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Neptune Calculus VCTNeptune Calculus (C) - 2016 results and Annual Financial Report - Part 1

RNS Number : 1414A
Neptune-Calculus Income &Growth VCT
21 March 2017

FINANCIAL HIGHLIGHTS

OrdinaryShares

Year ended 31December2016

NAVasat31December2016

32.5p

Cumulativedividendspaidto31December2016

37.5p

Accumulated shareholdervalue

70.0p

RecommendedFinalDividend

2.0p

Accumulated shareholder value represents net asset value per share plus cumulative dividends paid per share since inception.

As at 28 February 2017*

Unauditednetassetvaluepershare

32.6p

* Being the latest practicable date prior to publication.

Including current year revenue.

CHAIRMAN'SSTATEMENT

TheCompany'sresultsfortheyearended31December2016weremainlyaffectedbyfallsinthesharepricesoftwo AIMquotedqualifyingstocks,GenedriveplcandScancellHoldingsplc("Scancell").Thisisdisappointingasthefallsin theirsharepricesmaskayearofconsiderableprogressforthesecompanies.Netassetvaluepershareattheyearend was32.5pencecomparedto39.3pencefortheprioryear.Ofthisdecline,3.5pencereflectedthedividendspaidin theyear.Theremainderofthefallof3.3pencepersharewaslargelyattributabletoadeclineinthesharepricesofthe GenedriveplcandScancell.Netassetvaluepershare(excludingdividendspaidintheperiod)roseslightlyinthesecond halfoftheyearand,overall,Ibelieveittohavebeenayearofprogressformanyofthecompaniesintheportfolio.

Investment performance (QualifyingInvestments)

TheCompanycontinuestomeetitsrequirementstoqualifyasaVCT.Ourqualifyinginvestmentsaremanagedby Calculus Capital Limited and are in a combination of unquoted and AIMcompanies.

Duringtheyear,theCompanymadesixnewqualifyinginvestments.InJanuary2016,100,000wasinvestedinArcis BiotechnologyHoldingsLimited("Arcis").ArcisisaCheshirebased,researchanddevelopment("R&D"),companywhich hasuseditstechnologyplatformtodevelopinnovativeproductsintheDNAextraction,agricultureandhygienemarkets. InApril2016,theCompanyinvested150,000inadeveloperofnoveltherapeuticvaccinesfortreatingcancer,Scancell. InSeptember2016,theCompanyinvested100,000indrugdiscoveryanddevelopmentcompany,C4XDiscovery Holdingsplc.InDecember2016,theCompanyinvestedinthreenewcompanies.100,000wasinvestedinAirLeisure Group Limited (trading as "Jumptastic"), an operator of trampoline parks across the UK and Europe. Another100,000 wasinvestedinOriginBroadbandLimited("Origin"),aYorkshire-basedproviderofinternetandtelephoneservices. Finally,beforetheyearend,100,000wasinvestedinWeedingTechnologiesLimited,acleantechcompanywhose technologytreatsweedsandmoss.

DrydenHumanCapitalGroupLimited'sequitywaswrittendowntonilattheyearend,impactingnetassetvalueby approximately0.4pencepershare,aheadofthesaleofthecompanyinJanuary2017inwhichtheCompanyrecovered thevalueofitsloanstock.RMSEuropeLimitedandTerrainEnergyLimitedwerebothwrittendownbyapproximately10 percentintheperiod,reflectingtoughertradingconditions.

TheCompanysuccessfullyexiteditsholdinginHumanRaceGroupLimitedinSeptember2016,achievingareturnof32%.

AmoredetailedanalysisofinvestmentperformancecanbefoundintheInvestmentManager'sReviewthatfollowsthis statement.

Investment performance (Non-QualifyingInvestments)

Ournon-qualifyinginvestmentscompriseholdingsintheNeptuneIncomeFund,theNeptuneQuarterlyIncomeFundand liquidity funds. Our investments in the Neptune Income Fund rose by 9 per cent but declined in the NeptuneQuarterly IncomeFundby4percentovertheyear.

Attheyearend,theCompanyheld50,000intheAberdeenGlobalLiquidityFund,103,000intheFidelityLiquidity Fund, and 175,000 in the liquidity fund held with Goldman Sachs AssetManagement.

Sharebuyback

DuringtheyeartheCompanypurchased100,000sharesforcancellation.Inlinewithitspolicyofreturningcashto shareholders,theCompanymaycarryoutlimitedsharebuybacksinthefutureifitconsidersittobeinthebestof interestsofallshareholders.

Boardchanges

InviewofthefactthatIhaveservedasChairmanofyourCompanysinceitslaunchin2004,Ihavedecidedtoretire fromtheBoardattheforthcomingAGMtobeheldon22ndJune2017.Inthemeantimeanumberofcandidatesare currentlybeingconsideredformyreplacementasChairmanandweexpecttobeabletomakeanannouncementinthe comingweeks.

Dividends

TheCompanypaidthe2015finaldividendof2pencepershareinJune2016andaninterimdividendfor2016of1.5 pencepershareinOctober2016.The totaldividendspaidtoanordinaryshareholdertodateare37.5p.

Thedirectorsarepleasedtoproposeafinaldividendfor2016of2penceperOrdinarySharewhich,subjecttoshareholder approval,willbepayableon30June2017toshareholdersontheregisteron26May2017.

InadditionyourboardisconsideringstrategicoptionsfortheCompanywhichmayleadtoproposalsinvolvingasignificant returnofcapitaltoshareholders.Welookforwardtoprovidingyouwithmoreinformationoverthecomingmonths.

Outlook

TheUKeconomyremainsstrongthoughitisdifficulttoassesswhatimpactthecommencementofformal'Brexit' negotiationsmayhave.However,theoutlookforyounggrowingcompaniesremainspositiveandshouldsupportfuture growthintheportfolioandprovideopportunitiesfornewinvestment.

Philip Stephens Chairman

21 March 2017


INVESTMENT MANAGER'S REVIEW (QUALIFYINGINVESTMENTS)

Calculus Capital Limited manages the Company's qualifying portfolio. The Company invests in a diversified portfolio of UK growth companies, whether unquoted or traded on AIM.

Portfoliodevelopments

Attheyearend,theportfolioofqualifyinginvestmentscomprised14companies,madeupofbothunquotedandAIM stocks.ThefallintheNetAssetValuewaslargelyattributabletoadeclineinthesharepriceofAIMquotedholding, Genedrive.Thiswasduetoanoverhangofstockinthemarket,representingabout5%ofGenedrive'stotalequity, from several institutions which did not participate in the fundraising in July 2016. These shares were placed with other institutionsinFebruary2017buttheplacingservedtopushdownthesharepricefurther.Twonewquotedinvestments weremadeintheyear,inC4XDiscoveryplcandScancellHoldingsplc,bothquotedonAIM.Scancell'spricehasdecreased by15percentcomparedtocost.Thisisdisappointingaseachofthesecompaniesshowedunderlyingprogressduring theyearunderreviewwhichisdetailedlaterinthereport.

Theunquotedportfoliodeclinedinvalueby7percent,largelybecauseRMSEuropeLimitedandTerrainEnergyLimited, thetwolargestholdingsintheportfolio,werebothwrittendownby10perduetomoreadversetradingconditionsin 2016.Fournewqualifyinginvestmentsweremadeduringthe year,Arcis,Jumptastic,WeedingTechnologiesandOrigin. Thesectiononunquotedportfoliocompaniesinthisreportcontainsfurtherinformation.

Quotedportfolio Genedrive plc("Genedrive")

Genedrive, a next-generation Point of Care molecular diagnostic system, provides a low cost, rapid, simple to use and robustplatformforthediagnosisofinfectiousdiseases.Thecompanyismakingprogresstowardsrealisingthepotential oftheGenedriveplatforminarangeofapplicationsthroughownprogrammesandpartnerships.Progresscontinuesto bemadewiththeHepatitisC(HCV)testandthecompanyistargetingsubmissionforCEMarkingbytheendofMarch basedonhighlyencouragingperformanceresults.EndusersalesinIndiafortheTBassayhavebeenslowmainlydue tosamplepreparationissuesforthetestinfieldthatareuniquetotheTBassay.InJanuary,Genedriveannouncedthat theUSDepartmentofDefensewasstartingfieldtrialsofahandheld,rapidbiohazardidentifierdevelopedbyGenedrive.

