Final Results

RNS Number : 0732O

TP70 VCT Plc

22 June 2010

 

 

 

TP70 VCT plc

Final Results

 

22 June 2010

 

TP70 VCT plc, managed by Triple Point Investment Management LLP today announces the final results for the year ended 28 February 2010.

 

These results were approved by the Board of Directors on 16 June 2010.

 

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

 

About TP70 VCT plc

 

TP70 VCT plc ("the Company") is a Venture Capital Trust ("VCT"). The investment manager is Triple Point Investment Management LLP. The Company was launched in January 2007 and raised £30.6 million through an offer for subscription.

 

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

 

Venture Capital Trusts (VCTs)

 

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

 

·; upfront income tax relief of 30%

·; exemption from income tax on dividends paid; and

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

 

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

 

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

 

Report of the Directors - Group Financial Summary

For the year ended 28 February 2010

 

	Year ended			11 months ended
	28 February 2010			28 February 2009
		£'000			£'000
Net assets		23,894			25,504
Net loss before tax		(1,610)			(4,208)
Loss per share		(5.03p)			(13.14p)
Net asset value per share		74.62p			79.65p

 

 

TP70 VCT plc ("the Company") is a Venture Capital Trust ("VCT"). The investment manager is Triple Point Investment Management LLP. The Company was launched in January 2007 and raised £30.6 million (net of expenses) through an offer for subscription.

 

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

 

The Directors submit to the members their Annual Report and Financial Statements for the Group for the year ended 28 February 2010. The Report of the Directors includes the Group Financial Summary, Chairman's Statement, Details of Advisers, Shareholder Information, Investment Portfolio, Directors' Report, Directors' Remuneration Report and the Corporate Governance Statement.

 

Report of the Directors - Chairman's Statement

 

 

I am pleased to present the audited accounts for TP70 VCT plc for the year ended 28 February 2010.

 

 

INVESTMENT STRATEGY

 

TP70's strategy offers combined exposure to GAM's flagship Diversity fund and to Triple Point's particular brand of VCT-qualifying investments. This strategy - intended to provide substantial exposure to a market-leading fund of hedge funds within a Venture Capital Trust - has been structured around taking initial exposure to GAM Diversity and then replacing at least 70% of that exposure during the Company's third year in order to make VCT-qualifying investments. The remaining 'non-qualifying' exposure was to retain exposure to GAM Diversity for the remainder of the Company's life.

 

RESULTS

 

The Board is delighted to note that the Company is now fully invested in VCT-qualifying holdings which at cost represent 84% of investments, exceeding the 70% required for VCT qualification. Further details of the VCT-qualifying investments that have been made are given in the Investment Manager's Review. 

 

The Company's exposure to GAM Diversity, held through a Bank Julius Baer note, stands at 16.4% of NAV before leverage. Over the year, this has contributed positively to performance, with a gain on this investment of £269,000 (see note 17 of the financial statements for more detail). The performance of GAM Diversity is discussed further in the Investment Manager's Review.

 

The Board has decided on grounds of prudence to make a fair value adjustment of £1.5m against the full value of a bond which was formerly understood to be fully recoverable, contributing to an overall loss of £1.6m for the year. Steps are being taken to recover an amount equal to the provision, but any recovery is not accrued for in these Financial Statements.

 

RISKS

 

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

• Investment risk associated with exposure to GAM Diversity;

• Investment risk associated with VCT qualifying investments;

• Failure to maintain approval as a qualifying VCT;

• Counterparty risk relating to the Julius Baer leveraged note.

 

The Board believes these risks are manageable and, with the Investment Manager, continues to work to minimise either the likelihood or potential impact of these risks, within the scope of the Company's established investment strategy. Further details of how these risks are managed are detailed within the Directors' Report. There has been no change in the risks to which the company is exposed during the course of the year.

 

OUTLOOK

 

Having secured a well diversified portfolio of VCT-qualifying investments, the Company's focus over the next two years will be to complete the underlying investment companies' deployment and to ensure that they are profitable for the Company.

 

As reported in the financial statements to 28 February 2009, the board expects to maintain an exposure to Diversity of over 30% through using leverage for the remaining life of the VCT.

 

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

 

 

 

Michael Sherry

Chairman

16 June 2010

 

Investment Manager's Review

 

 

I am pleased to report that over the past year the Company has made excellent progress in building its portfolio of VCT qualifying holdings, in line with its investment strategy. These investments are spread across a range of businesses and sectors, with a focus on technology and renewable energy businesses that derive predictable revenue streams from a financially sound customer base.

 

 

VCT Qualifying Investments

 

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

 

The major Hollywood film studios, as well as second tier as other distributers are willing to pay 'Virtual Print Fees' in return for the ability to distribute digital rather than celluloid films, providing revenues which flow through to digital deployment companies such as those into which the Company has invested. Digital opportunities are scheduled to commence at an accelerated pace during 2010, and in response to this the Company invested a further £1m into each of the five companies in February.

 

In April 2009 the company invested £1m each into three companies which trade satellite capacity providing for two-way broadband communications and digital channels access to remote, rural regions across the UK and Europe. This investment seeks to benefit from potential increases in demand for such capacity, together with a degree of downside protection.

 

In February 2010 the Company invested £1m each into a number of different companies, including; a company targeting the UK consumer electronics sector; a company seeking to provide managed broadband and telephony services to multi-tenant sites; and a new cinema digitisation company also seeking to benefit from the conversion trends which have led to the previous investment opportunities described above.

