Final Results

Financial highlights

*Being the latest practicable date prior to publication

♦Including current year revenue

I present your Company's results for the year ended 31 December 2011. Net assets per Ordinary Share as at 31 December 2011 were 58.9p, compared with 61.9p as at 30 June 2011 and 68.5p as at 31 December 2010. This result for the year is encouraging, particularly in the last six months, and in light of the fact we paid dividends amounting to a total of 4.5 pence during the year.

Our qualifying investments are managed by Calculus Capital Limited and are in a combination of unquoted and AIM companies. Several new qualifying investments were made during the year including £413,000 in Lime Technology Limited, £134,000 in Heritage House Media Limited, £100,000 in MicroEnergy Generation Services Limited and £75,000 in Terrain Energy Limited. Further details of these investments are set out in the Investment Manager's Review that follows this statement. During the year we sold our holding in Brulines Group as it was considered that there was limited upside as a result of the economic pressures in the leisure, and in particular the pub, sector.

The overall value of the quoted portfolio, which is composed entirely of AIM companies, has fallen by 27 per cent over the last twelve months on a like for like basis which compares with a decline in the FTSE AIM All-Share Index of 26 per cent over the same period.

By contrast, the value of the unquoted portfolio only showed a decline of 7 per cent over the past twelve months on a like for like basis and the new companies invested in have increased in value.

A more detailed analysis of investment performance can be found in the Investment Manager's Review that follows this statement.

Our non-qualifying investments comprise holdings in the Neptune Income Fund, the Neptune Quarterly Income Fund and liquidity funds. Both Neptune Funds are biased towards large cap stocks and our investments fell by 10.1 and 10.7 per cent respectively over the period, compared to a fall of 6 per cent in the FTSE 100 index. During the year the Company sold £300,000 of its holding in the Neptune Income Fund and £300,000 of its holding in the Neptune Quarterly Income Fund. We also sold £695,000 of the liquidity funds to make qualifying investments and to buy back shares.

In line with its policy of returning cash to shareholders, during the year, the Company purchased a total of 665,948 Ordinary Shares for cancellation for a consideration of £399,000 at an average price of 59.9 pence per share representing 5.7 per cent of the current issued share capital.

Another method of returning cash to shareholders is through payment of tax-free dividends. The Company paid a special interim dividend for 2011 of 1.5 pence per Ordinary Share in March as well as an interim dividend of 1 penny per Ordinary Share which was paid in October. These together with the 2010 final dividend of 2 pence per share paid in June 2011 resulted in dividends of 4.5 pence being paid during the year.

The Directors are also pleased to propose a final dividend for 2011 of 2 pence per Ordinary Share which, subject to shareholder approval, will be payable on 15 June 2012 to shareholders on the register on 11 May 2012.

The euro zone debt crisis continues to be a concern for the UK economy which remains fragile with little growth expected in 2012. Cutbacks in public sector spending have also adversely affected businesses, particularly companies which contract with public sector entities. We are encouraged, however, by the robust performance of some of our unquoted holdings which may indicate that the UK economy will fare better in 2012 than is generally predicted.

Philip Stephens

Chairman

15 March 2012

Calculus Capital manages the Company's qualifying portfolio. 

The FTSE AIM All-Share index fell by 26 per cent during 2011 and was significantly outperformed by the FTSE 100, which only fell by 6 per cent over the same period.

At the year end, the portfolio of qualifying investments comprised 17 companies, made up of both unquoted and AIM stocks.

The quoted portfolio, which consists entirely of AIM companies, has shown an overall fall in value of the year of 27 per cent on a like for like basis. At 31 December 2011, it was valued at £1,017,000 compared with £1,619,000 as at 31 December 2010. During the year the Company made no new quoted investments, and the decrease in value includes the sale for £183,000 of the Company's investment in Brulines Group plc in May as it was felt that the stock no longer had any upside potential due to economic pressures in the leisure, and, in particular, the pubs sector.

EpiStem Holdings plc ("EpiStem") continues to show year on year growth in revenues and earnings. In March 2011, EpiStem announced a collaboration agreement with Sanofi-Aventis U.S. relating to EpiStem's proprietary biomarker technologies. A number of new, larger institutional investors acquired or increased their holdings in the company during the year.