C4X Discovery Holdings plc ("C4X")

InSeptember,theCompanyinvested100,000inC4Xaspartofa3millionequityinvestmentbyfundsmanagedby CalculusCapitalLimited.C4Xisaninnovativecompanyinthediscovery,designanddevelopmentofsmallmolecule drugs.ThecompanywasspunoutoftheUniversityofManchesterinJuly2007.During2016,thecompanyenhanced its drug discovery engine through acquisitions and continued to broaden its portfolio of proprietary drugprogrammes. The acquisitions(AdorialLimited'sinnovativetargetdiscoveryplatformtechnology,Taxonomy3,andMolplexLimited's pioneeringchemoinformaticsandartificialintelligencesoftwareplatform)combinewithC4X'sdrugdiscoveryand rational molecule optimisation technology platform, Conformetrix, to create a state-of-the-art drug discovery engine. Approximatelytwo-thirdsofnewdrugsoriginatefromsmallerbiotechcompanies.C4XDcontinuestobuildandprogress its pipeline of programmes in a variety of therapeutic areas including addiction, diabetes, inflammatory diseases and cancer.ThecompanyhascollaborationsinplacewiththeUniversityofOxfordStructuralGenomicsConsortiumand EvotecAG.

Scancell Holdings plc ("Scancell")

Scancell is developing two distinct immune-oncology platforms, ImmunoBody and Moditope, each with broad applications.Bothplatformsaretargetingmulti-billiondollarmarkets.SCIB1(basedontheImmunoBodyplatform)has achievedunprecedentedsurvivalratesinaphaseI/IIclinicaltrialcoveringtwentypatientsformalignantmelanoma.The initialresultsshowsurvivalandprogressionfreedatawellbeyondestablishednorms.AphaseIIcombinationtrialof SCIB1 together with Keytruda, a checkpoint inhibitor, will commence out of Massachusetts General Hospital in Boston and include Harvard Medical School, MD Anderson, Memorial Sloan Kettering and the Division of Medical Oncology at UniversityofColorado.ThetwodrugsworkindifferentwaysandKeytrudaisrelativelytoxicwhilstSCIB-1isfarlesssoon evidencetodate.Itisbelievedthatacombinationtreatmentofthetwodrugswillsignificantlyincreasethesuccessrate inthetreatmentofadvancedmelanomabeyondcurrentnormswithoutsignificantadditionaltoxicity.AphaseItrialfor Modi-1 (based on the Moditope platform) targeting triple negative breast cancer, osteosarcoma and ovarian cancer is scheduledfor2018.ThescientificprinciplebehindModitopeisautophagywhichisthehithertoobscureareaofmedical researchwhichwasthesubjectofthisyear'sNobelPrizeforMedicine.ScancellisalsodevelopingSCIB2(basedonthe ImmunoBodyplatform)forthetreatmentofnon-smallcelllungcancer(NSCLC)incombinationwithacheckpoint inhibitor. In January 2017, Scancell announced a collaboration with The Addario Lung Cancer Medical Institute and the BonnieJ.AddarioLungCancerFoundationtoevaluatetheuseofSCIB2totreatNSCLC.

Unquotedportfolio Arcis Biotechnology Holdings Limited ("Arcis")

Arcis has developed an innovative DNA extraction process which is on the cusp of commercialisation.

DNAextraction,essentiallyopeningcellstoallowaccesstotheirDNAwithoutdamagingthem,isanecessarypreliminary stepbeforeDNAanalysisandsequencingcanbeperformed.Overthelast20years,therehavebeenhugeadvancesin DNAanalysisandsequencing,butlittlechangeinDNAextractionprotocols,whichareslowandcumbersome.Arcis' extractionprocessismuchfasterandsimpler,andalsooffersamuchhigherlevelofDNAstabilisation.Thisenhanced stabilisationisimportantindislodginglongestablishedlaboratoryproceduresand,potentiallyverysignificantly,it extendstostabilisationofRNAwhichotherprocessescannotdo(becauseRNA,whichperformsaninformationcarrying roleinacell,isinherentlylessstablethanDNA).

During2016,Arcis'initialproducts,targetingbothhumanandinfectiousdiseaseDNAextraction,haveundergone externalvalidationwithanumberofcompaniesandkeyopinionleadersandachievedCE-markcertification.Inearly 2017,headsoftermsweresignedwiththefirstcustomertoincludeArcis'productsintheirdiagnosticdevices,andsome salesdirecttoend-userscommenced.

Fromthesametechnologyplatform,Arcishascreatedtwocropandturfyieldimprovementproducts.Theseareonthe marketandmakingapositivecontribution,butdonothavethesamepotentialasDNAextractionandareconsidered non-strategicassets.Thecompanyisalsoworkingonthedevelopmentofanovelbiopesticidetotreatnematodes.Asits components are naturally occurring (rather than chemical) and trials to date have exceeded expectations, thisproduct mayhavesignificantpotential,althoughitisatarelativelyearlystageofdevelopment.

Dryden Human Capital Group Limited ("Dryden")

Drydenisaspecialistactuarial,insuranceandcompliancerecruitmentcompanywhichwassoldinJanuary2017.The valueoftheequitywaswrittenoffin2016impactingtheCompany'snetassetvalueby0.4pencepershare,butthe Companyreceivedarepaymentofloanstock.

Air Leisure Limited ("Jumptastic")

Intheperiodunderreview,theCompanymadeanewunquotedinvestmentof100,000inJumptasticaspartofa

3m equity investment by funds managed by Calculus Capital Limited. Jumptastic operates trampoline parks in the UK and Continental Europe. Its first site opened in Gloucester in October 2015, trading under the brand name Jumptastic. This site incorporates 90 interlinked trampolines and has traded profitably since inception. The company's second site openedinCopenhagen,DenmarkinJanuary2017andtheteamhaveastrongpipelineofpotentialsitesidentifiedacross Scandinaviawhichtheywilllooktoopenin2017.

MicroEnergy Generation Services Limited ("MicroEnergy")

MicroEnergyownsandoperatesafleetof166smallonshorewindturbines(5kW)installedonlandinEastAngliaand Yorkshire.Revenuesfromthefleetofturbinescomefromtwosources,bothofwhichareinflationprotected,being directlylinkedtoRPI.First,thereistheGovernmentbackedfeed-intariff(FIT)paidbytheelectricitysuppliersforevery kilowatt of electricity generated for twenty years. Secondly,there is an export tariff for any surplus electricity not used bythesiteownerthatisexportedtothegrid.ThevaluationofMicroEnergyhasbeenreducedaschangestolegislation meansthatitislikelythatbusinessrateswillnowbepayableontheinstallations.MicroEnergyhasappointedanadviser toassistwithitssale-expectedtobeinthefirsthalfof2017.

Origin Broadband Limited ("Origin")

TheCompanyinvested100,000inOrigininDecember,aproviderofinternetandphoneservices,basedinYorkshire. Sincelaunchin2011,whenitacquiredfornocostpartoftheDigitalEuropenetworkbuiltwithEUandgovernment fundingwhichDigitalEuropewasproposingtoclose,Originhasdevelopeditsowninfrastructureandnowhasthesixth largestbroadbandnetworkintheUKmeasuredbypointsofpresence.Asanoperatorofitsownphysicalnetwork,Origin isabletodealdirectlywithOpenreach,theBTdivisionthatmaintainstheUK'smaintelecomsnetwork.Thisgivesthe company greater control over the underlying circuits and equipment; allowing it to provide a better service level than apureresellerandmakingiteasiertogivecommitmentsonspeed.Thecompany'scorenetworkiscomposedofover 50 points of presence, together with diverse network links to locations including Manchester, London and datacentres includingTelecityNorthandTelecity8/9HarbourExchange.

Originisseenasanagilealternativetotheunwieldycorporategiants,withafocusonprovidingfasterbroadbandspeeds, acompetitivepricingmodelandfirst-classcustomerservice.Moreandmorebusinessesaremovingtocloudcomputing andtheneedforexcellent24/7supportisanimportantfactorwhenchoosingaprovider.Likewise,consumersareusing everincreasingamountsofdataandrequirefast/superfastbroadbandservices.CurrentclientsincludeAmazon-where Originisthepreferredproviderforallnewwarehouseandcorporatesites,NHSSheffieldandvariousUKuniversities.

FundsmanagedbyCalculusCapitalLimitedinvested3millioninOriginofwhich100,000camefromtheCompany.

RMS Europe Limited ("RMS")

RMSprovidesportservicesfromsixlocationsontheHumberEstuary,theUK'sbusiesttradingestuary.Tradingconditions throughout2016werechallengingandtheimplicationsofBrexithavecreatedsomeuncertaintyaboutfuturetrade betweentheUKandcontinentalEurope.Despitethis,RMSachievedincreasedturnoverandprofitabilityintheyear.This holdingisshowingasignificantreturnoncostandwillbesoldwhentherightopportunityarises.

