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TP70 2008(ii) VCT (TPV2)

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Monday 07 June, 2010

TP70 2008(ii) VCT

Final Results

RNS Number : 1969N
TP70 2008 (ii) VCT PLC
07 June 2010
 



 

TP70 2008 (II) VCT plc

Final Results

 

7 June 2010

 

TP70 2008 (II) VCT plc, managed by Triple Point Investment Management LLP today announces the final results for the year ended 31 March 2010.

 

These results were approved by the Board of Directors on 3 June 2010.

 

You may view the Annual Report in on the Triple Point website www.triplepoint.co.uk at Our Products/TP70 2008 (II)/ TP70 2008 (II)/ News. All other statutory information will also be found there.

 

About TP70 2008 (II) VCT plc

 

TP70 2008 (II) VCT plc ("the Company") is a Venture Capital Trust ("VCT"). The investment manager is Triple Point Investment Management LLP. The Company was launched in November 2007 and raised £23 million (net of expenses) through an offer for subscription.

 

Details of the Fund's progress are discussed in the Chairman's Statement and Investment Manager's Review forming part of the extract from the Financial Statements which follows.

 

Venture Capital Trusts (VCTs)

 

VCTs were introduced in the Finance Act 1995 to provide a means for private individuals to invest in unlisted companies in the UK. Subsequent Finance Acts have introduced changes to VCT legislation. The tax benefits currently available to eligible new investors in VCTs include:

 

·      upfront income tax relief of 30%

·      exemption from income tax on dividends paid; and

·      exemption from capital gains tax on disposals of shares in VCTs

 

The Company has been approved as a VCT by HM Revenue & Customs. In order to maintain its approval, the Company must comply with certain requirements on a continuing basis. Above all, the Company is required at all times to hold  70% of its investments (as defined in the legislation) in VCT qualifying holdings, of which at least 30% must comprise eligible ordinary shares.

 

For this purpose, a 'VCT qualifying holding' consists of up to £1 million invested in any one year in new shares or securities of a UK unquoted company (which may be quoted on AIM) which is carrying on a qualifying trade, and whose gross assets at the time of investment do not exceed a prescribed limit. The definition of 'qualifying trade' excludes certain activities such as property investment and development, financial services and asset leasing. The Company will continue to ensure its compliance with these qualification requirements.

 

 

 

  

 

Report of the Directors - Financial summary

For the year ended 31 March 2010


2010


2009


£'000


£'000

Net assets

19,809


19,762

Profit / (loss) before tax

480


(2,029)

Earnings per share

1.97p


(10.20p)

Net asset value per share

86.51p


86.30p

 

For a £1 investment per share investors, with a sufficient income tax liability in the relevant year, can expect to have received a 30p tax credit and a first dividend of 1.76p which taken together with the current NAV of 86.51p totals 118.27p.

 

 

TP70 2008 (II) VCT plc ("the Company") is a Venture Capital Trust ("VCT"). The investment manager is Triple Point Investment Management LLP. The Company was launched in November 2007 and raised £23.0 million through an offer for subscription. Initially 70% of the Company's net assets were to be invested in cash and liquid assets. Thereafter by the end of the third year, at least 70% will be invested in VCT qualifying investments.  The remaining 30% of net assets are exposed to a leveraged version of GAM Diversity, a fund of hedge funds. The Company invests in businesses with contractual revenues from financially sound customers and aims to generate an attractive income stream and modest but accessible capital growth to shareholders.

 

The Directors' Report on pages 11 to 15 and the Directors' Remuneration Report on pages 16 to 17 have each been drawn up in accordance with the requirements of English law and liability in respect thereof is also governed by English law. In particular, the responsibility of the Directors for these reports is owed solely to TP 70 2008 (II) VCT plc.

 

The directors submit to the members their Annual Report and financial statements for the Company for the year ended 31 March 2010. The Report of the Directors, includes the Group Financial Summary, Chairman's statement, Details of Advisers, Shareholder Information, Investment Portfolio, Directors' Report, Directors' Remuneration Report and the Corporate Governance Statement.

 

 

Report of the Directors - Chairman's Statement

 

 

I am pleased to present the audited accounts for TP70 2008 (II) VCT plc ("the Company") for the year ended 31 March 2010.

 

INVESTMENT STRATEGY

 

The Company's strategy offers combined exposure to GAM Diversity 2.5XL and to VCT-qualifying venture capital investments with contractual revenues from financially secure counterparties. 30% of the Company's funds at cost are currently exposed to GAM Diversity 2.5XL.  The remaining 70% is in the process of being invested in suitable VCT-qualifying holdings. Funds not deployed are held in money market funds.

 

By the end of the third accounting period, to meet the VCT-qualifying criteria, the Company's intention is that at least 70% of assets will be committed to VCT-qualifying holdings with the balance exposed to GAM Diversity 2.5XL.



 

 

Report of the Directors - Chairman's Statement (continued)

 

RESULTS

 

At 31 March 2010 the portfolio of qualifying holdings comprised some 52.2% of TP70 2008 (II)'s net assets. The Investment Manager's report details the progress made in building up the portfolio of VCT qualifying holdings in order to secure the Company's VCT tax status. Progress slowed this year compared to last year but having reviewed the Investment Manager's pipeline of investment opportunities, the Board is confident that the 70% target can be secured by 31 March 2011. 

 

The Company's exposure to GAM Diversity 2.5XL now stands at 23.8% of net assets. The past year has seen a recovery in the value of GAM Diversity of 8.63%, which after the leverage translated into a gain of £377,000 which has contributed to an overall profit for the year of £450,000. The performance of GAM Diversity is discussed further in the Investment Manager's Review. At the year end, the Net Asset Value per share stood at 86.51p (2009: 86.30p).

 

DIVIDEND

 

As an investment trust the Company is able to distribute its revenue profits but not its capital profits  whilst subject to solvency tests ignorring capital losses. . Hence its income statement  records separately its revenue return and capital return under guidance published by the Association of Investment Companies.

The Board has resolved to pay a second dividend equal to its revenue profits of £282,000 for the year (1.23p per share) in accordance with its dividend policy, the dividend to be paid to shareholders on the register at 16 July 2010.

 

 

RISKS

 

The Board believes that the principal risks facing the Company are:

·    investment risk associated with exposure to GAM Diversity 2.5XL

·    investment risk associated with undertaking VCT qualifying investments

·    failure to secure final approval as a VCT

 

The first risk is a consequence of the Company's investment strategy. The Board and the Investment Manager continue to work to minimise either the likelihood or potential impact of the second and third risks which also follow from the Company's investment strategy.

 

OUTLOOK

 

The Company's focus over the next year will be to complete its investment into qualifying investments to secure VCT status and to work closely with the management of those businesses to ensure funds are deployed in a profitable manner.

 

 

If you have any queries or comments, please do not hesitate to telephone Triple Point Investment Management LLP on 020 7201 8989 or email me at [email protected]

.

