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TP70 2008(ii) VCT (TPV2)

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Wednesday 08 June, 2011

TP70 2008(ii) VCT

Final Results

RNS Number : 0984I
TP70 2008 (ii) VCT PLC
08 June 2011
 



 

 

TP70 2008 (II) VCT plc

Final Results

 

TP70 2008 (II) VCT plc managed by Triple Point Investment Management LLP today announces its final results for the year ended 31 March 2011.

 

These results were approved by the Board of Directors and authorised for issue on 8 June 2011.

 

You can view the Annual Report in on the Triple Point website www.triplepoint.co.uk at Our Products/TP70 2008/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 Company'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 provisionally 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

Year ended


Year ended


31 March 2011


31 March 2010


£'000


£'000

Net assets

19,193


19,809

Net asset value per share

83.96p


86.51p

Net (loss) / profit before tax

(287)


480

(Loss) / earnings per share

(1.32p)


1.97p





 

For a £1 investment per share investors with a sufficient income tax liability in the relevant year have already received a 30p tax credit and a first dividend of 1.76p and a second dividend of 1.23p which, taken together with the current NAV of 83.96p, totals 116.95p.

 

TP70 2008 (II) VCT plc ("the Company") is a Venture Capital Trust ("VCT"). The Investment Manager is Triple Point Investment Management LLP ("TPIMLLP"). 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 prior to investment in VCT qualifying holdings. The remaining 30% directly or indirectly of net assets were to be exposed to a leveraged version of GAM Diversity, a fund of hedge funds. The Company's qualifying investment holdings are in businesses with predictable revenue streams from financially sound customers and aim to generate an attractive income stream and modest growth for 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 TP70 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 2011. The Report of the Directors includes the Financial Summary, Chairman's Statement, Details of Directors, Details of Advisers, Shareholder Information, Investment Manager's Review, Investment Portfolio, Directors' Report, Directors' Remuneration Report and the Corporate Governance Statement.

 

 

Report of the Directors - Chairman's Statement

 

I am writing to present the audited financial statements for TP70 2008 (II) VCT plc ("the Company") for the year ended 31 March 2011.

 

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.

 

Results

 

We are pleased to report that at 31 March 2011 the Company has in place a diversified portfolio of VCT qualifying investments, representing 74% of its net assets, which meant that the Company met the 70% criteria for securing its VCT tax status. Further details of the portfolio are given in the Investment Manager's Review on page 6.

 

The Company's exposure to GAM Diversity 2.5XL now stands at 22% of net assets, which with leverage

represents 56% of net assets. During the year GAM Diversity 2.5XL, contributed a loss of £384,000 to the Company which overall made a loss before taxation of £287,000. The performance of GAM is detailed further in the Investment Manager's Review on page 6. At the year end the Company's Net Asset Value per share stood at 83.96p (2010: 86.51p).

 

Dividend

 

The Board is pleased to recommend payment of a third dividend of £352,000 (2010: £282,000) payable to shareholders on 29 July 2011 equal to 1.54 p per share.

 

Board Composition

 

Amendments to the Listing Rules requiring the majority of the Board of an investment company to be independent of the investment manager have made it necessary for changes to the composition of the Board.  As already advised to shareholders in the Interim Report, Michael Stanes joined the Board on 13 September and Sir John Lucas Tooth and Robert Reid retired from it on 15 October 2010. The Board regularly reviews the independence of its members and as a result of its review a decision was taken that the TPIMLLP appointee should be replaced by a director who is independent of TPIMLLP. Therefore on 2 June, Peter Hargreaves resigned from the Board and Baroness Jo Valentine was appointed.  I am delighted to welcome Jo to the Board.  A biographical summary with details of her distinguished career is set out on page 3.

 

All this means that the Board now comprises Chad Murrin, Michael Stanes and Baroness Jo Valentine.  Michael and Jo are independent of the Investment Manager, and the Board now meets the requirement that the majority of its members are independent.

 

It is also a corporate governance requirement that the Chairman of the Board is independent of the investment manager.  By reason of me being a Director of other companies where TPIMLLP is the investment manager, I am deemed not be independent.  After discussion with the Board, it was felt that shareholders' interests were best served by me continuing as Chairman to provide continuity through these considerable changes

 

In line with corporate governance requirements, I have to stand for re-election by reason of being Chairman (until the change is made) but not independent of the investment manager.  Both Michael Stanes and Baroness Jo Valentine are standing for re-election at what will be the first AGM since their appointments.