Solab Group Limited ("Solab") (formerly Hampshire Cosmetics)

Solabisalongestablishedmanufactureroffragrances,shampoosandskincareproductsforthirdpartycustomers, includingPenhaligon'sandPhilipKingsley.Itscosmeticsbusinesshasbeenaffectedbyasignificantreductioninvolumes fromitslargestcustomer,TheBodyShop,asaresultofL'Oreal'sdecisiontoin-sourcemanufacturingtoFrenchfactories followingitsacquisitionofTheBodyShop.Newbusinessfromthirdpartiesisbeginningtoreplacelostturnover,although Solab has also had success in growing existing customer accounts. In January 2017, L'Oreal announced the intention to sellTheBodyShop.ItistooearlytosaywhetherthisrepresentsanopportunityforSolabtowinbackbusiness.

Terrain Energy Limited ("Terrain")

Terrain has interests in eleven petroleum licences: Keddington, Kirklington, Dukes Wood, Burton on the Wolds,Whisby andLouthintheEastMidlands,LarneinNorthernIreland,BrockhamandLidseyintheWealdBasinandEgmatingand Starnberger See in Germany. The Whisby-6 well was successfully drilled in 2016 and encountered a good oil-saturated basalsandstonewithinitialproductionof168barrelsofoilperday("bopd")(ofwhichTerrain receives85%).The operatoriscurrentlyworkingtooptimiseproductionfromthiswellfollowingawaxingissue.The companyisproducing fromwellsatKeddingtonandWhisby;BrockhamandLidseyarecurrentlyshut-inpendingdrillingor,inthecaseof Brockham,analysisofrecentdrillingresults.AnewwellatLidseyisduetobedrilledin2017,withKeddingtonandLouth tofollowin2018.TerrainsoldhalfofitsinterestintheBrockhamlicencetoAngusEnergy(theoperator)inDecember


2016(reducingTerrain'sinterestto10%)inreturnforacashconsiderationandcarryingTerrain'sremaininginterestin thelicenceforthecostsassociatedwiththenewsidetrack.Angushastheoptionforasimilartransactioninrelation toLidseywhichwouldmeanTerrain'scostswouldalsobecarriedforthiswell.Fromtheevidencesofar,thedrilling atBrockhamappearstoindicateasimilarstructuretotheoilbearingKimmeridgesectionsinthenearbyHorseHill-1 well(thiswellproducedover1600bopdontest).OilandgasshowshavealsobeenfoundintheunderlyingCorallian structure.AgeothermalwellatHolzkirchen,whichisontheEgmatinglicence,drilledin2016encounteredoverpressured gaswhichhadtobeflaredfor4daysbeforethewellwasbroughtbackundercontrol.Thiscouldbeasignificant discoveryonTerrain's licence-interpretationofthelimiteddataavailabletodatesuggeststhepotentialforasmuchas 75BCFofgastobepresentatapproximately4000metres(equivalenttoapproximately10millionbarrelsofoil).Afirst wellontheLarnelicencetargetingtheWoodburnprospectwasdrilledinMay/June2016,butdidnotencounterany hydrocarbonaccumulation.Thedatacollectedinthewellisbeingevaluatedtodecidewheretofocusfutureexploration activity in thebasin.

Weeding Technologies Limited ("Weedingtech")

Weedingtech is a cleantech company focused on replacing toxic herbicides, particularly in the municipalmarket, butwithpotentialintheagriculturalanddomesticmarkets.Weedingtech'stechnologytreatsweedandmossusing environmentallyfriendlyhotfoam(whichkeepstheheatonlongenoughtokilltheweedormoss)ratherthanherbicides such asGlyphosate.

Increasingly, governments and regulators around the world are considering, or are already, banning the use of certain chemicalherbicides(e.g.glyphosate,asusedinRoundup,whichstudieshaveshowntobepotentiallycarcinogenic)amid concerns about the risks they pose to human health and the environment. Globally, the herbicide market is estimated togrowat6%ayeartoreach$31bnby2020(AlliedMarketResearch,October2014),withglyphosateaccountingfor aroundthreequartersofthetotal.Assuchthereishugepotentialforherbicide-freealternativestoincreasetheirshare as concerns around glyphosategrow.

FundsmanagedbyCalculusCapitalLimitedinvested3mintoWeedingtechinDecember2016ofwhich100,000came from theCompany.

Developments since the yearend

Other than disclosed, there have been no developments since the year end.

John Glencross

Calculus Capital Limited 21 March 2017


INVESTMENTPORTFOLIO

The ten largest holdings by value are included below:

Cost

Valuation

Percentage

'000

'000

%




AIM investments (quoted equity)




Genedrive plc*

251

111

3.04%

Scancell Holdings plc

150

128

3.51%

Other AIM investments*

551

94

2.58%

Unquoted equity investments




Arcis Biotechnology Holdings Limited

100

110

3.02%

RMS Europe Limited

100

537

14.73%

Solab Group Limited equity

35

46

1.26%

Terrain Energy Limited

414

726

19.92%

Other unquoted equity investments*

433

326

8.94%

Unquoted loan notes




Solab Group Limited loan notes

215

215

5.90%

Other unquoted loan notes

25

25

0.69%

Non-qualifying equity investments*

(9)

(6)

(0.16)%

Total qualifying investments

2,265

2,312

63.43%

Quoted funds




Neptune Income Fund Income A Class

444

521

14.29%

Neptune Quarterly Income Fund Income Units

431

477

13.09%

Goldman Sachs Liquidity Fund

175

175

4.80%

Fidelity Sterling Liquidity fund

103

103

2.83%

Other quoted funds

51

51

1.40%

Non-qualifying equity investments*

9

6

0.16%

Total non-qualifying investments

1,214

1,333

36.57%

Total investments

3,478

3,645

100.00%

* The valuations of certain investments include small purchases made which are non-qualifying investments. These cost 9,000 and are valued at

5,750.


UNQUOTEDPORTFOLIOCOMPANIES

The following unquoted investments are included in the investment portfolio at the balance sheet date. Further details of these companies are provided below:

Arcis BiotechnologyHoldingsLimited Agri-sciences

Latest audited results (group):

'000

'000

Investment information:

'000

Year ended 31 July

2016

2015

Total cost

100

Turnover

184

281

Income recognised in year

-

Pre-tax loss

1,768

1,098

Equity valuation

110

Net Assets

1,352

498

Voting rights

0.7 per cent

Valuation basis: Discounted cash flow





OtherfundsmanagedbyCalculusCapitalLimitedhaveinvestedinthisCompanyandhavecombinedvotingrightsof

36.4 per cent.

RMSEuropeLimited Operator of PortFacilities

Latest audited results:

'000

'000

Investment information:

'000

Period ended 31 December

2016

2015

Total cost

100

Turnover

27,435

29,223

Income recognised in year

-

Profit after tax

642

775

Equity valuation

537

Net Assets

9,081

8,880

Loan stock valuation

-

Valuation basis: Expected sale price



Voting rights

1.0 per cent

SolabGroupLimited CosmeticsManufacturing

Latest audited results (group):

'000

'000

Investment information:

'000

Period ended 31 Dec

2015

2014

Total cost

250

Turnover

21,912

26,021

Income recognised in year

16

Profit after tax

(330)

181

Equity valuation

46

Net Assets

2,474

2,691

Loan stock valuation

215

Valuation basis: Discounted cash flow and multiples

Voting rights

1.2 per cent

OtherfundsmanagedbyCalculusCapitalLimitedhaveinvestedinthisCompanyandhavecombinedvotingrightsof

6.3 per cent.

TerrainEnergyLimited Oil and GasProduction

Latest audited results:

'000

'000

Investment information:

'000

Year ended 31 December

2015

2014

Total cost

414

Turnover

108

205

Income recognised in year

-

Pre-tax loss

595

635

Equity valuation

726

Net Assets

6,038

6,617

Voting rights

5.7 per cent

Valuation basis: Reserves multiple & DCF




OtherfundsmanagedbyCalculusCapitalLimitedhaveinvestedinthiscompanyandhavecombinedvotingrightsof

4.9 per cent.


STRATEGICREPORT

ThisreporthasbeenpreparedbythedirectorsinaccordancewiththerequirementsofSection414AoftheCompanies Act2006.

Activities, status and investment objective

The Company is a VCT listed on the London Stock Exchange. The principal activity of the Company is investing in unquotedorAIMtradedcompaniesintheUKwiththeobjectiveofgeneratinglongtermcapitalgrowthandtaxfree dividendsforinvestors.TheCompanyismanagedasaVCTinorderthatshareholdersmaybenefitfromthetaxreliefs available.

Businessmodel

TheBoardofdirectorsisresponsiblefortheoverallstewardshipoftheCompanyincludinginvestment,dividend,borrowing andpurchaseofownsharespolicies,corporatestrategyandgovernanceandriskmanagement.Allthedirectors,whose detailsaresetoutonpage14oftheReportandAccounts,arenon-executive.The BoardhasappointedCalculusCapital Limitedtomanageitsqualifyingportfolioandtoprovidecertainadministrativeservices.Detailsofthemanagement agreementaresetoutunder"Management"intheDirectors'Report.CalculusCapitalLimitedengageswithcompanies investedinbytheCompanyoncorporategovernancematterstoencouragegoodpractice.Thisincludesengagementon significantsocialandenvironmentalissueswherethesemayimpactshareholdervalue.