 

 

 

Chad Murrin
Chairman
3 June 2010



 

Investment Manager's review

 

 

Overview

 

TP70 2008 (II) VCT plc's (the "Company's") objective is to deploy at least 70% of its funds into VCT-qualifying investments and, with the remainder of its funds, to offer leveraged exposure to GAM's flagship fund of hedge funds; Diversity, via GAM Diversity GBP 2.5XL. Over the year under review, the Company has continued to make progress with its investment programme and at 31 March 2010 the Company had deployed 52.2% of net assets in VCT qualifying investments. 

 

VCT Qualifying Investments Portfolio

 

The Company's portfolio of VCT qualifying investments is currently spread across fourteen qualifying companies in five sectors.

 

In March 2009, the Company invested £1m into each of five companies which specialise in the deployment of digital projection technology, and who will each work with one or more of the major UK cinema chains. The companies will need to purchase and deploy digital technology and equipment, and will carry out a number of services, including the installation and ongoing maintenance of the systems to specific industry wide specifications. Over the past two years there has been a global movement towards the digitisation of film distribution, due latterly to the significant commercial success of 3D movies, such as Avatar and UP, as well as the significant reduction in both distribution and printing costs over celluloid; avoiding piracy is another driver towards digital.

 

The major Hollywood film studios, as well as other second tier distributers, are willing to pay 'Virtual Print Fees' in return for the ability to distribute digital rather than celluloid films, providing revenues which flow through to digital deployment companies such as those into which the Company has invested. Digital opportunities are scheduled to commence at an accelerated pace during 2010, and the portfolio companies may have opportunities to raise further investment capital.

 

In the year to 31 March 2010 the Company invested in a business which trades satellite capacity providing for two-way broadband communications and digital channels access to remote, rural regions across the UK and Europe. This investment seeks to benefit from potential increases in demand for such capacity, together with a degree of downside protection.

 

The Company also increased its investment in a business that provides medical gas services for the NHS, and also has investments in a crematorium management company, a business which provides telecommunications services to a public sector body, and three businesses supplying telecoms services to a large, corporate customer. Each of these qualifying investments is aligned with the investment criteria prioritising predictable revenues from financially sound customers and counterparties.

 

During the year £712,000 of loan repayments were made to the Company from its qualifying investment portfolio. In summary movements in the qualifying investments for the year were;

 


Year ended


Period ended


31 March 2010


31 March 2009



£'000



£'000

Brought forward


9,108



-  

New investments


1,434



9,247

Follow on investments             


512



-  

Loan repayments


(712)



-  

Carried forward


10,342



9,247

 

 

 



 

Investment Manager's review (continued)

 

 

GAM Diversity

 

Over the year under review, GAM Diversity 2.5XL rose by 8.63% with all three strategies (equity hedge, trading and arbitrage) generating positive returns. 

 

Having navigated the turmoil of 2008, Diversity was cautiously positioned at the beginning of 2009 with the majority of assets in trading strategies and the lowest historic allocation to equity hedge of 14%. This stance enabled the fund to achieve its core objective of producing absolute returns. In the third quarter Diversity's asset allocation was moved to more equal weightings in the three strategies, as GAM felt that the markets had moved to a more "normalised" environment and, therefore, were willing to increase the equity hedge exposure but remaining focussed on less directional managers.

 

GAM believes that 2010 will see a clear differentiation between regions and countries combined with sharp fluctuations in investor sentiment and has positioned Diversity to take advantage of such a changing landscape.

 

Outlook

 

Our focus for the year ahead is twofold: to continue to make qualifying investments to meet the minimum 70% threshold required to secure VCT qualification and to monitor closely the performance of the investee companies to ensure that the investments are profitable for the Company and shareholders.

 

 

 

Claire Ainsworth

Triple Point Investment Management LLP

3 June 2010

 

 

 

About Triple Point Investment Management LLP (Triple Point)

 

Triple Point is a specialist in tax-efficient investments. As well as managing several market-leading VCTs, Triple Point offers investors a range of investment products that qualify for government sponsored tax reliefs including the Enterprise Investment Scheme (EIS) and Business Property Relief (BPR).

 

With its focus on capital security, liquidity and tax-enhanced returns, the Triple Point investment model has been built around the group's capabilities in taxation, structured finance and investment; to the benefit of every Triple Point product.

 

For more information on Triple Point please call 020 7201 8990.

 

 

 Report of the Directors - Investment Portfolio

 

Security

2010


2009


        Cost 

     Valuation


        Cost 

     Valuation


£'000

£'000


£'000

£'000

Qualifying holdings

10,342

47.05

10,342

51.43


9,108

46.35

9,108

52.37

Non-qualifying holdings

3,501

15.92

2,549

12.67


3,300

16.78

2,166

12.45


13,843

62.97

12,891

64.10


12,408

63.13

11,274

64.82

Derivative

3,292

14.97

2,361

11.74


3,292

16.74

2,166

12.45

Total holdings

17,135

77.94

15,252

75.84


15,700

79.87

13,440

77.27

Money market funds

3,360

15.28

3,360

16.71


-  

-  

-  

-  

Uninvested funds

1,493

6.78

1,493

7.45


3,962

20.13

3,962

22.73


21,988

100.00

20,105

100.00


19,662

100.00

17,402

100.00

Activity










Unquoted Qualifying Holdings






Provision of satellite capacity










Beam Carrier Trading Ltd

563

2.56

563

2.80


-  

-  

-  

-  

Satellite Broadband Access Solutions Ltd

871

3.96

871

4.33


-  

-  

-  

-  

Telecommunications










Per Port Services Ltd

310

1.41

310

1.54


310

1.58

310

1.78

WAN Solutions Ltd

436

1.98

436

2.17


611

3.11

611

3.51

Wide Area Network Services Ltd

564

2.57

564

2.81


711

3.62

711

4.09

Wide Area Network Solutions Ltd

357

1.62

357

1.78


443

2.25

443

2.55

Cinema Digitisation










21 Century Cinema Ltd

1,000

4.55

1,000

4.97


1,000

5.09

1,000

5.75

Big Screen Digital Services Ltd

1,000

4.55

1,000

4.97


1,000

5.09

1,000

5.75

Cinematic Services Ltd

1,000

4.55

1,000

4.97


1,000

5.09

1,000

5.75

Digima Ltd

1,000

4.55

1,000

4.97


1,000

5.09

1,000

5.75

Digital Screen Solutions Ltd

1,000

4.55

1,000

4.97


1,000

5.09

1,000

5.75

Carried forward

8,101

36.85

8,101

40.28


7,075

36.01

7,075

40.68

 



 

 

Report of the Directors - Investment Portfolio (continued)

 

Activity

2010


2009


        Cost 

     Valuation


        Cost 

     Valuation


£'000

£'000


£'000

£'000

Unquoted Qualifying Holdings (continued)






Brought forward

8,101

36.85

8,101

40.28


7,075

36.01

7,075

40.68

Crematorium management










Furnace Management Services Ltd

910

4.14

910

4.53


910

4.63

910

5.23

Medical gas supplies










MGS NW Ltd

703

3.20

703

3.50


325

1.65

325

1.87

MGS WM Ltd

628

2.86

628

3.12


798

4.06

798

4.59


10,342

47.05

10,342

51.43


9,108

46.35

9,108

52.37









Unquoted Non-qualifying Holdings










Ambulance refurbishment










Cranmer Lawrence Engineering Services Limited

196

0.89

196

0.97


-  

-  

-  

-  

Investment Holding










Lorngreen Limited   *

3,305

15.03

2,353

11.70


3,300

16.78

2,166

12.45


3,501

15.92

2,549

12.67


3,300

16.78

2,166

12.45











 

*TP70 2008 (II) holds 50% of the issued share capital of Lorngreen Limited. However your Company does not account for its investments in associates using equity accounting as IAS28 "Investments in Associates" does not apply to venture capital organisations.  They are instead treated as portfolio investments.

