Final Results

RNS Number : 4806O

Calculus VCT PLC

17 May 2018

 

Calculus VCT plc

Legal Entity Identifier: 2138005SMDWLMMNPVA90

Annual Financial Report for the year ended 28 February 2018

The Annual Report and Financial Statements ("Annual Report and Accounts") for the year ended 28 February 2018 and the Notice of Annual General Meeting will be posted to shareholders shortly and will be available for inspection at 104 Park Street , London, W1K 6NF, the Company's registered office, and will be available in electronic format for download on www.calculuscapital.com/calculus-vct/ , a website maintained by the Company's Investment Manager, Calculus Capital Limited. A copy of the Annual Report and Accounts will also be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at: http://www.morningstar.co.uk/uk/NSM.

Page numbers and cross-references in the announcement below refer to page numbers and cross-references in the PDF of the Annual Report and Accounts.

Financial Highlights

Year to 28 February 2018

Net asset value per share	87.00p
Final dividend proposed	4.00p
Total return per share	(2.72)p

As a result of the class merger and the different ratios used to equalise the classes, the returns for the D shares, ordinary shares and C shares from prior periods are not directly comparable with the returns for Ordinary shares in existence at 28 February2018.

The returns for the D shares, ordinary shares and C shares for the 12 months to and as at 28 February 2017 are shown in notes 8 and 13 in the financial statements.

Our Aim

Calculus VCT is a tax efficient listed company which aims to achieve long-term returns including tax-free dividends, for investors.

Investment Objective

To invest primarily in a diverse portfolio of UK growth companies whether unquoted or traded on AIM. Investments are made selectively across a range of sectors in companies that have the potential for long-term growth.

Dividend Objective

Your board aims to maintain a regular tax free annual dividend of 4.5% of NAV mindful of the need to maintain net asset value. The ability to meet these twin objectives depends significantly on the level and timing of profitable realisations and cannot be guaranteed.

Strategic report

The Strategic Report has been prepared in accordance with the requirements of Section 414A of the Companies Act 2006 (the "Act"). Its purpose is to inform members of the Company and help them assess how the Directors have performed their legal duty under Section 172 of the Act, to promote the success of the Company.

CHAIRMAN'S STATEMENT

I am pleased to present your Company's results for the year ended 28 February 2018. It has been an active year for the Company with the merger of the share classes, the acquisition of the assets and liabilities of Neptune-Calculus Income and Growth VCT plc (Neptune-Calculus) and the launch of an issue of new Ordinary shares. The Manager has also been busy on a further seven investments in qualifying companies. I believe these actions provide a platform for future growth as we continue to invest funds and put capital to work.

Share Class Merger

On 1 August 2017 the ordinary, C share classes and D classes were merged using a ratio of 0.1442 D shares for every ordinary share held and 0.2435 D shares for every C share held. This was after the ordinary and C shareholders had received special dividends of 7.00 pence and 3.00 pence respectively in June 2017 bringing total dividends received by those classes prior to the merger to 84.05 pence and 73.10 pence per share, respectively. All shares were subsequently named Ordinary shares.

Results for the year

Following the merger of the share classes, the net asset value per Ordinary share at 28 February 2018 was 87.00 pence. The closest comparative figure to the NAV of the Ordinary shares is the NAV of the D shares, which was 92.43 pence per share as at 28 February 2017. As a result of the different ratios used to equalise the share classes in the merger, the net asset values per share for the original ordinary shares and C shares are not comparable.

The year's performance reflects a 4.25p dividend paid during the year, an improvement in the unquoted portfolio and a small decrease in the quoted portfolio on a like for like basis.

There has also been a reduction in the annual running costs in the second half of the year as a result of the agreement with Calculus Capital by which Calculus Capital undertook to meet costs above a cost cap set at a lower level than was previously the case. Performance should benefit as the Manager makes further investments and puts more of the Company's capital to work.

Venture Capital Investments

Calculus Capital Limited manages the portfolio of VCT qualifying investments made by the Company.

In addition to the investments acquired from Neptune- Calculus, the Company made a number of new and follow-on investments, which are set out in the Investment Manager's report. It also made two disposals: £50,000 was received from the redemption of loan stock in Terrain Energy Limited and a modest amount was received from the sale of MCD Ventures Limited, a small holding that was part of the Neptune-Calculus.

Acquisition of assets and liabilities of Neptune-Calculus

At the general meeting on 31 August 2017 all proposed resolutions set out in the Circular dated 4 August 2017, including the resolution to approve the acquisition of the assets and liabilities of Neptune-Calculus and to authorise the issue of new shares in the Company to the shareholders of Neptune-Calculus, were duly passed. Assets with a net value of £2.2 million were acquired on 12 September 2017 of which £2 million was represented by investments in ten unquoted and four quoted companies. Further details of these are set out in the Investment Manager's Report.

Issue of new Ordinary shares

At the general meeting on 31 August 2017 shareholders approved the launch of a further offer for subscription for Ordinary shares, with the shares to be issued in the 2017/18 and 2018/19 tax years. 367,800 new Ordinary shares were allotted during the year and a further 1,779,298 shares were allotted after the year end in the 2017/2018 tax year. The offer remains open until 31 July 2018.

Share buy backs

During the year the Company bought back and cancelled 62,210 Ordinary shares. The Company continues to review opportunities to carry out share buybacks for   up to £500,000 of Ordinary shares at a discount of no greater than 10% to the NAV.

Cancellation of share premium

On 1 November 2017 the High Court of Justice, Business and Property Court of England and Wales, confirmed the cancellation of the amount standing to the credit of the share premium account of the Company enabling the application of the resulting distributable capital reserve to be applied in any manner in which the Company's profits available for distribution may be applied.

Dividend

The Directors are pleased to announce a final dividend of 4 pence per Ordinary share to be paid to all eligible Ordinary shareholders.

The new Ordinary shares issued pursuant to the latest Offer do not rank for this final dividend. Subject to shareholder approval, the Ordinary share dividend will be paid on 26 July 2018 to eligible Ordinary shareholders on the register on 5 July 2018.

The Board

I am delighted that Diane Seymour-Williams joined the board in September 2017. Diane was the Chairman of Neptune-Calculus.  She   brings   a wealth of general experience as well as fund experience.  Further details   about   her   are   given in the Directors' report in the Annual Report and Accounts.

Outlook

A number of changes to the rules relating to VCTs were introduced by the government in the budget in November 2017 and have now passed in to law. The key changed requirement is for investments to be focused on companies intent on long term growth where there    is a real risk to the capital being invested by the VCT. Investment in companies and arrangements intended to provide low risk investment, so called 'capital preservation' investments, are no longer qualifying.

Calculus Capital is recognised as a growth investor and we continue to believe that there will be sufficient investment opportunities for the VCT. The acquisition of the Neptune-Calculus investments provides our investors with a more diversified portfolio and greater potential for long term returns. Brexit uncertainties remain and economic growth is expected to be modest but our investments are in interesting areas and show good potential for growth.

Michael O'Higgins

Chairman

17 May 2018

INVESTMENT MANAGER'S REVIEW

(Qualifying Investments)

The net assets of £10,129,722 were as follows:

Asset class	NAV (£000s)	% of NAV	Number of investee companies/funds
Unquoted company investments	4,727	47	18
AIM traded company investments	610	6	5
Liquidity Fund investments	2,645	26	3
Other Liquid assets	2,148	21	-
Totals	10,130	100

During the year, the Company made seven qualifying investments, as we seek to build a diversified portfolio. These were:

Quai Administration Services Limited ("Quai")

In March 2017, £70,000 was invested in a back office digital administration company, Quai Administration Services Limited ("Quai"). Quai provides platform technology combined with back office administration services for the high- volume personal savings industry. Quai's platform administers thousands of individual savings plans at a fraction of the cost incurred by established insurance companies and wealth managers.

Blu Wireless Technology Limited ("Blu Wireless")

In June 2017, £150,000 was invested in a UK based semiconductor design company, Blu Wireless Technology Limited ("Blu Wireless"). Blu Wireless develops hardware and software IP to provide carrier- grade wireless communications at multi-Gbit speeds (similar to that provided by fibre). There are immediate applications for fixed wireless broadband (where fibre roll out may be prohibitively expensive), rail and road transport and in due course, in providing the "backhaul" for the much denser network of base stations that will be required for 5G roll-out. Calculus Capital invested alongside ARM Holdings, which has a strategic aim of strengthening its position in networking.

Cornerstone Brands Limited ("Cornerstone")

In August 2017, £150,000 was invested in Cornerstone Brands Limited ("Cornerstone") an internet shaving products subscription business. Cornerstone provides quality British skin care products and German engineered razors to over 150,000 customers around the UK via an online, 'direct- to-consumer' model which challenges the strategy of traditional retail businesses. A key focus is the successful rollout of the company's multiproduct launch, moving into other toiletries categories.

Arcis Biotechnology Holdings Limited ("Arcis")

In September 2017, £150,000 was invested in research and development company, Arcis Biotechnology Holdings Limited ("Arcis"). Arcis is developing rapid DNA / RNA extraction and preservation products which have significant advantages over other techniques.  Two DNA extraction products, which are CE-IVD (in- vitro diagnostic) marked, were launched in 2017 and are gaining commercial traction. Arcis' RNA products are at an earlier stage of development but have exciting potential. RNA biomarkers can be an early warning signal that a cell is mutating and turning cancerous but have been very difficult to detect because RNA is inherently fragile. Arcis' technology can stabilise RNA biomarkers for prostate cancer in urine. Preserving RNA in this way opens the possibility of earlier and more accurate cancer detection, particularly the hard to detect, so called 'silent cancers'. Arcis completed an oversubscribed £1.15m fundraising in March 2018 via the crowdfunding platform Syndicate Room.

The One Place Capital Limited ("Money Dashboard" or "MDB")

In October 2017, £150,000 was invested in web based personal finance application, Money Dashboard (trading name of The One Place Capital Limited). Money Dashboard offers its users a free view of their finances by automatically analysing all their transactions (from bank accounts, credit cards, store cards, etc.). In February 2018, MDB won Best Personal Finance App at the British Bank Awards for the second year running, the first time the same app has won in two consecutive years. MDB has a database of over 100,000 users and aggregates their data on an anonymised basis to analyse consumer spending trends which can be sold to institutional investors and others, tracking trends in consumer expenditures. The introduction of the Open Banking Standards in January 2018 (after significant delays) is a major opportunity for MDB, making it easier to acquire new users and so enhance the efficacy of its data analysis. The company completed an oversubscribed £1.4m fundraising in September 2017 via the crowdfunding platform Crowdcube.

