The key areas of risk identified by the Audit Committee in
relation to the business activities and Financial Statements of the
Company are:
-- compliance with HM Revenue & Customs to maintain the Company's VCT status;
-- valuation of unquoted investments;
-- recoverability of the deferred consideration in respect of Craig Wing Farm Limited; and
-- revenue recognition and recoverability.
These matters are monitored regularly by the Investment Manager,
and reviewed by the Board at every Board meeting. They were also
discussed with the Investment Manager and the Auditor at the Audit
Committee meeting held to discuss the annual Financial
Statements.
The Audit Committee concluded:
VCT Status -the Investment Manager confirmed to the Audit
Committee that the conditions for maintaining the Company's status
had been complied with throughout the year. The Investment Manager,
typically, obtains pre-approval from HM Revenue & Customs for
each qualifying investment. New investments and the Company's VCT
status are also reviewed by the Company's tax adviser, Robertson
Hare LLP (previously PricewaterhouseCoopers LLP).
Valuation of unquoted investments - the Investment Manager
confirmed to the Audit Committee that the basis of valuation for
unquoted investments was consistent with the prior year and in
accordance with published industry guidelines, taking account of
the latest available information about investee companies and
current market data. A comprehensive report on the valuation of
investments is presented and discussed at every Board meeting;
Directors are also consulted about material changes to those
valuations between Board meetings.
Recoverability of the deferred consideration in respect of Craig
Wind Farm Limited - the Audit Committee is satisfied that the
deferred consideration in respect of the sale of Craig Wind Farm is
recoverable and the Company has adequate security over the amount
receivable.
Revenue recognition and recoverability - the Audit Committee
considered the revenue recognised during the year and the revenue
receivable by the Company at the year end and is satisfied that
they are appropriately accounted for.
The Investment Manager and the Auditor confirmed to the Audit
Committee that they were not aware of any unadjusted material
misstatements. Having reviewed the reports received from the
Investment Manager and the Auditor, the Audit Committee is
satisfied that the key areas of risk and judgement have been
properly addressed in the Financial Statements and that the
significant assumptions used in determining the value of assets and
liabilities have been properly appraised and are sufficiently
robust.
The Audit Committee has managed the relationship with the
external Auditor and assessed the effectiveness of the audit
process. When assessing the effectiveness of the process for the
year under review the Audit Committee considered the Auditor's
technical knowledge and it has a clear understanding of the
business of the Company; that the audit team is appropriately
resourced; that the Auditor provided a clear explanation of the
scope and strategy of the audit and that the Auditor maintained
independence and objectivity. As part of the review of Auditor
effectiveness and independence, BDO LLP ("BDO") has confirmed that
it is independent of the Company and has complied with professional
accounting standards. BDO and prior to their merger PKF (UK) LLP
has held office as Auditor for six years and in accordance with
professional guidelines the engagement partner is rotated after at
most five years. The current partner has worked with the Company
for two years.
The appointment of BDO as the Company's Auditor was approved by
shareholders at the AGM held on 29 July 2014. Following the review
as noted above the Audit Committee is satisfied with the
performance of BDO and recommends the services of BDO to the
shareholders in view of both that performance and the firm's
extensive experience in auditing VCTs. A resolution to re-appoint
BDO as Auditor to the Company will be proposed at the forthcoming
AGM.
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.
During the year under review, the Company's external Auditor also
provided tax compliance services, iXBRL tagging services and a
review of the Half-yearly Report, details of which can be found in
Note 4 to the Financial Statements. The Board believes that the
appointment of BDO to supply these services was in the interests of
the Company due to their knowledge of the Company and the VCT
sector. BDO 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 BDO'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. Where a VCT has no executive directors,
the Code principles relating to Directors' remuneration do not
apply and as such no Remuneration Committee has been appointed.
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.
The Board has considered the recommendations of the Code
concerning gender diversity and welcomes initiatives aimed at
increasing diversity generally. The Board believes, however, that
all appointments should be made on merit rather than positive
discrimination. The policy of the Board is that maintaining an
appropriate balance round the board table through a diverse mix of
skills, experience, knowledge and background is of paramount
importance and gender diversity is a significant element of this.
The Board therefore does not consider it appropriate to set
diversity targets.
Any search for new candidates is conducted, and appointments
made, on merit, against objective selection criteria having due
regard, amongst other things, to the benefit of diversity on the
Board, including gender. When recommending new appointments to the
Board the Directors draw on their extensive business experience and
range of contacts to identify suitable candidates, the use of
formal advertisements and external consultants is not considered
cost effective given the Company's size.
Internal control
The Directors acknowledge their responsibility for the Company's
risk management and systems of internal control and for reviewing
their effectiveness. Internal control systems are designed to
provide reasonable, but not absolute, assurance against material
misstatement or loss. 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
which has been in place for the year under review and up to the
date of approval of the accounts. 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.
In April 2012, the Company appointed Roffe Swayne, an
independent external party, to undertake an internal audit of the
processes and procedures in place at the Investment Manager. Roffe
Swayne has agreed a three year internal audit plan in consultation
with the Investment Manager and the Directors based on risks and
control objectives identified jointly. Roffe Swayne tests the
satisfactory operation of internal controls for the Company and
reports to the Audit Committee twice yearly. The controls on which
Roffe Swayne is focusing are portfolio management, asset
management, execution of investment and divestment decisions and
back office operations. Roffe Swayne has reported to the Audit
Committee that key controls tested in the current year are
predominantly effectively and efficiently designed and operate to
mitigate the risk associated with them. 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 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.
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 Investment
Manager and in the opinion of the Directors, the continuing
appointment of Temporis Capital LLP as 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.
Share Capital
The Company has three classes of shares, ordinary, "C" shares
and "D" 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. 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. The powers of the
Company's Directors in relation to the Company issuing or buying
back its own shares are set out in the Directors' Report.
Voting
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.
Dividends
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.
Capital entitlement
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.
Major interests in the Company's shares
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.
Articles of Association
The Company may by special resolution make amendment to the
Company's Articles of Association.
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. The
Board confirms that the Annual Report and Financial Statements,
taken as a whole, are fair, balanced, and understandable and
provide the information necessary for shareholders to assess the
Company's performance, business model and strategy. 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
Paul Thomas
Director
28 May 2015
DIRECTORS' INFORMATION
The Company's Board comprises three Directors, two of whom are
independent of the Investment 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 was appointed an Adjunct Professor at Imperial
College, London, in 2012. In 2013 he was appointed non-executive
Director of the Offshore Renewable Energy Catapult. He has been a
member of the Board since January 2006.
Paul Thomas - Director
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 30 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 - Chairman of the Audit Committee
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 was a
Director of The Century Building Society in Edinburgh until it
merged with the Scottish Building Society on 1 February 2013. He
has been a member of the Board since January 2006.
Statement of Directors' Responsibilities
Directors' responsibilities
The Directors are responsible for preparing the Annual Report
and the Financial Statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare Financial
Statements for each financial year. Under Company law the Directors
are required to prepare the Financial Statements and have elected
to prepare the Company Financial Statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the European Union. Under company law the Directors must not
approve the Financial Statements unless they are satisfied that
they give a true and fair view of the state of affairs of the
Company and of the profit or loss for the company for that
period.
In preparing these Financial Statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether they have been prepared in accordance with
IFRSs as adopted by the European Union,, subject to any material
departures disclosed and explained in the Financial Statements;
and
-- prepare a strategic report, Director's report and Director's
remuneration report which comply with the requirements of the
Companies Act 2006.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the Financial Statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the Annual Report and
the Financial Statements are made available on a website. Financial
Statements are published on the Company's website in accordance
with legislation in the United Kingdom governing the preparation
and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity
of the Company's website is the responsibility of the Directors.