Lorngreen holds 50% of the Company's exposure to GAM Diversity 2.5XL.

 

 



 

Report of the Directors - Investment Portfolio (continued)

 

Additional Information

 



Last Statutory Financial Statements



Equity held by TP70 2008 (II)  VCT plc

Equity held by all funds managed by TPIM LLP


Initial Investment Date

Date

P / (L) before int & Tax

Total assets before VCT loans

VCT loans

Net Assets


Basis of Valuation **




£'000

£'000

£'000

£'000


Qualifying Holdings











Beam Carrier Trading Ltd

02-Apr-09

31-Mar-09

(66)

783

781

2


Transaction price

28.10

78.00

Satellite Broadband Access Solutions Ltd

02-Apr-09

31-Mar-09

33

1,345

1,310

35


Transaction price

43.50

93.40

Per Port Services Ltd

17-Mar-09

31-Mar-09

(12)

554

372

182


Transaction price

47.50

95.00

WAN Solutions Ltd

17-Mar-09

31-Mar-09

31

1,086

856

230


Transaction price

47.50

95.00

Wide Area Network Services Ltd

17-Mar-09

31-Mar-09

(8)

722

498

224


Transaction price

49.97

49.97

Wide Area Network Solutions Ltd

17-Mar-09

31-Mar-10

33

780

621

159


Transaction price

47.50

95.00

21 Century Cinema Ltd

31-Mar-09

No financial statements available




Transaction price

24.06

96.24

Big Screen Digital Services Ltd

31-Mar-09

No financial statements available




Transaction price

24.06

96.24

Cinematic Services Ltd

31-Mar-09

No financial statements available




Transaction price

24.06

96.24

Digima Ltd

31-Mar-09

No financial statements available




Transaction price

24.06

96.24

Digital Screen Solutions Ltd

31-Mar-09

No financial statements available




Transaction price

24.06

96.24

Furnace Management Services Ltd

17-Mar-09

31-Mar-09

(28)

1,681

1,274

407


Transaction price

24.50

49.00

MGS NW Ltd

23-Dec-08

31-Mar-09

(508)

1,349

1,042

307


Transaction price

24.49

48.98

MGS WM Ltd

30-Oct-08

No financial statements available




Transaction price

24.50

49.00

Non-qualifying Holdings








Transaction price



Cranmer Lawrence Engineering Services Limited

02-Apr-09

31-Mar-09

47

889

475

414


Transaction price

50.00

100.00

Lorngreen Limited   *

17-Jun-08

31-Mar-09

(2,268)

4,331

1,320

3,011


Net Assets

50.00

100.00

** Financial assets are measured at fair value. The best estimate of the value of a financial asset that is either quoted or unquoted is the transaction price.


 

Report of the Directors - Corporate Governance

 

The Board of TP70 2008 (II) VCT plc has considered the principles and recommendations of the Association of Investment Companies Code of Corporate Governance (AIC Code) by reference to the Association of Investment Companies Corporate Governance Guide for Investment Companies (AIC Guide).  The AIC Code, as explained by the AIC Guide, addresses all the principles set out in Section 1 of the Combined Code, as well as setting out additional principles and recommendations on issues that are of specific relevance to the Company.  The Board considers that reporting against principles and recommendations of the AIC Code, by reference to the AIC Guide (which incorporates the Combined Code), will provide better information to shareholders.

 

The Company is committed to maintaining high standards in corporate governance and has complied with the recommendations of the AIC Code and the relevant provisions of Section 1 of the Combined Code, except as set out at the end of this report in the Compliance Statement.

 

Board of Directors

 

The Company has a Board of four non-executive Directors, three of whom are considered to be independent of the Company's investment manager (the exception being Peter Hargreaves). The Board meets regularly on a quarterly basis, and on other occasions as required, to review the investment performance and monitor compliance with the investment policy laid down by the Board. The Board has a formal schedule of matters specifically reserved for its decision and the agreement between the Company and the Investment Manager has authority and limits beyond which Board approval must be sought.

 

The Investment Manager has authority over the management of the investment portfolio, the organisation of custodial services, accounting, secretarial and administrative services. In practice the Investment Manager makes investment recommendations for the Board's approval. In addition all investment decisions involving other VCTs managed by the Investment Manager are taken by the Board rather than the Investment Manager. Other matters reserved for the Board include:

·      the consideration and approval of future developments or changes to the investment policy, including risk and asset allocation;

·      consideration of corporate strategy;

·      approval of the appropriate dividend to be paid to the shareholders

·      the appointment, evaluation, removal and remuneration of the Manager;

·      the performance of the Company, including monitoring the net asset value per share; and

·      approving shareholder communications.

 

The Chairman leads the Board in the determination of its strategy and in the achievement of its objectives.  The Chairman is responsible for organising the business of the Board, ensuring its effectiveness and setting its agenda, and has no involvement in the day to day business of the Company.  He facilitates the effective contribution of the directors and ensures that they receive accurate, timely and clear information and that they communicate effectively with shareholders.

 

The Company Secretary is responsible for advising the Board through the Chairman on all governance matters.  All of the directors have access to the advice and services of the Company Secretary, which has administrative responsibility for the meetings of the Board and its committees.  Directors may also take independent professional advice at the Company's expense where necessary in the performance of their duties.  As all of the directors are non-executive, it is not considered appropriate to identify a member of the Board as the senior non-executive director of the Company.

 

The Company's articles of association and the schedule of matters reserved to the Board for decision provide that the appointment and removal of the Company Secretary is a matter for the full Board.

 

 



 

Report of the Directors - Corporate Governance (continued)

 

The Company's articles of association require that one third of the directors should retire by rotation each year and seek re-election at the Annual General Meeting, and that directors newly appointed by the Board should seek re-appointment at the next Annual General Meeting.  The Board complies with the requirement of the Combined Code that all directors are required to submit themselves for re-election at least every three years.

 

The Board regularly reviews the independence of its members and is satisfied that (with the exception of Peter Hargreaves who is beneficially interested in TPIM LLP, the Company's investment manager) the Company's directors are independent in character and judgement and there are no relationships or circumstances which could affect their objectivity.