 

Three further investments of £1m each were made in to alternative energy companies which would potentially benefit in various ways from Feed in Tariffs (FITs), government sponsored tariffs for the supply of green energy. The first was an investment in a company aimed at generating electricity from water power, or small scale hydro electricity. The generation of electricity from water power attracts Green Tariffs which would underpin income from the sale of electricity. The second is a company generating electricity from normal diesel or biodiesel for supply to the national grid. Such electricity is used by National Grid. The third is a company seeking to generate heat and electricity from biomass products and biogas for sale. The customers for this electricity are either an electric utility company via the grid connection or a factory or business located close to the generators.

 

A £275,000 pilot investment has also been made into a company whose business is built around managing the treatment of water effluent from landfill sites and the treatment of these sites to speed up the rate of decomposition.

 

Each of these investments seeks to meet Triple Point's investment criteria, prioritising predictable revenues from financially sound customers and counterparties.

 

GAM Diversity

 

Over the year under review, GAM Diversity rose by 3.78% with all three strategies (equity hedge, trading and arbitrage) generating positive returns. This is compared to the MSCI World's rise of 45.29% and the FTSE All Share's return of 47.32%. The performance of Diversity should be viewed against the backdrop of the extraordinary market conditions of 2008 when the hedge fund model was severely tested. Equity markets collapsed in the third and fourth quarters, arbitrage managers were impacted by the extreme shortage of credit and market conditions were exacerbated by widespread withdrawals from many funds as investors became increasingly risk adverse. Having navigated the turmoil of 2008 Diversity was cautiously positioned at the beginning of 2009 with the majority of assets in trading strategies and the lowest historic allocation to equity hedge of 14%. This stance enabled the fund to achieve its core objective of producing absolute returns and to outperform its peers in 2008 and in the two years to the end of 2009, although it resulted in the returns for 2009 lagging its peer group, In the third quarter Diversity's asset allocation was moved to more equal weightings in the three strategies, as GAM felt that the markets had moved to a more "normalised" environment and, therefore, were willing to increase the equity hedge exposure but remaining focussed on less directional managers.

 

 

Outlook

 

With the VCT qualifying investment portfolio now in place, our attention for the next two years for this element of the VCT's investments will focus on the continuing trades of the companies in which TP70 has already invested and managing the performance of those investee companies, ensuring that they are profitable for the Company and shareholders.

 

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

 

 

Claire Ainsworth

for

Triple Point Investment Management LLP

16 June 2010

 

About Triple Point Investment Management LLP (Triple Point)

 

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

 

The Triple Point investment model - focused on capital security, liquidity and tax-enhanced returns - 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

 

	2010					2009
	Cost		Valuation			Cost		Valuation
	£'000	%	£'000	%		£'000	%	£'000	%
Qualifying holdings	19,275	83.85	19,275	82.88		-	-	-	-
Non-qualifying holdings	-	-	-	-		5,695	98.31	5,164	100.00
Derivative	3,651	15.88	3,920	16.85		-	-	-	-
Total holdings	22,926	99.73	23,195	99.73		5,695	98.31	5,164	100.00
Uninvested funds	69	0.27	69	0.27		98	1.69	98	-
	22,995	100.00	23,264	100.00		5,793	100.00	5,262	100.00
Qualifying Holdings (all Unquoted)
Provision of satellite capacity
Beam Carrier Trading Ltd	1,000	4.35	1,000	4.30		-	-	-	-
Broadsword Satellite Communications Ltd	1,000	4.35	1,000	4.30		-	-	-	-
Satellite Broadband Access Solutions Ltd	1,000	4.35	1,000	4.30		-	-	-	-
Cinema Digitisation
21 Century Cinema Ltd	2,000	8.70	2,000	8.60		-	-	-	-
Big Screen Digital Services Ltd	2,000	8.70	2,000	8.60		-	-	-	-
Cinematic Services Ltd	2,000	8.70	2,000	8.60		-	-	-	-
Digima Ltd	2,000	8.70	2,000	8.60		-	-	-	-
Digital Screen Solutions Ltd	2,000	8.70	2,000	8.60		-	-	-	-
DLN Digital Ltd	1,000	4.35	1,000	4.30		-	-	-	-
Consumer Electronics
Convertibox Services Ltd	1,000	4.35	1,000	4.30		-	-	-	-
Renewable energy
Archimedes Power Ltd	1,000	4.35	1,000	4.30		-	-	-	-
Biomass Future Generations Ltd	1,000	4.35	1,000	4.30		-	-	-	-
Peak Power Associates Ltd	1,000	4.35	1,000	4.30		-	-	-	-
Carried forward	18,000	78.30	18,000	77.40		-	-	-	-

 

 

Report of the Directors- Investment Portfolio (continued)

 

	2010					2009
	Cost		Valuation			Cost		Valuation
	£'000	%	£'000	%		£'000	%	£'000	%
Qualifying Holdings (all Unquoted) continued
Brought forward	18,000	78.30	18,000	77.40		-	-	-	-
Provision of broadband and telephony services
Campus Link Ltd	1,000	4.35	1,000	4.30		-	-	-	-
Water treatment management
Katharos Water Ltd	275	1.20	275	1.18		-	-	-	-
	19,275	83.85	19,275	82.88		-	-	-	-
Non-qualifying holdings (all quoted)
MG Fund 4.625 18 Jan 2013 MTN	-	-	-	-		1,530	26.41	1,505	29.00
GAM Diversity Hedge Fund	-	-	-	-		4,165	71.90	3,659	71.00
	-	-	-	-		5,695	98.31	5,164	100.00