Every1Mobile Limited ("Every1Mobile")

In October 2017, an investment of £200,000 was completed in digital platform, Every1Mobile. Every1Mobile has developed a propriety modular web platform that is focused on delivering web services to the developing African market, where mobile phone penetration is high but where the cost of data and the range of handsets mean that normal web platforms are unsuitable. Every1Mobile provides its platform to multi-national corporates, international development agencies and non-profit organisations. It has delivered programmes for them across much of sub Saharan Africa and is in a position to become the provider of choice in this important developing market where living standards are rising and education and improved healthcare are becoming major priorities.

Open Energy Market Limited ("OEM")

In January 2018, Calculus Capital invested £200,000 in OEM, an online trading platform for energy contracts for medium-large enterprises. According to Ofgem, contracts in the corporate energy market total over £1.2 billion per year, of which 85% is bought using an energy broker in what has essentially been a paper-based process. OEM is an online trading platform for medium to large enterprises to contract for their future energy requirements. OEM connects businesses through the platform to all sixteen major energy providers of gas and electricity. These providers bid for contracts in a live auction process allowing businesses to buy energy in a streamlined and more transparent way.

Investments acquired from Neptune-Calculus

In addition, a number of investments were acquired by way of the merger with Neptune-Calculus. In September 2017, the majority of the companies were already held in the Company. The investments acquired which were not already held in the Company were Arcis Biotechnology Limited in which a follow-on investment of £150,000 was made during the year and Synpromics Limited which identifies gene sequences, known as promoters, which control how cells are affected in gene and cell therapies. The full list of investments acquired by way of the merger and their values at the time of merger were:

£100,000 in trampoline park operator, Air Leisure Group Limited (trading as XJump).

£125,000 in Arcis Biotechnology Holdings Limited.

£74,000 in drug discovery and development company, C4X Discovery Holdings plc.

£69,000 in molecular diagnostics company, Genedrive plc.

£25,000 in renewable energy company, MicroEnergy Generation Services Limited.

£126,000 in a provider of internet and phone services, Origin Broadband Limited.

£264,000 in Scancell Holdings plc, an immunotherapy company.

£249,000 in a developer and manufacturer of cosmetics, toiletries and fragrances, Solab Group Limited.

£134,000 in Synpromics Limited a synthetic biology company.

£722,000 in an oil and gas exploration and production company, Terrain Energy Limited.

£116,000 in cleantech company Weeding Technologies Limited.

In addition, a number of smaller holdings were acquired for an aggregate value of less than £2,000. £286,000 cash and £90,000 of net liabilities were also acquired.

Investment Diversification at 28 February 2018

Sectors by investment cost

Sector	%
Consumer	17
Energy	24
Healthcare	22
Industrials	12
Technology	25

Total assets by value

Asset	%
Unquoted company equity	41
Unquoted company loanstock	6
AIM traded equity	6
Liquidity fund investments	26
Other liquid assets	21

Holding period of qualifying investments by value

Asset	%
Less than 1 year	27
Between 1 and 3 years	29
Between 3 and 5 years	12
Greater than 5 years	32

Developments since the year end

Since the year end the Company has invested £200,000 in Mologic Limited, a developer of point of care diagnostic devices, designed to improve the lives of patients by giving them the opportunity to manage their own condition in the home environment. The Company has also received £32,000 as additional consideration for the sale of an investment in Triage Limited which was sold by Neptune-Calculus before the assets and liabilities were acquired by the Company in September 2017. Other than this, there have been no developments since the year end.

Calculus Capital Limited

17 May 2018

INVESTMENT PORTFOLIO

Largest holdings by value

Three of the Company's ten largest investments are currently in liquidity funds. Details of the liquidity funds and 10 largest qualifying investments are set out below:

Investment	Book Cost £'000	Valuation £'000	% of investment portfolio
Unquoted Equity Investments
Terrain Energy Limited	972	1,037	13.0
Solab Group Limited	479	501	6.3
AnTech Limited	270	292	3.7
The One Place Capital Limited	277	277	3.5
Acris Biotechnology Holdings	275	275	3.4
Origin Broadband Limited	226	252	3.2
Weeding Technologies	216	233	2.9
Synpromics Limited	134	232	2.9
Quai Administration Services Limited	220	220	2.8
Other unquoted equity investments	1,371	1,408	17.6
AIM Investments (quoted equity)
Scancell Holdings plc	378	367	4.6
Other AIM investments	350	243	3.0
Quoted Funds
Fidelity Sterling Liquidity Fund	881	883	11.1
Aberdeen Sterling Liquidity Fund	882	882	11.0
Goldman Sachs Liquidity Funds	880	880	11.0
Total Investments	7,811	7,982	100

More information of the unquoted holdings included within the 10 largest qualifying investments by value are provided below.

Terrain Energy Limited ("Terrain")

Terrain has interests in eleven licenses, with nine onshore in the UK and two in Germany.

The company is currently producing from wells at Keddington, Whisby and Lidsey. Brockham was successfully drilled in 2017 but there have been some delays in testing and production due to a planning dispute which the company believes is close to settlement. Initial results indicate that the well could be very productive from the Kimmeridge clay, in line with the nearby Horse Hill-1 well which had initial production of over 1600bopd. A new well at Lidsey was spudded in September 2017 which is currently producing c.  30bopd.  Further work is expected to increase production. The company is in discussions regarding the farm-out or sale of its German licences with several larger industry players following a gas discovery on its Holzkirchen licence by a geothermal company.

Latest Results	Unaudited 2017 £'000	Audited 2016 £'000	Investment Information	Ordinary share Fund £'000
Year ended	31 Dec	31 Dec
Turnover	704	544	Total cost	972
Pre-tax loss	136	543	Income recognised in year/period	19
Net assets	6,329	6,466	Equity valuation	937
Valuation basis: Comparable companies and DCF			Loan stock valuation	100
			Total valuation	1,037
			Voting rights / % of equity share capital held	7.4%

Total equity held by funds managed by Calculus Capital Limited: 100 per cent.

Solab Group Limited ("Solab")

Solab is a long-established manufacturer of fragrances, shampoos and skincare products for third party customers, including Penhaligon's and Philip Kingsley.

2017 was challenging with difficult market conditions generally, the continuing effects of losing its largest customer (The Body Shop), when it was acquired by L'Oreal and some unforeseen operational issues related to a new joint venture to supply some of the supermarket majors (Tesco, Lidl). Losses were incurred in the first half of the year, but, following management and other changes, Solab has been trading profitably since September. This has continued in 2018, with new customer wins and first orders from The Body Shop following its sale by L'Oréal.

Latest Results (group)	Unaudited 2017 £'000	Audited 2016 £'000	Investment Information	Ordinary share Fund £'000
Year ended	31 Dec	31 Dec
Turnover	19,013	18,081	Total cost	479
Pre-tax loss	1,335	525	Income recognised in year/period	22
Net assets	1,128	2,039	Equity valuation	206
Valuation basis: Comparable companies, comparable transactions and DCF			Loan stock valuation	295
			Total valuation	501
			Voting rights / % of equity share capital held	7.5%

Total equity held by funds managed by Calculus Capital Limited: 85 per cent.

AnTech Limited ("AnTech")

AnTech is a specialist oil and gas engineering company, both manufacturing products for use at the wellhead during production and providing services for directional coiled tube drilling.

AnTech's Products Division, whose largest product category is technically advanced Well Head Outlets, suffered falls in sales because of low oil prices. However, in 2017, sales stabilised and then increased with a strong order book. The Coiled Tube Drilling Services Division has developed a new generation of directional drilling tools for use in coiled tube drilling. These tools, COLT and POLARIS, are effective for interventions in existing wells to enhance production yield and extend well life. Commercialisation has been delayed by low oil prices, but drilling is expected during 2018 in North America and Saudi Arabia (which was originally contracted for 2016).

Latest Results (group)	Unaudited 2017 £'000	Audited 2016 £'000	Investment Information	Ordinary share Fund £'000
Year ended	31 Aug	31 Aug
Turnover	2,089	2,130	Total cost	270
Pre-tax loss	474	1,149	Income recognised in year/period	18
Net assets	6,808	7,673	Equity valuation	142
Valuation basis: DCF and comparable companies and transactions			Loan stock valuation	150
			Total valuation	292
			Voting rights / % of equity share capital held	1.0%

Total equity held by funds managed by Calculus Capital Limited: 32 per cent.

The One Place Capital Limited ("Money Dashboard")

Information on The One Place Capital Limited ("Money Dashboard") is included under details of investments in the year on page 10 of the Annual Report and Accounts.

Latest Results (group)	Unaudited 2017 £'000	Audited 2016 £'000	Investment Information	Ordinary share Fund £'000
Year ended	30 Apr	30 Apr
Turnover	633	509	Total cost	277
Pre-tax loss	669	1,250	Income recognised in year/period	-
Net assets	356	5	Equity valuation	277
Valuation basis: Last price paid			Loan stock valuation	-
			Total valuation	277
			Voting rights / % of equity share capital held	2.2%

Total equity held by funds managed by Calculus Capital Limited: 36 per cent.

Arcis Biotechnology Holdings Limited ("Arcis")

Information on Arcis is included under details of investments in the year on page 10 of the Annual Report and Accounts.

Latest Results (group)	Audited 2017 £'000	Audited 2016 £'000	Investment Information	Ordinary share Fund £'000
Year ended	31 Jul	31 Jul
Turnover	225	217	Total cost	275
Pre-tax loss	1,464	1,729	Income recognised in year/period	-
Net assets	204	1,460	Equity valuation	275
Valuation basis: Last price paid			Loan stock valuation	-
			Total valuation	275
			Voting rights / % of equity share capital held	1.5%

Total equity held by funds managed by Calculus Capital Limited: 38 per cent.

Origin Broadband Limited ("Origin")

Origin is an award-winning internet service provider, serving residential and business customers throughout the UK.

The company owns and operates the sixth largest broadband network in the UK measured by points of presence. As a network operator Origin is able to deal directly with Openreach, the BT division that maintains the UK's main telecoms network. This gives the company greater control over the underlying circuits and equipment; allowing it to provide a better service level than a pure reseller. Origin is viewed by its customers as an agile alternative to the large, incumbent telecom operators, with a focus on faster broadband speeds, competitive pricing and first-class customer service. Many businesses are moving to cloud computing and need strong customer support. Consumers are using increasing amounts of data and require fast/superfast broadband services.

Since the original Calculus investment in December 2016, Origin has grown its residential customer base from approximately 8,000 to over 35,000. Current business clients include Amazon - where Origin is the preferred provider for all new warehouse and corporate sites, NHS Sheffield and various UK universities. 