 

During the year ended 31 March 2010 the following meetings were held:

 

Directors present

4 Full Board Meetings


2 Audit Committee Meetings

J C Murrin (Chairman)

4


2

J Lucas-Tooth

4


2

R V Reid

4


2

P W Hargreaves

4


2  

 

 

The Board has appointed an Audit Committee, of which Chad Murrin is Chairman, comprising the full Board, which deals with matters relating to audit, financial reporting and internal control systems. The committee meets as required and has direct access to Grant Thornton UK LLP, the Company's auditor. The committee met once in the period ending 31 March 2010.

 

The Audit Committee safeguards the objectivity and independence of the auditor by reviewing the nature and extent of non-audit services supplied by the external auditors of the Company, seeking to balance objectivity and value for money.

 

The Audit Committee's terms of reference include the following roles and responsibilities:

·   reviewing and making recommendations to the Board in relation to the Company's published financial statements and other formal announcements relating to the Company's financial performance;

·   reviewing and making recommendations to the Board in relation to the Company's internal control (including internal financial control) and risk management systems;

·   periodically considering the need for an internal audit function;

·   making recommendations to the Board in relation to the appointment, re-appointment and removal of and approving the remuneration and terms of engagement of the external auditor;

·   reviewing and monitoring the external auditor's independence and objectivity and the effectiveness of the audit process, taking into consideration relevant UK professional regulatory requirements;

·   ensuring that the investment manager has arrangements in place for the investigation and follow-up of any concerns raised confidentially by staff in relation to propriety of financial reporting or other matters.

 

The committee reviews its terms of reference and effectiveness annually and recommends to the Board any changes required as a result of the review.  The terms of reference are available on request from the Company Secretary.

 

The Board considers that the members of the committee are independent and collectively have the skills and experience required to discharge their duties effectively, and that the chairman of the committee meets the requirements of the Combined Code as to relevant financial experience.



 

 

Report of the Directors - Corporate Governance (continued)

 

The Company does not have an independent internal audit function as it is not deemed appropriate given the size of the Company  and the nature of the Company's business.  However, the committee considers annually whether there is a need for such a function and if so would recommend this to the Board.

 

During the year ended 31 March 2010, the Audit Committee discharged its responsibilities by:

 

·   reviewing and approving the external auditor's terms of engagement and remuneration;

·   reviewing the external auditor's plan for the audit of the financial statements, including identification of key risks and confirmation of auditor independence;

·   reviewing TPIM LLP's statement of internal controls operated in relation to the Company's business and assessing those controls in minimising the impact of key risks;

·   reviewing periodic reports on the effectiveness of TPIM LLP's compliance procedures;

·   reviewing the appropriateness of the Company's accounting policies;

·   reviewing the Company's half-yearly results statements and interim management statements prior to Board approval; and

 

Internal Control

 

The Directors have overall responsibility for keeping under review the effectiveness of the Company's systems of internal controls. The purpose of these controls is to ensure that proper accounting records are maintained, the Company's assets are safeguarded and the financial information used within the business and for publication is accurate and reliable; such a system can only provide reasonable and not absolute assurance against material misstatement or loss. The system of internal controls is designed to manage rather than eliminate the risk of failure to achieve business objectives. The Board regularly reviews financial results and investment performance with its investment managers.

 

TPIM LLP is engaged to provide administrative including accounting services and retains physical custody of the documents of title relating to investments.

 

The Directors confirm that they have established a continuing process throughout the year and up to thedate of this report for identifying, evaluating and managing the significant potential risks faced by the Company and have reviewed the effectiveness of the internal control systems. As part of this process an annual review of the internal control systems is carried out in accordance with "Internal Controls: Guidance for Directors on the Combined Code", published by the Institute of Financial Reporting Council. This process has been in place throughout and subsequent to the accounting period under review.

 

Risk management

 

TPIM LLP carries out management of liquid funds in accordance with the policy guidelines laid down and regularly reviewed by the Board. In general the guidelines require that uninvested cash will be held in money market funds. The Company has no borrowing facilities

Risk management is discussed in greater detail in the Directors' Report on pages 12-13.

 

Going concern

 

After making the necessary enquiries, the Directors confirm that they are satisfied that the Company has adequate resources to continue in business for the foreseeable future. The Directors therefore believe that it is appropriate to continue to apply the going concern basis in preparing the financial statements.  There are no borrowings or banking facilities in place nor are they anticipated to be required going forward.



 

Report of the Directors - Corporate Governance (continued)

 

Relations with shareholders

 

The Board recognise the value of maintaining regular communications with shareholders. In addition to the formal business of the Annual General Meeting, an opportunity is given to all shareholders to question the Board and the investment managers on matters relatingto the Company's operation and performance. Proxy voting figures for each resolution will be announced at the Annual General Meeting. The Board will also respond to any written queries made by shareholders during the course of the year and can be contacted at 4-5 Grosvenor Place, London, SW1X 7HJ. Alternatively, the Investment Manager may be contacted on 020 7201 8989.

 

 

Compliance statement

 

The Listing Rules require the Board to report on compliance with the Combined Code provisions throughout the accounting year. With the exception of the limited items outlined below, the Directors consider that the Company has complied throughout the year under review with the provisions set out in Section 1 of the Combined Code of Corporate Governance published by the Financial Reporting Council in 2008:

 

1.  New Directors do not receive a full, formal and tailored induction on joining the Board. Such matters are addressed on an individual basis as they arise (A5.1).

 

2.  Due to the size of the Board and the nature of the Company's business, a formal performance evaluation of the Board, its committees, the individual Directors and the Chairman has not been undertaken. Specific performance issues are dealt with as they arise (A1.3, A6.1).

 

3. The Company does not have a majority of independent Directors, as defined by the Combined Code issued in 2008. The Board considers that all Directors have sufficient experience to be able to exercise proper judgement within the meaning of the Combined Code (A3.2).

 

4.  The Company does not have a senior independent Director. The Board does not consider such an appointment appropriate for a Company such as TP70 2008 (II) VCT plc (A3.3).

 

5. The Company does not conduct a formal review as to whether there is a need for an internal audit function. The Directors do not consider that an internal audit would be an appropriate control for a venture capital trust (C3 .5).

 

6.  As all the Directors are non-executive, it is not considered appropriate to appoint a Nomination or Remuneration Committee (A4.1 and B2.1).

 

 

On behalf of the Board

 

 

 

 

Chad Murrin 

Chairman

3 June 2010



 

Report of the Directors - Directors' Responsibility Statement

 

 

The directors are responsible for preparing the annual report and the Financial Statements in accordance with applicable law and regulations.

 

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS).


The financial statements are required by law to give a true and fair view of the state of affairs of the Company at the end of the financial period and of the return of the Company for that period.

 

 

In preparing these Financial Statements, the Directors are required to:

·      select suitable accounting policies and then apply them consistently;

·      make judgements and estimates that are reasonable and prudent;

·      state whether applicable IFRS have been followed, subject to any material departures disclosed and explained in the financial statements; and

·      prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

 

 

The Directors confirm that to the best of their knowledge the Financial Statements for the year ended 31 March 2010 comply with the requirements set out above and that suitable accounting policies, consistently applied and supported by reasonable and prudent judgement, have been used in their preparation. They also confirm that the annual report includes a fair review of the business together with a description of the principal risks and uncertainties faced by the Company.