Alternative Investment Funds Directive (AIFMD)

The AIFMD regulates the management of alternative investment funds, including VCTs. The VCT is externally managed under the AIFMD by Calculus Capital Limited which is a small authorised Alternative Investment Fund Manager.

Investment and co-investment policies

Theinvestmentpolicyistoinvestapproximately75percentoftheCompany'sfundsinadiversifiedportfolioofholdings inqualifyinginvestments,whetherunquotedortradedonAIM.Investmentsaremadeselectivelyacrossadiverserangeof sectorsincompanieswhichhavethepotentialtogenerategrowthandenhancetheirvalue.Thebalanceofapproximately 25percentoftheCompany'sfundscanbeinvestedinacombinationofNeptuneIncomeFunds,aportfolioofincome generatingUKquotedshares,andmoneymarketinstruments.

TheCompanymayco-investwithotherfundsmanagedandadvisedbyCalculusCapitalLimited.Theallocationbetween differentfundstakesintoaccountsuchfactorsasthefundsavailableforinvestmentandthetimehorizonofthesefunds, thesizeofapotentialinvestment,andtheexistingsectorexposureofthevariousfunds.

Policy on qualifying investments

Thequalifyinginvestmentsinaparticularcompanymaybemadeinequityshares,loanstocksand/orpreferenceshares whereitisfeltthiswouldenhanceshareholderreturn.Itisintendedthatnoonecompanyshallrepresentmorethan10 percentoftheportfolioandnosectorshallrepresentmorethan20percentofthetotalportfolio,inbothcasesatthe dateofinvestment.TheCompany'spolicyisnottoinvestinstart-uporseedcapitalsituations.Tomeettherequirements ofaVCTqualifyinginvestment,atleast10percentbyvalueofthetotalinvestmentsinanyonequalifyingcompany mustbeinordinaryshareswhichcarrynopreferentialrights.Inaddition,thecompaniesinwhichqualifyinginvestments aremademustbeUKcompaniesthathavenomorethan15millionofgrossassetsatthetimeofinvestment(or7 millionifthefundsbeinginvestedwereraisedafter5April2006).Therearealsorestrictionsontheageofthequalifying companyandonthetotalamountoffundsitcanraise.


VCTregulation

TheCompany'sinvestmentpolicyisdesignedtoensurethatitcontinuestomeettherequirementsforapproved VCTstatus.Amongstotherconditions,theCompanymaynotinvestmorethan15percent,byvalueatthetimeof investment,inasinglecompanyandmusthaveatleast70percentbyvalueofitsinvestmentsthroughouttheperiod insharesorsecuritiesinqualifyingholdings,ofwhich30percentbyvaluemustbeordinaryshareswhichcarryno preferentialrights.

Long term viability of the Company

InassessingthelongtermviabilityoftheCompany,thedirectorshavehadregardtotheguidanceissuedbytheFinancial ReportingCouncil.ThedirectorshaveassessedtheprospectsoftheCompanyforaperiodofthreeyears,whichwas selected because the Company's strategic review covers a three-year period. The Board's three-year strategic review considers the Company's income and expenses, dividend policy, liquid investments and ability to make realisations of qualifyinginvestments.Theseprojectionsaresubjecttosensitivityanalysiswhichinvolvesflexinganumberofthemain assumptions underlying the forecast both individually and in unison. Where appropriate, this analysis is carried out to evaluate the potential impact of the Group's principal risks actually occurring. Based on the results of this analysis, the directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities astheyfalldueoverthethree-yearperiodoftheirassessment.Theprincipalassumptionsusedareasfollows:i)Calculus CapitalLimitedpaysanyexpensesinexcessof3.5percentofnetassetvalueassetoutonpage16oftheReportand Accounts;ii)thelevelofdividendspaidareatthediscretionoftheBoard;iii)theCompany'sliquidinvestmentswhich includecash,moneymarketinstrumentsandNeptunefundscanberealisedaspermittedbytheCompany'sinvestment policy; iv) the illiquid nature of the qualifying portfolio.The Company has a continuation vote in 2018 and the directors havealsolookedattheprojectionswereshareholdersnottovotefortheCompanytocontinue.Basedontheresultsof thisanalysis,thedirectorshaveareasonableexpectationthattheCompanywillbeabletocontinueinoperationand meetitsliabilitiesastheyfalldue.

InmakingthisstatementtheBoardcarriedoutarobustassessmentoftheprincipalrisksfacingtheCompanyincluding thosethatmightthreatenitsbusinessmodel,futureperformance,solvencyorliquidity.

Borrowingpowers

Togiveadegreeofinvestmentflexibilityandtomeetshorttermliquidityrequirements,borrowingispermittedby theCompany'sArticlesofasumwhichdoesnotexceed10percentoftheCompany'ssharecapitalandreserves.The Companyhasnotutilisedthesepowerstodateanddoesnotplantoutilisethisabilityatthecurrenttime.

Principal risks and uncertainties and management of risk

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

- Regulatory

TheCompanyisrequiredatalltimestoobservetheconditionswithintheIncomeTaxAct2007forthemaintenance ofapprovedVCTstatus.Thisinvolvescompliancewithanumberoftestswhich,ifnotmet,couldresultinthelossofa numberoftaxreliefswhicharecurrentlyavailabletoboththeCompanyanditsshareholdersunderitsVCTstatus.The tests are under continual review by Calculus Capital Limited, the administrator and (qualifying) investment managerof the Company. The Board keeps these matters under continual review through the provision of monthly management informationandquarterlyboardmeetings.TheBoardhasalsoretainedtheservicesofaVCTconsultanttoundertakean independent monitoringrole.


- Investment and liquidity risk

ThemajorityoftheCompany'sinvestmentsareinsmallandmediumsizecompaniesasthesemeettheVCTqualifying holdings rules. These companies may not be publicly traded or freely marketable and realisations of such investments canbedifficultandcantakeaconsiderableamountoftime.Theyalso,bytheirnature,tendtocarryhigherriskthana largerorlongerestablishedbusiness.Thisriskisinpartmitigatedbydiversifyingtheinvestmentsandmaintainingaround 25percentoftheCompany'sportfolioinliquidassetstoenableanyshorttermcashrequirementstobemet.Calculus CapitalLimitedfurthermitigatesthisriskbyconsideringexitstrategyatthetimeofmakinginvestments.

- Market pricerisk

Inaddition,theCompanyissubjecttootherpriceriskconstitutinguncertaintyaboutthefuturepricesoffinancial instrumentsheldbytheCompany.ThisriskisinpartmitigatedbydiversifyingtheCompany'sportfolio.TheCompany hasinvestedinloanstocksandasaresultissubjecttocreditrisk.Creditriskisalsoincludedwithinmarketrisk.The CompanymitigatesthisriskthroughtheregularmonitoringoffinancialperformanceofinvesteecompaniesbyCalculus CapitalLimited.

- Otherrisks

The majorityoftheloanstocksarefixedratesotheBoarddoesnotconsiderinterestraterisktobematerial.The Company has no exposure to foreign currency risk, nor does it have any interest bearing liabilities. Further commentis providedonthefinancialinstrumentsrisksoftheCompanyinnote18tothefinancialstatements.

TheBoardregularlyreviewstherisksthebusinessfacesandtheirpotentialimpactontheCompany.TheBoardmonitors theCompany'sperformancethroughtheuseofregularfinancialinformationandadministratorandmanagementreports.

Key performanceindicators

ThekeyperformanceindicatorsarethosethatcommunicatethefinancialperformanceandstrengthoftheCompanyas a whole; these being principally the net asset value per Ordinary Share. Further key performance indicators are those whichshowtheCompany'spositioninrelationtotheVCTtestswhichitisrequiredtomeettomaintainitsVCTstatus.

The performancemeasuresfortheyearareincludedintheFinancialHighlightsonpage1andreportedoninthe Chairman'sstatementonpage2oftheReportandAccounts.

Key strategic issues considered during the year

The key strategic issues considered during the year were:

The performance of theCompany

Thevalueandnatureofinvestmentsmadeandrealisedduringtheyeartoensurethesewereinaccordancewiththe investmentpolicyand/orwhetheranychangesshouldbeproposedtotheinvestmentpolicy.

The InvestmentManager'sReview(QualifyingInvestments)onpages4to7oftheReportandAccountsprovides commentaryontheperformanceoftheCompanyduringtheyear.


The level of dividends paid and proposed

TheBoardconsideredthelevelofdividendstobeproposed,andtheuseofproceedsarisingfromthesaleofoneofthe Company's investments.