 

 

 

Report of the Directors- Investment Portfolio (continued)

 

Additional Information

		Last Statutory Financial Statements							Equity held by TP70 VCT plc	Equity held by all funds managed by TPIM LLP
	Initial Investment Date	Date	P / (L) before int & Tax	Total assets before VCT loans	VCT loans	Net Assets		Basis of Valuation *
			£'000	£'000	£'000	£'000			%	%
Beam Carrier Trading Ltd	02-Apr-09	31-Mar-09	(66)	783	781	2		Transaction price	49.90	78.00
Broadsword Satellite Communications Ltd	02-Apr-09	31-Mar-09	61	1,569	1,343	226		Transaction price	49.90	95.70
Satellite Broadband Access Solutions Ltd	02-Apr-09	31-Mar-09	33	1,345	1,310	35		Transaction price	49.90	93.40
21 Century Cinema Ltd	31-Mar-09	No financial statements available						Transaction price	48.12	96.24
Big Screen Digital Services Ltd	31-Mar-09	No financial statements available						Transaction price	48.12	96.24
Cinematic Services Ltd	31-Mar-09	No financial statements available						Transaction price	48.12	96.24
Digima Ltd	31-Mar-09	No financial statements available						Transaction price	48.12	96.24
Digital Screen Solutions Ltd	31-Mar-09	No financial statements available						Transaction price	48.12	96.24
DLN Digital Ltd	26-Feb-10	No financial statements available						Transaction price	49.00	98.00
Convertibox Services Ltd	24-Feb-10	No financial statements available						Transaction price	48.98	48.98
Archimedes Power Ltd	26-Feb-10	No financial statements available						Transaction price	49.00	98.00
Biomass Future Generations Ltd	24-Feb-10	No financial statements available						Transaction price	46.97	93.94
Peak Power Associates Ltd	26-Feb-10	No financial statements available						Transaction price	45.45	90.90
Campus Link Ltd	24-Feb-10	No financial statements available						Transaction price	49.00	98.00
Katharos Water Ltd	26-Feb-10	No financial statements available						Transaction price	46.11	92.22
* Financial assets are measured at fair value. The best estimate of the value of a financial asset that is either quoted or unquoted is the transaction price.

 

Report of the Directors - Corporate Governance

 

 

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

 

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

 

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

 

Board of Directors

 

The Company has a Board of three non-executive Directors, two of whom are considered to be independent (the exception being Michael Sherry). Since all Directors are non-executive and day-to-day management responsibilities are sub-contracted to the 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 Manager, who 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 if necessary.

 

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. There is a formal schedule of matters reserved for Board decision and the agreement between the Company and the Manager has authority limits beyond which Board approval must be sought.

 

The 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 Manager;

- the performance of the Company, including monitoring the discount against net asset value represented by the share price; and

- approving shareholder communications.

 

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

 

The Company Secretary is responsible for advising the Board through the Chairman on all governance matters. All of the Directors have access to the advice and services of the Company Secretary, 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.

 

 

Report of the Directors - Corporate Governance (continued)

 

.

Board of Directors (continued)

 

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.

 

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

 

During the period up to the approval of these Accounts the following meetings were held:

 

Directors present	9 Full Board Meetings		1 Audit Committee Meeting
M G Sherry (Chairman)	7		1
J C Murrin	7		1
I D Parsons	7		1

 

 

Audit Committee

 

The Board has appointed an Audit Committee, of which Chad Murrin is Chairman, which deals with matters relating to audit, financial reporting and internal control systems. The committee meets as required and has direct access to Grant Thornton UK LLP, the Company's auditor. The committee met once in the year ended 28 February 2010.

 

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 the external auditor and approving the remuneration and terms of engagement of the external auditor;

- reviewing and monitoring the external auditors' 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 the 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.

 

 

 

Report of the Directors - Corporate Governance (continued)

 

 

Audit Committee (continued)

 

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

 

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 28 February 2010, the Audit Committee discharged its responsibilities by:

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

- reviewing the external auditor's plan for the audit of the Financial Statements, including identification of key risks and confirmation of auditor independence;

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

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

- reviewing the appropriateness of the Company's accounting policies; and

- reviewing the Company's half-yearly results statements prior to Board approval.

 

Internal Control

 

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

 

Triple Point Investment Management LLP is engaged to provide administrative services 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 in accordance with "Internal Control - Guidance for Directors on the Combined Code" published by the Institute of chartered Accountants in England and Wales. This process has been in place throughout and subsequent to the accounting period under review.

 

Internal control systems include the production and review of monthly bank and management accounts. The VCT is subject to a full annual audit whereby the auditors are the same auditors as other VCTs managed by the Investment Manager.

 

Risk management

 

TPIM LLP carries out management of liquid funds in accordance with the policy guidelines laid down and regularly reviewed by the Board. The Board carries out a regular review of the risk environment in which the Company operates. 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 17 to the Financial Statements.