 

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

In so far as the Directors are aware:

·    there is no relevant audit information of which the Company's auditor is unaware; and

·     the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information.

 

Under applicable law and regulations, the Directors are also responsible for preparing a directors' report, Directors' Remuneration Report and corporate governance statement that comply with that law and those regulations.

 

 

The Company's Financial Statements are published on the TPIM LLP website, www.triplepoint.co.uk. The maintenance and integrity of this website is the responsibility of TPIM LLP and not of the Company. The work carried out by Grant Thornton UK LLP as independent auditor of the Company does not involve consideration of the maintenance and integrity of the website and accordingly they accept no responsibility for any changes that have occurred to the financial statements since they were initially presented on the website. Visitors to the website should be aware that legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in their jurisdiction.

 

 

 



 

Report of the Directors - Directors' Responsibility Statement (continued)

 

To the best of my knowledge:

•     The Financial Statements prepared in accordance with the applicable set of accounting standards give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

•     the Directors' report includes a fair review of the development and performance of the business and the position of the Company together with a description of the principal risks and uncertainties it faces.

 

 

On behalf of the Board

 

 

 

Chad Murrin

Chairman

3 June 2010



 

Statement of Comprehensive Income

for the year ended 31 March 2010

 



Year ended


Period 08-Nov-07 to



31 March 2010


31 March 2009


Note

Revenue

Capital

Total


Revenue

Capital

Total



£'000

£'000

£'000


£'000

£'000

£'000










Investment income

5

584

-  

584


720

-  

720

Unrealised gain / (loss) on investments

11

-  

182

182


-  

(1,134)

(1,134)

Gain / (loss) on derivative transaction

11

-  

195

195


-  

(1,126)

(1,126)

Investment return


584

377

961


720

(2,260)

(1,540)










Investment management fees

6

88

263

351


93

279

372

Financial and regulatory costs


24

-  

24


12

-  

12

General administration


11

-  

11


21

-  

21

Legal and professional fees

7

32

23

55


32

-  

32

Directors' remuneration

8

40

-  

40


52

-  

52

Operating expenses


195

286

481


210

279

489

Profit / (loss) before taxation


389

91

480


510

(2,539)

(2,029)

Taxation

9

(107)

77

(30)


(106)

58

(48)

Profit / (loss) after taxation


282

168

450


404

(2,481)

(2,077)

Other comprehensive income


-  

-  

-  


-  

-  

-  

Total comprehensive income


282

168

450


404

(2,481)

(2,077)

Earnings / (loss) per share (basic & diluted)

10

1.23p

0.73p

1.97p


1.98p

(12.18p)

(10.20p)

 

 

 

The total column of this statement is the statement of comprehensive income of the Company prepared in accordance with International Financial Reporting Standards (IFRS).  The supplementary revenue return and capital return columns have been prepared under guidance published by the Association of Investment Companies.

All revenue and capital items in the above statement derive from continuing operations.

 

This statement of comprehensive income includes all recognised gains and losses.

 

 

 

The accompanying notes are an integral part of these statements.



 

 

Balance Sheet

as at 31 March 2010

 



31-Mar-10

31-Mar-09


Note


£'000


£'000







Non Current Assets






Financial assets at fair value through profit or loss

11


15,252


13,440













Current assets:






Receivables

13


71


2,523

Money market funds

14


3,360


-  

Cash and cash equivalents

15


1,493


3,962




4,924


6,485







TOTAL ASSETS



20,176


19,925







Current Liabilities






Payables

16


339


115

Current taxation payable

9


28


48




367


163













NET ASSETS


19,809


19,762












EQUITY






Share capital

17


229


229

Capital redemption reserve



2


2

Special distributable reserve



21,608


21,608

Capital reserve



(2,313)


(2,481)

Revenue reserve



283


404

Total equity



19,809


19,762







Net asset value per share  (pence)

18


86.51p


86.30p

 

 

The statements were approved by the Directors and authorised for issue on 3 June 2010 and are signed on their behalf by:

 

 

 

 

 

Chad Murrin

Chairman

3 June 2010

 

Company registration number: 6421355

 

 

The accompanying notes are an integral part of these statements.



 

 

Statement of Changes in Shareholders' Equity

for the year ended 31 March 2010


Issued Capital

Share Redem. Reserve

Share Prem.

Special Distrib. Reserve

Capital Reserve

Revenue Reserve

Total


£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 1 April 2009

229

2

-  

21,608

(2,481)

404

19,762

Dividend paid

-  

-  

-  

-  

-  

(403)

(403)

Transactions with owners

-  

-  

-  

-  

-  

(403)

(403)









Profit for the year

-  

-  

-  

-  

168

282

450

Other comprehensive income

-  

-  

-  

-  

-  

-  

-  

Total comprehensive income for the year

-  

-  

-  

-  

168

282

450

Balance at 31 March 2010

229

2

-  

21,608

(2,313)

283

19,809

Capital reserve consists of:







Unrealised losses on investments




(1,883)



Other realised losses





(430)








(2,313)











for the period ended 31 March 2009






Issue of share capital

231

-  

22,818

-  

-  

-  

23,049

Share issue costs

-  

-  

(1,037)

-  

-  

-  

(1,037)

Purchase of own shares

(2)

2

-  

(173)

-  

-  

(173)

Cancellation of share premium

-  


(21,781)

21,781

-  

-  

-  

Transactions with owners

229

2

-  

21,608

-  

-  

21,839









Loss for the year

-  

-  

-  

-  

(2,481)

404

(2,077)

Other comprehensive income

-  

-  

-  

-  

-  

-  

-  

Total comprehensive income for the period

-  

-  

-  

-  

(2,481)

404

(2,077)

Balance at 31 March 2009

229

2

-  

21,608

(2,481)

404

19,762

Capital reserve consists of:







Unrealised losses on investments




(2,260)



Other realised losses





(221)








(2,481)



 

The special distributable reserve arises from the cancellation of the share premium. The capital reserve is non-distributable. The special distributable reserve and revenue reserve are distributable by way of dividend.

 

There have been no realised gains or losses on investments.

 

The accompanying notes are an integral part of this statement.