Latest Audited Results	2017 £'000	2015* £'000	Investment Information	Ordinary share Fund £'000
Year ended	31 Mar	30 Nov
Turnover	3,011	730	Total cost	226
Pre-tax loss	2,350	1,301	Income recognised in year/period	-
Net assets/ (liabilities)	1,425	(178)	Equity valuation	252
Valuation basis: Last price paid			Loan stock valuation	-
			Total valuation	252
			Voting rights / % of equity share capital held	0.6%

* Comparative figures restated according to FRS 102. Change in accounting period end from 30 Nov 2016 to 31 Mar 2017, therefore 2017 results cover a 16 month period which is not entirely comparable to the prior period which was 12 months in length.

Total equity held by funds managed by Calculus Capital Limited: 18 per cent.

Weeding Technologies Limited ("Weedingtech")

Increasingly, governments and regulators are becoming concerned about the use of chemical herbicides, such as glyphosate, particularly in public spaces. Weedingtech's "Foamstream" product treats and controls weed and moss using environmentally friendly hot foam.  The company has had a strong 2017; it doubled its turnover for the second year in a row, launched a new and significantly improved product and is building a distributor network across Europe and North America.

The company continues to invest in R&D and has plans for improvements to the existing product and for new complementary products to be released in 2018. 

Latest Unaudited Results	Unaudited 2017 £'000	Audited 2016 £'000	Investment Information	Ordinary share Fund £'000
Year ended	31 Dec	31 Dec
Turnover	2,625	1,260	Total cost	216
Pre-tax loss	1,627	1,177	Income recognised in year/period	-
Net assets/ (liabilities)	981	2,086	Equity valuation	233
Valuation basis: Last price paid			Loan stock valuation	-
			Total valuation	233
			Voting rights / % of equity share capital held	1.4%

Total equity held by funds managed by Calculus Capital Limited: 22 per cent.

Synpromics Limited ("Synpromics")

Synpromics is a leader in gene control, improving human health by enabling safer, more effective cell and gene medicines through proprietary genomics, bioinformatics and intelligent data-driven design.

The company has developed PromPT®, its multi- dimensional bioinformatics database that enables the development of specific "promoters" for the next generation of cell and gene-based medicines and bioprocessing applications. Promoters are the gene mechanism that direct cell and gene therapies to the specific targets. The company operates in a diverse range of fields, including broad applications in cell and gene-based medicine, biologics manufacturing and viral vector bioprocessing.

Latest Results (group)	Unaudited 2017 £'000	Audited 2016 £'000	Investment Information	Ordinary share Fund £'000
Year ended	31 Dec	31 Dec
Turnover	1,744	1,243	Total cost	134
Pre-tax loss	1,594	429	Income recognised in year/period	-
Net assets	4,470	1,048	Equity valuation	232
Valuation basis: DCF			Loan stock valuation	-
			Total valuation	232
			Voting rights / % of equity share capital held	0.7%

Total equity held by funds managed by Calculus Capital Limited: 50 per cent.

Quai Administration Services Limited ("Quai")

Quai provides platform technology combined with back office administration services for the high-volume personal savings industry.

Quai's platform administers thousands of individual savings plans at a fraction of the cost incurred by established insurance companies and wealth managers. In October 2016 Punter Southall Aspire, the leading workplace pensions and savings business, selected Quai as the out-sourced investment administrator for its forthcoming Master Trust. At the same time, Punter Southall Aspire made a strategic investment in Quai, which was further supported by Calculus and other existing shareholders in February 2017.

Latest Results (group)	Unaudited 2017 £'000	Audited 2016 £'000	Investment Information	Ordinary share Fund £'000
Year ended	31 Oct	31 Oct
Turnover	1,543	919	Total cost	220
Pre-tax loss	1,200	1,830	Income recognised in year/period	-
Net assets	225	124	Equity valuation	220
Valuation basis: Last price paid			Loan stock valuation	-
			Total valuation	22
			Voting rights / % of equity share capital held	2.7%

Total equity held by funds managed by Calculus Capital Limited: 52 per cent.

OTHER STATUTORY INFORMATION

Company activities and status

The Company is registered as a public limited company and incorporated in England and Wales with registration number 07142153. Its shares have a premium listing and are traded on the London Stock Exchange.

On incorporation, the Company was an investment company under section 833 of the Companies Act 2006. On 18 May 2011, investment company status was revoked by the Company. This was done in order to allow the Company to pay dividends to shareholders using the special reserve (a distributable capital reserve), which had been created on the cancellation of the share premium account on 20 October 2010 and on 1 November 2017.

Company business model

The Company's business model is to conduct business as a VCT. Company affairs are conducted in a manner to satisfy the conditions to enable it to obtain approval as a VCT under sections 258-332 of the Income Tax Act 2007 ("ITA 2007").

Investment policy

It is intended that a minimum of 75 per cent of the monies raised by the Company will be invested in a variety of investments which will be selected to preserve capital value, whilst generating income, and may include:

•       Bonds issued by the UK Government; and

•       Fixed income securities issued by major companies and institutions, liquidity funds and fixed deposits with counterparty credit rating of not less than A minus (Standard & Poor's rate)/A3 (Moody's rated).

The Company's policy is to build a diverse portfolio of Qualifying Investments of primarily established unquoted companies across different industries and investments which may be by way of loan stock and/or fixed rate preference shares as well as Ordinary shares to generate income. The amount invested in any one sector and any one company will be no more the Company's liquid investments which include cash, money market instruments and quoted shares can be realised as permitted by the Company's investment policy; iv) the illiquid nature of the qualifying portfolio. Based on the results of than 20 per cent and 10 per cent respectively of the qualifying portfolio. These percentages are measured as at the time of investment. The Board and its Investment Manager, Calculus Capital Limited, will review the portfolio of investments on a regular basis to assess asset allocation and the need to realise investments to meet the Company's objectives or maintain VCT status.

Where investment opportunities arise in one asset class which conflict with assets held or opportunities in another asset class, the Board will make the investment decision. Under its Articles, the Company has the ability to borrow a maximum amount equal to 25 per cent of    the aggregate amount paid on all shares issued by the Company (together with any share premium thereon). The Board will consider borrowing if it is in the shareholders' interests to do so. In particular, because the Board intends to minimise cash balances, the Company may borrow on a short-term to medium-term basis for cashflow purposes and to facilitate the payment of dividends and expenses in the early years.

Long term viability

In assessing the long-term viability of the Company, the Directors have had regard to the guidance issued by the Financial Reporting Council. The Directors have assessed the prospects of the Company for a period of five years, which was selected because this is the minimum holding period for VCT shares. The Board's strategic review considers the Company's income and expenses, dividend policy, liquid investments and ability to make realisations of qualifying investments. These projections are subject to sensitivity analysis which involves flexing a number of the main assumptions underlying the forecast both individually and in unison. Where appropriate, this analysis is carried out to evaluate the potential impact of the Company's principal risks actually occurring. Based on the results of this analysis, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the five-year period of their assessment. The principal assumptions used are as follows: i) Calculus Capital Limited pays any expenses in excess of 3.0 per cent of NAV as set out on page 30 of the Annual Report and Accounts; ii) the level of dividends paid are at the discretion of the Board; iii) this analysis, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due.

In making this statement the Board carried out a robust assessment of the principal risks facing the Company including those that might threaten its business model, future performance, solvency or liquidity.

Alternative investments funds directive (AIFMD)

The AIFMD regulates the management of alternative investment funds, including VCTs. The VCT is externally managed under the AIFMD by Calculus Capital Limited which is a small authorised Alternative Investment Fund Manager.

Risk diversification

The Board controls the overall risk of the Company. Calculus Capital Limited will ensure the Company has exposure to a diversified range of Qualifying Investments from different sectors.

Since November 2015, the types of non-qualifying investment include:

•       Bonds issued by the UK Government; and

•       Fixed income securities issued by major companies and institutions, liquidity funds and fixed deposits with counterparty credit rating of not less than A minus (Standard & Poor's rate)/A3 (Moody's rated).

VCT regulation

The Company's investment policy is designed to ensure that it will meet, and continue to meet, the requirements for approved VCT status from HM Revenue & Customs. Amongst other conditions, the Company may not invest more than 15 per cent (by value at the time of investment) of its investments in a single company and must have at least 70 per cent by value of its investments throughout the period in shares or securities in qualifying holdings, of which 30 per cent by value must be Ordinary shares which carry no preferential rights ("eligible shares"). For funds raised from 6 April 2011, the requirement for 30 per cent to be invested in eligible shares was increased to 70 per cent.

Changes to legislation were made in the Finance Bill 2018 such that from 1 March 2020 the percentage by value of the Company's investments in shares or securities which must be invested by and maintained in qualifying holdings will rise to 80 per cent. In addition, 30 per cent of any money raised after 6 April 2018 will need to be invested in qualifying holdings within 12 months after the end of the accounting period in which the money was raised and loan stock investments in investee companies must be unsecured and must not carry a coupon which exceeds 10% per annum on average over a five-year period.

Key strategic issues considered during the year

Performance

The Board reviews performance by reference to a number of key performance indicators ("KPIs") and considers that the most relevant KPIs are those that communicate the financial performance and strength of the Company as a whole, being;

•     total return per share

•     net asset value per share

The financial highlights of the Company can be found after the contents page of the Annual Report and Accounts.

Further KPIs are those which show the Company's position in relation to the VCT tests which it is required to meet in order to meet and maintain its VCT status. The Qualifying % is disclosed in the Investment Manager's review. The Company has received approval as a VCT from HM Revenue & Customs.

Principal risks and uncertainties facing the Company and management of risk

The Company is exposed to a variety of risks. The principal financial risks, the Company's policies for managing these risks and the policy and practice with regard to financial instruments are summarised in note 16 to the full Annual Report and Accounts.

The Board has also identified the following additional risks and uncertainties:

Regulatory risk

The Company has received approval as a VCT under ITA 2007. Failure to meet and maintain the qualifying requirements for VCT status could result in the loss of tax reliefs previously obtained, resulting in adverse tax consequences for investors, including a requirement to repay the income tax relief obtained, and could also cause the Company to lose its exemption from corporation tax on chargeable gains.

The Board receives regular updates from the Investment Manager and financial information is produced on a monthly basis. The Investment Manager monitors VCT regulation and presents its findings to the Board on   a quarterly basis. The Investment Manager builds in 'headroom' when making investments to allow for changes in valuation. This 'headroom' is reviewed prior to making and realising qualifying investments.

Independent advisers are used to monitor and advise on the Company's compliance with the VCT rules.

Qualifying investments

There are restrictions regarding the type of companies in which the Company may invest and there is no guarantee that suitable investment opportunities will be identified.

Investment in unquoted companies and AIM-traded companies involves a higher degree of risk than investment in companies traded on the main market of the London Stock Exchange. These companies may not be freely marketable and realisations of such investments can be difficult and can take a considerable amount of time. There may also be constraints imposed upon the Company with respect to realisations in order to maintain its VCT status which may restrict the Company's ability to obtain the maximum value from its investments.