 

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 and maintain approval as a VCT

 

The first risk is a consequence of the Company's investment strategy to which the Company committed in its Prospectus.  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

 

With the VCT qualifying investment portfolio in place the Company's principal focus will be on monitoring and managing the performance of these investments, as well as maintaining the required level of qualifying investments taking realisations and loan repayments into account.

 

If you have any queries or comments, please do not hesitate to telephone Triple Point Investment Management LLP on 020 7201 8989.

 

 

 

 

Chad Murrin

Chairman

8 June 2011

 

 

 

Investment Manager's Review

 

TP70 2008 (II) VCT plc'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 fund of hedge funds, Diversity, via GAM Diversity GBP 2.5XL. 

 

VCT Qualifying Investment Portfolio

 

As at 31 March 2011, I can report that the Company had 74% of net assets deployed in VCT qualifying investments, thereby satisfying the VCT qualification target. These investments are spread across a range of companies and sectors, with a focus on businesses that derive predictable revenue streams from a financially sound customer base. All of these investments are HMRC approved for VCT qualifying purposes.

 

The Company has investments in four companies active in the renewable energy sector. Two of these companies are pursuing opportunities in electricity generation from solar photo voltaic panels for social housing. The panels will be placed on suitable roofs within housing associations' stock and used to generate electricity for the residents, with any surplus electricity exported to the National Grid. The generation of electricity from solar PV falls within the Government's Feed-in Tariff regime and the companies will benefit from this framework. Feed-in Tariffs are linked to inflation and rates for solar PV arrays installed before 2012 have been set for 25 years, which will provide the companies with a long term, pre-determined cash flow.

 

The Company's other two investments in the renewable energy sector will be pursuing opportunities in anaerobic digestion. Their customers will be either electricity utility companies via a National Grid connection, or a business located close to the generators. Energy generation from biomass is also underpinned by the Feed-in Tariff or Renewables Obligation Certificate regime. 

 

The Company has invested in five companies which specialise in the deployment of digital projection technology and they continue to expand their operations in the UK and Continental Europe.

 

The Company's other businesses are active in satellite trading (providing for two-way broadband communications and digital channels access to remote, rural regions across the UK and Europe), a business supplying medical gas services for the NHS, a crematorium management company for a local authority, a business providing telecommunications services to a public sector body, and three businesses delivering telecoms services to the corporate sector.

 

GAM Review

 

In the period the Company's gross exposure to GAM Diversity stood at 56% of its assets, through holdings in GAM Diversity 2.5XL and a Julius Baer derivative transaction. 

 

GAM Diversity lost 1.77% over the year to 31 March 2011, with positive performance in the Equity Long/Short and Trading allocations being offset by losses in two specific funds held by the Arbitrage sector of the portfolio during the first half of 2010. These funds both had exposure to US real estate which faced significant challenges throughout the second quarter of 2010 due to the weaker than expected macro environment in both Europe and the US.

 

During the second half of the period under review, performance improved with GAM Diversity GBP returning 2.93%.  

 

GAM Outlook

 

GAM believe that markets may be broadly positive in 2011 but with considerable volatility as markets react to prevailing sentiment.

 

GAM believe that the outlook remains uncertain for a number of reasons. Three years after the start of the financial crisis, the response of global policymakers has seemingly failed to identify and to 'resolve' the causes of the crisis (excessive leverage, consumer spending and so on), and the unintended consequences of their response (enormous government-sponsored spending, cheap borrowings and lower fiscal penalties) are now becoming a reality. The cost of this has been periodic losses of confidence among investors ('risk off/on'), manifested in weaknesses within equity and sovereign debt markets, and reflected most recently in the sovereign debt problems that emerged in some of the states of Europe at the start of the second quarter and dominated part of the fourth quarter.

GAM report that they are likely to retain their longer-term cautious economic view while global imbalances in trade and economic policy remain, particularly between the US and China, where outright 'protectionism' may result in the next recession. QE2 was introduced in the US in the fourth quarter as the Fed gave in to populist alarm, but this will keep the US dollar weak against other currencies. By contrast, inflation is appearing across all emerging markets as output gaps have vanished and unemployment remains low. This is evident not only in China, but also in other countries such as Brazil and Turkey.

Claire Ainsworth

Triple Point Investment Management LLP

8 June 2011

 

 

About Triple Point Investment Management LLP

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.