Infrastrata plc ("Infrastrata") has re-positioned itself to be better placed to benefit from developments in the gas storage market and also from traditional oil and gas exploration. In March 2011, Infrastrata spun out part of its exploration interests in to two companies, Brigantes Energy Limited ("Brigantes") and Corfe Energy Limited ("Corfe"). Infrastrata and Corfe were awarded three offshore blocks adjacent to the Dorset coast close to the giant Wytch Farm oilfield in the UK's 26th licensing round. Infrastrata has also shot 275 kilometres of 2D seismic data at its Larne exploration licence in County Antrim. The agreement with BP Gas Marketing Limited ("BPGM") regarding the appraisal of the Islandmagee gas storage facility in County Antrim, and the grant of an option to BPGM to acquire a 50.495 per cent equity interest in the project is also a notable step for Infrastrata's gas storage development operations.

The quoted investment showing the largest decrease in value was Managed Support Services plc which fell in value by 85 per cent over the period. The company sold its core business of building services on 5 December 2011 to a subsidiary of Rentokil Initial plc and is no longer carrying on any trading activities. The rest of the quoted portfolio is positioned to benefit from improved trading conditions.

Several of the unquoted companies are making good progress and have increased in value over the year. Overall, the unquoted portfolio has shown a decrease in value over the year of 7 per cent on a like for like basis. At 31 December 2011, the unquoted portfolio was valued at £3,674,000 compared with £3,009,000. The increase in value reflects the new investments made during the year.

New qualifying investments were made during the year in Heritage House Media Limited ("Heritage"), Terrain Energy Limited ("Terrain"), MicroEnergy Generation Services Limited ("MicroEnergy") and Lime Technology Limited ("Lime") and the company made a small investment of £10,000 in Mechadyne Holdings Limited, an automotive technology company. £116,700 was received from Waterfall Services Limited ("Waterfall") when it redeemed its preference shares at par. The section on unquoted portfolio companies on pages 8 to 10 of the Report and Accounts contains further information.

Terrain acquired interests in two additional licences during the year and raised a further £75,000 from the VCT in March 2011 (as part of a £600,000 fundraising). The new licence interests are a 10 per cent interest in a gas exploration opportunity in the Larne-Lough Neagh basin in County Antrim and a 12.5 per cent interest in an oil licence exploration at Burton on the Wold in the East Midlands. The main prospect at Larne is a conventional gas play which is thought to be an extension of the Morecambe Bay gas field. 270km of 2D seismic data has recently been obtained with the plan to drill a gas appraisal well in the first half of 2012. Of the four existing licences, Keddington is currently producing oil and the ongoing evaluation of this field is expected to lead to increased field production and revenues during 2012. The use of gas at Keddington for electricity generation and export to the grid is under evaluation, and further development of the rest of the portfolio is also planned for the forthcoming year. During the period, Terrain acquired an interest in the PL1/10 licence in the Larne-Lough Neagh basin in Northern Ireland.

The Company invested £63,000 in Heritage in January, £21,000 in April and £50,000 in December following the restructuring of the balance sheet which converted part of the company's debt into equity. As part of this process, the company also invested £5,500 to acquire 100 per cent of the shares in Neptune-Calculus SPV Limited ("Neptune-Calculus SPV"). Neptune-Calculus SPV, in turn, owns shares and securities in Heritage which were purchased from Foresight 2 VCT plc and Foresight 3 VCT plc. Various initiatives are being implemented at Heritage in 2012. Heritage's printed books and magazines will be offered online (and via apps), providing enhanced selling opportunities and reduced printing costs. In addition, a ticketing/pass scheme (selling tickets for Stately Homes and other attractions) and an accommodation website will be launched, enabling customers to book accommodation and tickets for properties advertised in Heritage's printed Visit Britain guides and Hudson's. Further cost savings have been made following a re-organisation of the staff and office buildings. For the first time, all Heritage employees are now based at one site. Although trading continued to be tough in 2011, the migration to digital media and the new opportunities should enable Heritage to enhance performance in 2012.