The Directors' responsibility also extends to the ongoing integrity
of the Financial Statements contained therein.
Directors' responsibilities pursuant to DTR4
The Directors confirm to the best of their knowledge:
-- The Financial Statements have been prepared in accordance
with International Financial Reporting Standards (IFRSs) as adopted
by the European Union and Article 4 of the IAS Regulation and give
a true and fair view of the assets, liabilities, financial position
and profit or loss of the Company; and
-- The Annual Report includes a fair review of the development
and performance of the business and the financial position of the
Company, together with a description or the principal risks and
uncertainties that they face.
The names and functions of all the Directors are stated in the
Directors' Information.
For and on behalf of the Board
Paul Thomas
Director
28 May 2015
Directors and Advisers
Directors Investment Manager and Registered Office
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 Barclays Bank plc
Thistle House 1 Churchill Place
21 Thistle Street London
Edinburgh E14 5HP
EH2 1DF
Auditor VCT Taxation Adviser
BDO LLP Robertson Hare LLP
55 Baker Street Suite C- First Floor
London 4-6 Staple Inn
W1U 7EU London
WC1V 7QH
Solicitors Broker
Howard Kennedy LLP Panmure Gordon (UK) Limited
No. 1 London Bridge One New Change
London London
SE1 9BG EC4M 9AF
Registrars
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Independent Auditor's Report
to the members of Ventus 2 VCT plc
Our opinion on the Financial Statements
In our opinion the Ventus 2 VCT plc Financial Statements for the
year ended 28 February 2015, which have been prepared by the
Directors in accordance with applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European
Union:
-- give a true and fair view of the state of the Company's
affairs as at 28 February 2015 and of its profit for the year then
ended;
-- the Financial Statements have been properly prepared in
accordance with IFRSs as adopted by the European Union; and
-- the Financial Statements have been prepared in accordance
with the requirements 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.
What our opinion covers
Our audit opinion on the Financial Statements covers the:
-- statement of comprehensive income;
-- statement of financial position;
-- statement of changes in equity;
-- statement of cash flows; and,
-- related notes
Respective responsibilities of Directors and Auditor
As explained more fully in the report of the Directors, 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 FRC's Ethical Standards for
Auditors.
A description of the scope of an audit of Financial Statements
is provided on the Financial Reporting Council's (FRC) website at
www.frc.org.uk/auditscopeukprivate
Our approach
Our audit approach was developed by obtaining an understanding
of the Company's activities, the key functions undertaken on behalf
of the Board by the Investment Manager and Administrator and, the
overall control environment. Based on this understanding we
assessed those aspects of the Company's transactions and balances
which were most likely to give rise to a material misstatement.
Below are those risks which we considered to have the greatest
impact on our audit strategy and our audit response:
Risk area Audit response
----------------------------------------------- ---------------------------------------------------------------------
Valuation of investments: Valuation The valuations are prepared in accordance with the
of investments is a key accounting estimate International Private Equity
where there is an inherent risk of management and Venture Capital Valuation Guidelines. The majority of
override arising from the investment investments are valued
valuations being prepared by the Investment using an appropriately tailored discounted cashflow model. For
Manager, who is remunerated based on a sample of such
the net asset value of the Company. investments held, our audit procedures included:
* reviewing and challenging the assumptions inherent in
the discounted cashflow model by comparison to
current operational and appropriate benchmark data;
* assessing the appropriateness of the discount rates
applied in the model with reference to recent market
data for comparable assets;
* testing the integrity of each model by using computer
assisted audit techniques; and
* assessing the appropriateness of the discount rates
applied in the model with reference to recent market
data for comparable assets; and
* assessing the impact of estimation uncertainty
concerning these assumptions and the completeness of
associated disclosures in the Financial Statements;
For the remaining investments cost reviewed for impairment is
typically used as
an approximation of fair value. For a sample of these
investments we considered
the appropriateness of this methodology by considering the
proximity of the acquisition
to the year end, if appropriate, or the operational performance
of the investee
company. Where such investments were loans, we also considered
wider economic
and commercial factors that, in our judgement, could impact on
the recoverability
and valuation of those loans.
----------------------------------------------- ---------------------------------------------------------------------
Revenue recognition: Revenue consists
of loan stock interest, dividends receivable * we assessed the design and the implementation of the
from investee companies and interest controls relating to revenue recognition and we
earned cash balances. Revenue recognition developed expectations for interest income receivable
is a presumed risk under International based on loan instruments and investigated any
Standards on Auditing (UK & Ireland). variations in amounts recognised to ensure they were
valid.
* we considered whether the accounting policy had been
applied correctly by management in determining
provisions against income where recovery is
considered doubtful, considering management
information relevant to the ability of the investee
company to service the loan and the reasons for any
arrears of loan interest.
* we also reviewed the recognition and classification
of any accrued income, considering the
appropriateness of the classification of income
between revenue and capital in the Income Statement.
* we also tested dividends receivable to cash received,
as well as to supporting documentation and management
accounts of the investee companies.
----------------------------------------------- ---------------------------------------------------------------------
Recoverability of deferred consideration: We challenged the assumptions used by the Investment Manager to
The Company measures deferred consideration evaluate the carrying
arising from the sale of investments value and recoverability of deferred consideration. In
at amortised cost and the recoverability particular we had regard
of this asset is largely dependent on to independent evidence to support the financing situation of
events outside of the control of the the counterparty
Company. As a consequence there is a and considered the adequacy of disclosures in the Financial
risk the value of deferred consideration Statements.
could be misstated.
----------------------------------------------- ---------------------------------------------------------------------
The Audit Committee's consideration of their key issues is set
out in the Corporate Governance statement.
Materiality in context
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of
misstatements. For planning, we consider materiality to be the
magnitude by which misstatements, including omissions, could
influence the economic decisions of reasonable users that are taken
on the basis of the Financial Statements. Importantly,
misstatements below this level will not necessarily be evaluated as
immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their
occurrence, when evaluating their effect on the Financial
Statements. The application of these key considerations gives rise
to two levels of materiality, the quantum and purpose of which are
tabulated below.
Materiality measure Purpose Key considerations and benchmarks Quantum
(GBP)
---------------------- --------------------- ------------------------------------------------------------- --------
* The value of net assets
Assessing whether
the Financial
Statements * The level of judgement inherent in the valuation
as a whole present
Financial statement a true and fair
materiality view * The range of reasonable alternative valuation 610,000
---------------------- --------------------- ------------------------------------------------------------- --------
Assessing those
classes of
transactions,
balances
or disclosures for
which misstatements
of lesser
amounts than
materiality for the
Financial
Statements as a
whole could
Specific materiality reasonably be
- expected
classes of to influence the
transactions economic decisions
and balances which of users
impact taken on the basis
on net realised of the Financial
returns Statements. * Level of gross expenditure 115,000
---------------------- --------------------- ------------------------------------------------------------- --------
We agreed with the Audit Committee that we would report to the
Committee all audit differences in excess of GBP7,000, as well as
differences below that threshold that, in our view, warranted
reporting on qualitative grounds.
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 Strategic Report and 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
of the Annual Report with respect to 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
Under the ISAs (UK and Ireland), we are required to report to
you if, in our opinion, information in the Annual Report is:
-- materially inconsistent with the information in the audited Financial Statements; or
-- apparently materially incorrect based on, or materially
inconsistent with, our knowledge of the Company acquired in the
course of performing our audit; or
-- is otherwise misleading.
In particular, we are required to consider whether we have
identified any inconsistencies between our knowledge acquired
during the audit and the Directors' statement that they consider
the Annual Report is fair, balanced and understandable and whether
the Annual Report appropriately discloses those matters that we
communicated to the Audit Committee which we consider should have
been disclosed.