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

 

Report of the Directors - Investment Portfolio 


31 March 2011


31 March 2010


        Cost 

     Valuation


        Cost 

     Valuation


£'000

£'000


£'000

£'000

Qualifying holdings

14,365

66.87

14,365

73.66


10,342

47.05

10,342

51.43

Non-qualifying holdings

3,308

15.39

2,158

11.23


3,501

15.92

2,549

12.67

Money market funds

398

1.85

398

2.07


3,360

15.28

3,360

16.71


18,071

84.11

16,921

86.96


17,203

78.25

16,251

80.81

Derivative

3,292

15.32

2,175

10.12


3,292

14.97

2,361

11.74

Fixed assets at fair value through profit or loss

21,363

99.43

19,096

97.08


20,495

93.22

18,612

92.55











Cash and cash equivalents

125

0.57

125

2.92


1,493

6.78

1,493

7.45


21,488

100.00

19,221

100.00


21,988

100.00

20,105

100.00

Unquoted Qualifying Holdings









£'000

£'000


£'000

£'000

Provision of satellite capacity








Beam Carrier Ltd

563

2.62

563

2.93


563

2.56

563

2.80

Satellite Broadband Access Solutions Ltd

871

4.05

871

4.53


871

3.96

871

4.33

Telecommunications










Per Port Services Ltd

310

1.44

310

1.61


310

1.41

310

1.54

WAN Solutions Ltd

184

0.86

184

0.96


436

1.98

436

2.17

Wide Area Network Services Ltd

231

1.08

231

1.20


564

2.57

564

2.81

Wide Area Network Solutions Ltd

146

0.68

146

0.76


357

1.62

357

1.78

Cinema digitisation










21 Century Cinema Ltd

2,000

9.31

2,000

10.41


1,000

4.55

1,000

4.97

Big Screen Digital Services Ltd

1,400

6.52

1,400

7.28


1,000

4.55

1,000

4.97

Cinematic Services Ltd

1,000

4.65

1,000

5.20


1,000

4.55

1,000

4.97

Digima Ltd

2,000

9.31

2,000

10.41


1,000

4.55

1,000

4.97

Digital Screen Solutions Ltd

2,000

9.31

2,000

10.41


1,000

4.55

1,000

4.97

Balance carried forward

10,705

49.83

10,705

55.70


8,101

36.85

8,101

40.28































 

 

 

Report of the Directors - Investment Portfolio (continued)


31 March 2011


31 March 2010


        Cost 

     Valuation


        Cost 

     Valuation


£'000

£'000


£'000

£'000

Unqouted Qualifying Holdings  (continued)










Balance brought forward

10,705

49.83

10,705

55.70


8,101

36.85

8,101

40.28

Crematorium management








Furnace Management Services Ltd

910

4.23

910

4.73


910

4.14

910

4.53

Medical gas supplies










MGS NW Ltd

420

1.95

420

2.19


703

3.20

703

3.50

MGS WM Ltd

330

1.54

330

1.72


628

2.86

628

3.12

Electricity generation










Archimedes Power Ltd

500

2.33

500

2.33


-  

-  

-  

-  

Biomass Future Generations Ltd

500

2.33

500

2.33


-  

-  

-  

-  

Katharos Organic Ltd

500

2.33

500

2.33


-  

-  

-  

-  

Convertibox Services Ltd

500

2.33

500

2.33


-  

-  

-  

-  


14,365

66.87

14,365

73.66


10,342

47.05

10,342

51.43

Unquoted Non-qualifying Holdings








Ambulance refurbishment








Cranmer Lawrence Engineering Services Limited

-  

-  

-  

-  


196

0.89

196

0.97

Investment holding










Lorngreen Limited *

3,308

15.39

2,158

11.23


3,305

15.03

2,353

11.70


3,308

15.39

2,158

11.23


3,501

15.92

2,549

12.67









 

* The 50% holding in Lorngreen has not been accounted for as a subsidiary as TP70 2008 (II) is not deemed to have control over the company. 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". They are instead treated as portfolio investments. Lorngreen holds 50% of the Company's exposure to GAM Diversity 2.5XL GBP.

 

VCT investments are measured at fair value. The initial best estimate of fair value of these investments that are either quoted or not quoted in an active market is the transaction price (i.e. cost). The fair value of these investments is subsequently measured by reference to the enterprise value of the investee company, which is deemed to best reflect the fair value. Where the Board consider the investee company's enterprise value to remain unchanged since acquisition, investments continue to be held at cost less any loan repayments received.

