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TP70 2008(ii) VCT (TPV2)

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Friday 28 November, 2008

TP70 2008(ii) VCT

Interim Results

RNS Number : 1716J
TP70 2008 (ii) VCT PLC
28 November 2008
 

The directors of TP70 2008 (II) VCT plc are pleased to announce the interim financial report

for the period ended 30 September 2008


For further information, please contact :


David Dick        020 7201 8989        or         Graham Urquhart        020 3216 2000


Financial summary


£'000 

Net assets

20,647 

Net loss before tax

(1,165)

Loss per share

(6.46p)

Net asset value per share

90.17p 


  Chairman's statement    


I am pleased to be writing to you to present the unaudited interim results for TP70 2008 (II) VCT plc ('the Company') for the period from incorporation on 8 November 2007 to 30 September 2008.

 

The Company's investment strategy is to offer combined exposure to GAM's fund of hedge funds - GAM Diversity and venture capital investments focused on companies with contractual revenues from financially secure counterparties.  30% of the Company's funds are currently exposed to GAM Diversity 2.5XL. The remaining 70% will be invested in suitable VCT qualifying investments as they become available. In the meantime these funds are held in deposit accounts. During the period funds were held with Royal Bank of Scotland but, subsequently half have been moved to AIB overnight deposit accounts. 


By the end of the third year, in order to meet the VCT qualifying criteria, the Company's intention is that at least 70% of the fund will be committed to VCT qualifying holdings with up to 30% remaining exposed to GAM Diversity 2.5 XL. In this connection, as detailed in the investment manager's report, the board is pleased to note that the first VCT qualifying investment was made following the period end.

 

Results


Since the Company completed fundraising on 30 April 2008, there has been unprecedented turmoil in financial markets. This has led to a fall in the value of the Company's exposure to GAM Diversity 2.5XL, which has contributed to an overall loss for the period of £1,192,000. 


Risks and Uncertainties


The board confirms that the principal risks facing the company over the remainder of the financial period are:

(a)     investment risk associated with investing in small and immature businesses

(b)     failure to maintain approval as a VCT.

(c)     exposure to GAM Diversity 2.5 XL.

(d)     the possibility that the required redemption period for GAM Diversity will be extended. 


The Board believe these principal risks are manageable and to
 be expected for a company with TP70 2008 (II) VCT plc's strategy. The Board continues to work closely with the Investment Manager to endeavour to minimise either their likelihood or potential impact.


Conclusion


The financial markets have experienced unprecedented difficulties and the Company has not been unaffected. However, the Board is confident that the strategy of the Company is correct, and that the Company's exposure to GAM Diversity 2.5XL will be profitable over the longer term. Furthermore, a significant proportion of the returns to shareholders will be delivered by the VCT tax reliefs therefore the Board is pleased that the Company is on course to secure VCT tax status. 


If you have any queries or comments, please do not hesitate to telephone Triple Point Investment Management LLP on 020 7404 7403 or email me at [email protected].


James Chadwick Murrin

Chairman

28 November 2008

  TP70 2008 (II) VCT plc

Condensed interim financial report

for the period ended 30 September 2008



Investment manager's report


In accordance with the prospectus following launch of the company, approximately 30% of net asset value was committed to GAM Diversity 2.5 XL, half directly via the underlying company, Lorngreen Limited, and half indirectly via the Derivative Transaction with Julius Baer explained in Note 14 to these financial statements.

 

Shareholders will be aware that this has been a bleak period in the markets, affecting hedge funds such as GAM Diversity which seek absolute returns in common with other investments.  For the period from investment by the company up to 30 September 2008 GAM Diversity fell 6.8% which compares with falls in the FTSE of 16.3% and in the MSCI World Index of 13.4%.  However, the loss of 6.8% was increased to a loss of 19.5%, taking into account the leverage within Diversity 2.5 XL, resulting in the overall loss recognised in the financial statements of £1,292,000 on the company's exposure to Diversity 2.5 XL.  


These short term losses are disappointing but GAM Diversity 2.5XL was chosen for the Company because of its attractiveness as a long term investment. The investment manager remains confident that, given the extended period for which the company intends retaining its exposure, the exposure to GAM Diversity 2.5XL will have a positive impact on shareholders' funds.