Under the Companies Act 2006 we are required to report to you
if, in our opinion:
-- adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not
visited by us; or
-- the Financial Statements and the part of the Directors'
remuneration report to be audited are not in agreement with the
accounting records and returns; or
-- certain disclosures of Directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit; or
-- a Corporate Governance Statement has not been prepared by the Company.
Under the Listing Rules we are required to review:
-- the Directors' statement, in relation to going concern; and
-- the part of the corporate governance statement relating to
the Company's compliance with the provisions of the UK Corporate
Governance Code specified for our review.
We have nothing to report in respect of these matters.
Rhodri Whitlock (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
London
United Kingdom
28 May 2015
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
Statement of Comprehensive Income
for the year ended 28 February 2015
Ordinary Shares "C" Shares "D" Shares Total
Revenue Capital Total Revenue Capital Total Revenue Capital Total Revenue Capital Total
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Realised gain
on
investments 9 - 96 96 - - - - - - - 96 96
Net unrealised
gain on
investments 9 - 1,318 1,318 - 474 474 - - - - 1,792 1,792
Income 2 964 - 964 694 - 694 2 - 2 1,660 - 1,660
Investment
management
fees 3 (111) (334) (445) (85) (254) (339) (11) (33) (44) (207) (621) (828)
Other expenses 4 (216) (8) (224) (95) - (95) (14) - (14) (325) (8) (333)
Profit/(loss)
before
taxation 637 1,072 1,709 514 220 734 (23) (33) (56) 1,128 1,259 2,387
Taxation 6 5 (18) (13) 10 (2) 8 5 (5) - 20 (25) (5)
Profit/(loss)
and total
comprehensive
income for
the
year
attributable
to equity
shareholders 642 1,054 1,696 524 218 742 (18) (38) (56) 1,148 1,234 2,382
-------- -------- ------- -------- -------- ------- -------- -------- ------- -------- -------- -------
Return per
share
Basic and
diluted
return per
share
(p) 8 2.63 4.33 6.96 4.64 1.93 6.57 (1.05) (2.19) (3.24)
The Company has only one class of business and derives its
income from investments made in the UK.
The total column of this statement represents the 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 below form an integral part of these
Financial Statements.
Statement of Comprehensive Income
for the year ended 28 February 2014
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 - (203) (203) - (281) (281) - (484) (484)
Net unrealised
gain on investments 9 - 1,003 1,003 - 2,151 2,151 - 3,154 3,154
Income 2 937 - 937 764 - 764 1,701 - 1,701
Investment management
fees 3 (110) (330) (440) (75) (226) (301) (185) (556) (741)
Other expenses 4 (218) (37) (255) (102) - (102) (320) (37) (357)
Profit before
taxation 609 433 1,042 587 1,644 2,231 1,196 2,077 3,273
Taxation 6 (67) 77 10 (60) 55 (5) (127) 132 5
Profit and total
comprehensive
income for the
year attributable
to equity shareholders 542 510 1,052 527 1,699 2,226 1,069 2,209 3,278
-------- -------- ------- -------- -------- ------- -------- -------- -------
Return per share
Basic and diluted
return per share
(p) 8 2.22 2.09 4.31 4.65 15.00 19.65
The Company has only one class of business and derives its
income from investments made in the UK.
The total column of this statement represents the Company'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 below form an integral part of these
Financial Statements.
Statement of Financial Position
As at 28 February 2015
As at 28 February
As at 28 February 2015 2014
Ordinary "C" "D" Ordinary "C"
Shares Shares Shares Total Shares Shares Total
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Non-current assets
Investments 9 16,975 12,875 712 30,562 16,339 12,941 29,280
Trade and other receivables 10 801 - - 801 745 - 745
17,776 12,875 712 31,363 17,084 12,941 30,025
--------- --------- ---------- --------- --------- ---------- ---------
Current assets
Trade and other receivables 10 348 263 1 612 287 419 706
Cash and cash equivalents 11 458 833 1,173 2,464 562 519 1,081
806 1,096 1,174 3,076 849 938 1,787
--------- --------- ---------- --------- --------- ---------- ---------
Total assets 18,582 13,971 1,886 34,439 17,933 13,879 31,812
--------- --------- ---------- --------- --------- ---------- ---------
Current liabilities
Trade and other payables 12 (102) (63) (11) (176) (236) (46) (282)
Net current assets 704 1,033 1,163 2,900 613 892 1,505
--------- --------- ---------- --------- --------- ---------- ---------
Net assets 18,480 13,908 1,875 34,263 17,697 13,833 31,530
--------- --------- ---------- --------- --------- ---------- ---------
Equity attributable
to equity holders
Share capital 13 6,097 2,832 498 9,427 6,097 2,832 8,929
Capital redemption reserve 2,105 - - 2,105 2,105 - 2,105
Share premium - - 1,433 1,433 - - -
Special reserve 13,472 7,725 - 21,197 13,575 7,770 21,345
Capital reserve - realised (10,914) (1,498) (38) (12,450) (10,860) (1,242) (12,102)
Capital reserve - unrealised 7,661 4,699 - 12,360 6,553 4,225 10,778
Revenue reserve 59 150 (18) 191 227 248 475
Total equity 18,480 13,908 1,875 34,263 17,697 13,833 31,530
--------- --------- ---------- --------- --------- ---------- ---------
Basic and diluted net
asset value per share
(p) 14 75.8 123.3 94.2 72.6 122.1
Approved by the Board and authorised for issue on 28 May
2015.
Paul Thomas
Director
The accompanying notes below form an integral part of these
Financial Statements.
Ventus 2 VCT plc. Registered No: 05667210
Statement of Changes in Equity
for the year ended 28 February 2015
Capital Capital Capital
Share redemption Share Special reserve reserve Revenue
capital reserve premium reserve realised unrealised reserve Total
Ordinary
Shares GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 March
2014 6,097 2,105 - 13,575 (10,860) 6,553 227 17,697
Transfer of
special
reserve
to revenue
reserve - - - (103) - - 103 -
Transfer of
unrealised
losses on
investment
to realised
losses on
investment - - - - 210 (210) - -
Profit/(loss)
and total
comprehensive
income
for the year - - - - (264) 1,318 642 1,696
Dividends paid
in the
year - - - - - - (913) (913)
----------- --------------------- --------------------- -------------- --------------- ---------------- ------------------ -----------------
At 28 February
2015 6,097 2,105 - 13,472 (10,914) 7,661 59 18,480
----------- --------------------- --------------------- -------------- --------------- ---------------- ------------------ -----------------
Capital Capital Capital
Share redemption Share Special reserve reserve Revenue
capital reserve premium reserve realised unrealised reserve Total
"C" Shares GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 March
2014 2,832 - - 7,770 (1,242) 4,225 248 13,833
Share buyback
for Treasury
in the period - - - (45) - - - (45)
Profit/(loss)
and total
comprehensive
income
for the year - - - - (256) 474 524 742
Dividends paid
in the
year - - - - - - (622) (622)
----------- --------------------- --------------------- -------------- --------------- ---------------- ------------------ -----------------
At 28 February
2015 2,832 - - 7,725 (1,498) 4,699 150 13,908
----------- --------------------- --------------------- -------------- --------------- ---------------- ------------------ -----------------
Capital Capital Capital Capital
Share redemption redemption Special reserve reserve
capital reserve reserve reserve realised unrealised Revenue reserve Total
"D" Shares GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 March
2014 - - - - - - - -
Shares issued
in the
year 498 - 1,488 - - - - 1,986
Issue costs - - (55) - - - - (55)
Profit/(loss)
and total
comprehensive
income
for the year - - - - (38) - (18) (56)
Dividends paid
in the
year - - - - - - - -
----------- --------------------- --------------------- -------------- --------------- ---------------- ------------------ -----------------
At 28 February
2015 498 - 1,433 - (38) - (18) 1,875
----------- --------------------- --------------------- -------------- --------------- ---------------- ------------------ -----------------
Share Capital redemption Special Capital reserve Capital reserve
capital reserve Share premium reserve realised unrealised Revenue reserve Total
Total GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 March
2014 8,929 2,105 - 21,345 (12,102) 10,778 475 31,530
Shares issued
in the
year 498 - 1,488 - - - - 1,986
Issue costs - - (55) - - - - (55)
Share buyback
for Treasury
in the period - - - (45) - - - (45)
Transfer of
special
reserve
to revenue
reserve - - - (103) - - 103 -
Transfer of
unrealised
losses on
investment to
realised
losses on
investment - - - - 210 (210) - -
Profit/(loss)
and total
comprehensive
income
for the year - - - - (558) 1,792 1,148 2,382
Dividends paid
in the
year - - - - - - (1,535) (1,535)
----------- --------------------- --------------------- -------------- --------------- ---------------- ------------------ -----------------
At 28 February
2015 9,427 2,105 1,433 21,197 (12,450) 12,360 191 34,263
----------- --------------------- --------------------- -------------- --------------- ---------------- ------------------ -----------------
The ordinary share fund revenue reserve includes GBP59,000 of
income which is considered to be unrealised.