In early April, £100,000 was invested in MicroEnergy. MicroEnergy is a company set up to acquire renewable, microgeneration facilities, including (but not limited to) wind, anaerobic digestion, hydro and micro CHP (Combined Heat and Power). The investment was provided as £30,000 of ordinary equity and £70,000 in the form of long-term loan stock with a coupon of 7 per cent. The Company has entered into a contract to buy a fleet of 84 small wind turbines (

£413,000 was invested in Lime, a low carbon based building materials developer, in the second half of the year. The investment was £213,000 in ordinary equity and £200,000 loan stock. The company's main product is Hembuild, a lime and hemp based building material manufactured in panel form and used in the mainstream construction industry. Lime has recently completed its contracts for the new Marks & Spencer Cheshire Oaks superstore, the largest outside Marble Arch, and a warehouse for Kane's Foods. Lime is currently completing a contract to build new archives for the Science Museum. Lime's subsidiary Hemp Technology, which operates a fibre processing plant, has been operating profitably since August 2011. Hemp Technology's sales of processed linseed to the paper industry have increased from nil to an annualised rate of 5,000 tonnes since Easter.

Waterfall's education division has won a significant contract in Sheffield. Waterfall redeemed its preference shares at par in November, and in December, was chosen for the Private Companies Sunday Times Virgin Fast Track 100 after three years of high growth.

Triage Holdings Limited provides IT repair and refurbishment services. In February the company won a contract with CompuCover, a leading provider of specialist theft and accidental damage insurance to individuals and to the education and business sectors. The market has been difficult. A fall in retail sales since the financial crash of 2008 has impacted the level of warranty repairs work carried out by the group. Some work has been taken back in-house by customers and competition has put pressure on margins. Performance in 2011 has been reasonable given the slackness in its market.

RMS Group Holdings Limited ("RMS") provides port services from six locations on the Humber Estuary, the UK's busiest trading estuary. The group's services cover shipping, stevedoring, storage/warehousing and support logistics for import and export cargoes moving between Northern Europe, the Baltic, Russia, the Iberian Peninsula and the Mediterranean. During 2011 the company performed ahead of budget. Total borrowings also fell below £10 million for the first time in May, illustrating the progress that has been made since the management buyout in 2007, when borrowings stood at £15.6 million.

Since the year end RMS has redeemed the Company's holding of £200,000 of its loan stock. There have been no other developments since year end.

Companies that contract with the public sector and those which are affected by indirect exposure to weak retail markets have found conditions challenging. Overall, we are encouraged by the performance of the portfolio. Several companies which operate primarily in UK markets have performed ahead of expectations which may indicate that the economy is showing signs of robustness at ground level which are not yet apparent in the official statistics.

John Glencross

Calculus Capital Limited

15 March 2012

 INVESTMENT PORTFOLIO

Ɨ The valuation of Heritage House Media Limited loan stock includes rolled up interest which is non-qualifying. This cost £309,118 and is valued at £nil.

¥ The valuation of Triage Holdings Limited preference shares includes a redemption premium which is non-qualifying. This cost £nil and is valued at £85,852.

* The valuations of certain investments include small purchases made which are non-qualifying investments. These cost £15,934 and are valued at £12,313.

∞ Included in the cost of the equity holding of Heritage House Media is £37 of shares which belong to Neptune-Calculus SPV, which is wholly owned by the Company. Included within the cost and valuation of the loan stock holding of Heritage House Media is £5,463 and £120,344 respectively of loan stock held by Neptune-Calculus SPV. These investments are non-qualifying.

The following unquoted investments are included in the investment portfolio at the balance sheet date. Further details of these companies (based on the latest published accounts) are provided below:

The Company is exposed to a variety of risks and the principal risks identified by the Board are noted below.

The Company is required at all times to observe the conditions within the Income Tax Act 2007 for the maintenance of approved VCT status. This involves compliance with a number of tests which, if not met, could result in the loss of a number of tax reliefs which are currently available to both the Company and its shareholders under its VCT status. The tests are under continual review by Calculus Capital Limited, the administrator and (qualifying) investment manager of the Company. The Board keeps these matters under continual review through the provision of monthly management information and quarterly Board meetings. The Board has also retained the services of a VCT consultant to undertake an independent monitoring role.