 

 

Cash Flow Statement

for the year ended 31 March 2010

 


Year

Period


ended

ended


31-Mar-10

31-Mar-09



£'000


£'000

Cash flows from operating activities





Profit / (loss) before taxation


480


Unrealised (gain) / loss on investments


(377)


Cashflow generated by operations


103


231

Decrease / (increase) in receivables


2,452


Increase in payables


224


Taxation paid


(50)


Net cash flows from operating activities


2,729


(2,177)





Cash flow from investing activities




Purchase of financial assets at fair value through profit or loss account


(2,385)


(15,700)

Sales proceeds of financial assets at fair value through profit or loss account


950


-  

Increase in money market funds


(3,360)


-  

Net cash flows from investing activities


(4,795)


(15,700)





Cash flows from financing activities




Proceeds from issue of share capital


-  


Share issue expenses


-  


Buyback of own shares


-  


Dividends paid


(403)


Net cash flows from financing activities


(403)


21,839

Net (decrease) / increase in cash and cash equivalents


(2,469)


3,962











Reconciliation of net cash flow to movements in cash and cash equivalents





Cash and cash equivalents at 1 April 2009


3,962


-  

Net (decrease) / increase in cash and cash equivalents


(2,469)


3,962

Cash and cash equivalents at 31 March 2010


1,493


3,962

 

 

 

 

 

 

The accompanying notes are an integral part of this statement



 

 

Notes to the Financial Statements

 

 

1.     Corporate Information     

                                                                                                                 

The financial statements of the Company for the year ended 31 March 2010 were authorised for issue in accordance with a resolution of the Directors on 3 June 2010.

 

The Company was admitted for listing on the London Stock Exchange on 6 February 2008.

 

The Company is incorporated and domiciled in Great Britain.  The address of its registered office, which is also its principal place of business, is 4-5 Grosvenor Place, London, SW1X 7HJ.

 

The Company's financial statements are presented in Pounds Sterling (£) which is also the functional currency of the Company.

 

The principal activity of the Company is investment.  The Company's investment strategy is to offer combined exposure to GAM Diversity 2,5XL (a leveraged version of GAM's fund of hedge funds, GAM Diversity) and venture capital investments focused on companies with contractual revenues from financially secure counterparties.

.

                                                                                                                                   

                                                                                                                                   

2.     Basis of preparation and accounting policies                  

 

Basis of preparation

The Financial Statements of the Company for the period to 31 March 2010 have been prepared in accordance with accounting policies consistent with International Financial Reporting Standards (IFRS) adopted for use in the European Union and therefore comply with the articles of the EU (IAS) regulation and with the statement of recommended practice ("SORP"), "Financial Statements of Investment Trust Companies" issued by the Association of Investment Companies ("AIC") in January 2009, in so far as this does not conflict with IFRS.

 

The Financial Statements have been prepared on a historical cost basis except that investments are shown at fair value through profit and loss.

 

The preparation of Financial Statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis of making judgements about the carrying value of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these judgements.

 

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities relate to:

·    the valuation of unlisted financial investments held at fair value through profit and loss, which are valued on the basis noted below (in the section headed Fixed asset investments), the key areas of judgement being the adjustments required to normalise sustainable earnings and the appropriate comparable multiple to apply;

·    the recognition or otherwise of accrued income on loan notes and similar instruments granted to investee companies, which are assessed in conjunction with the overall valuation of unlisted financial investments as noted above;

·    the estimated future financial liability arising from future equity commitments and guarantees, which is assessed on the same basis as the valuation of unlisted financial investments as noted above.

 

The appropriateness of the allocation of management expenses between revenue and capital, which is based on the split of the long-term anticipated return between revenue and capital of net income will impact on the value of distributable reserves.



 

 

Notes to the Financial Statements (continued)

 

 

2.     Basis of preparation and accounting policies(continued)

 

Basis of preparation (continued)

 

The key judgements made by directors are in the valuation of non-current assets.  The estimates and underlying assumptions are reviewed on an ongoing basis.  Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects that period, or in the period of revision and future periods if the revision affects both current and future periods.

 

Another key judgement made by the Board is that the company owns 50% of the issued share capital of Lorngreen Ltd but does not have control over the company and therefore does not consolidate the results of Lorngreen Limited.

 

The directors do not believe that there are any further key judgements made in applying accounting policies or estimates in respect of the financial statements.

 

Standards effective for the first time in these financial statements

 

The revisions to IAS 1, Presentation of Financial Statements, IFRS7, Financial Instruments: Disclosures and IFRS 8, Operating Segments, have been applied for the first time in the preparation of these financial statements.

 

Standards issued but not yet effective

 

The following new standards, amendments to standards and interpretations are not yet effective for the year ended 31 March 2010, and have not been applied in preparing these consolidated financial statements:

·    IFRS 9 Financial Instruments (effective 1 January 2013)

·    IAS 24 (Revised 2009) Related Party Disclosures (effective 1 January 2011)

 

All of these changes will be applied by the Company from the effective date but none of them are expected to have a significant impact on the Company's financial statements.

 

Capital Management

 

The Company's objectives when managing capital are:

·    to safeguard its ability to continue as a going concern, so that it can continue to provide returns to shareholders and benefits for other stakeholders;

·    to ensure sufficient liquid resources are available to meet the funding requirements of its investments and to fund new investments where identified;

 

The Company has no external debt; consequently all capital is represented by the value of share capital, distributable and other reserves.  Total Shareholder equity at 31 March 2010 was £19.8 million (2009: £19.8 million).

 

Non-current Asset Investments

The Company invests in financial assets with a view to profiting from their total return through income and capital growth. These investments are managed and their performance is evaluated on a fair value basis in accordance with a documented investment strategy, and information about the portfolio is provided internally on that basis to the Company's Board of directors. Accordingly upon initial recognition the investments and loan notes are designated as "at fair value through the profit and loss" ("FVTPL"). They are included initially at fair value which is taken to be their cost (excluding expenses incidental to the acquisition which are written off in the statement of comprehensive income and allocated to "capital" at the time of acquisition).  Subsequently the investments are valued at "fair value" which is measured as follows:

 

 

Notes to the Financial Statements (continued)

 

 

2.     Basis of preparation and accounting policies(continued)

 

Non-current Asset Investments continued)

·    Unlisted investments are fair valued by the directors in accordance with the International Private Equity and Venture Capital Valuation Guidelines. Fair value is established by using measurements of value such as price of recent transactions, earnings multiples and net assets.

·    Listed investments are fair valued at bid price.

                  

Where securities are designated upon initial recognition as at fair value through the profit or loss, gains and losses arising from changes in fair value are included in net profit or loss for the period as a capital item in accordance with the AIC SORP.  The profit or loss on disposal is calculated net of transaction costs of disposal.

 

Investments are recognised as financial assets on legal completion of the investment contract and are de-recognised on legal completion of the sale of an investment

 

In accordance with the exception within IAS 28, "Investments in Associates", those undertakings in which the Company holds more than 20% of the equity are not regarded as associated undertakings.  Therefore these investments are measured at fair value in accordance with IAS 39, "Financial Instruments: Recognition and Measurement".

 

Money Market Funds

 

Money market funds are held at cost as the nature of these funds is their capital value remains at par and all income less operating costs is distributed.  All income is recognised as earned.

 

Income

Investment income includes interest earned on bank balances and money market securities and includes income tax withheld at source. Dividend income is shown net of any related tax credit and is brought into account on the ex-dividend date.

 

Fixed returns on investment loans, debt and money market securities are recognised on a time apportionment basis so as to reflect the effective interest rate, provided there is no reasonable doubt that payment will be received in due course.