All amounts presented in the Statement of Changes in Equity are
attributable to equity holders.
The revenue reserve, special reserve and realised capital
reserve are distributable reserves. The special reserve may be used
to fund buy-backs of shares and pay dividends as and if it is
considered by the Board to be in the interests of the
shareholders.
The accompanying notes below form an integral part of these
Financial Statements.
Statement of Changes in Equity
for the year ended 28 February 2014
Capital redemption Special Capital reserve Capital reserve Revenue
Share capital reserve reserve realised unrealised reserve Total
Ordinary
Shares GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 March
2013 6,105 2,097 13,592 (10,367) 5,550 540 17,517
Shares
repurchased
in the year (8) 8 (17) - - - (17)
Profit/(loss)
and total
comprehensive
income for
the year - - - (493) 1,003 542 1,052
Dividends paid
in the year - - - - - (855) (855)
--------------------- ------------------------- ------------------ -------------------- ----------------- ------------------
At 28 February
2014 6,097 2,105 13,575 (10,860) 6,553 227 17,697
--------------------- ------------------------- ------------------ -------------------- ----------------- ------------------
Capital redemption Special Capital reserve Capital reserve Revenue
Share capital reserve reserve realised unrealised reserve Total
"C" Shares GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 March
2013 2,832 - 7,874 (591) 1,874 104 12,093
Transfer of
special
reserve to
revenue
reserve - - (104) - - 104 -
Transfer of
unrealised
losses on
investment to
realised
losses on
investment - - - (200) 200 - -
Profit/(loss)
and total
comprehensive
income for
the year - - - (452) 2,151 527 2,226
Dividends paid
in the year - - - - - (487) (487)
--------------------- ------------------------- ------------------ -------------------- ----------------- ------------------
At 28 February
2014 2,832 - 7,770 (1,242) 4,225 248 13,833
--------------------- ------------------------- ------------------ -------------------- ----------------- ------------------
Capital redemption Capital reserve Capital reserve
Share capital reserve Special reserve realised unrealised Revenue reserve Total
Total GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 March
2013 8,937 2,097 21,466 (10,958) 7,424 644 29,610
Shares
repurchased
in the year (8) 8 (17) - - - (17)
Transfer of
special
reserve to
revenue
reserve - - (104) - - 104 -
Transfer of
unrealised
losses on
investment to
realised
losses on
investment - - - (200) 200 - -
Profit/(loss)
and total
comprehensive
income for
the year - - - (944) 3,154 1,069 3,279
Dividends paid
in the year - - - - - (1,342) (1,342)
At 28 February
2014 8,929 2,105 21,345 (12,102) 10,778 475 31,530
--------------------- ------------------------- ------------------ -------------------- ----------------- ------------------
The accompanying notes below form an integral part of these
Financial Statements.
Statement of Cash Flows
for the year ended 28 February 2015
Year ended 28 February 2015 Year ended 28 February 2014
Ordinary Ordinary
Shares "C" Shares "D" Shares Total Shares "C" Shares Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cash flows from
operating
activities
Investment income
received 861 906 - 1,767 825 507 1,332
Deposit interest
received 2 1 2 5 - 1 1
Investment
management fees
paid (446) (338) (44) (828) (440) (301) (741)
Other cash
payments (386) (127) (4) (517) (258) (116) (374)
Net cash
generated
from/(used in)
operations 31 442 (46) 427 127 91 218
Taxes paid - - - - (42) (5) (47)
Net cash inflow/
(outflow) from
operating
activities 31 442 (46) 427 85 86 171
Cash flows from
investing
activities
Purchases of
investments (15) (2) (712) (729) (1,313) (411) (1,724)
Proceeds from
investments 793 541 - 1,334 1,025 83 1,108
Net cash
inflow/(outflow)
from investing
activities 778 539 (712) 605 (288) (328) (616)
Cash flows from
financing
activities
"C" shares
repurchased - (45) - (45) - - -
"D" shares issued - - 1,986 1,986 - - -
"D" share issue
costs - - (55) (55) - - -
Ordinary shares
purchased - - - - (17) - (17)
Dividends paid (913) (622) - (1,535) (855) (487) (1,342)
Net cash
inflow/(outflow)
from financing
activities (913) (667) 1,931 351 (872) (487) (1,342)
Net increase/
(decrease) in
cash and cash
equivalents (104) 314 1,173 1,383 (1,075) (729) (1,804)
Cash and cash
equivalents at
the beginning of
the year 562 519 - 1,081 1,637 1,248 2,885
Cash and cash
equivalents at
the end of the
year 458 833 1,173 2,464 562 519 1,081
The accompanying notes below form an integral part of these
Financial Statements.
Notes to the Financial Statements
for the year ended 28 February 2015
1. Accounting policies
Accounting convention
The Financial Statements 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 reporting
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.
Changes in accounting policy and disclosure
The accounting policies adopted are consistent with those of the
previous financial year.
Standards and interpretations which will be effective for future
reporting periods have been considered but not been early adopted
in these Financial Statements. These changes are not expected to
have a material impact on the transactions and balances reported in
the Financial Statements.
Income
Interest income on investments is stated on an accruals basis,
by reference to the principal outstanding and at the effective
interest rates applicable. Interest receivable on cash and
non-equity investments is accrued to the end of the year. 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. Investment costs have been allocated to
capital which represents the expenditure associated with the
Company's investments.
Expenses are allocated between the ordinary, "C" and "D" 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 VCT, 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
statement of financial position 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 statement of financial position 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. Deferred tax assets and liabilities are not
discounted.
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.
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
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 are valued using the "discounted future cash flows from
the underlying business" methodology, excluding interest accrued in
the accounts to date, unless uncertainties existwhich would make
the "price of recent investment" methodology, reviewed for
impairment, more appropriate. Generally, renewable energy
generating plant will be considered to be operating when it has
been taken-over by the investee company, although specific
circumstances could cause a plant to be considered operating
satisfactorily earlier than formal take-over by the investee
company. 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 any loss in value below cost is considered to
be permanent, the investment, although physically not disposed of,
is treated as being realised.
The Company has taken the exemption permitted by IAS 28
"Investments in Associates and Joint Ventures" and IFRS 11 "Joint
Arrangements" and upon initial recognition, will measure its
investments in Associates and Joint Ventures at fair value, with
subsequent changes to fair value recognised in the Income Statement
in the period of change.
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.