 

 

 

Report of the Directors - Corporate Governance (continued)

 

 

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 Board receives regular reports from the Manager and the Directors believe that, as no material uncertainties leading to significant doubt about going concern have been identified, 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 recognise the value of maintaining regular communications with shareholders. In addition to the formal business of the Annual General Meeting, an opportunity is given to all shareholders to question the Board and the investment 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 and the investment manager will also respond to any written queries made by shareholders during the course of the year and both can be contacted at 4-5 Grosvenor Place, London, SW1X 7HJ or on 020 7201 8989.

 

Compliance statement

 

The Listing Rules require the Board to report on compliance with the 48 Combined Code provisions throughout the accounting period. With the exception of the limited items outlined below, the Directors consider that the Company has complied throughout the period under review with the provisions set out in Section 1 of the Combined Code of Corporate Governance published by the UK Listing Authority in 2008:

 

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

 

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

 

3. The Company does not have a senior independent director. The Board does not consider such an appointment appropriate for a Company such as TP70 VCT (A3.3).

 

4. The Company conducts a formal review as to whether there is a need for an internal audit function. However 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).

 

 

On behalf of the Board

 

 

 

 

 

Michael Sherry, Director 

16 June 2010

 

 

Report of the Directors - Directors' Responsibility Statement

 

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

Company law requires the Directors to prepare Financial Statements for each financial year. Under that law the Directors are required to prepare the Financial Statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS).

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

In preparing these financial statements, the Directors are required to:

·; select suitable accounting policies and then apply them consistently;

·; make judgements and estimates that are reasonable and prudent;

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

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

The Directors confirm that to the best of their knowledge the Financial Statements for the year ended 28 February 2010 comply with the requirements set out above and that suitable accounting policies, consistently applied and supported by reasonable and prudent judgement, have been used in their preparation. They also confirm that the annual report includes a fair review of the business together with a description of the principal risks and uncertainties faced by the Group.

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

In so far as the Directors are aware:

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

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

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

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

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 undertakings included in the consolidation taken as a whole; and

• the Directors' Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole together with a description of the principal risks and uncertainties it faces.

 

On behalf of the Board

 

 

Michael Sherry

Director

16 June 2010

 

 

Consolidated Statement of Comprehensive Income

For the year ended 28 February 2010

 

		Year ended				11 months ended
	Note	28 February 2010				28 February 2009
		Revenue	Capital	Total		Revenue	Capital	Total
		£'000	£'000	£'000		£'000	£'000	£'000
Investment income	4	360	-	360		965	-	965
Realised (loss) / gain on investments	10	-	(1,513)	(1,513)		-	214	214
Unrealised loss on investments	10	-	-	-		-	(442)	(442)
Derivative transaction	10	-	269	269		(2,429)	(1,937)	(4,366)
Investment return		360	(1,244)	(884)		(1,464)	(2,165)	(3,629)
Investment management fees	5	110	330	440		108	325	433
Financial and regulatory costs		30	-	30		7	-	7
General administration		23	-	23		39	-	39
Legal and professional fees	6	134	19	153		60	-	60
Directors' remuneration	7	39	-	39		40	-	40
Operating expenses		336	349	685		254	325	579
Operating profit / (loss)		24	(1,593)	(1,569)		(1,718)	(2,490)	(4,208)
Loan interest paid		(41)	-	(41)		-	-	-
Loss before taxation		(17)	(1,593)	(1,610)		(1,718)	(2,490)	(4,208)
Taxation	8	-	-	-		-	-	-
Loss after taxation		(17)	(1,593)	(1,610)		(1,718)	(2,490)	(4,208)
Other comprehensive income		-	-	-		-	-	-
Total comprehensive loss		(17)	(1,593)	(1,610)		(1,718)	(2,490)	(4,208)
Basic & diluted loss per share	9	(0.05p)	(4.98p)	(5.03p)		(5.37p)	(7.77p)	(13.14p)

 

 

The total column of this statement represents the Group's statement of comprehensive income, prepared in accordance with International Financial Reporting Standards ("IFRS"). The supplementary revenue and capital reserve columns are prepared under guidance published by the Association of Investment Companies.

 

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

 

The loss for the year and the total comprehensive income is attributable to the equity holders of the Parent Company.

 

The Company has taken advantage of section 408 of the Companies Act 2006 not to publish its own Statement of Comprehensive Income in these Financial Statements. The Parent Company's loss for the year was £1,610,000 (2009: £4,206,000).

 

This Statement of Comprehensive Income includes all recognised gains and losses.

 

 

 

The accompanying notes are an integral part of this statement.

 

 

Balance Sheets - Consolidated and Company

At 28 February 2010

		2010			2009
		Group	Parent Company		Group	Parent Company
	Note	£'000	£'000		£'000	£'000
ASSETS
Non Current Assets
Financial assets at fair value through profit and loss	10	23,195	23,894		5,164	5,152
Current assets:
Receivables	11	737	735		20,677	20,675
Cash and cash equivalents	12	69	69		98	97
		806	804		20,775	20,772
TOTAL ASSETS		24,001	24,698		25,939	25,924
CURRENT LIABILITIES
Payables	13	13	785		342	327
Current taxation payable	8	-	-		-	-
Accrued expenses		94	19		93	93
		107	804		435	420
NET ASSETS		23,894	23,894		25,504	25,504
EQUITY
Equity attributable to equity holders of the parent
Share capital	14	320	320		320	320
Special distributable reserve		30,583	30,583		30,583	30,583
Capital reserve		(5,617)	(5,656)		(3,532)	(3,560)
Revenue reserve		(1,392)	(1,353)		(1,867)	(1,839)
Total equity		23,894	23,894		25,504	25,504
Net asset value per share (pence)	15	74.62p	74.62p		79.65p	79.65p

 

The statements were approved by the Directors and authorised for issue on 16 June 2010 and are signed on their behalf by:

 

 

 

Michael Sherry

Chairman

16 June 2010

 

Company registration number: 6010401

 

The accompanying notes are an integral part of this statement.