 

Expenses

All expenses are accounted for on the accruals basis. Expenses are charged to revenue with the exception of the investment management fee, which has been charged 25% to the revenue account and 75% to the capital account to reflect, in the directors' opinion, the expected long term split of returns in the form of income and capital gains respectively from the investment portfolio.

 

Taxation

Corporation tax payable is applied to profits chargeable to corporation tax, if any, at the current rate in accordance with IAS12, "Income Taxes". The tax effect of different items of income / gain and expenditure / loss is allocated between capital and revenue on the same basis as the particular item to which it arises using the marginal basis in line with the AIC SORP.

 

In accordance with IAS12, "deferred tax" is recognised in respect of all temporary differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that will result in an obligation to pay more, or a right to pay less tax, with the exception that deferred tax assets are recognised only to the extent that the Directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing can be deducted. These temporary differences are due to differences between the carrying amount and the tax base of assets and liabilities using the Balance Sheet method. The Directors have considered the requirements of IAS12 and do not believe that any provision should be made.

 



 

 

Notes to the Financial Statements (continued)

 

 

2.     Basis of preparation and accounting policies(continued)

 

Financial instruments

The Company's principal financial assets are its investments and the policies in relation to those assets are set out above.  Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the entity after deducting all of its financial liabilities. Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed as an equity instrument. Dividends and distributions relating to equity instruments are debited direct to equity.

 

Derivatives, comprising income swaps, are classified at fair value through profit and loss.                      

 

Provisions                                                                                                                    

A provision is recognised when the Company has a legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, expected future cash flows are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability.

                                                                                                                                   

Where the Company expects some or all of a provision to be reimbursed, for example under an insurance policy, the reimbursement is recognised as a separate asset but only when recovery is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement. Where discounting is used, the increase in the provision due to unwinding the discount is recognised as a finance cost.

 

Issued share capital

Ordinary shares are classified as equity because they do not contain an obligation to transfer cash or another financial asset.  Issue costs associated with the allotment of shares have been deducted from the share premium account in accordance with IAS 32, "Financial Instruments: Presentation".

 

Cash and cash equivalents

 

Cash and cash equivalents represents cash available at less than 3 month's notice.

 

Receivables

Receivables are included at fair value on initial recognition and subsequently at amortised cost.  An impairment loss is recognised whenever the carrying amount of an asset exceeds the receivable amount.  The recoverable amount is only determined when objective evidence of impairment exists.

 

Trade and other payables

Trade and other payables are included at fair value on initial recognition and subsequently at amortised cost. 

 

Reserves

All fixed asset investments are designated as fair value through profit or loss at the time of acquisition, and all capital gains or losses on investments so designated. Given the nature of the Company's venture capital investments, the changes in fair value of such investments recognised in these financial statements are not considered to be readily convertible to cash in full at the balance sheet date and accordingly these gains are treated as unrealised gains or losses.


When the Company re-values the investments still held during the period, any gains or losses arising are credited/charged to the Capital reserve - holding gains/(losses).


When an investment is sold any balance held on the Capital reserve - holding gains/(losses) is transferred to the Capital reserve - realised gains/(losses) as a movement in reserves.


Reserves available for potential distribution by way of a dividend are the revenue reserve and special distributable reserve.



 

 

Notes to the financial Statements (continued)

 

 

2.     Basis of preparation and accounting policies(continued)

 

Reserves (continued)

 

Movements in reserves and an analysis of the capital reserve between realised and unrealised are shown in the statement of changes in shareholders' equity.

 

 

 

3.     Seasonality of operations

The Company's operations are not seasonal.

 

 

 

4.     Segmental reporting                              

The Company only has one class of business, being investment activity. 

 

 

 

5.    Investment Income


Year ended 31 March 2010


Period ended 31 March 2009


Revenue

Capital

Total


Revenue

Capital

Total


£'000

£'000

£'000


£'000

£'000

£'000

Loan stock interest

558

-  

558


-  

-  

-  

Income from short term investments

25

-  

25


336

-  

336

Bank interest

1

-  

1


384

-  

384

Total

584

-  

584


720

-  

720

 

 

All investment income earned by the Company is included in the income column of the income statement.

 

 

 

6.     Investment Management Fees

TPIM LLP provides investment management and administration services to the Company under an Investment Management Agreement effective 6 February 2008 which runs until 6 February 2013 and may be terminated at any time thereafter by not less than twelve months' notice given by either party and which provides for an administration and investment management fee of 1.75% per annum of net assets payable quarterly in arrears.  Should such notice be given the Investment Manager would continue to perform its duties under the investment management agreement and to receive its management fee during the notice period.

 

 

 



 

 

Notes to the Financial Statements (continued)

 

 

7.    Legal and professional fees

Legal and professional fees include the following remuneration paid to the Group's auditor, Grant Thornton UK LLP:


Year ended 31 March 2010


Period ended 31 March 2009


Revenue

Capital

Total


Revenue

Capital

Total


£'000

£'000

£'000


£'000

£'000

£'000

Fees payable to the Company's auditor for the audit of the Company and Group accounts

10

-  

10


12

-  

12

Other services related to taxation

4

-  

4


-  

-  

-  


14

-  

14


12

-  

12

 

 

 

8.     Directors' Remuneration


Year ended 31 March 2010


Period ended 31 March 2009


Revenue

Capital

Total


Revenue

Capital

Total


£'000

£'000

£'000


£'000

£'000

£'000

Chad Murrin (Chairman)

15

-  

15


20

-  

20

Sir John Lucas-Tooth

13

-  

13


16

-  

16

Robert Reid

12

-  

12


16

-  

16

Peter Hargreaves

-  

-  

-  


-  

-  

-  

Total

40

-  

40


52

-  

52

 

None of the directors received any other remuneration or benefit from the Company during the period, receiving only fees in the form of short term employee benefits. The Company has no employees other than the non-executive directors. The average number of non-executive directors in the year was 3.

 

 

 

9.       Tax on return on ordinary activities


Year ended 31 March 2010


Period ended 31 March 2009


Revenue

Capital

Total


Revenue

Capital

Total


£'000

£'000

£'000


£'000

£'000

£'000

Profit / (loss) on ordinary activities before tax

389

91

480


510

(2,539)

(2,029)

Add back capital (gains) / losses

-  

(377)

(377)


-  

2,260

2,260

Taxable income

389

(286)

103


510

(279)

231

UK corporation tax at an effective rate of 27% (21%)

105

(77)

28


106

(58)

48

Adjustment re prior year

2

-  

2


-  

-  

-  

Total charged in Statement of comprehensive income

107

(77)

30


106

(58)

48

 

The Directors are not aware of any matters which may affect the tax charges in future periods.

 

Approved venture capital trusts are exempt from tax on capital gains within the Company.  Since the Directors intend that the Company will continue to conduct its affairs so as to maintain its approval as a venture capital trust, no current or deferred tax will be provided in respect of any capital gains or losses arising on the revaluation or disposal of investments.