Deferred consideration
Deferred consideration is initially recognised at fair value and
then designated as a loan and receivable under IAS 39 measured at
amortised cost. Any subsequent movement in the value relating to
changes in expected cash flows and the recognition of income using
the effective interest rate is shown in the Statement of
Comprehensive Income. Gains and income derived from deferred
consideration are recognised as realised when the outstanding
amounts are capable of being settled within a reasonable period of
time, there is reasonable certainty that the outstanding amounts
will be settled when called upon and there is an expectation that
the receivable amounts will be settled. Until such time, the gains
and income derived from deferred consideration are recognised as
unrealised.
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.
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 and reserves
Equity instruments
Equity instruments issued by the Company are recorded at the
proceeds received amount, net of direct issue costs.
Special reserve
The special reserves were created by approval of the High Court
to cancel the Company's share premium accounts in respect of the
shares issued. The special reserves may be used to fund buy-backs
of shares and pay dividends 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 insofar as they are not
considered to be permanent.
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. The estimates and
assumptions adopted are those which the Board considers to be
appropriate at the reporting date. Estimates and assumptions will
change from time to time depending on prevailing circumstances.
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 impact of changes in the key estimates and assumptions
adopted are discussed in the Investment Manager's Report.
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, the amount of electricity the investee companies' generating
assets are expected to produce and operating costs. 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 terms 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
Ordinary Shares "C" Shares "D" Shares Total
GBP000 GBP000 GBP000 GBP000
Income from investments
Loan stock interest 542 410 - 952
Dividend income 361 283 - 644
Other income 59 - - 59
962 693 - 1,655
Other income
Bank deposit interest 2 1 2 5
964 694 2 1,660
Year ended 28 February 2014
Ordinary Shares "C" Shares Total
GBP000 GBP000 GBP000
Income from investments
Loan stock interest 568 433 1,001
Dividend income 323 330 653
Other income 46 - 46
937 763 1,700
Other income
Bank deposit interest - 1 1
937 764 1,701
During the year ended 28 February 2015, the Company recognised
other investment income from the interest income earned on the
deferred consideration due from the sale of Craig Wind Farm of
GBP59,000 (2014:GBP55,000).
3. Investment management fees
Year ended 28 February 2015
Ordinary Shares "C" Shares "D" Shares Total
GBP000 GBP000 GBP000 GBP000
Investment management fees 445 339 44 828
Year ended 28 February 2014
Ordinary Shares "C" Shares Total
GBP000 GBP000 GBP000
Investment management fees 440 301 741
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, investment costs and
irrecoverable VAT), 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.
4. Other expenses
Year ended 28 February 2015
Ordinary Shares "C" Shares "D" Shares Total
GBP000 GBP000 GBP000 GBP000
Revenue expenses:
Directors' remuneration (note 5) 52 25 3 80
Fees payable to the Company's
Auditor for:
- Audit of the Company's Annual
Financial Statements 18 10 2 30
- Audit related services pursuant
to legislation 4 1 - 5
- Other services relating to
taxation 6 3 1 10
Legal and professional fees 23 8 1 32
Other revenue expenses 113 48 7 168
216 95 14 325
Capital expenses:
Investment costs 8 - - 8
224 95 14 333
Year ended 28 February 2014
Ordinary Shares "C" Shares Total
GBP000 GBP000 GBP000
Revenue expenses:
Directors' remuneration (note 5) 49 24 73
Fees payable to the Company's Auditor for:
- Audit of the Company's Annual Financial
Statements 20 10 30
- Audit related services pursuant to
legislation 4 2 6
- Other services relating to taxation 3 1 4
Legal and professional fees 24 7 31
Other revenue expenses 118 58 176
218 102 320
Capital expenses:
Investment costs 37 - 37
255 102 357
Other services relating to taxation were in respect of tax
services provided by the Company's Auditor relating to corporation
tax compliance and iXBRL tagging services. Audit related services
pursuant to legislation provided by the Company's Auditor related
to the review of the Half-yearly Report.
5. Directors' remuneration
Year ended 28 February 2015
Ordinary Shares "C" Shares "D" Shares Total
GBP000 GBP000 GBP000 GBP000
A Moore 20 9 1 30
P Thomas 16 8 1 25
C Wood 16 8 1 25
Aggregate emoluments 52 25 3 80
Year ended 28 February 2014
Ordinary Shares "C" Shares Total
GBP000 GBP000 GBP000
A Moore 17 10 27
P Thomas 16 7 23
C Wood 16 7 23
Aggregate emoluments 49 24 73
Further details regarding Directors' remuneration are disclosed
in the Directors' Remuneration Report.
The Company had no employees other than the Directors.
6. Taxation
Year ended 28 February 2015
Ordinary Shares "C" Shares "D" Shares Total
GBP000 GBP000 GBP000 GBP000
(a) Tax charge/ (credit) for the year
Current UK corporation tax:
Charged to revenue reserve (58) (50) (5) (113)
Credited to capital reserve 58 50 5 113
Deferred Tax
Prior year deferred tax asset adjustment 13 (8) - 5
13 (8) - 5
(b) Factors affecting the tax charge/ (credit) for the year
Profit/(loss) before taxation 1,709 734 (56) 2,387
Tax charge/(credit) calculated on loss before taxation
at the applicable rate of 21.17% (2014:
23.08%) 362 155 (12) 505
-
Effect of: -
UK dividends not subject to tax (76) (60) - (136)
Capital losses not subject to tax (299) (100) - (399)
Non-deductible expenses 2 (1) - 1
Deferred tax adjustment 24 (2) 12 34
13 (8) - 5
Year ended 28 February 2014
Ordinary Shares "C" Shares Total
GBP000 GBP000 GBP000
(a) Tax (credit)/charge for the year
Current UK corporation tax:
Charged to revenue reserve 67 60 127
Credited to capital reserve (67) (55) (122)
Deferred tax
Credited to capital reserve (10) - (10)
(10) 5 (5)
(b) Factors affecting the tax (credit)/charge for the year
Profit before taxation 1,042 2,231 3,273
Tax charge calculated on profit before taxation at the applicable
rate of 23.08% (2013: 24%) 240 515 755
Effect of:
UK dividends not subject to tax (75) (76) (151)
Capital gains not subject to tax (188) (434) (622)
Non-deductible investment costs 13 - 13
(10) 5 (5)
A deferred tax asset was recognised in the ordinary share fund
during the year ended 28 February 2014 corresponding to a tax loss
carried forward. This was written back during the year as a matter
of prudence because the Directors do not expect the Company will be
able to offset the tax loss in future given the level of taxable
revenue the Company is expected to earn versus tax deductible
expenses. Moreover, a significant portion of the Company's future
revenue is expected to be in the form of non-taxable franked
investment income.
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 Income Tax Act 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 2015 2014
GBP000 GBP000
Amounts recognised as distributions to ordinary shareholders in the
year:
Previous year's final dividend of 1.75p per ordinary share (2014: 1.75p) 427 427
Current year's interim dividend of 2.0p per ordinary share (2014: 1.75p) 486 426
913 853
Subject to approval of the final dividend, the total dividend in
respect of the financial year is set out below. 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.
2015 2014
GBP000 GBP000
Interim dividend for the year ended 28 February 2015 of 2.0p per
ordinary share (2014: 1.75) 486 427
Proposed final dividend for the year ended 28 February 2015 of 2.10p per
ordinary share (2014:
1.75p) 512 427
998 854
"C" Shares 2015 2014
GBP000 GBP000
Amounts recognised as distributions to "C" shareholders in the year:
Previous year's final dividend of 2.50p per "C" share (2014: 1.80p) 283 204
Current year's interim dividend of 3.0p per "C" share (2014: 2.50p) 339 283
622 487
Subject to approval of the final dividend, the total dividend in
respect of the financial year is set out below. 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.