Employees, environmental, human rights and communityissues

TheCompanyhasnoemployeesandtheBoardcomprisesentirelynon-executivedirectors.Day-to-daymanagementof theCompany'sbusinessisdelegatedtotheinvestmentmanagers(detailsofthemanagementagreementissetoutin the Directors' Report) and the Company itself has no environmental, human rights, or community policies. In carrying outitsactivitiesandinrelationshipswithsuppliers,theCompanyaimstoconductitselfresponsibly,ethicallyandfairly.

Genderdiversity

TheBoardbelievesthatdiversityofexperienceandapproach,includinggenderdiversity,amongstboardmembersisof great importance and the Board gives careful consideration to issues of board balance and diversity when considering thecompositionoftheBoardandmakingnewappointments.

Statement regarding Annual Report and Accounts

Thedirectorsconsiderthattakenasawhole,theAnnualReportandAccountsisfair,balancedandunderstandableand providestheinformationnecessaryforshareholderstoassesstheCompany'spositionandperformance,businessmodel andstrategy.

By order of the Board

Lesley Watkins Company Secretary

21 March 2017

DIRECTORS' RESPONSIBILITIESSTATEMENT

ThedirectorsareresponsibleforpreparingtheAnnualFinancialReportandtheCompany'sfinancialstatementsin accordance with applicable law andregulations.

Companylawrequiresthedirectorstopreparefinancialstatementsforeachfinancialyear.Underthatlawthedirectors have to prepare the financial statements 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 financialstatementsunlesstheyaresatisfiedthattheygiveatrueandfairviewofthestateofaffairsandprofitorloss oftheCompanyforthatperiod.Inpreparingthesefinancialstatements,thedirectorsarerequiredto:

selectsuitableaccountingpoliciesandthenapplythemconsistently;

makejudgementsandaccountingestimatesthatarereasonableandprudent;

statewhetherapplicableUKAccountingStandardshavebeenfollowed,subjecttoanymaterialdepartures disclosedandexplainedinthefinancialstatements;

preparethefinancialstatementsonthegoingconcernbasisunlessitisinappropriatetopresumethatthe Company will continue inbusiness.

Thedirectorsareresponsibleforkeepingadequateaccountingrecordsthataresufficienttoshowandexplainthe Company'stransactionsanddisclosewithreasonableaccuracyatanytimethefinancialpositionoftheCompanyand enablethemtoensurethatthefinancialstatementsandtheremunerationreportcomplywiththeCompaniesAct 2006.TheyarealsoresponsibleforsafeguardingtheassetsoftheCompanyandhencefortakingreasonablesteps for the prevention and detection of fraud and other irregularities. Under applicable law and regulations, the directors arealsoresponsibleforpreparingaStrategicReport,Directors'Report,Directors'RemunerationReportandCorporate GovernanceStatementthatcomplieswiththatlawandthoseregulations.

ThedirectorsareresponsiblefortheintegrityofthecorporateandfinancialinformationincludedontheCompany's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differfromlegislationinotherjurisdictions.

The financial statements 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 byCalculusCapitalLimitedis,sofarasitrelatestotheCompany,theresponsibilityofCalculusCapitalLimited.The workcarriedoutbytheauditordoesnotinvolveconsiderationofthemaintenanceandintegrityofthiswebsiteand accordingly, the auditors accept no responsibility for any changes that have occurred to the financial statements since theywereinitiallypresentedonthewebsite.VisitorstothewebsiteneedtobeawarethatlegislationintheUnited Kingdomcoveringthepreparationanddisseminationofthefinancialstatementsmaydifferfromlegislationintheirown jurisdiction.

Weconfirmthat,tothebestofourknowledge:(a)thefinancialstatements,preparedinaccordancewithapplicable accountingstandards,giveatrueandfairviewoftheassets,liabilities,financialpositionanddeficitoftheCompany;and

(b)theStrategicReportincludesafairreviewofthedevelopmentandperformanceofthebusinessandthepositionof theCompany,togetherwithadescriptionoftheprincipalrisksanduncertaintiesthatitfaces.

On behalf of the Board

Philip Stephens Chairman

21 March 2017


INCOMESTATEMENT

For the year ended 31 December 2016

Year ended

31 December 2016




Yearended

31 December2015




Revenue


Capital


Total

Revenue


Capital


Total



Note

'000


'000


'000


'000


'000


'000


(Losses)/gains on investments at fair value

9

-


(325)

(325)

-


(389)

(389)

Investment income

3

77


-


77


114


-


114


Investment management fee

4

-


-


-


(4)

(11)

(15)

Other expenses

5

(127)

-


(127)

(141)

-


(141)

Deficit before taxation


(50)

(325)

(375)

(31)

(400)

(431)

Taxation

6

-


-


-


-


-


-


Deficit attributable to Ordinary shareholders


(50)

(325)

(375)

(31)

(400)

(431)

Deficit per Ordinary Share

8

(0.45

)p (2.89

)p (3.34

)p (0.27

)p (3.54

)p (3.81

)p

The total column is the profit and loss account of the Company. The revenue and capital columns are provided as supplementary information in accordance with the AIC SORP.

Allitemsintheabovestatementderivefromcontinuingoperations.Nooperationswereacquiredordiscontinuedin theyear.

There is no other comprehensive income as there were no other gains and losses.

The notes to the financial statements on pages 35 to 48 of the financial statements form an integral part of this statement.


STATEMENT OF CHANGES INEQUITY

For the year ended 31 December 2016



Share capital

Special reserve

Capital

redemption

reserve

Capital reserves

Revenue reserve

Total


Note

'000

'000

'000

'000

'000

'000

For the year ended

31 December2016

1 January 2016


1,131

7,395

510

(4,505)

(85)

4,446

Net deficit after taxation for the year





(325)

(50)

(375)

Shares bought back for cancellation

13

(10)

(40)

10



(40)

Dividends paid

7


(392)




(392)

31 December 2016


1,121

6,963

520

(4,830)

(135)

(3,639)

For the year ended

31 December2015

1 January 2015


1,131

8,356

510

(4,105)

(54)

5,838

Net deficit after taxation for the year


-

-

-

(400)

(31)

(431)

Dividends paid

7

-

(961)

-

-

-

(961)

31 December 2015


1,131

7,395

510

(4,505)

(85)

4,446

The notes to the financial statements on pages 35 to 48 of the financial statements form an integral part of this statement.


STATEMENT OF FINANCIALPOSITION

As at 31 December 2016




Year ended

31 December 2016

Year ended

31 December 2015


Note

'000

'000

FixedAssets




Investments at fair value through profit or loss

9

3,645

4,085

CurrentAssets

Debtors

11

25

34

Cash at bank


37

392



62

426

Creditors: Amounts falling due within oneyear

Creditors

12

(68)

(65)

Net Current Assets


(6)

361

Net Assets


3,639

4,446

Representedby:

CALLED UP SHARE CAPITAL AND RESERVES

Share capital

13

1,121

1,131

Special reserve

14

6,963

7,395

Capital redemption reserve

14

520

510

Capital reserve

14

(4,830)

(4,505)

Revenue reserve

14

(135)

(85)

Total Ordinary shareholders' funds


3,639

4,446

Net asset value per Ordinary Share

15

32.46p

39.31p

The notes to the financial statements on pages 35 to 48 of the financial statements form an integral part of this statement.

Thefinancialstatementsonpages31to48wereapprovedbytheBoardofdirectorsonandweresignedonitsbehalfby: PhilipStephens

Director

21 March 2017


STATEMENT OF CASHFLOWS

For the year ended 31 December 2016

Year ended

31 December

2016

Year ended

31 December

2015


Note

'000

'000

Cash flows from operating activities

Investment income received


82

108

Investment management fees refunded/(paid)


7

(67)

Administration fees paid


(12)

(26)

Other cash payments


(115)

(116)

Net cash used in operating activities

16

(38)

(101)

Cash flows from investing activities

Purchase of investments


(651)

(975)

Sale of investments


766

450

Net cash inflow/(outflow) from investing activities


115

(525)

Cash flows from financing activities

Equity dividends paid

7

(392)

(961)

Purchase of own shares


(40)

-

Net cash used in financing activities


(432)

(961)

Decrease in cash and cash equivalents


(355)

(1,587)

Cash and cash equivalents at the beginning of the year


392

1,979

Cash and cash equivalents at the end of the year


37

392

Thenotestothefinancialstatementsonpages35to48of the financialstatementsformanintegralpartofthis statement.


NOTES TO THE FINANCIALSTATEMENTS

1 Companyinformation

TheCompanyisincorporatedinEnglandandWalesandoperatesundertheCompaniesAct2006(theAct)andthe regulationsmadeundertheActasapubliccompanylimitedbyshares,withregisterednumber05300876.Theregistered officeoftheCompanyis104ParkStreetLondonW1K6NF.