 



Report of the Directors - Investment Portfolio (continued)

Additional Information



Last Statutory Financial Statements


Equity held by TP70 2008 (I)  VCT plc

Equity held by all funds managed by TPIMLLP


Initial Investment Date

Date

Profit / (loss) before int & Tax

Total assets before VCT loans

VCT loans

Net Assets





£'000

£'000

£'000

£'000

 

Qualifying Holdings










Beam Carrier Ltd

02-Apr-09

31-Mar-10

(129)

781

781

-  


45.80

95.70

Satellite Broadband Access Solutions Ltd

17-Mar-09

31-Mar-10

(16)

1,398

1,310

88


43.50

93.40

Per Port Services Ltd

17-Mar-09

31-Mar-10

(74)

467

372

95


47.50

95.00

WAN Solutions Ltd

17-Mar-09

31-Mar-10

(12)

663

506

157


47.50

95.00

Wide Area Network Services Ltd

17-Mar-09

31-Mar-10

(47)

156

18

138


49.97

49.97

Wide Area Network Solutions Ltd

17-Mar-09

31-Mar-10

(92)

475

448

27


47.50

95.00

21 Century Cinema Ltd

31-Mar-09

31-Mar-10

(725)

4,528

4,200

328


32.49

97.47

Big Screen Digital Services Ltd

31-Mar-09

31-Mar-10

(318)

4,668

3,780

888


22.74

97.47

Cinematic Services Ltd

31-Mar-09

31-Mar-10

(332)

4,641

3,920

721


16.24

97.45

Digima Ltd

31-Mar-09

31-Mar-10

(318)

5,088

4,200

888


32.49

97.47

Digital Screen Solutions Ltd

31-Mar-09

31-Mar-10

(165)

5,088

4,200

888


32.49

97.47

Furnace Management Services Ltd

17-Mar-09

31-Dec-09

149

1,689

1,274

415


24.50

49.00

MGS NW Ltd

23-Dec-08

31-Mar-10

166

820

207

613


24.49

49.00

MGS WM Ltd

30-Oct-08

30-Oct-09

286

791

163

628


24.50

49.00

Archimedes Power Ltd

30-Mar-11

No financial statements available




14.92

98.78

Biomass Future Generations Ltd

30-Mar-11

No financial statements available




14.53

95.88

Katharos Organic Ltd

30-Mar-11

No financial statements available




19.26

98.22

Convertibox Services Ltd

30-Mar-11

No financial statements available




24.76

99.51

Non-qualifying Holdings










Lorngreen Limited

17-Jun-08

31-Mar-09

(2,268)

4,331

1,320

3,011


50.00

100.00

 

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 in accordance with 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 and explained at the end of this report in the Compliance Statement.

 

The Corporate Governance Report forms an integral part of the Report of the Directors.

 

Board of Directors

 

The Board regularly reviews the independence of its members and as a result of their review a decision was taken that the TPIMLLP appointee should be replaced by a director who is independent of TPIMLLP. Therefore Peter Hargreaves resigned as a Director and Baroness Jo Valentine was appointed on 2 June 2011.

 

The Directors who own shares in the Company are considered independent under the Listing Rules. Since all Directors are non-executive and day-to-day management responsibilities are sub-contracted to the Investment Manager, the Company does not have a Chief Executive Officer.  The Directors have a range of business and financial skills which are relevant to the Company; these are described on page 3 of this report.  Directors are provided with key information on the Company's activities, including regulatory and statutory requirements by the Investment Manager.  The Board has direct access to company secretarial advice and compliance services provided by the Investment Manager, which is responsible for ensuring that Board procedures are followed and applicable regulations complied with.  All Directors are able to take independent professional advice in furtherance of their duties.

 

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 and any return of capital to be paid to the shareholders;

•     the appointment, evaluation, removal and remuneration of the Investment Manager;

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

•    monitoring shareholder profiles and considering 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, who 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.

 

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 and where a Director is not considered to be independent submit themselves for re-election every year.

 

During the year ended 31 March 2011 the following meetings were held:

                                                                                                                     

Directors present

2 Audit Committee Meetings

Chad Murrin (Chairman)

5

2

Michael Stanes (appointed 13 September 2010)

2

1

Peter Hargreaves

4

2

Sir John Lucas Tooth (resigned 15 October 2010)

4

2

Robert Reid (resigned 13 September 2010)

2

1

 

Audit Committee

 

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 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;

·   monitoring the extent to which the external auditor is engaged to supply non-audit services; and

·   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 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.

 

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 2011, 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 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 TPIMLLP's compliance procedures;

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

 

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 Manager.

 

TPIMLLP 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 the date 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. The review covers all material controls including financial, operational and risk management systems.