2015 2014
GBP000 GBP000
Interim dividend for the year ended 28 February 2015 of 3.0p per "C"
share (2014: 2.50p) 339 283
Proposed final dividend for the year ended 28 February 2014 of 3.50p per
"C" share (2014:
2.50p) 395 283
734 566
8. Basic and diluted return per share
For the year ended 28 February 2015 Ordinary Shares "C" Shares "D" Shares
Revenue return for the year p per share* 2.63 4.64 (1.05)
Based on:
Revenue return for the year GBP000 642 524 (18)
Weighted average number of shares in issue number of shares 24,392,655 11,298,758 1,738,861
Capital gain for the year p per share* 4.33 1.93 (2.19)
Based on:
Capital gain for the year GBP000 1,054 218 (38)
Weighted average number of shares in issue number of shares 24,392,655 11,298,758 1,738,861
Net profit for the year p per share* 6.96 6.57 (3.24)
Based on:
Net profit for the year GBP000 1,696 742 (56)
Weighted average number of shares in issue number of shares 24,392,655 11,298,758 1,738,861
For the year ended 28 February 2014 Ordinary Shares "C" Shares
Revenue return for the year p per share* 2.22 4.65
Based on:
Revenue return for the year GBP000 542 527
Weighted average number of shares in issue number of shares 24,418,792 11,329,107
Capital gain for the year p per share* 2.09 15.00
Based on:
Capital gain for the year GBP000 510 1,699
Weighted average number of shares in issue number of shares 24,418,792 11,329,107
Net profit for the year p per share* 4.31 19.65
Based on:
Net profit for the year GBP000 1,052 2,226
Weighted average number of shares in issue number of shares 24,418,792 11,329,107
* The value per share may differ on recalculation due to
rounding differences.
There is no difference between the basic return per ordinary
share and the diluted return per ordinary share, between the basic
return per "C" share and the diluted return per "C" share or
between the basic return per "D" share and the diluted return per
"D" share because no dilutive financial instruments have been
issued.
9. Investments Ordinary Shares "C" Shares "D" Shares Total
Year ended 28 Loan Loan Loan
February 2015 Shares stock Total Shares stock Total Shares Loan stock Total Shares stock Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Opening
position
Opening cost 10,042 5,893 15,935 5,457 3,740 9,197 - - - 15,499 9,633 25,132
Closing
realised
losses (4,234) (1,228) (5,462) (464) (17) (481) - - - (4,698) (1,245) (5,943)
Opening
unrealised
gains 5,397 469 5,866 3,984 241 4,225 - - - 9,381 710 10,091
Opening fair
value 11,205 5,134 16,339 8,977 3,964 12,941 - - - 20,182 9,098 29,280
During the year
Purchases at
cost 15 - 15 2 - 2 712 - 712 729 - 729
Investment
proceeds* (303) (490) (793) - (541) (541) - - - (303) (1,031) (1,334)
Conversion of
loan stock to
shares 300 (300) - 300 (301) (1) - - - 600 (601) (1)
Realised gains 96 - 96 - - - - - - 96 - 96
Unrealised
gains/(losses) 1,375 (57) 1,318 488 (14) 474 - - - 1,863 (71) 1,792
Closing fair
value 12,688 4,287 16,975 9,767 3,108 12,875 712 - 712 23,167 7,395 30,562
Closing
position
Closing cost 8,783 5,103 13,886 5,759 2,898 8,657 712 - 712 15,254 8,001 23,255
Closing
realised
losses (2,564) (1,228) (3,792) (464) (17) (481) - - - (3,028) (1,245) (4,273)
Closing
unrealised
gains 6,469 412 6,881 4,472 227 4,699 - - - 10,941 639 11,580
Closing fair
value 12,688 4,287 16,975 9,767 3,108 12,875 712 - 712 23,167 7,395 30,562
* Investment proceeds in the year ended 28 February 2015
includes GBP303,000 of liquidation proceeds received. The Company
retains the contractual rights to the cash flows from the asset and
so the asset has not been derecognised.
The opening position of the ordinary share fund at 1 March 2014
included cost and realised losses of GBP1,574,000 in relation to
the investments in Redimo LFG Limited and PBM Power Limited. During
the year ended 28 February 2015, Redimo LFG Limited and PBM Power
Limited were struck off the register, therefore the investments
have been derecognised.
During the year, GBP210,000 of unrealised losses in the value of
shares held by the "C" share fund were transferred to realised
losses.
Ordinary Shares "C" Shares Total
Year ended
28 February
2014 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 9,773 7,264 17,037 5,447 3,422 8,869 15,220 10,686 25,906
Closing
realised
losses (4,329) (1,740) (6,069) - - - (4,329) (1,740) (6,069)
Opening
unrealised
gains 4,543 320 4,863 1,788 86 1,874 6,331 406 6,737
Opening
fair value 9,987 5,844 15,831 7,235 3,508 10,743 17,222 9,352 26,574
During the
year
Purchases
at cost 50 692 742 10 401 411 60 1,093 1,153
Disposal
proceeds (352) (682) (1,034) - (83) (83) (352) (765) (1,117)
Conversion
of loan
stock to
shares 848 (848) - - - - 848 (848) -
Realised
losses (182) (21) (203) (264) (17) (281) (446) (38) (484)
Unrealised
gains 854 149 1,003 1,996 155 2,151 2,850 304 3,154
Closing
fair value 11,205 5,134 16,339 8,977 3,964 12,941 20,182 9,098 29,280
Closing
position
Closing
cost 10,042 5,893 15,935 5,457 3,740 9,197 15,499 9,633 25,132
Closing
realised
losses (4,234) (1,228) (5,462) (464) (17) (481) (4,698) (1,245) (5,943)
Closing
unrealised
gains 5,397 469 5,866 3,984 241 4,225 9,381 710 10,091
Closing
fair value 11,205 5,134 16,339 8,977 3,964 12,941 20,182 9,098 29,280
The shares held by the Company are in unquoted UK companies. The
Investment Manager's Report provides details in respect of the
Company's shareholding in each investment, loans issued and
investments purchased and disposed of during the year.
Under IFRS 7 and IFRS 13, 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 28 February 2015, 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 fair value
in the discounted future cash flow valuations are the discount
factors used (which range from 9.5% to 11.5%), 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 (which are taken from specialist consultant reports).
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 to the
investments in the ordinary share fund's portfolio would have
resulted in the total value of its investments having been
GBP1,256,000 or 7.4% higher. The application of the downside
alternative discount factor would have resulted in the total value
of all investments having been GBP925,000 or 7.4% lower.
The application of the upside alternative discount factor to the
"C" share fund's portfolio would have resulted in the total value
of its investments having been GBP1,074,000 or 8.3% higher. The
application of the downside alternative discount factor would have
resulted in the total value of its investments having been
GBP806,000 or 6.3% 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. Trade and other receivables
Year ended 28 February 2015
Ordinary Shares "C" Shares "D" Shares Total
GBP000 GBP000 GBP000 GBP000
Non-current assets
Deferred consideration 801 - - 801
801 - - 801
Current assets
Accrued interest income 274 180 - 454
Other investment income - - - -
Other receivables 62 78 - 140
Corporation tax - - - -
Prepayments 12 5 1 18
348 263 1 612
The deferred consideration of GBP801,000 represents the
outstanding balance of the consideration arising from the Company's
sale of Craig Wind Farm Limited during the year ended 28 February
2013. The Directors expect the Company will receive the outstanding
amount in a period of between one and two years, therefore this
amount is regarded as a non-current asset. The Directors consider
that the carrying amount of trade and other receivables
approximates to their fair value.