 

Finally I am pleased to announce that following the period end the company completed its first VCT qualifying investment investing £875,000 in MGS West Midlands Limited which will supply medical gas to the West Midlands Ambulance Trust. This investment meets the criteria required for a Triple Point VCT qualifying investment, including contractual cash flows and a high quality counterparty, and is a significant first step towards the Company gaining VCT approval.


David Dick

for

Triple Point Investment Management LLP

28 November 2008

 

TP70 2008 (II) VCT plc

Condensed interim financial report

for the period ended 30 September 2008



Investment portfolio review



Security

  Cost  

  Valuation


£'000 

%  

£'000 

%  






Qualifying holdings

-  

-  

-  

-  

Non-qualifying holdings

6,593 

30.00 

5,301 

25.62 

Uninvested funds

15,386 

70.00 

15,386 

74.38 


 

 

 

 


21,979 

100.00 

20,687 

100.00 











Non-qualifying holdings










Unquoted





Lorngreen Limited





Equity

2,640 

40.04 

1,993 

37.60 

Loan

660 

10.01 

660 

12.45 

Deposit with Julius Baer securing the derivative transaction

3,293 

49.95 

3,293 

62.12 

Derivative Transaction

-  

-  

(645)

(12.17)


 

 

 

 


6,593 

100.00 

5,301 

100.00 



 TP70 2008 (II) VCT plc

Condensed interim financial report

for the period ended 30 September 2008


Directors' Responsibility Statement


The Directors have chosen to prepare the interim financial report for the company in accordance with International Financial Reporting Standards ('IFRS').


In preparing the summarised financial statements for the 11 month period to 30 September 2008, the Directors confirm that to the best of their knowledge:

a)    the summarised set of financial statements have been prepared in accordance with international accounting standard IAS34,'Interim Financial Reporting' issued by the International Accounting Standards Board;

b)    the interim management report includes a fair review of important events during the period and their effect on the financial statements and description of principal risks and uncertainties for the remainder of the accounting period;

c)    the summarised set of financial statements give a true and fair view in accordance with IFRS of the assets, liabilities, financial position and of the profit or loss of the company for the period and comply with IFRS and the Companies Acts 1985 and 2006; and

d)    the interim management report includes a fair review of related party transactions and changes therein. There were no related party transactions during the period.

 

This Interim Financial Report has not been audited or reviewed by the auditor. 




James Chadwick Murrin

Chairman

28 November 2008

  TP70 2008 (II) VCT plc        

Summary income statement

for the period ended 30 September 2008



Note

Rev.

Cap.

Total




£'000

£'000

£'000







Investment income

5

386 

-  

386 

Unrealised loss on investments

10

-  

(647)

(647)

Derivative transaction

10

-  

(645)

(645)

Investment return


386 

(1,292)

(906)






Investment management fees

6

49 

148 

197 

Financial and regulatory costs


-  

General administration


10 

-  

10 

Legal and professional fees


13 

-  

13 

Directors' remuneration

7

32 

-  

32 

Operating expenses


111 

148 

259 

Profit / (loss) on ordinary activities before taxation


275 

(1,440)

(1,165)

Taxation on ordinary activities

8

27 

-  

27 

Profit / (loss) on ordinary activities after taxation


248 

(1,440)

(1,192)

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

9

1.35p 

(7.81p)

(6.46p)


The loss per share shown above is both basic and diluted as there are no potentially dilutive financial instruments in issue.


The total column of this statement is the company's income statement 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 ('AIC').



Summary statement of changes in equity (unaudited)

for the period ended 30 September 2008


Issued Capital

Cap Red Reserve

Share Premium

Capital Reserve

Revenue Reserve

Total


£'000


£'000

£'000

£'000

£'000








Loss for the period

-  


-  

(1,440)

248 

(1,192)

Issue of share capital

231 


22,818 

-  

-  

23,049 

Share issue costs

-  


(1,037)

-  

-  

(1,037)

Buyback of own shares

(2)

-  

-  

(173)

(173)

Balance at 30 September 2008

229 

21,781 

(1,440)

75 

20,647 


The accompanying notes on pages 8 to 13 form an integral part of this interim financial report.

.