 

Risk Management

 

TPIMLLP 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 un-invested cash will be held in money market funds. The particular risks they have identified are detailed in the Directors' Report on page 13.  The Company has entered into a derivative transaction, further details of which are given in the Chairman's Statement and in note 12 to the Financial Statements.

 

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.

 

 

Relations with Shareholders

 

The Board recognises 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 manager on matters relating to 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 and explained 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.  Whilst there is a process for briefing new directors they 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 senior independent director. The Board does not consider such an appointment appropriate for the Company.(A3.3).

 

4. 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).

 

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

 

6.  A smaller company should have at least two independent non-executive directors. The Board regularly reviews the independence of its members and as a result of their review a decision was taken that the TPIMLLP appointee should be replaced by a director who is independent of TPIMLLP. (A.3.2)

 

On behalf of the Board

 

 

 

 

 

Chad Murrin,

Chairman

8 June 2011



 

 

Report of the Directors - Directors' Responsibility Statement

 

The Directors are responsible for preparing the Report of the Directors 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 elect to prepare the Financial Statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs). Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss 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 accounting estimates that are reasonable and prudent;

§  state whether applicable IFRSs have been followed, subject to any material departures disclosed and explained in the Financial Statements;

§  prepare the Financial Statements 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 Financial Statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

In so far as each of the Directors is aware:

 

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

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

The Company's Financial Statements are published on the TPIMLLP website, www.triplepoint.co.uk. The maintenance and integrity of this website is the responsibility of TPIMLLP and not of the Company. Legislation in the United Kingdom governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.

 

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 management 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

 

 

 

 

 

Chad Murrin

Chairman

8 June 2011

 

 

 

 

 



 

 

Statement of Comprehensive Income

for the year ended 31 March 2011

 



31 March 2011


31 March 2010


Note

Rev.

Cap.

Total


Rev.

Cap.

Total



£'000

£'000

£'000


£'000

£'000

£'000










Investment income

5

553

-  

553


584

-  

584

Realised (loss) on investments


-  

(5)

(5)


-  

-  

-  

Unrealised (loss) / gain on investments


-  

(198)

(198)


-  

182

182

Unrealised (loss) / gain on derivative transaction


-  

(186)

(186)


-  

195

195

Investment return


553

(389)

164


584

377

961










Investment management fees

6

84

252

336


88

263

351

Financial and regulatory costs


23

-  

23


24

-  

24

General administration


17

-  

17


11

-  

11

Legal and professional fees

7

34

-  

34


32

23

55

Directors' remuneration

8

41

-  

41


40

-  

40

Operating expenses


199

252

451


195

286

481

Profit/ (loss) before taxation


354

(641)

(287)


389

91

480

Taxation

9

(68)

53

(15)


(107)

77

(30)

 Profit / (loss) after taxation


286

(588)

(302)


282

168

450

Total comprehensive income / (loss)


286

(588)

(302)


282

168

450

Basic and diluted earnings / (loss) per share

10

1.25p

(2.57p)

(1.32p)


1.23p

0.74p

1.97p

 

 

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 this statement.



 

Balance Sheet

as at 31 March 2011

 

 


Note


31 March 2011


31 March 2010




£'000


£'000







Non current assets






Financial assets at fair value through the


income statement

11


19,096


18,612













Current assets






Receivables

13


46


71

Cash and cash equivalents

14


125


1,493




171


1,564







Total assets



19,267


20,176













Current liabilities






Payables and accrued expenses

15


53


339

Current taxation payable



21


28




74


367







Net assets


19,193


19,809







Equity attributable to equity holders of the Company





Share capital

16


229


229

Capital redemption reserve



2


2

Special distributable reserve



21,576


21,608

Capital reserve



(2,901)


(2,313)

Revenue reserve



287


283

Total equity



19,193


19,809







Net asset value per share (pence)

17


83.96p


86.51p

 

 

The statements were approved by the Directors and authorised for issue on 8 June 2011 and are signed on their behalf by:

 

 

 

 

 

Chad Murrin

Chairman

8 June 2011

 

Company registration number: 6421355

 

The accompanying notes are an integral part of this statement.