The majority of the Company's investments will ultimately be in small and medium size companies as these meet the VCT qualifying holdings rules. These companies may not be publicly traded or freely marketable and realisations of such investments can be difficult and can take a considerable amount of time. They also, by their nature, tend to carry higher risk than a larger or longer established business. This risk is in part mitigated by diversifying the investments and maintaining around 25 per cent of the Company's portfolio in liquid assets to enable any short term cash requirements to be met.

In addition, the Company is subject to other price risk constituting uncertainty about the future prices of financial instruments held by the Company. The Company has also invested in loan stocks and as a result is subject to credit risk. The majority of the loan stocks are fixed rate so the Board does not consider interest rate risk to be material. The Company has no exposure to foreign currency risk, nor does it have any interest bearing liabilities. Further comment is provided on the financial risks of the Company in note 19 to the accounts.

The Board regularly reviews the risks the business faces and their potential impact on the Company. The Board monitors the Company's performance through the use of regular financial information and administrator and management reports.

A special interim dividend of 1.5 pence and an interim dividend of 1.0 pence per Ordinary Share were paid during the year. As the proposed final dividend of 2.0 pence per Ordinary Share has to be approved at the Annual General meeting, it will be paid, subject to approval, to shareholders on 15 June 2012. The record date of the dividend will be 11 May 2012.

The Directors are responsible for preparing the Directors' Report and the accounts in accordance with applicable law and regulations.

Company law requires the Directors to prepare accounts for each financial year. Under that law the Directors have to prepare the accounts in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable laws). Under Company law, the Directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the Company for that period. In preparing these accounts, the directors are required to:

• select suitable accounting policies and then apply them consistently;

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

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

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

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

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

The Directors confirm that to the best of their knowledge:

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

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

On behalf of the Board

Philip Stephens

Chairman

15 March 2012

 INCOME STATEMENT

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

There is no statement of recognised gains and losses as there were no other gains and losses.

 The relevant accompanying notes are an integral part of this statement.RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

The relevant accompanying notes are an integral part of this statement.

BALANCE SHEET

The relevant accompanying notes are an integral part of this statement.

CASH FLOW STATEMENT

The relevant accompanying notes are an integral part of this statement.

The accounts have been prepared under the historical cost convention, except for the valuation of investments at fair value, and in accordance with applicable UK accounting standards. The Directors have prepared the accounts on a basis compliant with the recommendations of the Statement of Recommended Practice January 2003, revised January 2009 ("the SORP") for Investment Trust Companies and Venture Capital Trusts produced by the Association of Investment Companies ("AIC").

The Company has not prepared consolidated accounts and has accounted for its subsidiary Neptune-Calculus SPV Limited ("Neptune-Calculus SPV") as an investment on the grounds that its results are immaterial to the Company and control is intended to be temporary because the subsidiary has been acquired and held exclusively with a view to its subsequent disposal in the near future.

As the Company's business is investing in investments with a view to profiting from their total return in the form of increases in fair value, investments are designated as fair value through profit or loss on initial recognition in accordance with FRS 26. Fair value is the amount for which an asset can be exchanged between knowledgeable, willing parties in an arm's length transaction. The Company manages and evaluates the performance of these investments on a fair value basis in accordance with its investment strategy, and information about the investments is provided on this basis to the Board of Directors.

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

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

Aggregate transaction and dealing costs included in disposals and additions are disclosed in note 8 to the accounts, as recommended by the SORP. All purchases and sales of investments are accounted for on the trade date basis.

For quoted investments, fair value is established by reference to bid, or last, market prices depending on the convention of the exchange on which the investment is quoted.

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

Those venture capital investments that may be termed associated undertakings are not equity accounted for and are carried at fair value as determined by the Directors in accordance with the Company's accounting policy, as required by FRS 9 "Associates and Joint Ventures", where venture capital entities hold investments as part of an investment portfolio.

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

Interest receivable from fixed income securities is recognised using the effective interest rate method.

Interest receivable on bank deposits is included in the accounts on an accruals basis.

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

All expenses are accounted for on an accruals basis. Expenses are charged through revenue in the Income Statement except as follows:

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

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

• expenses associated with the issue of shares are deducted from the Share premium account.