2 Basis ofpreparation

Basis ofaccounting

The financial statements have been prepared on a basis compliant with applicable United Kingdom accounting standards,includingFinancialReportingStandard102-TheFinancialReportingStandardapplicableintheUnited KingdomandRepublicofIreland('FRS102')andwiththeAct.Thedirectorshavepreparedthefinancialstatementsona basis compliant with the recommendations of the Statement of Recommended Practice November 2014 ("the SORP") updatedinJanuary2017forInvestmentTrustCompaniesandVentureCapitalTrustsproducedbytheAssociationof Investment Companies("AIC").

The financial statements are presented in Sterling ().

Goingconcern

AfterreviewingtheCompany'sforecastsandprojections,thedirectorshaveareasonableexpectationthattheCompany hasadequateresourcestocontinueinoperationalexistenceforatleast12monthsfromthedateofsigningthisreport. TheCompanythereforecontinuestoprepareitsfinancialstatementsonthegoingconcernbasisandonthebasisthat itsVCTstatuswillcontinuetobemet.

Significant judgements andestimates

Preparationsofthefinancialstatementsrequiresmanagementtomakesignificantjudgementsandestimates.Theitems inthefinancialstatementswherethesejudgementsandestimateshavebeenmadeareinthevaluationofunquoted investments.Thevaluationmethodologiesusedwhenvaluingunquotedinvestmentsprovidearangeofpossiblevalues. Judgementsareusedtoestimatewhereintherangethefairvaluelies.Thesensitivityanalysisinnote18demonstrates theimpactontheportfolioofapplyingalternativevaluesintheupsideanddownside.

As at 31 December 2016 the value of unquoted investments included within the Company's investment portfolio was

1,984,720(2015:2,193,518).Theseinvestmentsarevaluedinaccordancewiththeaccountingpolicydisclosedunder note9investments.

Principal accounting policies

Investments

TheCompanyhasadoptedFRS102sections11and12fortherecognitionoffinancialinstruments.TheCompany's businessisinvestinginfinancialassetswithaviewtoprofitingfromtheirtotalreturnintheformofincreasesinfair value.Fairvalueistheamountforwhichanassetcanbeexchangedbetweenknowledgeable,willingpartiesinanarm's lengthtransaction.TheCompanymanagesandevaluatestheperformanceoftheseinvestmentsonafairvaluebasisin accordance with its investment strategy, and information about the investments is provided on this basis to the Board ofdirectors.

Investmentsheldatfairvaluethroughprofitorlossareinitiallyrecognisedatfairvalue,beingtheconsiderationgiven andexcludingtransactionorotherdealingcostsassociatedwiththeinvestment,whichareexpensedandincludedinthe capitalcolumnoftheIncomeStatement.


Afterinitialrecognition,investments,whichareclassifiedasatfairvaluethroughprofitorloss,aremeasuredatfair value.Gainsorlossesoninvestmentsclassifiedasatfairvaluethroughprofitorlossarerecognisedinthecapitalcolumn oftheIncomeStatement,andallocatedtothecapitalreserve-other,andcapitalreserve-investmentholdinglossas appropriate.

Aggregatetransactionanddealingcostsincludedindisposalsandadditionsaredisclosedinnote9tothefinancial statements.Allpurchasesandsalesofquotedinvestmentsareaccountedforonthetradedatebasis.Allpurchases andsalesofunquotedinvestmentsareaccountedforonthedatethatthesaleandpurchaseagreementbecomes unconditional.

Forquotedinvestmentsandmoneymarketinstrumentsfairvalueisestablishedbyreferencetobid,orlast,marketprices dependingontheconventionoftheexchangeonwhichtheinvestmentisquotedatthecloseofbusinessonthebalance sheetdate.

Unquotedinvestmentsarevaluedusinganappropriatevaluationtechniquesoastoestablishwhatthetransactionprice would have been at the balance sheet date. Such investments are valued in accordance with the International Private EquityandVentureCapital("IPEVC")guidelines.Primaryindicatorsoffairvaluearederivedfromearningsorsales multiples, using discounted cash flows, recent arm's length market transactions by independent third parties, fromnet assets,orwhereappropriate,atpriceofrecentinvestments.

PremiumsonloanstockinvestmentsandpreferencesharesareaccruedatfairvaluewhentheCompanyhastheright toreceivethepremiumandexpectstodoso.RedemptionpremiumsareallocatedtotherevenuecolumnoftheIncome Statement.

Cashandcashequivalents

Cashcomprisescashonhandanddemanddeposits.Cashequivalentsdoesnotincludeliquidityfundinvestmentsasthe Company does not consider the risk associated with changes in value to beinsignificant.

Debtors Shorttermdebtorsaremeasuredattransactionprice,lessanyimpairment.

Creditors Shorttermtradecreditorsaremeasuredatthetransactionprice.

Income

Dividendsreceivableonequitysharesandonunquotedfundsarerecognisedasincomeonthedateonwhichthe sharesorunitsaremarkedasex-dividend.Wherenoex-dividenddateisavailable,theincomeisrecognisedwhenthe Company'srighttoreceiveithasbeenestablished.

Interestincomeonloanstockanddividendsonpreferencesharesareaccruedonadailybasis.Provisionismadeagainst thisincomewhererecoveryisdoubtful.

Interestreceivablefromfixedincomesecuritiesisrecognisedusingtheeffectiveinterestratemethod. Interestreceivableonbankdepositsisincludedinthefinancialstatementsonanaccrualsbasis.

OtherincomeiscreditedtotherevenuecolumnoftheIncomeStatementwhentheCompany'srighttoreceivethe income isestablished.


Expenses

Allexpensesareaccountedforonanaccrualsbasis.ExpensesarechargedthroughrevenueintheIncomeStatement except asfollows:

- costswhichareincidentaltotheacquisitionordisposalofaninvestmentaretakentothecapitalcolumnofthe Income Statement;

- expensesarechargedtothecapitalcolumnintheIncomeStatementwhereaconnectionwiththemaintenance orenhancementofthevalueoftheinvestmentscanbedemonstrated.Inthisrespectinvestmentmanagement feeshavebeenallocated75percenttothecapitalcolumnand25percenttotherevenuecolumnintheIncome Statement,beinginlinewiththeBoard'sexpectedlong-termsplitofreturns,intheformofcapitalgainsand revenuerespectively,fromtheinvestmentportfoliooftheCompany;

- expensesassociatedwiththeissueofsharesaredeductedfromthesharepremiumaccount.

Reserves Specialreserve

ThespecialreservewascreatedbyareductioninthesharepremiumaccountbyorderoftheHighCourt.Itcanbeused fortherepurchaseoftheCompany'sordinarysharesandforthepaymentofdividends.

InaccordancewiththeAICSORP,theconsiderationpaidforsharesboughtforcancellationisshownasareductionof thespecialreserve.

Capital redemption reserve

The capital redemption reserve accounts for amounts by which the issued capital is diminished through the repurchase of the Company's own shares.

Capital reserve - other

The following are accounted for in this reserve:

- gains and losses on disposal ofinvestments;

- transactioncostswhichareincidentaltotheacquisitionofinvestments;

- 75%ofinvestmentmanagementfeeexpenses,togetherwithanyrelatedtaxeffect,ischargedtothecapital columnoftheIncomeStatementinaccordancewiththeabovepolicies;and

- 100% of performance incentivefees. Capital reserve - investment holdingloss

The following are accounted for in this reserve:

- movementsinthefairvalueofinvestmentsheldattheyearend. Revenuereserve

TherevenuereserverepresentsthebalanceofrevenueretainedwithintheCompanyafterthepaymentofanydividends.

Taxation

UnderFRS102,deferredtaxmustberecognisedinrespectofalltimingdifferencesthathaveoriginatedbutnotreversed atthereportingdatewheretransactionsoreventsthatresultinanobligationtopaymoretaxinthefuturehaveoccurred atthereportingdate.Thisissubjecttodeferredtaxassetsonlybeingrecognisedifitisconsideredmorelikelythannotthat therewillbesuitableprofitsfromwhichthefuturereversalsoftheunderlyingtimingdifferencescanbededucted.Timing differencesaredifferencesbetweentheCompany'staxableprofitsanditsresultsasstatedinthefinancialstatements.


Deferredtaxismeasuredattheaveragetaxratesthatareexpectedtoapplyintheperiodsinwhichthetimingdifferences areexpectedtoreverse,basedontaxratesandlawsthathavebeenenactedorsubstantiallyenactedbythebalance sheetdate.Deferredtaxismeasuredonanon-discountedbasis.