  TP70 2008 (II) VCT plc        

Summary balance sheet

as at 30 September 2008



Note


£'000 





Non Current Assets




Financial assets at fair value through profit and loss

10


5,301 









Current assets:




Other receivables



Cash and cash equivalents

11


15,386 




 




15,394 





TOTAL ASSETS



20,695 









Current Liabilities




Other payables



21 

Current taxation payable 

8


27 




 




48 








NET ASSETS


20,647 









EQUITY




Equity attributable to equity holders of the parent



Share capital

12


229 

Share premium



21,781 

Capital redemption reserve



Capital reserve



(1,440)

Revenue reserve



75 




 

Total equity



20,647 




 

Net asset value per share (pence)

13


90.17p 




These financial statements were agreed by the board and authorised for issue on 28 November 2008 and were signed on its behalf by:


James Chadwick Murrin

Director



The accompanying notes on pages 8 to 13 form an integral part of this interim financial report.

  TP70 2008 (II) VCT plc        

Summary cash flow statement

for the period ended 30 September 2008





£'000

Cash flows from operating activities




Loss before taxation


(1,165)

Unrealised loss in investment values



1,292 




127 

Increase in other receivables



(8)

Increase in current liabilities


21 

Cash generated from operations



140 





Cash flow from investing activities




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



(6,593)

Net cash flows from investing activities



(6,593)





Cash flows from financing activities




Proceeds from issue of share capital



23,049 

Share issue expenses



(1,037)

Buyback of own shares



(173)

Net cash flows from financing activities



21,839 

Net increase in cash and cash equivalents



15,386 













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




Cash and cash equivalents at 30 September 2008



15,386 



The accompanying notes on pages 8 to 13 form an integral part of this interim financial report.

  TP70 2008 (II) VCT plc

Notes to the summarised set of financial statements

for the period ended 30 September 2008



1. Corporate Information    

                    

The interim condensed financial statements of the company for the period from incorporation on 7 November 2007 to 30 September 2008 were authorised for issue in accordance with a resolution of the directors on 28 November 2008.


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 summarised financial statements are presented in Pounds Sterling (£) which is also the functional currency of the parent company.


The financial information set out in this interim report does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985.  


The principal activity of the company is investment. The company's investment strategy is to offer combined exposure to GAM Diversity Inc (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

                        

The interim condensed financial statements of the Company for the period to 30 September 2008 have been prepared in accordance with IAS 34: Interim Financial Reporting and other accounting policies consistent with IFRS adopted for use in the European Union and therefore complies with the articles of the EU IAJ regulation and with the statement of recommended practice: Financial Statements of Investment Trust Companies (SORP) issued by the Association of Investment Companies ('AIC') in January 2003 and revised in December 2005, in so far as this does not conflict with IFRS. The information in this document does not include all of the disclosures required by IFRS and the SORP in full annual financial statements. The interim financial information has been prepared applying the accounting policies and presentation that will be adopted in the preparation of the company's financial statements for the period ending 31 March 2009.


The summarised set of financial statements has 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 key judgements made by directors are in the valuation of non-current assets where they accept the independent expert valuation of professional valuers and the independently prepared summary of market prices for equity investments. 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.

 

TP70 2008 (II) VCT plc 

Notes to the summarised set of financial statements

for the period ended 30 September 2008



2. Basis of preparation and accounting policies (continued)


Presentation of income statement


In order to better reflect the activities of an investment trust company, and in accordance with the guidance issued by the AIC, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. In accordance with the Company's status as a UK investment company under section 266 of the Companies Act 1985, net capital returns may not be distributed by way of dividend.  


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 income statement 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.  

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


It is not the Group's policy to exercise control or significant influence over investee companies. Therefore, in accordance with IAS 27 Consolidated and separate financial statements, those undertakings in which the Group holds more than 20% of the equity are not regarded as associated undertakings.


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.


Dividends receivable are brought into account on the ex-dividend date. Fixed returns on debt and money market securities are recognised on a time apportionment basis so as to reflect the effective yield, 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.


  TP70 2008 (II) VCT plc

Notes to the summarised set of financial statements

for the period ended 30 September 2008

                        


2. Basis of preparation and accounting policies (continued)


Taxation


Corporation tax payable is applied to profits chargeable to corporation tax, if any, at the current rate. 