Year ended 28 February 2014
Ordinary Shares "C" Shares Total
GBP000 GBP000 GBP000
Non-current assets
Deferred consideration 742 - 742
Accrued interest income 3 - 3
745 - 745
Current assets
Accrued interest income 241 303 544
Other investment income - 90 90
Other receivables 13 15 28
Deferred tax asset 10 - 10
Prepayments 23 11 34
287 419 706
11. Cash and cash equivalents
Ordinary Shares "C" Shares "D" Shares Total
GBP000 GBP000 GBP000 GBP000
As at 1 March 2014 562 519 - 1,081
Net increase/(decrease) (104) 314 1,173 1,383
As at 28 February 2015 458 833 1,173 2,464
Ordinary Shares "C" Shares Total
Cash Cash Cash
GBP000 GBP000 GBP000
As at 1 March 2013 1,637 1,248 2,885
Net decrease (1,075) (729) (1,804)
As at 28 February 2014 562 519 1,081
The ordinary share fund was holding GBP156,000 on behalf of
Bernard Matthews Green Energy Halesworth Limited, one of its
investee companies, as at 28 February 2014, the corresponding
balance being included within other payables, which was repaid
during the year.
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.
12. Trade and other payables
As at 28 February 2015
Ordinary Shares "C" Shares "D" Shares Total
GBP000 GBP000 GBP000 GBP000
Trade payables 7 - - 7
Other payables 20 36 5 61
Accruals 75 27 6 108
102 63 11 176
As at 28 February 2014
Ordinary Shares "C" Shares Total
GBP000 GBP000 GBP000
Corporation tax - 7 7
Trade payables 8 20 28
Other payables 177 1 178
Accruals 51 18 69
236 46 282
The Directors consider that the carrying amount of trade and
other payables approximates to their fair value.
13. Share capital
Ordinary Shares "C" Shares "D" Shares Total
Number of Number of Number of Number of
shares of shares of shares of shares of
Authorised 25p each GBP000 25p each GBP000 25p each GBP000 25p each GBP000
At 1 March
2014 50,000,000 12,500 20,000,000 5,000 20,000,000 5,000 90,000,000 22,500
At 28
February
2015 50,000,000 12,500 20,000,000 5,000 20,000,000 5,000 90,000,000 22,500
Ordinary Shares "C" Shares "D" Shares Total
Allotted,
called up Number of Number of Number of Number of
and fully shares of shares of shares of shares of
paid 25p each GBP000 25p each GBP000 25p each GBP000 25p each GBP000
At 1 March
2014 24,392,655 6,097 11,329,107 2,832 - - 35,721,762 8,929
Allotted,
called up
and fully
paid
during the
year - - - - 1,990,767 498 1,990,767 498
At 28
February
2015 24,392,655 6,097 11,329,107 2,832 1,990,767 498 37,712,529 9,427
Ordinary Shares "C" Shares "D" Shares Total
Number of Number of Number of Number of
shares of shares of shares of shares of
Authorised 25p each GBP000 25p each GBP000 25p each GBP000 25p each GBP000
At 1 March
2013 50,000,000 12,500 20,000,000 5,000 - - 70,000,000 17,500
At 28
February
2014 50,000,000 12,500 20,000,000 5,000 20,000,000 5,000 90,000,000 22,500
Ordinary Shares "C" Shares Total
Allotted,
called up Number of Number of Number of
and fully shares of shares of shares of
paid 25p each GBP000 25p each GBP000 25p each GBP000
At 1 March
2013 24,422,655 6,105 11,329,107 2,832 35,751,762 8,937
Purchased
and
cancelled
during the
year (30,000) (8) - - (30,000) (8)
At 28
February
2014 24,392,655 6,097 11,329,107 2,832 35,721,762 8,929
At 28 February 2015 the Company had three 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.
On 27 June 2014, the Company purchased 25,900 "C" shares at the
price of 96.5p per "C" share. On 10 July 2014, the Company
purchased 20,000 "C" shares at the price of 100p per "C" share.
14. Basic and diluted net asset value per share
The net asset value per ordinary share of 75.8p as at 28
February 2015 (2014: 72.6p) is based on net assets of GBP18,480,000
(2014: GBP17,697,000) divided by 24,392,655 ordinary shares in
issue at that date (2014: 24,392,655 ordinary shares). The net
asset value per "C" share of 123.3p as at 28 February 2015 (2014:
122.1p) is based on net assets of GBP13,908,000 (2014:
GBP13,833,000) divided by 11,283,207 "C" shares in issue at that
date (2014: 11,329,107 "C" shares). The net asset value per "D"
share of 94.2p as at 28 February 2015 is based on net assets of
GBP1,875,000 divided by 1,990,767 "D" shares in issue at that
date.
15. Events subsequent to year end
Since the year end the Company invested additional funds into
Darroch Power Limited and Upper Falloch Power Limited. This is
discussed in the Investment Manager's Report.
16. Financial instruments and risk management
The Company'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 Company 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 Company'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. 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 28 February 2015
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 12,688 n/a n/a n/a
Loan stock 4,287 0% - 13.5% 12.42% 10.4 years
Loans and receivables:
Cash 458 0% - 0.38% 0.1% n/a
Deferred consideration 801 8.0% 8.0% 2 years
Accrued interest income 274 n/a n/a n/a
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 9,767 n/a n/a n/a
Loan stock 3,108 0% - 13% 12.92% 9.6 years
Loans and receivables:
Cash 833 0% - 0.38% 0.1% n/a
Accrued interest income 180 n/a n/a n/a
Weighted average interest Weighted average period to
"D" Shares ` Interest rate p.a. rate p.a. maturity
GBP000 %%
At fair value through profit
or loss:
Ordinary shares 712 n/a n/a n/a
Loan stock - n/a n/a n/a
Loans and receivables:
Cash 1,173 0% - 0.38% 0.2% n/a
Accrued interest income - n/a n/a n/a
As at 28 February 2014
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 11,205 n/a n/a n/a
Loan stock 5,134 0% - 13.5% 11.54% 11.4 years
Loans and receivables:
Cash 562 0% 0% n/a
Deferred consideration 742 7.84% 7.84% 1.2 years
Accrued interest income 244 n/a n/a n/a
Weighted
average
interest
"C" Shares Interest rate p.a. rate p.a. Weighted average period to maturity
GBP000 % %
At fair value through profit or loss:
Ordinary shares 8,977 n/a n/a n/a
Loan stock 3,964 0% - 13% 11.56% 10 years
Loans and receivables:
Cash 519 0% 0% n/a
Accrued interest income 303 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 significant guarantees or financial
liabilities other than the accruals.
Currency exposure
All financial assets and liabilities are held in sterling, hence
there is no foreign currency exchange rate exposure.
Borrowing facilities
As at 28 February 2015 the Company had no outstanding borrowings
(2014: GBPnil).
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.
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
profit before tax of the ordinary share fund of GBP1,698,000 or
99.33% (2014: GBP1,634,000 or 156.80%) and an increase or decrease
in net asset value of the same amount or 9.19% (2014: 9.23%).
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 GBP1,288,000 or 175.41%
(2014: GBP1,294,000 or 58.01%) and an increase or decrease in net
asset value of the same amount or 9.26% (2014: 9.36%).
The sensitivity of the "D" share fund to a 10% increase or
decrease in valuation would be an increase or decrease in the
profit before tax of the "D" share fund of GBP71,000 or 127.14% and
an increase or decrease in net asset value of the same amount or
3.80%.
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 easy
to liquidate investments in ordinary shares and loan stock in the
short term. 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. The Company is exposed to
credit risk through its receivables, and through cash held on
deposit with banks. The Company is also exposed to credit risk
through its investments in loan stock. The Company's receivables
include GBP742,000 of deferred consideration from the sale of Craig
Wind Farm Limited. The Company holds security over the assets of
Craig Wind Farm Limited in respect of the deferred
consideration.