Calculus Capital Limited has been appointed to manage the qualifying investments portfolio and has extensive experience of investing in this type of investment. Regular reports are provided to the Board and a representative of Calculus Capital Limited is on the Company's board. Risk is managed through the investment policy which limits the amount that can be invested in any one company and sector to 10 per cent and 20 per cent of the qualifying portfolio respectively at the time of investment - Liquidity/ marketability risk.

Due to the holding period required to maintain up-front tax reliefs, there is a limited secondary market for VCT shares and investors may therefore find it difficult to realise their investments. As a result, the market price of the shares may not fully reflect, and will tend to be at a discount to, the underlying net asset value. The level of discount may also be exacerbated by the availability of income tax relief on the issue of new VCT shares. The Board recognises this difficulty, and has taken powers to buy back shares, which could be used to enable investors to realise investments.

Employees, environmental, human rights and community issues

The Company has no employees and the Board comprises entirely non-executive directors. Day-to-day management of the Company's business is delegated to the Investment Manager (details of the management agreement are set out in the Directors' Report) and the Company itself has no environmental, human rights, or community policies. In carrying out its activities and in its relationships with suppliers, the Company aims to conduct itself responsibly, ethically and fairly.

Gender Diversity

The Board of directors comprised three male directors and two female Directors at the end of the year to 28 February 2018.

Statement regarding annual report and accounts

The Directors consider that taken as a whole, the Annual Report and Accounts is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

Michael O'Higgins

Chairman

17 May 2018

EXTRACT OF THE DIRECTOR'S REPORT

Share capital

The capital structure of the Company and movements during the year are set out in note 12 of the Accounts. At the year end, no shares were held in Treasury. In April 2017 160,810 D shares were issued pursuant to an offer for subscription. In July 2017 the share classes were merged and 4,055,220 old ordinary shares were converted into 683,243 new Ordinary shares, 1,460,898 C shares were converted into 470,197 new Ordinary shares and the 7,672,507 D shares then in issue were renamed Ordinary shares. In September 2017 2,511,180 new Ordinary shares were issues to acquire the assets and liabilities of Neptune. In December 2017 367,800 Ordinary shares were issued pursuant to offers for subscription. 62,210 Ordinary shares were bought back during the year. Since the year end a further 1,779,298 new Ordinary shares have been issued pursuant to an offer for subscription.

Substantial Shareholdings

As at 28 February 2018, Mr Alistair Watson held 407,022 Ordinary shares representing 3.5% of the share capital of the Company. There were no other notifiable interests in the voting rights of the Company.

Management

Calculus Capital Limited is the qualifying Investments' portfolio manager. Calculus Capital Limited was appointed as Investment Manager pursuant to an agreement dated 2 March 2010, a supplemental agreement was entered into on 7 January 2011 in relation to the management of the C Share fund, a further supplemental agreement entered into on 26 October 2015 in relation to the management of the D share fund and covers the addition of company secretarial duties and a further supplemental management agreement entered into on 12 September 2017 in relation to the merged share fund (together, the "Calculus Management Agreements"). Pursuant to the Calculus Management Agreements, Calculus Capital Limited agreed to meet the annual expenses of the Company in excess of 3.0 per cent of the aggregate gross amounts raised under the Ordinary share and C share offers, and 3.4 per cent of the aggregate gross amounts raised on the D share offer, for the period from 1 March 2017 to 12 September 2017. From 12 September 2017, Calculus Capital Limited agreed to meet the annual expenses of the Company in excess of 3.0 per cent of the net asset value of the Ordinary shares.

Pursuant to the Calculus Management Agreements, Calculus Capital Limited will receive an annual management fee of 1.75 per cent of the net asset value of the Ordinary share fund, calculated and payable quarterly in arrears.

Calculus Capital Limited is also entitled to a fee of £15,000 per annum (plus VAT where applicable) for the provision of company secretarial services.

For the year to 28 February 2018, Calculus Capital Limited charged £154,089 in management fees, £18,000 in company secretarial fees, and contributed £26,435 to the expenses cap such that net fees earned were £145,654 (2017: charged £62,838 in management fees, £18,000 in company secretarial fees and contributed £20,492 to the expenses cap).

Pursuant to a performance incentive agreement dated 26 October 2015, Calculus Capital Limited is entitled to a performance incentive fee equal to 20 per cent of Ordinary shareholder (formerly D shareholder) dividends and distributions paid in excess of 105 pence.

Investec Structured Products was appointed as Investment Manager pursuant to an agreement dated 2 March 2010, and their appointment as Investment Manager terminated in February 2017. Certain performance incentive agreements were entered into with Calculus Capital Limited and Investec Structured Products.

Pursuant to a performance incentive agreement between the Company, Calculus Capital Limited and Investec Structured Products dated 2 March 2010, Investec Structured Products and Calculus Capital Limited will each receive a performance incentive fee payable in cash of an amount equal to 10 per cent of dividends and distributions paid to old ordinary shareholders following the payment of such dividends and distributions provided that such shareholders have received in aggregate distributions of at least 105p per ordinary share (including the relevant distribution being offered).

Pursuant to a performance incentive agreement between the Company, Calculus Capital Limited and Investec Structured Products dated 7 January 2011, Investec Structured Products and Calculus Capital Limited will be entitled to performance incentive fees as set out below:

•     10 per cent of C shareholder proceeds in excess of 105p up to and including proceeds of 115p per C share, such amount to be paid within ten business days of the date of payment of the relevant dividend or distribution pursuant to which a return of 115p per C share is satisfied; and

•     10 per cent of C shareholder proceeds in excess of 115p per C share, such amounts to be paid within ten business days of the date of payment of the relevant dividend or distribution,

provided that C shareholders received at least 70p per C share on or before 14 March 2017 and at least a further 45p per C share is received or offered for payment on or before the 14 March 2019.

Continuing Appointment of the Investment Manager

The Board keeps the performance of Calculus Capital Limited under continual review. A formal review of the Investment Manager's performance and the terms of their engagement has been carried out and the Board are of the opinion that the continuing appointment of Calculus Capital Limited as Investment Manager is in the interests of shareholders as a whole. The Board is satisfied with the performance of the Company to date. The Board is confident that the VCT qualifying tests will continue to be met.

Financial Risk Management

The principal financial risks and the Company's policies for managing these risks are set out in note 16 to the Accounts.

Going Concern

In assessing the going concern basis of accounting, the Directors have had regard to the guidance issued by the Financial Reporting Council. After making enquiries, and having reviewed the portfolio, balance sheet and projected income and expenditure for a period of twelve months from the date these financial statements were approved, the Directors have a reasonable expectation that the Company has adequate resources to continue in operation for the foreseeable future. The Directors have therefore adopted the going concern basis in preparing the Accounts.

Annual General Meeting

The Annual General Meeting will be held at the offices of Calculus Capital Limited, 104 Park Street, London, W1K 6NF at 11.00am on 3 July 2018.

DIRECTOR'S RESPONSIBILITIES STATEMENT

Statement of Directors' Responsibilities in respect of the Annual Report and the Accounts

The directors are responsible for preparing the Annual Report and the Accounts in accordance with applicable law and regulations.

Company law requires the directors to prepare Accounts for each financial year. Under that law they have elected to prepare the Accounts in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable laws).

Under company law the Directors must not approve the Accounts unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the Company for that period.

In preparing these Accounts, the directors are required to:

•     select suitable accounting policies and then apply them consistently;

•     make judgments and accounting estimates that are reasonable and prudent;

•     state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the Accounts; and

•     prepare the Accounts on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Accounts comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Under applicable law and regulations, the directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that comply with that law and those regulations, and for ensuring that the Annual Report includes information required by the Listing Rules of the Financial Conduct Authority.

The Accounts are published on the www.calculuscapital. com website, which is a website maintained by the Company's investment manager, Calculus Capital Limited. The maintenance and integrity of the website maintained by Calculus Capital Limited is, so far as it relates to the Company, the responsibility of Calculus Capital Limited. The work carried out by the Auditor does not involve consideration of the maintenance and integrity of this website and accordingly, the Auditor accepts no responsibility for any changes that have occurred to the Accounts since they were initially presented on the website. Visitors to the website need to be aware that legislation in the United Kingdom covering the preparation and dissemination of the Accounts may differ from legislation in their jurisdiction.

We confirm that to the best of our knowledge:

•  the Accounts, prepared in accordance with UK accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

•  the Annual Report including the Strategic Report includes a fair review of the development and performance of the business and the position of the Company together with a description of the principal risks and uncertainties that it faces.

On behalf of the Board

Michael O'Higgins

Chairman

17 May 2018

NON-STATUTORY ACCOUNTS

The financial information set out below does not constitute the Company's statutory accounts for the year ended 28 February 2018 and the year ended 28 February 2017 but is derived from those accounts. Statutory Accounts for 2017 have been delivered to the Registrar of Companies, and those for 2018 will be delivered in due course. The Auditor has reported on these accounts; their report was (i) unqualified (ii) did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The text of the Auditor's report can be found in the Company's full Annual Report and Accounts at https://www.calculuscapital.com/calculus-vct/ .

INCOME STATEMENT

for the year ended 28 February 2018

		Year Ended 28 February 2018			Year Ended 28 February 2017
	Note	Revenue Return £'000	Capital Return £'000	Total £'000	Revenue Return £'000	Capital Return £'000	Total £'000
Gains on investments at fair value	9	-	232	232	-	‌70‌	‌70‌
Losses on disposal of investments	9	-	(159)	(159)	-	(214)	(214)
Income	3	65	-	65	62	-	62
Investment management fee	4	(39)	(115)	(154)	‌ (16) ‌‌‌	‌(47)‌‌‌	‌(63)‌‌‌
Costs of acquiring Neptune Calculus assets and liabilities		(55)	-	(55)	-	-	-
Other expenses	5	(202)	-	(202)	‌(193)‌‌‌	-	‌(193)‌‌‌
Deficit before taxation		(231)	(42)	(273)	‌(147)‌‌‌	‌(191)‌‌‌	‌(338)‌‌‌
Taxation	6	-	-	-	-	-	-
Deficit attributable to shareholders		(231)	(42)	(273)	‌(147)‌‌‌	‌(191)‌‌‌	‌(338)‌‌‌
Deficit per Ordinary share	8	(2.3)p	(0.4)p	(2.7)p	(3.8)	(4.9)	(8.7)

The columns for the year to February 2018 include the income attributable to the old ordinary shares, C shares and D shares prior to the merger of the classes. The columns for the year to February 2017 represent the income attributable to the old ordinary shares C shares and D shares prior to the merger of the classes. The columns for both years represent the Company's Income Statement for the relevant year.

The deficit per Ordinary share for the year to 28 February 2017 is the implied deficit per Ordinary share on the assumption that the merger of the share classes had taken place on 1 March 2016.