Capital reserve - other

The following are accounted for in this reserve:

• gains and losses on disposal of investments; and

• expenses, together with the related tax effect, charged to the capital column of the Income Statement in accordance with the above policies.

Capital reserve - investment holding loss

The following are accounted for in this reserve:

• movements in the fair value of investments held at the year end.

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 that result in an obligation to pay more tax in the future have occurred at the balance sheet date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversals of the underlying timing differences can be deducted. Timing differences are differences between the Company's taxable profits and its results as stated in the accounts.

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

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

Dividends to shareholders are accounted for in the period in which they are paid or approved in general meetings. Dividends payable to equity shareholders are recognised in the Reconciliation of Movements in Shareholders' Funds when they are paid, or have been approved by shareholders in the case of a final dividend and become a liability of the Company.

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

2 Income

3 Investment management fee

For the year ended 31 December 2011, Calculus Capital waived £36,483 (2010: Calculus Capital: £33,306, Neptune Investment Management £11,101) of its fees. At 31 December 2011, there was £17,509 outstanding payable to Calculus Capital (31 December 2010: Calculus Capital £15,199; Neptune Investment Management £5,066). Details of the terms and conditions of the investment management agreement are set out under "Management" in the Directors' Report.

4 Other expenses

Further details of Directors' Remuneration can be found in the Directors' Remuneration Report in the accounts.

5 Taxation on ordinary activities

At 31 December 2011, the Company had £977,428 (31 December 2010: £816,732) of excess management expenses to carry forward against future taxable profits. The deferred tax asset of £244,357 (31 December 2010: £212,350) has not been recognised due to the fact that it is unlikely the excess management fees will be set off in the foreseeable future.

6 Dividends

The Company paid a special interim dividend of 1.5p per Ordinary Share on 31 March 2011 (2010: nil) and an interim dividend on 17 October 2011 of 1p per Ordinary Share (2010: 1p). The Directors are proposing a final dividend of 2p per Ordinary Share in respect of the year ended 31 December 2011 (2010: 2p). Subject to shareholder approval, the dividend will be paid on 15 June 2012 to shareholders on the register on 11 May 2012.

7 Return per share

Revenue return per Ordinary Share is based on the net revenue on ordinary activities attributable to the Ordinary Shares of £44,000 (2010: £165,000) and on 11,827,117 (31 December 2010: 12,396,607) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the year.

Capital return per Ordinary Share is based on the net capital deficit for the year of £666,000 (2010: £999,000) and on 11,827,117 (2010: 12,396,607) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the year.

Total return per Ordinary Share is based on the total deficit on ordinary activities attributable to the Ordinary Shares of £622,000 (2010: £834,000) and on 11,827,117 (31 December 2010: 12,396,607) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the year.

8 Investments at fair value through profit or loss

Unquoted and money market investments includes unquoted shares valued at £120,344 in the Company's subsidiary Neptune-Calculus SPV. These shares cost £5,500 resulting in an unrealised gain through the profit and loss account of £114,844. Neptune-Calculus SPV was incorporated on 29 November 2011. As at 31 December 2011, Neptune-Calculus SPV had share capital of £5,500 and reserves and net profit of £114,844.

Note 19 to the accounts provides a detailed analysis of investments held at fair value through profit and loss in accordance with Financial Reporting Standard 29 'Financial Instruments: Disclosures'.

During the year, the Company incurred transaction costs of £nil (2010: £15) on purchases of investments and £370 (2010: £121) on sales of investments. These amounts are included in "losses on investments at fair value" as disclosed in the Income Statement.

The Company had the following interests of 3 per cent or more in the share capital of its portfolio companies:

*Included within this holding are 128,333 A ordinary shares and 1,762,856 AA Ordinary shares held by Neptune-Calculus SPV which is wholly-owned by the Company.

10 Debtors

11 Creditors - amounts falling due within one year

During the year, the Company purchased for cancellation 388,168 Ordinary Shares of 10p at a price of 59.5 pence per share and 277,780 Ordinary Shares of 10p at a price of 60.5 pence per share. The aggregate consideration was £401,330 including stamp duty of £2,310.