 

 

Statement of Changes in Shareholders' Equity - Consolidated and Company

For the year ended 28 February 2010

 

		Special
	Share	Distributable	Capital	Retained
	Capital	Reserve	Reserve	Earnings	Total
	£'000	£'000	£'000	£'000	£'000
Group
Balance at 28 February 2009	320	30,583	(3,532)	(1,867)	25,504
Transactions with owners	-	-	-	-	-
Correction of allocation error in previous period	-	-	(492)	492	-
Loss for the year	-	-	(1,593)	(17)	(1,610)
Other comprehensive income	-	-	-	-	-
Total comprehensive income / ( loss) for the year	-	-	(2,085)	475	(1,610)
Balance at 28 February 2010	320	30,583	(5,617)	(1,392)	23,894
Parent Company
Balance at 28 February 2009	320	30,583	(3,560)	(1,839)	25,504
Transactions with owners	-	-	-	-	-
Correction of allocation error in previous period	-	-	(492)	492	-
Loss for the year	-	-	(1,604)	(6)	(1,610)
Other comprehensive income	-	-	-	-	-
Total comprehensive income / ( loss) for the year	-	-	(2,096)	486	(1,610)
Balance at 28 February 2010	320	30,583	(5,656)	(1,353)	23,894

 

 

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

The capital reserve includes investment holding gains / (losses), being the difference between cost and market value of investments. At the year end this was £nil (2009: loss £442,000).

 

The accompanying notes are an integral part of this statement.

 

 

 

Statement of Changes in Shareholders' Equity - Consolidated and Company (continued)

For the period ended 28 February 2009

 

			Special
	Share	Share	Distributable	Capital	Retained
	Capital	Premium	Reserve	Reserve	Earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Group
Balance at 31 March 2008	320	30,596	-	(1,042)	(149)	29,725
Cancellation of share premium	-	(30,596)	30,596	-	-	-
Buy back of own shares	-	-	(13)	-	-	(13)
Transactions with owners	-	(30,596)	30,583	-	-	(13)
Loss for the period	-	-	-	(2,490)	(1,718)	(4,208)
Other comprehensive income	-	-	-	-	-	-
Total comprehensive loss for the period	-	-	-	(2,490)	(1,718)	(4,208)
Balance at 28 February 2009	320	-	30,583	(3,532)	(1,867)	25,504
Parent Company
Balance at 31 March 2008	320	30,596	-	(1,059)	(134)	29,723
Cancellation of share premium	-	(30,596)	30,596	-	-	-
Buy back of own shares	-	-	(13)	-	-	(13)
Transactions with owners	-	(30,596)	30,583	-	-	(13)
Loss for the period	-	-	-	(2,501)	(1,705)	(4,206)
Other comprehensive income	-	-	-	-	-	-
Total comprehensive loss for the period	-	-	-	(2,501)	(1,705)	(4,206)
Balance at 28 February 2009	320	-	30,583	(3,560)	(1,839)	25,504

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of this statement.

 

Statement of Cash Flows - Consolidated and Company

For the year ended 28 February 2010

 

			2010				2009
			Group	Parent Company			Group	Parent Company
			£'000	£'000			£'000	£'000
Cash flows from operating activities
Loss before taxation			(1,610)	(1,610)			(4,208)	(4,206)
Realised (gain) / loss on investments			1,513	1,505			(214)	(210)
Unrealised loss on investments			-	19			442	449
(Gain) / loss on derivative transaction			(269)	(269)			4,366	4,366
Cash absorbed by operations			(366)	(355)			386	399
(Decrease) / increase in receivables			(187)	(187)			561	563
(Increase) / decrease in current liabilities			(328)	384			(920)	(926)
Net cash outflow / (inflow) from operating activities			(881)	(158)			27	36
Cash flow from investing activities
Purchase of financial assets at fair value through profit and loss account			(22,926)	(22,927)			-	-
Sales of financial assets at fair value through profit and loss account			3,651	2,930			25,036	25,037
Loss on derivative transaction			-	-			(4,366)	(4,366)
Decrease / (increase) in receivables from investment disposals			20,127	20,127			(20,660)	(20,660)
Net cash flows from investing activities			852	130			10	11
Cash flows from financing activities
Purchase of own shares			-	-			(13)	(13)
Net cash flows from financing activities			-	-			(13)	(13)
Net increase/ (decrease) in cash and cash equivalents			(29)	(28)			24	34
Reconciliation of net cash flow to movements in cash and cash equivalents
Cash and cash equivalents at 1 March 2009			98	97			74	63
Net increase/(decrease) in cash and cash equivalents			(29)	(28)			24	34
Cash and cash equivalents at 28 February 2010			69	69			98	97

 

 

 

 

 

The accompanying notes are an integral part of this statement.

 

 

 

Notes to the Financial Statements

 

 

1. Corporate Information

The consolidated Financial Statements of the Group for the year ended 28 February 2010 were authorised for issue in accordance with a resolution of the Directors on 16 June 2010.