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 Company's maximum credit risk is GBP11.3 million (2014:
GBP11.6 million) of which the ordinary share fund is exposed to
GBP5.9 million (2014: GBP6.7 million), the "C" share fund is
exposed to GBP4.2 million (2014: GBP4.9 million) and the "D" share
fund is exposed to GBP1.2 million.
The table below sets out the amounts receivable by the Company
which were past due but not individually impaired as at 28 February
2015 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 1,240 1,240 - -
Accrued interest 158 74 84 -
Receivables past due 1,398 1,314 84 -
The amounts past due for payment represent interest due on a
loan investment with Achairn Energy Limited. In this analysis, the
loan principal amount on which the interest has accrued is included
as past due as required by IFRS 7. The loan principal which was
actually past due for payment at 28 February 2015 was GBPnil and
the loan interest past due was GBP84,000.
The tables below set out the amounts receivable by the Company
which were past due but not individually impaired as at 28 February
2014 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 55 - - 55
Accrued interest 24 2 3 19
Receivables past due 79 2 3 74
17. Contingencies, guarantees and financial commitments
On 2 April 2008, the Company registered a charge over its shares
in Redimo LFG Limited to Alliance & Leicester Commercial
Finance plc (now Santander Asset 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 of the two companies. 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 which took place in May 2010.
As at 28 February 2014 the Company's investment was valued at
GBPnil 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 28 February 2014 the
Company's investment was valued at nil for the reasons described in
the Investment Manager's Report. PBM Power Limited was placed into
liquidation on 15 October 2013.
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 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). This share charge was cancelled on 22 May 2014 when
Osspower Limited repaid the loan. On 22 May 2014, the Company
registered a charge over its shares in Osspower Limited to GCP
Hydro 1 Limited as security for a senior loan facility of GBP7
million. The liability of the Company under this charge of shares
is limited to the value of the Company's investment in the shares
of Osspower Limited.
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.
On 31 January 2013, the Company registered a charge over its
shares in Biggleswade Wind Farm Limited to The Co-operative Bank
plc as security for a senior loan facility of up to GBP22.5 million
raised by Biggleswade 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 Biggleswade Wind Farm Limited.
On 15 April 2013, the Company registered a charge over its
shares in Eye Wind Power Limited to GCP Onshore Wind 1 Limited as
security for the senior loan facility of GBP5 million raised by Eye
Wind Power Limited to finance the construction costs of a wind
farm. The liability of the Company under this charge of shares is
limited to the value of the Company's investment in the shares of
Eye Wind Power Limited.
On 5 August 2013, the Company registered a share charge over its
shares in North Pickenham Energy Limited and Bernard Matthews Green
Energy Pickenham Limited to GCP Onshore Wind 1 Limited as security
for a senior loan facility of GBP3.1 million raised by Bernard
Matthews Wind Farm (North Pickenham) LLP to finance the
construction costs of its 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 North Pickenham Energy Limited
and Bernard Matthews Green Energy Pickenham Limited.
On 5 August 2013, the Company registered a share charge over its
shares in Weston Airfield Investments Limited and Bernard Matthews
Green Energy Weston Limited to GCP Onshore Wind 1 Limited as
security for a senior loan facility of GBP4.5 million raised by
Bernard Matthews Wind Farm (Weston) LLP to finance the construction
costs of its 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 Weston Airfield Investments Limited and
Bernard Matthews Green Energy Weston Limited.
On 9 September 2014, the Company registered a share charge over
its shares in Bernard Matthews Green Energy Halesworth Limited to
GCP Onshore Wind 1 Limited as security for a senior loan facility
of GBP8.4 million raised by Bernard Matthews Green Energy
Halesworth Limited to finance the construction costs of its 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
Bernard Matthews Green Energy Halesworth Limited.
On 20 March 2015, the Company registered a share charge over its
shares in Upper Falloch Power Limited to GCP Hydro 1 Limited as
security for a senior loan facility of GBP3.4 million raised by
Upper Falloch Power Limited to finance the construction costs of
its hydro scheme. The liability of the Company under this charge of
shares is limited to the value of the Company's investment in
shares of Upper Falloch Power Limited.
On 20 March 2015, the Company registered a share charge over its
shares in Darroch Power Limited to GCP Hydro 1 Limited as security
for a senior loan facility of GBP6.5 million raised by Darroch
Power Limited to finance the construction costs of its hydro
scheme. The liability of the Company under this charge of shares is
limited to the value of the Company's investment in shares of
Darroch Power Limited.
During the year, a claim was filed against the Company under a
warranty in the Sale Purchase Agreement pertaining to the sale an
investee company previously owned by the Company. The claim is in
relation to a piece of equipment at the wind farm owned by the
investee company. The Directors dispute the claim and are defending
the Company vigorously. The likelihood of the claim being
successful is considered to be sufficiently remote, as such no
provision is made in the accounts. Further legal costs may be
incurred, however the Directors do not expect the outcome to have a
material impact on the accounts.
The Company had no other contingencies, financial commitments or
guarantees as at 28 February 2015.
18. Related party transactions
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 date of the
Statement of Financial Position and transactions with these
companies during the year are summarised below.
As at 28 February 2015
Ordinary Shares "C" shares "D" shares Total
Balances GBP000 GBP000 GBP000 GBP000
Investments - shares 12,676 9,767 712 23,155
Investments - loan stock 4,287 3,108 - 7,395
Accrued interest income 274 180 - 454
Transactions GBP000 GBP000 GBP000 GBP000
Loan stock interest income 541 410 - 951
Dividend income 361 283 - 644
As at 28 February 2014
Ordinary Shares "C" shares Total
Balances GBP000 GBP000 GBP000
Investments - shares 10,796 8,977 19,773
Investments - loan stock 5,134 3,964 9,098
Accrued interest income 244 303 547
Transactions GBP000 GBP000 GBP000
Loan stock interest income 384 433 817
Dividend income 222 330 552
19. Controlling party
In the opinion of the Directors there is no immediate or
ultimate controlling party.
20. 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 VCT 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, 21 July 2015 at the offices of Howard
Kennedy LLP, No.1 London Bridge, London, SE1 9BG, for the purpose
of considering and, if thought fit, passing the following
Resolutions (of which, Resolutions 1 to 8 will be proposed as
Ordinary Resolutions and Resolutions 9 to 11 will be proposed as
Special Resolutions):
Ordinary Business
1. To receive the Company's audited Annual Report and Financial
Statements for the year ended 28 February 2015.
2. To declare a final dividend of 2.10p per ordinary share and
3.50p per "C" share in respect of the year ended 28 February
2015
3. To approve the Directors' Remuneration Report for the year ended 28 February 2015.
4. To re-elect Mr Paul Thomas as a Director of the Company.
5. To re-elect Mr Alan Moore as a Director of the Company.
6. To re-elect Mr Colin Wood as a Director of the Company.
7. To appoint BDO 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.
8. To authorise the Directors to determine the remuneration of the Auditor.
Special Resolutions
9. 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, "C"
shares of 25p each and "D" 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 3,656,459 ordinary shares,
1,691,353 "C" shares and 298,415 "D" 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 2016 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.
10. The Company has the authority to issue shares in the capital
of the Company and to grant rights to subscribe for or to convert
any security into shares in each Company up to an aggregate nominal
amount of GBP6,250,000.
11. The Company will be empowered to allot or make offers to or
agreements to allot equity securities (which expression shall have
the meaning ascribed to it in Section 560(1) of the Companies Act)
for cash pursuant to the authority given pursuant to resolution 10
above, as if Section 561(1) of the Act did not apply to such
allotment.
By order of the Board
The City Partnership (UK) Limited
Secretary
28 May 2015
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACSPKDDPNBKDDAK
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