13 Reserves

The Special reserve was created to (i) create a distributable reserve which can be used by the Company to fund purchases of its own shares; (ii) to enable the Company to offset the effects of any future unrealised losses on future dividends payable in respect of shares; and (iii) since the Company revoked its status as an investment company, for any other purpose. The Company is therefore able to make distributions out of the aggregate of its Revenue reserve, Special reserve and Capital reserves, excluding any gains arising on the valuation of unquoted investments.

14 Net asset value per share

The basic net asset value per Ordinary Share is based on net assets (including current period revenue) of £6,852,000 (31 December 2010: £8,422,000) and on 11,635,043 (31 December 2010: 12,300,991) Ordinary Shares, being the number of Ordinary Shares in issue at the end of the year.

15 Reconciliation of net deficit before finance charges and taxation to net cash outflow from operating activities

The increase in creditors shown above does not agree with the movement shown on the balance sheet principally because of the effect of the prior year share buyback creditor of £62,000 included in creditors in the 2010 year end, which is not an operating activity.

16 Reconciliation of net cash flow to movement in net funds

17 Analysis of changes in net funds

The objective of the Company is to generate long term capital growth and tax free dividends for investors. The investment policy is to invest approximately 75 per cent of the Company's funds in a diversified portfolio of holdings in qualifying investments, whether unquoted or traded on AIM. Investments are made selectively across a diverse range of sectors in companies which have the potential to generate growth and enhance their value. The investments in a particular company may be made in loan stocks or preference shares as well as equity shares where it is felt this would enhance shareholder return. The Company does not invest in start-up or seed capital situations. In accordance with the Company's risk averse approach, the Investment Manager will only invest when it believes it has identified the right investment opportunity. The balance of approximately 25 per cent of the Company's funds can be invested in a combination of Neptune income funds, a portfolio of similar income generating UK listed shares and money market instruments.

The ten largest holdings by value and the amounts invested in quoted equity, unquoted equity, unquoted bonds, unquoted preference shares, quoted funds and unquoted funds are set out in the Investment Portfolio, on page 7 of the Report and Accounts.

The Company's financial instruments comprise securities, cash balances and debtors and creditors that arise from its operations.

The Company has no exposure to foreign currency risk.

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

- Other price risk

- Interest rate risk

- Liquidity risk

- Credit risk

The Investment Manager's policies for managing these risks are summarised below and have been applied throughout the year. The Board keeps the risks under continual review through the provision of monthly management information and quarterly board meetings.

Other price risk arises from uncertainty about the future prices of financial instruments held in accordance with the Company's investment objectives. It represents the potential loss that the Company might suffer through holding market positions in the face of market movements. This risk is monitored by the Investment Manager on a regular basis and by the Board at meetings with the Investment Manager.

The Board reviews each investment purchase in the qualifying portfolio to ensure that any acquisition allows the Company to maintain an appropriate spread of other price risk and that it falls within the VCT qualifying criteria at the time of purchase. It considers the associated business risks of each investment. These include, but are not restricted to, the industry sector, management expertise and financial stability of each company.

The Company does not use derivative instruments to hedge against other price risk. The maximum potential exposure to other price risk is the value of the investment portfolio as at 31 December 2011 of £6,504,000 (31 December 2010: £7,964,000).

The Board believes that the Company's assets are mainly exposed to other price risk, as the Company holds most of its assets in the form of investments in VCT qualifying small UK companies whose equity shares are either quoted or valued by reference to the share prices of quoted comparable companies and are thus subject to market movements. The Board considers that investments in loan stock and/or preference share may also be sensitive to changes in quoted share prices as the value of these financial instruments can be determined with reference to the enterprise value of the investee company which may be based on the value of quoted comparable companies.

The table below shows the impact upon profit and net assets if there were to be a 10 per cent (31 December 2010: 10 per cent) movement in overall share prices, and assumes:

- that each of the sub categories of instruments (shares and loan stocks) held by the Company produces an overall movement of 10 per cent, and

- that the actual portfolio of investments held by the Company is perfectly correlated to this overall movement in share prices. Shareholders should however note that this level of correlation is highly unlikely in reality.