 

The Company was admitted for listing on the London Stock Exchange on 21 March 2007.

 

TP70 VCT Plc is the Group's ultimate parent Company. It is incorporated and domiciled in Great Britain. The address of TP70 VCT plc's registered office, which is also its principal place of business, is 4-5 Grosvenor Place, London, SW1X 7HJ.

 

TP70 VCT plc's consolidated and parent Company Financial Statements are presented in Pounds Sterling (£) which is also the functional currency of the Parent Company, rounded to the nearest thousand.

 

The principal activity of the Company is investment. The Group 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 consolidated Financial Statements of the Company and its subsidiary ("the Group") and the Financial Statements of the Company ("the Company") for the year ended 28 February 2010 have been prepared in accordance 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: "Financial Statements of Investment Companies" (SORP) issued by the Association of Investment Companies (AIC) in January 2009, in so far as this does not conflict with IFRS.

 

The consolidated Financial Statements and the Company Financial Statements have been prepared on a historical cost basis except that investments and derivatives 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 the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these judgements. Further details are provided in the "non-current asset investments" section below.

 

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 Fixed asset investments), the key areas of judgement being the adjustments required to normalise sustainable earnings and the appropriate comparable multiple to apply;

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

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

 

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

 

 

 

Notes to the Financial Statements

 

 

2. Basis of preparation and accounting policies (continued)

 

Basis of preparation (continued)

 

The key judgements made by directors are in the valuation of non-current assets. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects that period or in the period of revision and future periods if the revision effects both current and future periods. The carrying value of investments is disclosed in note 11.

 

These consolidated Financial Statements have been prepared in accordance with the accounting policies set out below which are based on the recognition and measurement principles of IFRS in issue as adopted by the European Union (EU).

 

These accounting policies have been applied consistently throughout the Group for the purposes of preparation of these consolidated Financial Statements.

 

The adoption of IAS1 (revised 2007) does not affect the financial position or returns of the Group in the current or preceding periods. The measurement and recognition of the Group's assets, liabilities, income and expenses is unchanged in the current and preceding periods. Under IAS1 (revised 2007) an extra comparative statement of financial position is required when an accounting policy is applied retrospectively. This information has not been given on the grounds that there have been no changes to the earliest comparative statement of financial position, being the period ended 31 March 2008, as a result of the retrospective application and therefore its omission does not cause the financial statements to be materially miss-stated.

 

Standards effective for the first time in these financial statements

 

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

 

Standards issued but not yet effective

 

The following new standards, amendments to standards and interpretations are not yet effective for the year ended 28 February 2010, and have not been applied in preparing these consolidated financial statements:

·; IFRS 9 Financial Instruments (effective 1 January 2013)

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

·; IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments (effective 1 July 2010)

·; Amendment to IAS 32 Classification of Rights Issues (effective 1 February 2010)

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

 

Basis of consolidation

 

The consolidated Financial Statements comprise the Financial Statements of The Group at 28 February each year. The Financial Statements of the subsidiary are prepared to the same reporting period end as the Parent Company, using consistent accounting policies.

 

All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group transactions that are recognised in assets, are eliminated in full.

 

Subsidiaries are fully controlled from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

 

There are no minority interests.

 

 

Notes to the Financial Statements

 

 

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 Association of Investment Companies, 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 833 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 28 February 2010 was £23.9 million (2009: £25.5 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 are designated by the Company as "at fair value through profit or loss". 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. 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.

- The investment held in the unquoted subsidiary company is fair valued on the basis of the fair value of the subsidiary's net assets.

Where securities are designated upon initial recognition as at fair value through profit or loss, gains and losses arising from changes in fair value are included in net profit or loss for the year as capital items 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. Transaction costs are expensed to the income statement as incurred.

 

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 yield, provided there is no reasonable doubt that payment will be received in due course.

 

 

Notes to the Financial Statements

 

 

2. Basis of preparation and accounting policies (continued)

 

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 on the same basis as the particular item to which it relates, using the Company's effective rate of tax for the accounting period.

 

In accordance with IAS 12, deferred tax is recognised in respect of all temporary differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that will result in an obligation to pay more, or a right to pay less tax, with the exception that deferred tax assets are recognised only to the extent that the Directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing can be deducted. These temporary timing differences are due to differences between the carrying amount and the tax value of assets and liabilities using the Balance Sheet method. The directors have considered the requirements of IAS 12 and do not believe that any provision should be made.

 

Financial instruments

 

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

 

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

Issued share capital

 

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

 

Cash and cash equivalents

 

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

 

Receivables

 

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.

 

Payables

 

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

 

   

Notes to the Financial Statements

 

 

2. Basis of preparation and accounting policies (continued)

 

Reserves

 

The revenue reserve (retained earnings) and capital reserve reflect the guidance published by the Association of Investment Companies. The share premium account represents the proceeds of share allotments in excess of the par values of shares issued and against which offer costs have been set. The special distributable reserve arises from the cancellation of the share premium. The capital reserve is non-distributable. The revenue reserve and special distributable reserve are distributable by way of dividend.