NotaxationliabilityarisesongainsfromsalesoffixedassetinvestmentsbytheCompanybyvirtueofitsventurecapital truststatus.However,thenetrevenue(excludingUKdividendincome)accruingtotheCompanyisliabletocorporation tax at the prevailingrates.

Anytaxreliefobtainedinrespectofmanagementfeesallocatedtocapitalisreflectedinthecapitalreserve-otheranda correspondingamountischargedagainstrevenue.Thereliefistheamountbywhichcorporationtaxpayableisreduced as a result of capitalexpenses.

Dividends

Dividendstoshareholdersareaccountedforintheyearinwhichtheyarepaidorapprovedingeneralmeetings.Dividends payabletoequityshareholdersarerecognisedintheStatementofChangesinEquitywhentheyarepaid,orhavebeen approvedbyshareholdersinthecaseofafinaldividendandbecomealiabilityoftheCompany.

Sharebuybacks

Where shares are purchased for cancellation, the consideration paid, including any directly attributable incremental costs,isdeductedfromdistributablereserves.AsrequiredbytheCompaniesAct2006,theequivalentofthenominal valueofsharescancelledistransferredtocapitalredemptionreserve.

3 Income


Year ended 31 December 2016

Year ended 31 December 2015


'000

'000

Income from quotedinvestments

UK dividend income

31

52

Unfranked investment income

-

-


31

52

Income from unquotedinvestments

Unfranked investment income

46

62


46

62




Total income

77

114

Total income comprises



Dividends

31

52

Interest

46

62

Total income

77

114

All income arose in the United Kingdom.

The Board considered operating segments and considered there to be one, that of investing in financial assets.


4 Investment managementfee

Year ended 31 December 2016


Year ended 31 December 2015

Revenue

Capital

Total

Revenue

Capital

Total


'000

'000

'000

'000

'000

'000

Investment management fee

15

47

62

21

62

83

Claw back of excess expenses

(15)

(47)

(62)

(17)

(51)

(68)


-

-

-

4

11

15

Administration fee

12

-

12

17

-

17

Claw back of excess expenses

(12)

-

(12)

-

-

-


-

-

-

17

-

17

Expense contribution from the manager

(6)

-

(6)

-

-

-

Total (due from)/due to the Manager

(6)

-

(6)

21

11

32

Fortheyearended31December2016,CalculusCapitalLimitedwaived61,828(2015:68,455)ofitsfeesrelatingto investmentmanagement,and12,366(2015:nil)ofitsfeesrelatingtoadministration.Afurtherexpensecontributionof

6,144(2015:nil)wasmadebyCalculusCapitalLimitedtotheCompany.At31December2016,therewas6,144due totheCompanyfromCalculusCapitalLimited(31December2015:duetoCalculusCapitalLimited5,259).Detailsofthe termsandconditionsoftheinvestmentmanagementagreementaresetoutunder"Management"intheDirectors'Report.

5 Deficit before taxation

The deficit before taxation is stated after:

Year ended 31 December 2016

Year ended 31 December 2015


'000

'000

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

23

22

FeespayabletotheCompany'sauditorforotherservices:

Tax compliance services

-

7

Directors' remuneration and social security contributions

29

26

Expenses contribution from the manager

(6)

-

Other expenses

81

86


127

141

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

6 Taxation

Year ended 31 December 2016


Year ended 31 December 2015

Revenue

Capital

Total

Revenue

Capital

Total


'000

'000

'000

'000

'000

'000

UK Corporation Tax

-

-

-

-

-

-

ThetaxassessedfortheyearislowerthanthestandardrateofcorporationtaxIntheUnitedKingdomat20%(2015: 20.25%) The differences are explained asfollows

Deficit before taxation:

(50)

(325)

(375)

(31)

(400)

(431)

Deficit multiplied by Corporation Tax at 20% (2015: 20.25%)

(10)

(65)

(75)

(6)

(81)

(87)

Effectof:

UK dividends not chargeable to tax

(6)

-

(6)

(11)

-

(11)

Non-taxable losses


65

65

-

79

79

Excess expenses for the year

16

-

16

17

2

19

Total tax charge

-

-

-

-

-

-


The corporation tax rate remained at 20% throughout 2016.

At31December2016,theCompanyhad1,516,639(31December2015:1,437,541)ofexcessmanagementexpenses tocarryforwardagainstfuturetaxableprofits.Thedeferredtaxassetof257,829(31December2015:259,974)has notbeenrecognisedduetothefactthatitisunlikelytheexcessmanagementfeeswillbesetoffintheforeseeablefuture.

7 Dividends

Year ended 31 December 2016

Year ended 31 December 2015


'000

'000

Paid during the year:



2015 Special dividend: nil (2014: 5.0p) per Ordinary Share

-

565

2015 Final dividend: 2.0p (2014: 2.0p) per Ordinary Share

224

226

2016 Interim dividend: 1.5p (2015: 1.5p) per Ordinary Share

168

170


392

961

Declared post year end:



2016 Final dividend: 2.0p (2015: 2.0p) per Ordinary Share

224

226

TheCompanypaidafinaldividendinJune2016of2.0pperOrdinaryShare(2015:2.0p)andaninterimdividendin October2016of1.5pperOrdinaryShare(2015:1.5p).Thedirectorsareproposingafinaldividendof2.0pperOrdinary Shareinrespectoftheyearended31December2016(2015:2.0p).Subjecttoshareholderapproval,thisdividendwill bepaidon30June2017toshareholdersontheregisteron31May2017.

8 Basic and diluted earnings per share

Year ended 31 December 2016


Year ended 31 December2015



Revenue

Capital

Total

Revenue

Capital

Total



pence

pence

pence

pence

pence

pence


Ordinary Share

(0.45

(2.89)p

(3.34)p

(0.27)p

(3.54)p

(3.81

)p

Basic and diluted earnings per Ordinary Share is based on the net revenue deficit attributable to the Ordinary Shares of

50,442(2015:deficitof29,939)andon11,232,367(31December2015:11,311,329)OrdinaryShares,beingthe weightedaveragenumberofOrdinarySharesinissueduringtheyear.

BasicanddilutedcapitaldeficitperOrdinaryShareisbasedonthenetcapitaldeficitfortheyearof325,015(2015: return of 400,614) and on 11,232,367 (31 December 2015: 11,311,329) Ordinary Shares, being the weighted average numberofOrdinarySharesinissueduringtheyear.

Basic and diluted total deficit per Ordinary Share is based on the total deficit attributable to the Ordinary Shares of

375,457(2015:returnof430,553)andon11,232,367(31December2015:11,311,329)OrdinaryShares,beingthe weightedaveragenumberofOrdinarySharesinissueduringtheyear.

As the Company has not issued any convertible securities or share options, there is no dilutive effect on return per share.


9 Investments at fair value through profit or loss


Year Ended 31 December 2016

Year Ended 31 December 2015


'000

'000

AIM investments

333

236

Quoted Neptune income funds

998

978

Unquoted investments

1,985

2,193

Money market instruments

329

678


3,645

4,085





'000

'000

Opening book cost

5,422

5,414

Opening investment holding losses

(1,337)

(1,465)

Opening valuation

4,085

3,949




Movements in the year:



Purchases at cost

651

975

Sales - proceeds

(766)

(450)

- realised losses on sales

(1,828)

(517)

Movement in investment holding losses

1,503

128

Closing valuation

3,645

4,085

Closing book cost

3,479

5,422

Closing unrealised gains/(losses)

166

(1,337)

Closing valuation

3,645

4,085





'000

'000

Loss on disposal of investments

(1,828)

(517)

Movement in investment holding gains

1,503

128

Total losses on investments

(325)

(389)

Intheyearto31December2016,DrydenHumanCapitalGroupLimitedwaswrittendownby50,000asitwassoldfor noreturntoequityshareholdersinJanuary2017.TerrainEnergyLimitedandRMSEuropeLimitedwerewrittendownby

49,521 and 62,171 respectively due to adverse trading conditions. The holding in Human Race Group Limited which cost 400,000 was sold for 429,744.

Therehavenotbeenanytransactioncostsintheyearto31December2016,norintheyearto31December2015. Note18tothefinancialstatementsprovidesadetailedanalysisofinvestmentsheldatfairvaluethroughprofitorloss.

10 Significant interests

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


Class of shares

Number held

Proportion of class held

Terrain Energy Limited

Ordinary 1

412,677

5.7%

RMS Europe Limited

Ordinary 1

85,166

4.5%

11 Debtors


Year Ended

31 December 2016

Year Ended

31 December 2015


'000

'000

Accrued income

15

10

Other debtors and prepayments

10

24


25

34


12 Creditors - amounts falling due within one year


Year Ended

31 December 2016

Year Ended

31 December 2015


'000

'000

Accruals and other creditors

68

65

13 Called up share capital Ordinary Shares

Issued and fully paid:

Year Ended

31 December 2016

Year Ended

31 December 2015

Ordinary Shares of 10p each

Number

'000

Number

'000

As at 1 January

11,311,329

1,131

11,311,329

1,131

Buy back of shares for cancellation

(100,000)

(10)

-

-

As at 31 December

11,211,329

1,121

11,311,329

1,131

During the year the Company purchased for cancellation 100,000 Ordinary Shares of 10p (2015:nil) at a price of 39 pence per share. The consideration was 39,000 (2015:nil) including stamp duty.