The revenue and capital return columns are both prepared in accordance with the AIC SORP.

All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year.

There is no other comprehensive income as there were no other gains or losses other than those passing through the Income Statement.

The notes on pages 51 to 67 of the Annual Report and Accounts form an integral part of these Accounts.

STATEMENT OF CHANGES IN EQUITY

for the year ended 28 February 2018

	Share Capital £'000	Share Premium £'000	Special Reserve £'000	Capital redemption Reserve £'000	Capital Reserve Realised £'000	Capital Reserve Unrealised £'000	Revenue Reserve £'000	Total £'000
For the year ended 28 February 2018
1 March 2017	141	7,046	1,277	-	725	‌(61)‌‌‌	‌(705)‌‌‌	8,423
Investment holding gains	-	-	-	-		232	-	232
Loss on disposal of investments	-	-	-	-	(159)	-	-	(159)
New share issue (D shares)	2	153	-	-	-	-	-	155
Expense of share issue (D shares)	-	(9)	-	-	-	-	-	(9)
Purchase of shares for cancellation in connection with merger of classes	(55)	-		55	-	-	-	-
New share issue (Ordinary shares re Neptune-Calculus assets and liabilities acquisition)	25	2,176	3	-	-	-	-	2,204
Cancellation of share premium account	-	(9,342)	9,342	-	-	-	-	-
New share issue (Ordinary shares)	4	310	-	-	-	-	-	314
Expenses of share issue (Ordinary shares)	-	(11)	-	-	-	-	-	(11)
Share buybacks for cancellation	(1)	-	(49)	1	-	-	-	(49)
Management fee allocated to capital	-	-	-	-	(115)	-	-	(115)
Change in accrual in IFA commission	-	(25)	2	-	-	-	-	(23)
Revenue return after tax	-	-	-	-	-	-	(231)	(231)
Dividends paid	-	-	(601)	-	-	-	-	(601)
28 February 2018	116	298	9,974	56	451	171	(936)	10,130
For the year ended 28 February 2017
1 March 2016	66	-	2,615	-	986	(131)‌‌	(558)‌‌‌‌	2,978
Investment holding gains	-	-	-	-	-	‌70‌	-	‌70‌
Loss on disposal of investments	-	-	-	-	(214)‌‌	-	-	(214)‌‌
New share issue	75	7,420	-	-	-	-	-	7,495
Expense of share issue	-	(374)‌‌	-	-	-	-	-	(374)‌‌
Management fee allocated to capital	-	-	-	-	‌(47)‌‌‌	-	-	‌(47)‌‌‌
Revenue return after tax	-	-	-	-	-	-	‌(147)‌‌‌	‌(147)‌‌‌
Dividends paid	-	-	‌(1,338)‌‌‌	-	-	-	-	‌(1,338)‌‌‌
28 February 2017	141	7,046	1,277	-	725	‌(61)‌‌‌	‌(705)‌‌‌	8,423

The figures for the year to February 2018 include the combined changes in equity attributable to the old ordinary shares C shares and D shares prior to the merger of the classes. The figures for the year to February 2017 represent the combined changes in equity for the old ordinary shares C shares and D shares. All items represent the changes in equity for the Company for the relevant year.

The notes on pages 51 to 67 of the Annual Report and Accounts form an integral part of these Accounts.

STATEMENT OF FINANCIAL POSITION

at 28 February 2018

	Note	28 February 2018 £'000	28 February 2017 £'000
Fixed assets
Investments at fair value through profit or loss	9	7,982	4,906
Current assets
Debtors	10	44	14
Cash at bank and on deposit		2,267	3,782
Creditors: amount falling due within one year
Creditors	11	(142)	‌(279)‌‌‌
Net current assets		2,169	3,517
Non-current liabilities
IFA trail commission		(21)	-
Net assets		10,130	8,423
Capital and reserves
Called-up share capital	12	116	141
Share premium		298	7,046
Special reserve		9,974	1,277
Capital redemption reserve		56	-
Capital reserve - realised		451	725
Capital reserve - unrealised		171	‌(61)‌‌‌
Revenue reserve		(936)	‌(705)‌‌‌
Equity shareholders' funds		10,130	8,423
Net asset value per Ordinary share - basic	13	87.0p	-
Net asset value per original ordinary share - basic	13	-	20.6p
Net asset value per C share - basic	13	-	26.0p
Net asset value per D share - basic	13	-	92.4p

The assets and liabilities as at 28 February 2018 represent the assets and liabilities attributable to the Ordinary shares. The assets and liabilities as at 28 February 2017 represent the combined assets and liabilities attributable to the original ordinary shares C shares and D shares. The notes on pages 51 to 67 of the Annual Report and Accounts form an integral part of these Accounts. The financial statements on pages 46 to 67 of the Annual Report and Accounts were approved by the Board of directors of Calculus VCT plc and were authorised for issue on 17 May 2018 and were signed on its behalf by:

Michael O'Higgins

Chairman

17 May 2018

STATEMENT OF CASHFLOWS

for the year ended 28 February 2018

	Note	Year Ended 28 February 2018 £'000	Year Ended 28 February 2017 £'000
Cash flows from operating activities
Investment income received		67	59
Deposit interest received		2	1
Investment management fees		(145)	‌(40)‌‌‌‌‌
Other cash payments		(264)	‌(107)‌‌‌‌‌
Cash flow from operating activities	14	(340)	‌(87)‌‌‌‌‌
Cash flow from investing activities
Purchase of investments		(1,070)	(3,561)‌‌
Sale of investments		73	1,440
Net cash flow from investing activities		(997)	(2,121)‌‌
Cash flow from financing activities
Ordinary share issue/ D share issue		418	7,546
Expense of Ordinary/D share issue		(127)	(267)‌‌
IFA commissions		(3)	-
Neptune-Calculus cash received		286	-
Expenses of Neptune-Calculus transaction		(102)	-
Share buybacks for cancellation		(49)	-
Equity dividend paid		(601)	‌(1,338)‌‌‌‌‌
Net cash flow from financing activities		(178)	‌5,941‌‌‌
(Decrease)/increase in cash and cash equivalents		(1,515)	‌3,733‌‌‌
Analysis of changes in cash and cash equivalents
Cash and cash equivalents at the beginning of year		3,782	49
Net cash (decrease)/increase		(1,515)	‌3,733
Cash and cash equivalents at the year end		2,267	3,782

The cash flows for the year to 28 February 2018 include cash movements attributable to the original ordinary shares C shares and D shares prior to the merger of the classes. The cash flows for the year to 28 February 2017 represent the combined cash movements attributable to the original ordinary shares C shares and D shares.

The notes on pages 51 to 67 of the Annual Report and Accounts form an integral part of these Accounts.

NOTES TO THE ACCOUNTS

1.   Company Information

The Company is incorporated in England and Wales and operates under the Companies Act 2006 (the Act) and the regulations made under the Act as a public company limited by shares, with registered number 07142153. The registered office of the Company is 104 Park Street, London, W1K 6NF.

2.   Accounting Policies

Basis of Accounting

The financial statements have been prepared on a basis compliant with applicable United Kingdom accounting standards, including Financial Reporting Standard 102 - The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland ('FRS102') and with the Act. The Directors have prepared the financial statements on a basis compliant with the recommendations of the Statement of Recommended Practice ("the SORP") for Investment Trust Companies and Venture Capital Trusts produced by the Association of Investment Companies ("AIC").

The financial statements are presented in Sterling (£).

Expenses up to the date of the merger of the share classes were allocated between the old ordinary share fund, C share fund and the D share fund on the basis of the ratio of the net asset value of the previous month unless the expense is attributable in full to one of the funds.

Going concern

After reviewing the Company's forecasts and projections, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future (being a period 12 month from the date these financial statements were approved). The Company therefore continues to adopt the going concern basis in preparing its financial statements.

Significant judgements and estimates

Preparations of the financial statements requires management to make significant judgements and estimates.  The items in the financial statements where these judgements and estimates have been made are in the valuation of unquoted investments. The valuation methodologies used when valuing unquoted investments provide a range of possible values. Judgements are used to estimate where in the range the fair value lies. The sensitivity analysis in note 16 demonstrates the impact on the portfolio of applying alternative values in the upside and downside.

As at 28 February 2018 the value of unquoted investments included within the Company's investment portfolio was £4,726,742 (2017 original ordinary fund: £880,512; 2017 C share fund: £531,744; 2017 D share fund: £599,990).

Investments

The Company has adopted FRS 102, sections 11 and 12, for the recognition of financial instruments. The Company's business is investing in financial assets with a view to profiting from their total return in the form of increases in fair value. Fair value is the amount for which an asset can be exchanged between knowledgeable, willing parties in an arm's length transaction. The Company manages and evaluates the performance of these investments on a fair value basis in accordance with its investment strategy, and information about the investments is provided on this basis to the Board of directors.

Investments held at fair value through profit or loss are initially recognised at fair value, being the consideration given and excluding transaction or other dealing costs associated with the investment, which are expensed and included in the capital column of the Income Statement.

After initial recognition, investments, which are classified as at fair value through profit or loss, are measured at fair value. Gains or losses on investments classified as at fair value through profit or loss are recognised in the capital column of the Income Statement and allocated to the capital reserve - unrealised or realised as appropriate.

All purchases and sales of quoted investments are accounted for on the trade date basis. All purchases and sales of unquoted investments are accounted for on the date that the sale and purchase agreement becomes unconditional.

For quoted investments and money market instruments fair value is established by reference to bid, or last, market prices depending on the convention of the exchange on which the investment is quoted at the close of business on the balance sheetdate.

Unquoted investments are valued using an appropriate valuation technique so as to establish what the transaction price would have been at the balance sheet date. Such investments are valued in accordance with the International Private Equity and Venture Capital ("IPEVC") guidelines. Primary indicators of fair value are derived from earnings or sales multiples, using discounted cash flows, recent arm's length market transactions by independent third parties, from net assets, or where appropriate, at price of recent investments.

Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents does not include liquidity fund investments as the Company does not consider the risk associated with changes in value to be insignificant.

Debtors

Short term debtors are measured at transaction price, less any impairment.

Creditors

Short term trade creditors are measured at the transaction price.

Income

Dividends receivable on equity shares are recognised as revenue on the date on which the shares or units are marked as ex-dividend. Where no ex-dividend date is available, the revenue is recognised when the Company's right to receive it has been established.

Interest receivable from fixed income securities and premiums on loan stock investments and preference shares is recognised using the effective interest rate method. Interest receivable and redemption premiums are allocated to the revenue column of the Income Statement.

Interest receivable on bank deposits is included in the financial statements on an accruals basis. Provision is made against this income where recovery is doubtful.