 

Statement of Changes in Shareholders' Equity

for the year ended 31 March 2011

 


Issued Capital

Share Redemption Reserve

Special Distributable Reserve

Capital Reserve

Revenue Reserve

Total


£'000

£'000

£'000

£'000

£'000

£'000








Year ended 31 March 2011





Opening balance

229

2

21,608

(2,313)

283

19,809







  

Purchase of own shares

-  

-  

(32)

-  

-  

(32)

Dividend paid

-  

-  

-  

-  

(282)

(282)

Transactions with owners

-  

-  

(32)

-  

(282)

(314)

(Loss) / profit for the year

-  

-  

-  

(588)

286

(302)

Total comprehensive (loss) / year for the period

-  

-  

-  

(588)

286

(302)

Balance at 31 March 2011

229

2

21,576

(2,901)

287

19,193

Capital reserve consists of:







Unrealised losses on investments




(2,267)



Other realised losses




(634)







(2,901)










Year ended 31 March 2010







Opening balance

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

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)



 

 

The special distributable reserve arises from the cancellation of the share premium. The capital reserve is non-distributable. The revenue reserve is distributable by way of dividend. The special distributable reserve can be used to fund buy-backs of shares.

 

The accompanying notes are an integral part of this statement.



 

Cash Flow Statement

for the year ended 31 March 2011

 


Year ended

Year ended



31 March 2011


31 March 2010



£'000


£'000

Cash flows from operating activities





(Loss) / profit before taxation


(287)


480

Realised loss on investments


5


-  

Unrealised loss / (gain) on investments


384


(377)

Cash flows generated by operations


102


103

Decrease in receivables


25


2,452

(Decrease) / increase in payables


(286)


224

Taxation paid


(22)


(50)

Net cash flows from operating activities


(181)


2,729






Cash flows from investing activities





Purchase of financial assets at fair value through profit or loss


(5,403)


(2,385)

Proceeds of sale of financial assets at fair value through profit or loss


1,568


950

Purchase of money market funds


(1,160)


(3,360)

Proceeds from disposal of money market funds


4,122


-  

Net cash flows from investing activities


(873)


(4,795)






Cash flows from financing activities





Purchase of own shares


(32)


-  

Dividends paid


(282)


(403)

Net cash flows from financing activities


(314)


(403)

Net (decrease) in cash and cash equivalents


(1,368)


(2,469)
















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





Opening cash and cash equivalents


1,493


3,962

Net (decrease) in cash and cash equivalents


(1,368)


(2,469)

Closing cash and cash equivalents


125


1,493

 

 

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 2011 were authorised for issue in accordance with a resolution of the Directors on 2 June 2011.

 

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) and venture capital investments focused on companies with contractual revenues from financially secure counterparties.

                                                                                                 

                                                                                 

2.   Basis of preparation and accounting policies                                        

 

Basis of preparation

 

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.

The Financial Statements of the Company for the year ended 31 March 2011 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 Companies and Venture Capital Trusts" 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 or 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 or loss, which are valued on the basis noted below (in the section headed Non-current asset investments).

·    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 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.

 

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. The carrying value of investments is disclosed in note 11.

 

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.

 

These accounting policies have been applied consistently for the purposes of 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 period ended 31 March 2011, and have not been applied in preparing these Financial Statements. 

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

·      Improvements to IFRS issued May 2010 (some changes effective 1 July 2010, others effective 1 January 2011)

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.

 

Presentation of the statement of comprehensive income

 

In order to better reflect the activities of an investment trust company, and in accordance with the guidance issued by the Association of Investment Companies, supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and capital nature has been presented alongside the Statement of Comprehensive Income.  In accordance with the Company's status as a UK investment Company under sS833 of the Companies Act 2006, net capital returns may not be distributed by way of dividend. 

 

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 2011 was £19.2 million (2010: £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 profit or loss" ("FVTPL") with the exception of the derivative transactions which do not need to be designated. 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:

 

·    Unlisted investments are fair valued by the Directors in accordance with the International Private Equity and Venture Capital Valuation Guidelines and IAS 39. 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 on the relevant date.

                  

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.

 

Money market funds are designated as non-current asset investments at fair value through profit or loss due to the Company's investment policy of holding a combination of VCT qualifying holdings and monetary assets. Money market funds are valued based on the bid price quoted on the balance sheet date. Previously money market funds were classified as current investments.

 

 

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. Transaction costs are expensed to profit or loss as incurred.

 

The 50% shareholding in Lorngreen has not been accounted for as a subsidiary as TP70 2008 (I) VCT plc is not deemed to have control over the company. 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".

 

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

 

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 IAS 12 "Income Taxes". The tax effect of different items of income/gain and expenditure/loss is allocated between capital and revenue return on the "marginal" basis as recommended by the SORP.

 

In accordance with IAS 12, deferred tax is recognised using the balance sheet method providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary difference can be utilised. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. The directors have considered the requirements of IAS 12 and do not believe that any provision should be made.

 

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.