Deferred tax is recognised in respect of all timing 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. 



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 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.



Cash


Cash represents cash available at less than 3 months notice.


  TP70 2008 (II) VCT plc

Notes to the summarised set of financial statements

for the period ended 30 September 2008



Other receivables


Other receivables are recognised at fair value on initial recognition and subsequently at amortised cost. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount.


Other payables


Other payables are recognised at fair value on initial recognition and subsequently at amortised cost.


Segment reporting


A segment is a distinguishable component of the group that is engaged in generating income and expenses (business segment) which is subject to risks and rewards that are different from those of other segments.



    Seasonality of operations

                    

The companies operations are not seasonal.



    Segmental reporting

                    

The Company currently has only one class of business, investment activity, and its only geographical segment is Europe.



5    Investment Income



£'000 




Investment income


107 

Bank interest


279 

Total


386 



6     Investment management fees

                    

Triple Point Investment Management LLP provides investment management and administration services to the Company under an Investment Management Agreement dated 14 December 2007 which runs for a period of 6 years 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 calculated and payable quarterly in arrears.




  TP70 2008 (II) VCT plc

Notes to the summarised set of financial statements

for the period ended 30 September 2008



7     Directors' remuneration



£'000 




J C Murrin (Chairman)


12 

Sir John Lucas-Tooth


10 

R V Reid


10 

Total


32 



8     Taxation on ordinary activities



£'000 




Loss on ordinary activities before tax


(1,165)

Add back capital losses


1,292 

Taxable income


127 

UK corporation tax at 21%


27 


Capital gains and losses are exempt from corporation tax due to the company's status as a Venture Capital Trust.



9    Loss per share


The loss per share is based on a loss from ordinary activities after tax of £1,192,000 and on the weighted average number of shares in issue during the period of 18,431,632.



10    Financial assets at fair value through profit and loss account




Unquoted Investments



£'000 




Purchases at cost


6,593 

Unrealised loss on revaluation


(1,292)

Valuation as at 30 September 2008


5,301 

Cost as at 30 September 2008


6,593 

Unrealised loss at 30 September 2008


(1,292)


The company holds 50% of the issued share capital of Lorngreen Ltd, but is accounting for this in accordance with IAS 27 as it does not exercise control.


Included in Unquoted investments is a deposit of £3,293,000 with Julius Baer, which is the subject of the derivative transaction described in note 14.


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

  TP70 2008 (II) VCT plc

Notes to the summarised set of financial statements

for the period ended 30 September 2008


11     Cash and cash equivalents


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



12    Share Capital


No. Of Shares

Par Value




£'000 

Ordinary Shares of 1p




Authorised

50,000,000 

500 

Issued & Fully Paid

22,898,624 

229 


During the period the Company issued 23,098,622 ordinary shares of 1p each at a price of £1 each and 2 ordinary shares at par.  On 2 September 2008 the company bought in 200,000 ordinary shares of 1p at a total cost of £172,760 and subsequently cancelled them.



13    Net asset value per share


The calculation of net asset value per share is based on net assets of £20,647,000 divided by the 22,898,624 shares in issue.



14    Derivative transaction


The company has made a payment of £3,293.000 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 at any time before then.



15    Commitments and contingencies                    

                        

The company has no outstanding commitments or contingent liabilities.



16    Post balance sheet events


There have been no significant post balance sheet events.

                    

  TP70 2008 (II) VCT plc



Company Information


    

    

Directors                                        

James Chadwick Murrin

Sir John Lucas-Tooth

Robert Reid    


    

Secretary and Registered Office

Peter William Hargreaves

4-5 Grosvenor Place

London, SW1X 7HJ



Company Registered Number

6421355



Solicitors

Howard Kennedy

19 Cavendish Square

London, W1A 2AW



Bankers

Royal Bank of Scotland PLC                                       Allied Irish Bank            

54 Lime Street                                                           4 Tenterden Street

London, EC3M 7NQ                                                   London, W1S 1TE 



Investment Manager and Administrator

Triple Point Investment Management LLP

4-5 Grosvenor Place

London, SW1X 7HJ    



VCT Tax Advisor 

PricewaterhouseCoopers

1 Embankment Place

London, WC2N 6RH 





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