Other income is credited to the revenue column of the Income Statement when the Company's right to receive the income is established.

Expenses

All expenses are accounted for on an accruals basis. Expenses are charged to the Income Statement as follows:

Expenses are charged through revenue in the Income Statement except as follows:

•  costs which are incidental to the acquisition or disposal of an investment are taken to the capital column of the Income Statement.

•  expenses are charged to the capital column in the Income Statement where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. In this respect investment management fees have been allocated 75 per cent to the capital column and 25 per cent to the revenue column in the Income Statement, being in line with the Board's expected long-term split of returns, in the form of capital gains and revenue respectively, from the investment portfolio of the Company.

•  expenses associated with the issue of shares are deducted from the share premium account. Annual IFA trail commission covering a five-year period since share allotment has been provided for in the Accounts as, due to the nature of the Company, it is probable that this will be payable. The commission is apportioned between current and non-current liabilities.

Expenses incurred by the Company in excess of the agreed cap, currently 3 per cent of NAV (excluding irrecoverable VAT, annual trail commission and performance incentive fees), could be clawed back from Calculus Capital Limited. Any clawback is treated as a credit against the expenses of the Company.

Capital reserve

The realised capital return component of the return for the year is taken to the distributable capital reserves and the unrealised capital component of the return for the year is taken to the non-distributable capital reserves within the Statement of Changes in Equity.

Share Premium

The share premium is the excess paid by shareholders on share allotments above the nominal value of the share. There is currently a share premium account on the Ordinary shares issued since 1 November 2017. In order to allow the portfolios to pay dividends to shareholders using a distributable capital reserve, the special reserve was created on the cancellation of the share premium account on 20 October 2010 for original ordinary shares, 23 November 2011 for C shares and 1 November 2017 for the Ordinary share class.

Special reserve

The special reserve was created by the cancellation of the original ordinary share fund's share premium account on 20 October 2010. A further cancellation of the share premium account occurred on 23 November 2011 for both the original ordinary share fund and C share fund. A further cancellation of the share premium account occurred on 1 November 2017 for the Ordinary share fund. The special reserve is a distributable reserve created to be used by the Company inter alia to write off losses, fund market purchases of its own shares and make distributions and/or for other corporate purposes.

The Company was formerly an investment company under section 833 of the Companies Act 2006. On 18 May 2011, investment company status was revoked by the Company. This was done in order to allow the Company to pay dividends to shareholders using the special reserve.

Taxation

Deferred tax must be recognised in respect of all timing differences that have originated but not reversed at the reporting date where transactions or events that result in an obligation to pay more tax in the future have occurred at the reporting date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversals of the underlying timing differences can be deducted. Timing differences are differences between the Company's taxable profits and its results as stated in the financial statements.

Deferred tax is measured at the average tax rates that   are expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is measured on a non- discounted basis.

No taxation liability arises on gains from sales of fixed asset investments by the Company by virtue of its venture capital trust status. However, the net revenue (excluding UK dividend income) accruing to the Company is liable to corporation tax at the prevailing rates.

Any tax relief obtained in respect of management fees allocated to capital is reflected in the capital reserve - realised and a corresponding amount is charged against revenue. The relief is the amount by which corporation tax payable is reduced as a result of capital expenses.

Dividends

Dividends to shareholders are accounted for in the period in which they are paid or approved in general meetings. Dividends payable to equity shareholders are recognised in the Statement of Changes in Equity when they are paid or have been approved by shareholders in the case of a final dividend and become a liability of the Company.

Share buybacks

Where shares are purchased for cancellation, the consideration paid, including any directly attributable incremental costs, is deducted from distributable reserves. As required by the Companies Act 2006, the equivalent of the nominal value of shares cancelled is transferred to the capital redemption reserve.

3.   Income

	Year Ended 28 February 2018 £'000	Year Ended 28 February 2017 £'000
UK dividends	-	3
UK unfranked loan stock interest	59	54
Liquidity Fund interest	4	4
Bank interest	2	1
	65	62
Total income comprises:
Interest	65	59
Dividends	-	3
	65	62

All income arose in the United Kingdom.

The Board considered operating segments and considered there to be one, that of investing in financial assets.

4.   Investment Management Fee

	Year Ended 28 February 2018			Year Ended 28 February 2017
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Investment management fee	39	115	154	16	47	63

No performance fee was paid during the year. 

For the year ended 28 February 2018, Calculus Capital Limited contributed £26,435 (2017: £20,492 contributed) to the expenses of the Company such that its net management fee was £127,654 (2017: 42,346 contributed). At 28 February 2018, there was £42,310 due to Calculus Capital Limited for management fees (2017:  £32,949 due to Calculus Capital Limited).

Details of the terms and conditions of the investment management agreement are set out in the Directors' Report.

5.   Other expenses

	Year Ended 28 February 2018 £'000	Year Ended 28 February 2017 £'000
Directors' fees	57	50
Calculus secretarial fee	18	18
Link accounting fees	40	38
Fees payable to the Company's auditor for the audit of the company's annual accounts.	28	22
Other	85	85
Clawback of expenses in excess of expense cap repayable from the Manager	(26)	(20)
	202	193

Further details of directors' fees can be found in the Directors' Remuneration Report on page 35 to 38 of the Annual Report and Accounts.

 

6.   Taxation

	Year Ended 28 February 2018			Year Ended 28 February 2017
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Loss before tax	(231)	(42)	(273)	‌ (147) ‌‌‌	‌(191)‌‌‌	‌(338)‌‌‌
Theoretical tax at UK Corporation Tax rate of 19.1% (2017: 20.0%)	(44)	(8)	(52)	‌(30)‌‌‌	‌(38)‌‌‌	‌(68)‌‌‌
Timing differences: loss not recognised, carried forward	44	22		30	9	39
Effects of non-taxable gains		(14)		-	29	29
Tax charge	-	-	-	-	-	-

On 1 April 2017, the Corporation Tax rate decreased from 20% to 19%. The rate remained at 19% for the remainder of the reporting period.

At 28 February 2018, the Company had £1,184,503 (28 February 2017: £904,125) of excess management expenses to carry forward against future taxable profits.

The Company's deferred tax asset of £201,365 (28 February 2017: £153,701) has not been recognised due to the fact that it is unlikely the excess management expenses will be set off in the foreseeable future.

7.   Dividends

	28 February 2018 £'000	Year Ended 28 February 2017 £'000
Original ordinary shares
Declared and paid: 7.00p per Ordinary share in respect of the year ended 28 February 2018 (2017: 7.00p)	332	332
C shares
Declared and paid: 3.00p per C share in respect of the year ended 28 February 2018 (2017: 4.50p)	58	87
Declared and paid: nil per C share in respect of the year ended 28 February 2017 (2016: 47.6p)	-	919
D shares
Declared and Paid: 4.25p per Eligible D share in respect of the year ended 28 February 2018 (2017: 0.00p)	211	-

The Board have proposed an Ordinary share dividend in respect of the year to 28 February 2018 of 4 pence per share which, if approved by shareholders, will be paid to all Ordinary shareholders on the register on 5 July 2018 other than those who subscribed for new Ordinary shares after 1 August 2017.

The proposed dividend is subject to approval by shareholders at the forthcoming Annual General Meeting and has not been included as a liability in these Accounts.

8.   Return per share

	Year Ended 28 February 2018			Year Ended 28 February 2017
	Revenue pence	Capital pence	Total pence	Revenue pence	Capital pence	Total pence
Return per Ordinary share	(2.3)	(0.4)	(2.7)	(3.8)	(4.9)	(8.7)
Return per original ordinary share	-	-	-	(0.6)	(3.1)	(3.7)
Return per C share	-	-	-	(1.8)	2.6	0.8
Return per D share	-	-	-	(3.1)	(3.5)	(6.6)

Ordinary share return

From 1 March 2016 to 31 July 2017 the Company’s share capital comprised ordinary shares, C shares and D shares. On 1 August 2017 the share classes were merged to create one class of Ordinary shares. One Ordinary share was calculated to be equivalent to 0.1442 ordinary shares or 0.2435 C shares or one D share (the merger ratios). To calculate a return per Ordinary share for the period to 31 July 2017 (and for the comparative year to 28 February 2017), it is not considered meaningful to treat an ordinary share or a C share as equal to an Ordinary share nor to treat the share classes as equal to each other as the shares were represented by differing amounts of assets generating different returns. Accordingly, for this period (and for the year ended 28 February 2017) the number of Ordinary shares has been taken to be the aggregate equivalent number of Ordinary shares which each share class represented on the basis of the merger ratios. Throughout the period 1 March to 31 July 2017 the number of original ordinary shares was 4,738,463 equivalent to 683,243 Ordinary Shares (2017: 4,738,463 original ordinary shares equivalent to 683,243 Ordinary Shares) and the number of C shares was 1,931,095 equivalent to 470,197 Ordinary shares (2017: 1,931,095 C shares equivalent to 470,197 Ordinary shares). 7,511,697 D shares (equivalent to 7,511,697 Ordinary shares) were in existence at 1 March 2017 and a further 160,810 D shares (equivalent to 160,810 Ordinary Shares) were issued on 7 April 2017. 2,511,180 new Ordinary shares were issued on 12 September 2017, 367,800 new Ordinary shares were allotted on 20 December 2017 and 62,210 new Ordinary shares were bought back between 3 and 11 January 2018. On this basis, the weighted average number of Ordinary Shares for the period 1 March to 28 February 2018 was 10,033,757 Ordinary shares. (2017: 2,720,280 as the weighted average number of Ordinary shares is the same as the weighted average number of D shares in this year).

Revenue return per Ordinary share is based on the net revenue loss after taxation of £230,358 (2017: £146,730) and on 10,033,757 Ordinary shares, (2017: 3,873,720 implied Ordinary shares) being the weighted average number of Ordinary shares in issue during the period.

Capital return per Ordinary share is based on the net capital loss for the period of £42,305 and on 10,033,757 Ordinary shares (2017: 3,873,720 implied Ordinary shares) being the weighted average number of Ordinary shares in issue during the period.

Total return per Ordinary share is based on the net loss for the period of £272,663 and on 10,033,757 Ordinary shares (2017: 3,873,720 implied Ordinary shares), being the weighted average number of Ordinary shares in issue during the period.

Original ordinary Share return

Previously reported revenue return per Ordinary share is based on the net revenue loss after taxation of £30,481 and on 4,738,463 Ordinary shares, being the weighted average number of Ordinary shares in issue during the year to 28 February 2017.

Previously reported capital return per Ordinary share is based on the net capital loss for the year of £145,957 and on 4,738,463 Ordinary shares, being the weighted average number of Ordinary shares in issue during the year to 28 February 2017.

Previously reported total return per Ordinary share is based on the total loss after taxation of £176,438 and on 4,738,463 Ordinary shares, being the weighted average number of Ordinary shares in issue during the year to 28 February 2017.