 

 

 

3 Segmental reporting

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

 

 

 

4 Investment Income

	Year ended				11 months ended
	28 February 2010				28 February 2009
Group	Revenue	Capital	Total		Revenue	Capital	Total
	£'000	£'000	£'000		£'000	£'000	£'000
Interest receivable on bank balances and money market funds	30	-	30		2	-	2
Other Interest receivable	338	-	338		48	-	48
Income from bond portfolio	(8)	-	(8)		915	-	915
Total	360	-	360		965	-	965

 

  

5 Investment Management Fees

Triple Point Investment Management LLP provides investment management and administration services to the Company under an Investment Management Agreement effective 5 April 2007 which runs for a period of 5 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. Should such notice be given, the Investment Manager would perform its duties under the Investment Management Agreement and receive its management fee during the notice period.

 

  

Notes to the Financial Statements

 

 

6 Legal and Professional Fees

 

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

	Year ended				11 months ended
	28 February 2010				28 February 2009
Group	Revenue	Capital	Total		Revenue	Capital	Total
	£'000	£'000	£'000		£'000	£'000	£'000
Fees payable to the Company's auditor for the audit of the Company and Group accounts	19	-	19		11	-	11
Other services related to taxation	7	-	7		3	-	3
	26	-	26		14	-	14

 

 

 

7 Directors' Remuneration

	Year ended				11 months ended
	28 February 2010				28 February 2009
Group	Revenue	Capital	Total		Revenue	Capital	Total
	£'000	£'000	£'000		£'000	£'000	£'000
M G Sherry (Chairman)	12	-	12		12	-	12
J C Murrin	15	-	15		15	-	15
I D Parsons	12	-	12		13	-	13
Total	39	-	39		40	-	40

 

 

 

8 Taxation

Group	Year ended				11 months ended
	28 February 2010				28 February 2009
	Revenue	Capital	Total		Revenue	Capital	Total
	£'000	£'000	£'000		£'000	£'000	£'000
Loss on ordinary activities before tax	(17)	(1,593)	(1,610)		(1,718)	(2,490)	(4,208)
Capital (gains) / losses not taxable	-	1,244	1,244		-	2,165	2,165
	(17)	(349)	(366)		(1,718)	(325)	(2,043)
UK Corporation tax at 28% (2009: 28%)	(5)	(98)	(103)		(481)	(91)	(572)
Tax value of unused tax losses	5	98	103		481	91	572
Add tax value of unused tax losses brought forward from previous year	526	404	930		45	313	358
Correction of prior period allocation	(138)	-	(138)		-	-	-
Unused tax losses carried forward	393	502	895		526	404	930
Total current charge	-	-	-		-	-	-

 

 

Notes to the Financial Statements

 

 

8 Taxation (continued)

 

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

£895,000 of unused tax losses are carried forward, for which no deferred tax asset has been recognised.

 

 

 

9 Loss per Share

 

The loss per share is based on a loss from ordinary activities after tax of £1,610,000 (2009: £4,208,000), and on the weighted average number of shares in issue during the period of 32,023,259 (2009: 32,023,259).

 

No new shares were issued during the year and so the weighted average shares in issue during the year is equal to the number of shares in issue at both 28 February 2009 and 28 February 2010.

 

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

 

 

 

10 Financial assets at Fair Value through Profit and Loss Account

Investments

 

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

·; Level1: quoted prices in active markets for identical assets or liabilities. The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date, a market is regarded as active if quoted prices are readily and regularly available, and those prices represent actual and regularly occurring market transactions on an arms length basis. The quoted market price used for financial assets held by the group is the current bid price. These instruments are included in level 1 and comprise AIM listed investments or government securities classified as held at fair value through profit or loss.

·; Level 2: the fair value of financial instruments that are not traded in active markets is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. The Company holds no such instruments in the current or prior year.

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

 

There have been no transfers between these classifications in the period (2009: none) and the movement In level 3 instruments is disaggregated below The change in fair value for the current and previous year is recognised through the profit and loss account.

 

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

 

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

 

 

 Notes to the Financial Statements

 

 

10 Financial assets at Fair Value through Profit and Loss Account (continued)

 

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

 

Level 3 investments have been valued at cost due to the short time between initial acquisition and the date of these financial statements.

 

Movements in investments held at fair value through profit and loss during the year to 28 February 2010 were as follows:

 

				Level 1
	Level 3	Level 2	Level 1	Fixed
	Unquoted	Derivative	Quoted	Income	Total
	Investments	Transaction	Investments	Securities	Investments
	£'000	£'000	£'000	£'000	£'000
Group
Opening Cost	-	-	4,165	1,530	5,695
Opening unrealised loss	-	-	(506)	(25)	(531)
Opening fair value at 1 March 2009	-	-	3,659	1,505	5,164
Purchases at cost	22,926	-	-	-	22,926
Disposal Proceeds	-	-	(3,651)	-	(3,651)
Realised loss on disposals	-	-	(8)	(1,505)	(1,513)
Unrealised gain on investments	-	269	-	-	269
Closing fair value at 28 February 2010	22,926	269	-	-	23,195
Closing cost	22,926	-	-	-	22,926
Closing unrealised gain	-	269	-	-	269
Parent Company
Opening Cost	7,095	-	-	1,530	8,625
Opening unrealised (loss) / gain	(3,447)	-	-	(26)	(3,473)
Opening fair value at 1 March 2009	3,648	-	-	1,504	5,152
Purchases at cost	22,926	-	-	1	22,927
Disposal Proceeds	(2,930)	-	-	-	(2,930)
Realised loss on disposals	-	-	-	(1,505)	(1,505)
Unrealised (loss) / gain on investments	(19)	269	-	-	250
Closing fair value at 28 February 2010	23,625	269	-	-	23,894
Closing cost	24,177	-	-	-	24,177
Closing unrealised (loss) /gain	(552)	269	-	-	(283)