If overall share prices fell/rose by 10 per cent (2010: 10 per cent), with all other variables held constant:

A (decrease)/increase of £650,377 (31 December 2010: £796,415) in the net assets of the Company would have (decreased)/increased investment management fees payable to the Investment Managers for the financial year under review by £22,763 (31 December 2010: £27,874), subject to the 3.5 per cent annual expenses cap.

The impact of a change of 10 per cent has been selected, as in current market conditions, an increase/(decrease) in the aggregate values of investments by 10 per cent is reasonably possible based on historical changes that have been observed.

Interest is earned on cash balances and money market funds and is linked to the banks' variable deposit rates. The board does not consider interest rate risk to be material. Interest rate risk arising on loan stock instruments is not considered significant, as the main risks on these investments are credit risk and other price risk. The Company does not have any interest bearing liabilities.

As required by Financial Reporting Standard 29 'Financial Instruments: Disclosures' (the Standard) an analysis of financial assets and liabilities, which identifies the risk of the Company's holding of such items is provided. The Company's financial assets comprise equity and preference shares, loan stock, cash and debtors. The interest rate profile of the Company's financial assets is given in the table below:

*Inculded within the loan stock balance as at 31 December 2011 is £120,000 (2010:£nil) loan stock held by the Company through its wholly owned subsidiary Neptune-Calculus SPV.

The variable rate is based on the banks' deposit rate, and applies to cash balances held and the money market funds. The benchmark rate which determines the interest payments received on interest bearing cash balances is the Bank of England base rate which was 0.5 per cent as at 31 December 2011 (31 December 2010: 0.5 per cent).

The investments the Company holds include AIM quoted securities where the liquidity is generally below that of securities listed/quoted on the main market and it also holds unquoted investments where there is no ready market for the securities. The ability of the Company to realise positions may therefore be restricted when there are no willing purchasers.

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

At 31 December 2011, the Company held £2,189,000 (31 December 2010: £3,845,000) in cash and readily realisable securities (including the investments in the Neptune Income and Neptune Quarterly Income Funds) to pay accounts payable and accrued expenses.

The failure of a counterparty to a transaction to discharge its obligations under that transaction could result in the Company suffering a loss. The Company manages this risk by ensuring that where an investment is made in an unquoted loan, it is made as part of the overall equity and debt package. The recoverability of the debt is assessed as part of the overall investment process and is then monitored on an ongoing basis by the Investment Manager who reports to the Board on any recoverability issues. It also ensures that cash at bank is held only with reputable banks with high quality external credit ratings. None of the Company's financial assets are secured by collateral or other credit enhancements. The total exposure to loan stocks is set out above in the interest rate risk section.

All assets of the Company which are traded on a recognised exchange are held by HSBC, the Company's custodian. The Board regularly monitors the Company's risk by reviewing assessments of the custodian submitted by the Investment Manager.

Investments held at fair value through profit and loss are valued in accordance with International Private Equity and Venture Capital Association ("IPEVCA") guidelines as follows:

The valuation method used will be the most appropriate valuation methodology for an investment within its market, with regard to the financial health of the investment and the IPEVCA guidelines. Following a review of the performance of Heritage House Media, the basis of valuation changed between 31 December 2010 and 31 December 2011 from a sales multiple to Discounted cash flow.

As required by Financial Reporting Standard 29 'Financial Instruments: Disclosures' (the Standard) an analysis of financial assets and liabilities, which identifies the risk of the Company's holding of such items is provided. The Standard requires an analysis of investments carried at fair value based on the reliability and significance of the information used to measure their fair value.

In order to provide further information on the valuation techniques used to measure assets carried at fair value, the measurement bases are categorised into a "fair value hierarchy" as follows:

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

Inputs to Level 1 fair values are quoted prices in active markets for identical assets. An active market is one in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. The Company's investments in AIM quoted equities, money market funds and the quoted Neptune funds are classified within this category.

- Valued using models with significant observable market inputs - "Level 2"

Inputs to Level 2 fair values are inputs other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly. The Company has no investments classified within this category.

 - Valued using models with significant unobservable market inputs - "Level 3"

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

*Included within the fixed interest investments is £120,000 loan stock held by the Company through its wholly owned subsidiary Neptune-Calculus SPV.

The table below shows movements in the assets measured at fair value based on Level 3 valuation techniques for which any significant input is not based on observable market data. During the year there were no transfers between levels 1, 2 or 3.