C share return

Previously reported revenue return per C share is based on the net revenue loss after taxation of £33,187 and on 1,931,095 C shares, being the weighted average number of C shares in issue during the year to 28 February 2017.

Previously reported capital return per C share is based on the net capital gain for the year of £49,541 and on 1,931,095 C shares, being the weighted average number of C shares in issue during the year to 28 February 2017.

Previously reported total return per C share is based on the total gain for the year of £16,354 on 1,931,095 C shares, being the weighted average number of C shares in issue during the year to 28 February 2017.

D share return

Previously reported revenue return per D share is based on the net revenue loss after taxation of £83,062 and on 2,720,280 D shares, being the weighted average number of D shares in issue during the year to 28 February 2017.

Previously reported capital return per D share is based on the net capital loss for the year of £95,039 and on 2,720,280 D shares being the weighted average number of D shares in issue during the year to 28 February 2017.

Previously reported total return per D share is based on the total loss for the year of £178,101 and on 2,720,280 D shares, being the weighted average number of D shares in issue during the year to 28 February 2017.

 

9.   Investments

	Year Ended 28 February 2018
	VCT Qualifying Investments £'000	Other Investments £'000	Total £'000
Opening book cost	2,322	2,645	4,967
Opening investment holding losses	(59)	(2)	(61)
Opening valuation	2,263	2,643	4,906
Movements in year:
Purchases at cost	1,070	-	1,070
Sales proceeds	(73)	-	(73)
Acquisition of Neptune-Calculus investments	2,001	5	2,006
Realised losses on sales	(157)	(2)	(159)
Increase in investment holding gains/(losses)	228	4	232
Movements in year	3,069	7	3,076
Closing valuation	5,332	2,650	7,982
Closing book cost	5,163	2,648	7,811
Closing investment holding gains	169	2	171
Closing valuation	5,332	2,650	7,982

There have not been any transaction costs in the year to 28 February 2018, nor in the year to 28 February 2017.

Note 16 of the Annual Report and Accounts provides a detailed analysis of investments held at fair value through profit or loss.

10.  Debtors

	Year Ended 28 February 2018 £'000	Year Ended 28 February 2017 £'000
Prepayments and accrued income	18	14
Clawback of expenses in excess of 3% cap payable by the Manager	26	-
	44	14

11.  Creditors

	Year Ended 28 February 2018 £'000	Year Ended 28 February 2017 £'000
Management fees	42	33
Audit fees	33	27
Directors' fees	11	8
Secretarial fees	5	5
Administration fees	3	9
Costs of acquiring Neptune-Calculus assets and liabilities	8	-
Other creditors	40	197
	142	279

12.  Share Capital

Number of shares	Ordinary share	Original ordinary share	C share	D share
Opening balance 01 March 2017	-	4,738,463	1,931,095	7,511,697
New issue of shares	-	-	-	160,810
Conversion of shares to deferred shares and cancellation of deferred shares	-	(4,055,220)	(1,460,898)
All shares renamed Ordinary shares	8,825,947	(683,243)	(470,197)	(7,672,507)
New issue Ordinary shares (Neptune Calculus merger)	2,511,180	-	-	-
New issue Ordinary shares	367,800	-	-	-
Share buyback Ordinary shares	(62,210)	-	-	-
Closing balance 28 February 2018	11,642,717	-	-	-

Nominal value	Ordinary share £'000	Original ordinary share £'000	C share £'000	D share £'000
Opening balance 01 March 2017	-	47	19	75
New issue of shares	-	-	-	2
Conversion of shares to deferred shares and cancellation of deferred shares	-	(40)	(14)
All shares renamed Ordinary shares	89	(7)	(5)	(77)
New issue Ordinary shares (Neptune Calculus merger)	25	-	-	-
New issue Ordinary shares	3	-	-	-
Share buyback Ordinary shares	(1)	-	-	-
Closing balance 28 February 2018	116	-	-	-

In April 2017 the Company issued 160,810 D shares for a total consideration of £155,005. The D shares that were issued prior to 1 January 2017 ranked for the dividend of 4.25 pence per share that was paid on 1 September 2017. The D shares subscribed for after 1 January 2017 were not eligible for any dividends declared in respect of the Company's year ended 28 February 2017.

On 31 July 2017, based on adjusted net asset value per share of the respective share classes at 28 February 2017, it was calculated that 1 D share was equivalent to 0.1442 ordinary shares and 0.2435 C shares. The 4,738,463 ordinary shares in issue at that date were therefore equivalent to 683,243 D shares and the 1,931,095 C shares were equivalent to 470,197 D shares.

To effect the merger of the classes, on 1 August 2017 the Company converted 4,055,220 ordinary shares of 1p and 1,460,898 C shares of 1p into 4,055,220 deferred shares of 1p and 1,460,898 deferred shares of 1p respectively to create a total of 5,516,118 deferred shares of 1p each leaving 683,243 ordinary shares and 470,197 C shares. On the same day the C shares were renamed ordinary shares and the D shares were renamed Ordinary shares. On 17 August 2017 the 5,516,118 deferred shares were re-purchased by the Company for cancellation for a total cost of 1 penny. The above resulted in 8,825,947 Ordinary shares being in issue as at that date.

On 12 September 2017 2,511,180 Ordinary shares were issued to shareholders of Neptune-Calculus to acquire all the assets and liabilities of that company which were valued at £2,202,100.

On 20 December 367,800 Ordinary shares were issued for a total consideration of £312,408.

In January 2018, 62,210 Ordinary shares were bought back for cancellation at 78p per share for an aggregate consideration of £48,524. Since the year end the Company has issued 1,779,298 Ordinary shares for a total consideration of £1,519,000.

All Ordinary shares are fully paid, rank pari passu and carry one vote per share.

Ordinary shares that were issued after 1 August 2017 do not rank for the dividend of 4 pence per share that has been announced and will be paid on 26 July 2018 subject to the shareholder approval.

Under the Articles of Association, a resolution for the continuation of the Company as a VCT will be proposed at the Annual General Meeting falling after the tenth anniversary of the last allotment (from time to time) of shares in the Company and thereafter at five-yearly intervals.

13.  Net Asset Value per Share

	28 February 2018	28 February 2017
Ordinary Share
Net asset value per Ordinary share	87.0p	97.2p

The basic net asset value per Ordinary share is based on net assets of £10,129,722 (28 February 2017:

£8,423,089) and on 11,642,717 Ordinary shares (28 February 2017: £8,665,137), being the number of Ordinary shares in issue at the end of the year (28 February 2017: the implied number of Ordinary shares at 28 February 2017 on the assumption that the merger of the share classes happened on 1 March 2016 using the conversion ratio set out in note 12). Of the 11,642,717 Ordinary shares in issue, 376,800 Ordinary shares do not rank for the proposed final dividend of 4p per share. Taking account of the differing dividend entitlements, the attributable net asset value per Ordinary share for shares entitled to the dividend is 87.13p and for those shares not entitled to the dividend it is 83.13p.

Original ordinary share
Net asset value per original ordinary share	-	20.6p

The previously reported basic net asset value per original ordinary share was based on net assets of £977,699 and on 4,738,463 Ordinary shares, being the number of Ordinary shares in issue at the end of the year.

C share
Net asset value per C share	-	26.0p

The previously reported basic net asset value per C share is based on net assets of £502,438 and on 1,931,095 C shares, being the number of C shares in issue at the end of the year.

D share
Net asset value per D share	-	92.4p

The previously reported basic net asset value per D share is based on net assets of £6,942,952 and on 7,511,697 D shares, being the number of D shares in issue at the end of the year.

14.  Reconciliation of Net Loss before Tax to Cash Flow from Operating Activities

	Year Ended 28 February 2018 £'000	Year Ended 28 February 2017 £'000
Ordinary shares
Loss for the year	(273)	‌(338)‌‌‌
(Gains)/losses on investments	(73)	144
(Increase)/decrease in debtors	(30)	71
(Decrease)/increase in creditors	(137)	‌36‌
Change in IFA commission accrual	21	-
D share issue costs included in finance activities	157	-
Neptune-Calculus costs included in finance activities	(8)	-
IFA commission costs included in finance activities	3	-
Cash flow from operating activities	(340)	‌(87)‌‌‌

15.  Financial Commitments

At 28 February 2018, the Company did not have any financial commitments which had not been accrued for.

16.  Financial Instruments

The Company's financial instruments comprise securities and cash and liquid resources that arise directly from the Company's operations.

The principal risks the Company faces in its portfolio management activities are:

•   Market price risk

•   Liquidity risk

The Company does not have exposure to foreign currency risk.

a) Market price risk

Qualifying Investments

Market risk embodies the potential for losses and includes interest rate risk and price risk.

The management of market price risk is part of the investment management process. The portfolio is managed in accordance with policies in place as described in more detail in the Chairman's Statement and Investment Manager's Review (Qualifying Investments).

The Company's strategy on the management of investment risk is driven by the Company's investment objective as outlined above. Investments in unquoted companies and AIM-traded companies, by their nature, involve a higher degree of risk than investments in the main market. Some of that risk can be mitigated by diversifying the portfolio across business sectors and asset classes.

Interest is earned on cash balances and money market funds and is linked to the banks' variable deposit rates. The Board does not consider interest rate risk to be material. Interest rates arising on loan stock instruments is not considered significant as the main risk on these investments are credit risk and market price risk. The interest rate earned on the loan stock instruments is disclosed below:

	Effective interest rate on 28 February 2018 %
AnTech Limited	12.0
Solab Group Limited	12.0
Terrain Energy Limited	15.0

At the year end, no loan stock interest was overdue.

An analysis of financial assets and liabilities, which identifies the risk of the Company's holding of such items, is provided. The Company's financial assets comprise equity, loan stock, cash and debtors. The interest rate profile of the Company's financial assets is given in the table below:

	As at 28 February 2018				As at 28 February 2017
	Fair Value Interest Rate Risk £'000		Cash Flow Interest Rate Risk £'000		Fair Value Interest Rate Risk £'000		Cash Flow Interest Rate Risk £'000
Loan stock	545	-		380		-
Money market funds	-	2,645		-		2,643
Cash	-	2,267		-		3,782
	545	4,912		380		6,425

The variable rate is based on the banks' deposit rate and applies to cash balances held and the money market funds. The benchmark rate which determines the interest payments received on interest bearing cash balances is the Bank of England base rate, which was 0.5 per cent as at 28 February 2018.

Credit risk is considered to be part of market risk.

Where an investment is made in loan stock issued by an unquoted company, it is made as part of an overall equity and debt package. The recoverability of the debt is assessed as part of the overall investment process and is then monitored on an ongoing basis by the Investment Manager who reports to the Board on any recoverability issues.