 

 

Notes to the Financial Statements

 

 

10 Financial assets at Fair Value through Profit and Loss Account (continued)

 

Movements in investments held at fair value through profit and loss during the 11 months ended 28 February 2009 were as follows:

				Level 1
	Level 3	Level 2	Level 1	Fixed
	Unquoted	Derivative	Quoted	Income	Total
	Investments	Transaction	Investments	Securities	Investments
	£'000	£'000	£'000	£'000	£'000
Group
Opening Cost	-	-	4,465	25,593	30,058
Opening unrealised (loss) / gain	-	-	(62)	432	370
Opening fair value at 1 April 2008	-	-	4,403	26,025	30,428
Disposal Proceeds	-	-	(300)	(24,736)	(25,036)
Realised gain on disposals	-	-	4	210	214
Unrealised (loss) / gain on investments	-	-	(448)	6	(442)
Closing fair value at 28 February 2009	-	-	3,659	1,505	5,164
Closing cost	-	-	4,165	1,530	5,695
Closing unrealised loss	-	-	(506)	(25)	(531)
Parent Company
Opening Cost	4,481	-	-	25,593	30,074
Opening unrealised (loss) / gain	(78)	-	-	432	354
Opening fair value at 1 April 2008	4,403	-	-	26,025	30,428
Disposal Proceeds	(300)	-	-	(24,737)	(25,037)
Realised gain on disposals	-	-	-	210	210
Unrealised (loss) / gain on investments	(455)	-	-	6	(449)
Closing fair value at 28 February 2009	3,648	-	-	1,504	5,152
Closing cost	7,095	-	-	1,530	8,625
Closing unrealised loss	(3,447)	-	-	(26)	(3,473)

 

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 28 February 2010 by £232,000. 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.

 

 

 

Notes to the Financial Statements

 

 

11 Receivables

	28 February 2010			28 February 2009
	Group	Parent Company		Group	Parent Company
	£'000	£'000		£'000	£'000
Amount receivable from sale of bond portfolio	-	-		20,660	20,660
Other receivables	732	732
Accrued income	(1)	(1)		8	8
Prepaid expenses	6	4		9	7
	737	735		20,677	20,675

Other receivables are stated at the amount expected to be received.

 

 

 

12 Cash and Cash Equivalents

Cash and cash equivalents comprise deposits with HSBC Bank plc.

 

 

 

13 Payables

	28 February 2010			28 February 2009
	Group	Parent Company		Group	Parent Company
	£'000	£'000		£'000	£'000
Loan from subsidiary	-	706		-	-
Other payables	13	79		342	327
	13	785		342	327

 

 

 

14 Share Capital

	28 February 2010			28 February 2009
Ordinary Shares of 1p
Authorised
Number of shares	50,000,000			50,000,000
Par Value £'000		500			500
Issued & Fully Paid
Number of shares	32,022,471			32,022,471
Par Value £'000		320			320

 

.

 

15 Net Asset Value per Share

 

The calculation of Group net asset value per share is based on Group net assets of £23,894,000 (2009: £25,504,000) divided by the 32,022,471 (2009: 32,022,471) shares in issue.

 

The calculation of Parent Company net asset value per share is based on Parent Company net assets of £23,894,000 (2009: £25,504,000 divided by the 32,022,471 (2009: 32,022,471) shares in issue.

 

 

Notes to the Financial Statements

 

 

16 Subsidiary

 

At 28 February 2010 and 28 February 2009 the Company had the following subsidiary Company:

 

	Nature of Activities	Class of share capital	Country of Incorporation	Valuation of Investment	Proportion of shares held by the parent company
				£'000	%
Starshell Limited	Investment	Ordinary	Cyprus	700	100

 

 

 

17 Derivative Transaction

 

 Following early termination of the derivative transaction with Barclays Capital in January 2009, in order to maintain the Company's exposure to GAM Diversity, early in the current year the Company acquired a leveraged note from Julius Baer representing some 17% of Group financial assets and 16 % of Group total assets but, because of the leverage of the note, providing a 39% exposure of total assets to GAM Diversity.

 

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

 

 

 

18 Commitments and Contingencies

The Company had no outstanding commitments or contingent liabilities as at 28 February 2010 or 28 February 2009.

 

 

 

19 Related Party Transactions

 

Michael Sherry, Chairman of the Company, is an equity Member of Triple Point LLP (TPLLP). TPLLP in turn has a controlling interest in Triple Point Investment Management LLP (TPIMLLP). During the period, TPIMLLP received £440,000 (2009: £433,000) for providing management and administrative services to the Company. At 28 February 2010 £nil (2009: £138,000) was due to TPIMLLP.

 

TPIMLLP has agreed to contribute up to £800,000 to the losses suffered on the derivative transaction whereby the return on the Company's portfolio of bonds, managed by Barclays Capital, was swapped for that on an equivalent investment in GAM Diversity Inc by setoff against its management fee by up to a maximum of £266,667 per annum for 3 years commencing 1 March 2009. During the year the maximum of £266,667 was applied in settlement of the management fee and the amount outstanding at 28 February 2010 of £533,333 has been included as a receivable in the Company's balance sheet.

 

 

 

20 Post balance sheet events

 

To date there have been no significant post balance sheet events.