*Included within the fixed interest investments is loan stock purchased by the Company's wholly owned subsidiary Neptune-Calculus SPV for £5,463, on which a gain of £114,881 has been recognised in the Income Statement.

The Standard requires disclosure, by class of financial instruments, if the effect of changing one or more inputs to reasonably possible alternative assumptions would result in a significant change to the fair value measurement. The information used in determination of the fair value of Level 3 investments is chosen with reference to the specific underlying circumstances and position of the investee company. The portfolio has been reviewed and both downside and upside reasonable possible alternative assumptions have been identified and applied to the valuation of each of the unquoted investments. Applying the downside alternatives the value of the unquoted investment portfolio would be £490,000 (31 December 2010: £583,000) or 13.3 (31 December 2010: 19.4) per cent lower. Using the upside alternatives the value of the unquoted investment portfolio would be increased £364,000 (31 December 2010: by £676,000) or 9.9 (31 December 2010: 22.5) per cent.

The Company finances its operations through its issued share capital and existing reserves. The only financial liabilities of the Company are creditors all of which are sterling denominated and are due within one year. The creditors are disclosed in note 11. No interest is paid on these liabilities.

All assets and liabilities are carried at fair value.

The Company's capital management objectives are to ensure that it will be able to continue as a going concern and to maximise the income and capital return to its Ordinary shareholders.

The Board, with the assistance of the Investment Manager monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes the planned level of gearing, which takes account of the Manager's views on the market; the need for new issues of equity shares; and the extent to which revenue in excess of that which is required to be distributed should be retained. The capital of the Company is made up of called up share capital and reserves as detailed on the balance sheet on page 28 of the Report and Accounts.

The Company's qualifying investments are managed by Calculus Capital Limited. John Glencross, a Director of the Company, has an interest in Calculus Capital Limited and is a Director of Terrain Energy Limited and Lime Technology Limited. The amounts paid to the Investment Manager are disclosed in note 3. Calculus Capital Limited also acts as administrator to the Company and received a fee in the year to 31 December 2011 of £21,661 (2010: £27,150).

Calculus Capital Limited receives annual fees from Terrain Energy Limited and Lime Technology Limited for the provision of John Glencross as a Director, as well as annual monitoring fees. Calculus Capital also receives an annual monitoring fee from MicroEnergy Generation Services Limited. Other funds under the management or advice of Calculus Capital Limited have also invested in Terrain Energy Limited, Lime Technology Limited and MicroEnergy Generation Services Limited. In the year ended 31 December 2011, the amount paid to Calculus Capital Limited which was attributable to the investment made by the Company was £6,438 (2010: £8,500) (including VAT) from Terrain Energy Limited, £5,470 (2010: £nil) (including VAT) from Lime Technology Limited and £927 (2010:£nil) (including VAT) from MicroEnergy Generation Services Limited.

In the year ended 31 December 2011, Calculus Capital Limited received an arrangement fee of £4,026 (2010: £3,790) as a result of the Company's investment in Heritage House Media Limited, an arrangement fee of £2,250 (2010:£nil) as a result of the Company's investment in Terrain Energy Limited an arrangement fee of £8,250 (2010:£nil) as a result of the Company's investment in Lime Technology Limited and an arrangement fee of £3,000 (2010:£nil) as a result of the Company's investment in MicroEnergy Generation Services Limited.

As mentioned in the Directors' Report to the accounts, the Company may co-invest with other funds managed and advised by Calculus Capital Limited. The allocation between different funds takes into account such factors as the funds available for investment and the time horizon of these funds, the size of a potential investment, and the existing sector exposure of the various funds.

These are not full accounts in terms of Section 434 of the Companies Act 2006. Full audited accounts for the year ended 31 December 2010 have been lodged with the Registrar of Companies. The Report and Accounts for the year ended 31 December 2011 will be sent to shareholders shortly and will be available for inspection at 104 Park Street, London, W1K 6NF, the Company's registered office, and will be published on www.calculuscapital.com, a website maintained by the Company's Investment Manager, Calculus Capital Limited. The audited accounts for the year ended 31 December 2011 contain an unqualified audit report.