Credit risk arising on transactions with brokers relates to transactions awaiting settlement. Risk relating to unsettled transactions is considered to be small due to the short settlement period involved and the high credit quality of the brokers used. The Board monitors the quality of service provided by the brokers used to further mitigate this risk.

All the assets of the Company which are traded on AIM are held by Investec Wealth & Investment, the Company's custodian. Bankruptcy or insolvency of the custodian may cause the Company's rights with respect to securities held by the custodian to be delayed or limited. The Board and the Investment Manager monitor the Company's risk by reviewing the custodian's internal control reports.

b) Liquidity risk

The Company's liquidity risk is managed on an ongoing basis by the Investment Manager. The Company's overall liquidity risks are monitored on a quarterly basis by the Board.

The Company maintains sufficient investments in cash and readily realisable securities to pay accounts payable and accrued expenses as they fall due.

Qualifying Investments

The Company's financial instruments include investments in unlisted equity investments which are not traded in an organised public market and which may be illiquid. As a result, the Company may not be able to realise quickly some of its investments at an amount close to their fair value in order to meet its liquidity requirements, or to respond to specific events such as deterioration in the creditworthiness of any particular issuer.

The Board seeks to ensure that an appropriate proportion of the Company's investment portfolio is invested in cash and readily realisable assets, which are sufficient to meet any funding commitments that may arise.

Under its Articles of Association, the Company has the ability to borrow a maximum amount equal to 25 per cent of its gross assets. As at 28 February 2018, the Company had no borrowings.

c) Capital management

The capital structure of the Company consists of cash held and shareholders' equity. Capital is managed to ensure the Company has adequate resources to continue as a going concern, and to maximise the income and capital return to its shareholders, while maintaining a capital base to allow the Company to operate effectively in the market place and sustain future development of the business. To this end the Company may use gearing to achieve its objectives. The Company's assets and borrowing levels are reviewed regularly by the Board.

d) Fair value hierarchy

Investments held at fair value through profit or loss are valued in accordance with IPEV guidelines.

The valuation method used will be the most appropriate valuation methodology for an investment within its market, with regard to the financial health of the investment and the IPEV guidelines.

As required by the Standard, an analysis of financial assets and liabilities, which identifies the risk of the Company's holding of such items, is provided. The Standard requires an analysis of investments carried at fair value based on the reliability and significance of the information used to measure their fair value. In order to provide further information on the valuation techniques used to measure assets carried at fair value, we have categorised the measurement basis into a "fair value hierarchy" as follows:

•  Quoted market prices in active markets - "Level 1"

Inputs to Level 1 fair values are quoted prices in active markets for identical assets. Quoted in an active market in this context means quoted prices are readily and regularly available and those prices represent actual and regularly occurring market transactions on an arm's length basis. The quoted price is usually the current bid price. The Company's investments in AIM quoted equities and money market funds are classified within this category.

•   Valued using models with significant observable market parameters - "Level 2"

Inputs to Level 2 fair values are inputs other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly.

•   Valued using models with significant unobservable market parameters - "Level 3"

Inputs to Level 3 fair values are unobservable inputs for the asset. Unobservable inputs may have been used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset at the measurement date (or market information for the inputs to any valuation models). As such, unobservable inputs reflect the assumptions the Company considers that market participants would use in pricing the asset. The Company's unquoted equities and loan stock are classified within this category. As explained in note 1, unquoted investments are valued in accordance with the IPEV guidelines.

The table below shows assets measured at fair value categorised into the three levels referred to above. During the year there were no transfers between Levels 1, 2 or 3.

Ordinary share fund

	Financial Assets at Fair Value through Profit or Loss At 28 February 2018
	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000
Unquoted equity	-	-	4,182	4,182
Quoted equity	610	-	-	610
Money market funds	2,645	-	-	2,645
Loan stock	-	-	545	545
	3,255	-	4,727	7,982

Total share fund

	Financial Assets at Fair Value through Profit or Loss At 28 February 2017
	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000
Unquoted equity	-	-	1,632	1,632
Quoted equity	251	-	-	251
Money market funds	2,643	-	-	2,643
Loan stock	-	-	380	380
	2,894	-	2,012	4,906

Where the effect of changing one or more inputs to reasonably possible alternative assumptions would result in a significant change to the fair value measurement, information on this sensitivity is provided below. The information used in determination of the fair value of Level 3 investments is chosen with reference to the specific underlying circumstances and position of the investee company. The portfolio has been reviewed and both downside and upside reasonable possible alternative assumptions have been identified and applied to the valuation of the unquoted investments.

The assumptions changed for the sensitivity analysis are set out below:

Assumption	Impact on Upside £	Impact on downside £
Discount rate	340,760	175,590
Forecast 2018 results	146,227	146,227
	486,987	(321,817)

Applying the downside alternatives, the Ordinary share fund would be £321,817 or 3.2 per cent lower (Total share fund in 2017: £193,064 or 8.5 per cent lower). Using the upside alternatives, the Ordinary share fund would be £486,987 or 4.8 per cent higher (Total share fund in 2017: £92,425 or 4.1 per cent higher).

17.  Related Parties' Transactions

Kate Cornish Bowden, John Glencross and Diane Seymour-Williams were shareholders in Neptune-Calculus Income and Growth plc (Neptune). Pursuant to the acquisition by Calculus VCT plc of the assets and liabilities of Neptune, on 12 September 2017 in exchange for their shares in Neptune, they received 30,029, 19,251, and 12,208, Ordinary shares in Calculus VCT plc which were valued at £26,323, £16,875 and £10,702, respectively.

On 7 April 2017, Kate Cornish Bowden, a director of the Company subscribed for 10491 D shares. John Glencross a director of the company is a director of Calculus Capital Limited and owns 50 per cent of the shares of its holding Company. Calculus Capital Limited receives an investment manager's fee from the Company. As disclosed in Note 4, for the year ended 28 February 2018, Calculus Capital Limited earned £154,089 in relation to the Ordinary share portfolio (Total share fund 2017: £62,838). Calculus Capital Limited also earned a company secretarial fee of £18,000 (Total share fund 2017: £18,251).

Calculus Capital Limited took on the expenses cap on 15 December 2015. In the year to 28 February 2018, Calculus Capital Limited contributed £26,435 towards the expenses (2017: contributed £20,492).

All related party transactions were carried out on an arm's length basis.

18.  Transactions with Investment Manager

John Glencross, a Director of the Company, is Chief Executive and a director of Calculus Capital Limited, the Company's Investment Manager. He does not receive any remuneration from the Company. He is a director of Terrain Energy Limited.

Calculus Capital Limited receives a fee from certain portfolio companies. In the year to 28 February 2018, Calculus Capital Limited charged a monitoring fee to Air Leisure Group Limited, AnTech Limited, Arcis Biotechnology Holdings Limited, Cornerstone Brands Limited, Every1Mobie Limited, MicroEnergy Generation Services Limited, Origin Broadband Limited, Park Street Shipping Limited, Quai Administration Services Limited, Solab Group Limited, Synpromics Limited, Terrain Energy Limited, The One Place Capital Limited, Tollan Energy Limited and Weeding Technologies Limited.

Calculus Capital Limited charged a fee for the provision of a director to Air Leisure Group Limited, Cornerstone Brands Limited, Every1Mobile Limited, Origin Broadband Limited, Pico's Limited, Terrain Energy Limited, The One Place Capital Limited and Weeding Technologies Limited.

In the year to 28 February 2018, Calculus Capital Limited charged Air Leisure Group Limited, Blu Wireless Technology Limited, Cornerstone Brands Limited, Every1Mobile Limited, Open Energy Market Limited, Origin Broadband Limited, Quai Administration Services Limited and Synpromics Limited an arrangement fee.

Calculus Capital Limited also charged Terrain Energy Limited for the provision of office support services.

The aggregate amounts received by Calculus Capital Limited for any monitoring, provision of a director, arrangement and office support services to the companies above in relation to the Company's investment was as follows:

Air Leisure Group Limited: £1,578 (2017: £3,000); AnTech Limited: £972 (2017: £948); Arcis Biotechnology Holdings:£87 (2017:£nil); Blu Wireless Technology Limited: £5,172 (2017: £nil); Cornerstone Brands Limited: £5,780 (2017: £nil); Every1Mobile Limited: £6,459 (2017:£nil); MicroEnergy Generation Services Limited: £1,734 (2017: £1,554); Open Energy Market Limited: £5,999 (2017:£nil); Origin Broadband Limited: £2,544 (2017: £3,000); Park Street Shipping Limited: £836 (2017: £4,500); Pico's Limited: £318 (2017: £389); Quai Administration Services Limited: £3,122 (2017: £924); Solab Group Limited: £2,906 (2017: £1,479); Synpromics Limited: £131 (2017:£nil); Terrain Energy Limited: £1,094 (2017: £802); The One Place Capital Limited: £786 (2017: £817); Tollan Energy Limited: £1,659 (2017: £1,611); and Weeding Technologies Limited £1,960 (2017: £3,000) (all excluding VAT).

19.  Post balance sheet events

Since the year end, allotments of 1,779,298 Ordinary shares in respect of the 2017/18 tax year took place on 4th and 5th April at an average issue price of £0.8537 per share.

GLOSSARY OF TERMS

Accumulated Shareholder Value

The sum of the current NAV and cumulative dividends paid to date.

C share fund

The net assets of the Company attributable to the former C shares (including any income and/or revenue arising from or relating to such assets) prior to the merger of the share classes.

D share fund

The net assets of the Company attributable to the D shares (including any income and/or revenue arising from or relating to such assets) prior to the merger of the share classes.

IPEV Guidelines

The International Private Equity and Venture Capital Valuation Guidelines, used for the valuation of unquoted investments.

Net Asset Value or NAV per share

Shareholders' funds expressed as an amount per share. Shareholders' funds are the total value of a company's assets, at current market value, having deducted all prior charges at their par value (or at their market value).

Old ordinary share fund

The net assets of the Company attributable to the old Ordinary shares (including any income and/or revenue arising from or relating to such assets) prior to the merger of the share classes.

Ordinary share Fund

The net assets of the Company attributable to the new Ordinary shares (including any income and/or revenue arising from or relating to such assets).

Total/Total Fund

In the comparative figures for the year to 28 February 2017, the aggregate net assets of the Company attributable to the ordinary shares, C shares and D shares including any income and/or revenue arising from or relating to those assets.

VCT Value

The value of an investment calculated in accordance with section 278 of the Income Tax Act 2007 (as amended).

Qualifying Investments

An unquoted (or AIM-traded) company which satisfies the requirements of Part 4, Chapter 6 of the Income Tax Act 2007 (as amended).

END

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on this announcement (or any other website) is incorporated into, or forms part of, this announcement.

 

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