 

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 statement of comprehensive income 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 three months' 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

 

The revenue reserve and capital reserve reflect the guidance published by the Association of Investment Companies. The capital reserve is non-distributable. The revenue reserve is distributable by way of dividend. The special distributable reserve arises from the cancellation of share premium.

 

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.  All revenues and assets are generated and held in the UK. 

 

5.         Investment Income


Year ended


Year ended


31 March 2011


31 March 2010


Rev.

Cap.

Total


Rev.

Cap.

Total


£'000

£'000

£'000


£'000

£'000

£'000

Loan stock interest

537

-  

537


558

-  

558

Income receivable on money market funds

16

-  

16


25

-  

25

Interest receivable on bank balances

-  

-  

-  


1

-  

1

Total

553

-  

553


584

-  

584

 

6.         Investment Management Fees

TPIMLLP 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.

 

7.         Legal and professional fees

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


Year ended


Year ended


31 March 2011


31 March 2010


Rev.

Cap.

Total


Rev.

Cap.

Total


£'000

£'000

£'000


£'000

£'000

£'000

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

20

-  

20


10

-  

10

Other services related to taxation

4

-  

4


4

-  

4

24

-  

24


14

-  

14

 

8.         Directors' Remuneration

 

The only remuneration received by the Directors was their directors' fees. The Company has no employees other than the non-executive Directors. The average number of non-executive Directors in the year was 3.


Year ended


Year ended


31 March 2011


31 March 2010


Rev.

Cap.

Total


Rev.

Cap.

Total


£'000

£'000

£'000


£'000

£'000

£'000

Chad Murrin (Chairman)

15

-  

15


15

-  

15

Peter Hargreaves

6

-  

6


-  

-  

-  

Michael Stanes

6

-  

6


-  

-  

-  

Sir John Lucas-Tooth

8

-  

8


13

-  

13

Robert Reid

6

-  

6


12

-  

12

Total

41

-  

41


40

-  

40

 

9.            Taxation

 


Year ended


Year ended


31 March 2011


31 March 2010


Rev.

Cap.

Total


Rev.

Cap.

Total


£'000

£'000

£'000


£'000

£'000

£'000

Loss / (profit) on ordinary activities before tax

354

(641)

(287)


389

91

480

Capital losses / (gains) not taxable

-  

389

389


-  

(377)

(377)


354

(252)

102


389

(286)

103

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

74

(53)

21


105

(77)

28

Adjustment re prior year

(6)

-  

(6)


2

-  

2

Total charged in Statement of comprehensive income

68

(53)

15


107

(77)

30

 

10.       (Loss) / Earnings per share

The loss per share is based on the loss after tax of £302,000 (2010: £450,000 profit) and on the weighted average number of shares in issue during the period of 22,894,571 (2010: 22,898,626).

The weighted average number of shares during the year were:

 




Shares


Weighted




Issued

No. of Days

Average







01-Apr-10

No of Shares In Issue

22,898,626

365

22,898,626

23-Feb-11

Buy back


(40,000)

37

(4,055)







31-Mar-11

No of Shares In Issue

22,858,626

365

22,894,571

 

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 or loss

 

The Board's assessment of the key financial instrument risks of the Company is disclosed on page 13 of the Directors' Report.

 

Investments

 

For financial instruments that are measured in the balance sheet at fair value, IFRS 7 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 Company is the current bid price.

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. 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 and the movement in Level 3 instruments is disaggregated below.  The change in fair value is recognised through the statement of comprehensive income.

 

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

 

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

 

Level 3 valuations include assumptions based on non-observable data, such as discounts applied either to reflect impairment of the financial assets of the investee company, held at a price of recent investments, or valuations of investments based on their net asset values.

 

 

Movements in investments held at fair value through profit or loss during the year to 31 March 2011 and included in profit or loss were as follows:

 

Year ended 31 March 2011






Level 3

Level 2

Level 1



Unquoted

Derivative

Money

Total


Investments

Transaction

Market Funds

Investments


£'000

£'000

£'000

£'000

Opening cost

13,843

3,292

3,360

20,495

Opening unrealised loss

(952)

(931)

-  

(1,883)

Opening fair value at 1 April 2010

12,891

2,361

3,360

18,612

Purchases at cost

5,403

-  

1,160

6,563

Disposal proceeds

(1,568)

-  

(4,122)

(5,690)

Realised loss on investments

(5)

-  

-  

(5)

Unrealised loss on investments

(198)

(186)

-  

(384)

Closing fair value at 31 March 2011

16,523

2,175

398

19,096

Closing cost

17,673

3,292

398

21,363

Closing unrealised loss

(1,150)