 

 

 

 

Notes to the Financial Statements (continued)

 

 

10.   Return per share

The return per share is based on a profit from ordinary activities after tax of £450,000 (2009: Loss £2,077,000) and on the weighted average number of shares in issue during the period of 22,898,626 (2009: 20,367,330).

No new shares were issued during the year and so the weighted average shares in issue during the year is equal to the number of shares in issue at both 31 March 2009 and 31 March 2010.

 

There are no potentially dilutive capital instruments in issue and, therefore, no diluted return per share figures are included in these financial statements.

 

 

 

11.   Financial assets at fair value through profit and loss

 

The Board's assessment of the key risks of the Company is disclosed on pages 12-13 of the Directors' Report.

 

Investments

 

Effective from 1 January 2009 the Company adopted the amendment to IFRS 7 regarding financial instruments that are measured in the balance sheet at fair value, this requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:

·    Level 1: quoted prices in active markets for identical assets or liabilities. The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date, A market is regarded as active if quoted prices are readily and regularly available, and those prices represent actual        and regularly occurring market transactions on an arms length basis. The quoted market price used for   financial assets held by the group is the current bid price. These instruments are included in level 1 and comprise AIM listed investments or government securities classified as held at fair value through profit or loss.

·    Level 2: the fair value of financial instruments that are not traded in active markets is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is        available and rely as little as possible on entity specific estimates.  If all significant inputs required to fair   value an instrument are observable, the instrument is included in level 2.

·    Level 3: the fair value of financial instruments that are not traded in an active market (for example, investments in unquoted companies) is determined by using valuation techniques such as earnings multiples. If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

 

There have been no transfers between these classifications in the period (2009: none). The change in fair value for the current and previous year is recognised through the profit or loss account.

 

Further details of these investments are provided in the Investment Manager's Review.

 

All items held at fair value through profit and loss were designated as such upon initial recognition.

 



 

 

Notes to the Financial Statements (continued)

 

 

11.   Financial assets at fair value through profit and loss (continued)

 

Movements in investments held at fair value through profit and loss during the year to 31 March 2010 and included in profit or loss were as follows:

 


Level 3

Level 2



Unquoted

Derivative

Total


Investments

Transaction

Investments


£'000

£'000

£'000

Opening cost

12,408

3,292

15,700

Opening unrealised loss

(1,134)

(1,126)

(2,260)

Opening fair value at 1 March 2009

11,274

2,166

13,440

Purchases at cost

2,385

-  

2,385

Disposal proceeds

(950)

-  

(950)

Unrealised gain on investments

182

195

377

Closing fair value at 31 March 2010

12,891

2,361

15,252

Closing cost

13,843

3,292

17,135

Closing unrealised gain

(952)

(931)

(1,883)

 

 

Movements in investments held at fair value through profit and loss during the period to 31 March 2009 and included in profit or loss were as follows:

 


Level 3

Level 2



Unquoted

Derivative

Total


Investments

Transaction

Investments


£'000

£'000

£'000





Purchases at cost

12,408

3,292

15,700

Unrealised (loss) on investments

(1,134)

(1,126)

(2,260)

Closing fair value at 31 March 2009

11,274

2,166

13,440

Closing cost

12,408

3,292

15,700

Closing unrealised loss

(1,134)

(1,126)

(2,260)

 





Level 3 valuations include assumptions based on non-observable data, such as discounts applied either to reflect movement in the fair value of financial assets held at the price of recent investments, or to adjust earnings multiples. 

 

Included in the above is an investment of £3,292,000 with Julius Baer, which is the subject of the derivative transaction described in note 12.  Due to the nature of this investment the deposit held by Julius Baer is an integral part of the transaction, therefore the Directors consider that it is appropriate to disclose this as part of the Investment Portfolio.

 

 



 

 

Notes to the Financial Statements (continued)

 

 

11.   Financial assets at fair value through profit and loss (continued)

 

All investments are designated as fair value through profit or loss at the time of acquisition and all capital gains or losses arising on investments are so designated.  Given the nature of the Company's venture capital investments, the changes in fair values of such investments recognised in these financial statements are not considered to be readily convertible to cash in full at the balance sheet date and accordingly any gains are or losses on these items are treated as unrealised.

 

Sensitivity

 

An increase of 1% in the value of investments would increase the capital profits for the year and the net asset value at 31 March 2010 by £153,000.  A decrease of 1% would reduce the capital profits and net asset value by the same amount.

 

An increase of interest rates by 1% would have no significant impact.

 

 

 

12.   Derivative transaction

The Company has made a payment of £3,292,000 to Julius Baer and in return will receive back an equivalent sum plus or minus the performance in the intervening time of GAM Diversity 2.5XL. The transaction will run for a maximum of 5 years but may be terminated by the Company on three months' notice before the period expires.  The loss on this investment in the period is deemed to be a capital item and is therefore included in the capital column of the income statement.

 

The value shown for the derivative transaction represents the amount payable by the company if the derivative transaction were closed on the balance sheet date.

 

 

 

13.   Receivables


31-Mar-10


31-Mar-09



£'000



£'000

Receivables


68



2,500

Prepayments and accrued income


3



23

Total


71



2,523

 

 

 

 

14.   Money market funds


31-Mar-10


31-Mar-09



£'000



£'000

Henderson Liq Assets £ Institutional Fund


1,680



-  

Ignis Liquidity Fund


1,680



-  



3,360



-  

 

Money market funds are offshore funds which invest in money markets and distribute all net income.  The value of the investments remains constantly at par and they are repayable on demand.

 



 

 

Notes to the Financial Statements (continued)

 

 

15.   Cash and cash equivalents

Cash and cash equivalents comprise deposits with The Royal Bank of Scotland plc.

 

 

 

16.   Trade and other payables


31-Mar-10


31-Mar-09



£'000



£'000

Payables


318



85

Accrued expenses


21



30

Total


339



115

 

 

 

17.   Share capital

.


31-Mar-10


31-Mar-09



£'000



£'000

Ordinary Shares of 1p






Authorised






No. Of Shares

50,000,000


50,000,000

Par Value £'000


500



500

Issued & Fully Paid






No. Of Shares

22,898,626


22,898,626

Par Value £'000


229



229

 

 

18.   Net asset value per share

The calculation of net asset value per share is based on net assets of £19,809,000 (2009: £19,762,000) divided by the 22,898,626 (2009: 22,898,626) Ordinary Shares in issue.

 

 

19.   Related party transactions

Peter Hargreaves has an equity interest in TPIM LLP. During the year TPIM LLP provided investment management and administration services to the Company amounting to £351,000 (2009: £372,000). £7,000 was due to TPIM LLP at 31 March 2010.

 

20.   Contingent liabilities

There were no contingent liabilities at 31 March 2010 or at 31 March 2009.

 

 

21.   Capital commitments

There were no capital commitments at 31 March 2010 or at 31 March 2009

 

 

22.   Post balance sheet events

 

The Board has resolved to pay a dividend of £282,000 (1.23p per share) (2009: £404,000 and 1.76p) out of the revenue profits to be paid to shareholders on the register at 16 July 2010 in respect of the year ended 31 March 2010.


 


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