(1,117)

-  

(2,267)











Year ended 31 March 2010






Level 3

Level 2

Level 1



Unquoted

Derivative

Money

Total


Investments

Transaction

Market Funds

Investments


£'000

£'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

-  

3,950

6,335

Disposal proceeds

(950)

-  

(590)

(1,540)

Unrealised gain on investments

182

195

-  

377

Closing fair value at 31 March 2010

12,891

2,361

3,360

18,612

Closing cost

13,843

3,292

3,360

20,495

Closing unrealised loss

(952)

(931)

-  

(1,883)






 

 

Included in the above is an investment of £2,175,243 (2010: £2,361,000) in the derivative transaction with Bank Julius Baer described in note 12.

 

Further details of these investments are provided in the Investment portfolio review.

 

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 period and the net asset value at 31 March 2011 by £187,000 (31 March 2010: £152,000). 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.

 

The following table discloses the financial assets and liabilities of the company in the categories defined by IAS 39: Financial Instruments, Recognition and Measurement.


Book value

Held for Trading

Loans and receivables

Amortised cost

Designated at fair value through profit or loss

2011






Assets:






Financial assets at fair value through profit or loss

16,523

-  

-  

-  

16,523

Derivative

2,175

2,175

-  

-  

-

Money market funds

398

-  

-  

-  

398

Receivables

44

-  

44

-  

-  

Prepaid expenses

2

-  

2

-  

-  

Cash and cash equivalents

125

-  

125

-  

-  


19,267

2,175

171

-  

16,921

Liabilities:






Other payables

35

-  

-  

35

-  

Taxation payable

21

-  

-  

21

-  

Accrued expenses

18

-  

-  

18

-  


74

-  

-  

74

-  







2010






Assets:






Financial assets at fair value through profit or loss

12,891

-  

-  

-  

12,891

Derivative

2,361

2,361

-  

-  


Money market funds

3,360

-  

-  

-  

3,360

Receivables

68

-  

68

-  

-  

Prepaid expenses

3

-  

3

-  

-  

Cash and cash equivalents

1,493

-  

1,493

-  

-  


20,176

2,361

1,564

-  

16,251

Liabilities:






Other payables

318

-  

-  

318

-  

Taxation payable

28

-  

-  

28

-  

Accrued expenses

21

-  

-  

21

-  


367

-  

-  

367

-  

 

Analysis of money market funds:


31-Mar-11

31-Mar-10



£'000


£'000

Deutsche Global Liquidity Managed Sterling Fund


231


1,680

Ignis Liquidity Fund


230


1,680



461


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 realisable on demand.

 

12.       Derivative transaction

The Company has made a payment of £3,292,000 to Bank 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 five years but may be terminated by the Company on three months' notice before the period expires. The loss on this investment in the year 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 to the Company if the derivative transaction were closed on the balance sheet date.

 

 

13.       Receivables


31 March 2011


31 March 2010


£'000



£'000

Receivables


44



68

Prepayments and accrued income


2



3

Total


46



71

 

 

14.       Cash and cash equivalents

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

 

 

15.       Payables


31 March 2011


31 March 2010



£'000



£'000

Payables


35



318

Accrued expenses


18



21

Total


53



339

 

 

 

16.     Share capital

 


31 March 2011


31 March 2010

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

22,858,626


22,898,626

Par Value £'000


229



229

 

17.       Net asset value per share

 

The calculation of net asset value per share is based on Net Assets of£19,193,000 (2010: £19,809,000) divided by the 22,858,626 (2010: 22,898,626) Ordinary Shares in issue.

 

18.       Related party transactions

 

Peter Hargreaves has an equity interest in TPIMLLP. During the year TPIMLLP provided investment management and administration services to the Company amounting to £336,000 (2010: £351,000). £7,000 was due to TPIMLLP at 31 March 2011 (2010: £7,000).

 

During the year 40,000 shares were repurchased at a price of 79p per share and then cancelled. The shares were held by the late David Dick who had an equity interest in TPIMLLP

 

19.       Contingent liabilities

 

There were no contingent liabilities at 31 March 2011 or at 31 March 2010.

 

20.       Capital commitments

 

There were no capital commitments at 31 March 2011 or at 31 March 2010.

 

 

21.       Dividends

 

During the year a dividend of 1.23p per share was paid on 22,898,626 shares, which totalled £282,000. 

 

It has been proposed that a further dividend will be paid on 29 July 2011 of 1.54p per share on 22,858,626 shares, which totals £352, 000.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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