14 Reserves


Special reserve

Capital redemption

reserve

Capital reserve

- other

Capital

reserve - investment

holding

loss

Revenue reserve


'000

'000

'000

'000

'000

At 1 January 2016

7,395

510

(3,168)

(1,337)

(85)

Loss on sales

-

-

(1,828)

-

-

Movement in investment holding losses

-

-

-

1,503

-

Investment management feecharged to capital

-

-

-

-

-

Shares bought back for cancellation

(40)

10

-

-

-

Dividends paid

(392)

-

-

-

-

Retained net loss for the year

-

-

-

-

(50)

At 31 December 2016

6,963

520

(4,996)

166

(135)

TheSpecialreservewascreatedto(i)createadistributablereservewhichcanbeusedbytheCompanytofundpurchases ofitsownshares;(ii)toenabletheCompanytooffsettheeffectsofanyfutureunrealisedlossesonfuturedividends payableinrespectofshares;and(iii)sincetheCompanyrevokeditsstatusasaninvestmentcompany,foranyother purpose.TheCompanyisthereforeabletomakedistributionsoutoftheaggregateofitsRevenuereserve,Specialreserve andCapitalreserves,excludinganygainsarisingonthevaluationofunquotedinvestments.

15 Net asset value per share


Year Ended

31 December 2016

Year Ended

31 December 2015


pence

pence

Ordinary Shares of 10p each

32.46

39.31

The basic and diluted net asset value per Ordinary Share is based on net assets (including current year revenue) of

3,639,000(31December2015:4,446,002)andon11,211,329(31December2015:11,311,329)OrdinaryShares, beingthenumberofOrdinarySharesinissueattheendoftheyear.


16 Reconciliation of net (deficit)/return before finance charges and taxation to net cash outflow

from operatingactivities


Year ended

31 December 2016

Year ended

31 December 2015


'000

'000

Net deficit before finance charges and taxation

(375)

(431)

Net capital deficit/(return)

325

400

(Increase)/decrease in debtors

9

(13)

(Decrease)/ increase in creditors

3

(46)

Investment management fee charged to capital

-

(11)

Net cash outflow from operating activities

(38)

(101)

17 Financialcommitments

At31December2016and2015theCompanydidnothaveanyfinancialcommitmentswhichhadnotbeenaccrued.

18 Financial RiskManagement

TheobjectiveoftheCompanyistogeneratelongtermcapitalgrowthandtaxfreedividendsforinvestors.Theinvestment policyistoinvestapproximately75percentoftheCompany'sfundsinadiversifiedportfolioofholdingsinqualifying investments, whether unquoted or traded on AIM. Investments are made selectively across a diverse range of sectors incompanieswhichhavethepotentialtogenerategrowthandenhancetheirvalue.Theinvestmentsinaparticular companymaybemadeinloanstocksorpreferencesharesaswellasequityshareswhereitisfeltthiswouldenhance shareholder return. In accordance with the Company's risk averse approach, the investment manager will only invest whenitbelievesithasidentifiedtherightinvestmentopportunity.Thebalanceofapproximately25percentofthe Company's funds can be invested in a combination of Neptune income funds, a portfolio of similar income generating UKlistedsharesandmoneymarketinstruments.

Thetenlargestholdingsbyvalueandtheamountsinvestedinquotedequity,unquotedequity,unquotedbonds,unquoted preferenceshares,quotedfundsandunquotedfundsaresetoutintheInvestmentPortfolio,onpage8oftheReport andAccounts.

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

The Company has no direct exposure to foreign currency risk.

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

- Market pricerisk

- Interestraterisk

- Liquidityrisk

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 managementinformation andquarterlyboardmeetings.

(i) Market pricerisk

Marketpriceriskarisesfromuncertaintyaboutthefuturepricesoffinancialinstrumentsheldinaccordancewiththe Company'sinvestmentobjectives.ItrepresentsthepotentiallossthattheCompanymightsufferthroughholdingmarket positionsinthefaceofmarketmovements.Thisriskismonitoredbytheinvestmentmanageronaregularbasisandby theBoardatmeetingswiththeinvestmentmanager.


The Board reviews each investment purchase in the qualifying portfolio to ensure that any acquisition allowsthe CompanytomaintainanappropriatespreadofotherpriceriskandthatitfallswithintheVCTqualifyingcriteriaatthe timeofpurchase.Itconsiderstheassociatedbusinessrisksofeachinvestment.Theseinclude,butarenotrestrictedto, theindustrysector,managementexpertiseandfinancialstabilityofeachcompany.

TheCompanydoesnotusederivativeinstrumentstohedgeagainstmarketpricerisk.Themaximumpotentialexposure tomarketpriceriskisthevalueoftheinvestmentportfolioasat31December2016of3,645,000(31December2015:

4,085,000).

TheBoardbelievesthattheCompany'sassetsaremainlyexposedtomarketpricerisk,astheCompanyholdsmostof itsassetsintheformofinvestmentsinVCTqualifyingsmallUKcompanieswhoseequitysharesareeitherquotedor valued by reference to the share prices of quoted comparable companies and are thus subject to market movements. TheBoardconsidersthatinvestmentsinloanstockand/orpreferencesharesmayalsobesensitivetochangesinquoted sharepricesasthevalueofthesefinancialinstrumentscanbedeterminedwithreferencetotheenterprisevalueofthe investeecompanywhichmaybebasedonthevalueofquotedcomparablecompanies.

Thetablebelowshowstheimpactuponreturnandnetassetvaluepershareifthereweretobea10percent(31 December2015:10percent)movementinoverallshareprices,andassumes:

- thateachofthesharesandtheNeptunefundsheldbytheCompanyproducesanoverallmovementof10per cent,and

- thevaluesoftheloanstocksandliquidityfundsarenotaffectedbyamarketmovementofthissize,and

- thattheactualportfolioofinvestmentsheldbytheCompanyisperfectlycorrelatedtothisoverallmovementin shareprices.Shareholdersshouldhowevernotethatthislevelofcorrelationishighlyunlikelyinreality.

If overall share prices fell/rose by 10 per cent (2015: 10 per cent), with all other variables other than investment management fees held constant:


Year Ended 31 December 2016

Return and net assets


Year Ended 31 December 2015

Return and net assets


'000 '000

(Decrease)/increaseinreturn (297)/297 (271)/271 (Decrease)/increaseinnetassetvalueperOrdinaryShare (2.74)p/2.74p (2.40)p/2.40p

Adecreaseof296,821(31December2015:271,354)inthenetassetsoftheCompanywouldhaveincreasedthe manager'scontributiontoexpensesby10,766(31December2015:9,497).Anincreaseof296,821(31December 2015: 271,354) would have increased the investment management and admin fees payable by 4,622 (31 December 2015: 9,497) and reduced the expenses contribution to nil (31 December2015:nil).

The impactofachangeof10percenthasbeenselected,asincurrentmarketconditions,anincrease/(decrease)inthe aggregatevaluesofinvestmentsinsharesandNeptunefundsby10percentisreasonablypossiblebasedonhistorical changes that have beenobserved.

TheBoardconsiderscreditrisktobepartofmarketrisk.Thefailureofacounterpartytoatransactiontodischarge itsobligationsunderthattransactioncouldresultintheCompanysufferingaloss.TheCompanymanagesthisrisk byensuringthatwhereaninvestmentismadeinanunquotedloan,itismadeaspartoftheoverallequityanddebt package.Therecoverabilityofthedebtisassessedaspartoftheoverallinvestmentprocessandisthenmonitoredon anongoingbasisbytheinvestmentmanagerwhoreportstotheBoardonanyrecoverabilityissues.Italsoensuresthat cashatbankisheldonlywithreputablebankswithhighqualityexternalcreditratings.NoneoftheCompany'sfinancial assetsaresecuredbycollateralorothercreditenhancements.Themaximumexposuretocreditriskasat31December 2016was3,707,000(31December2015:4,511,000).


AllquotedsharesoftheCompanywhicharetradedonarecognisedexchangeareheldbyReykerSecuritiesplc,the Company'scustodian.TheBoardregularlymonitorstheCompany'sriskbyreviewingassessmentsofthecustodian submittedbytheinvestmentmanager.

(ii) Interest raterisk

Interestisearnedoncashbalancesandmoneymarketfundsandislinkedtothebanks'variabledepositrates.TheBoard doesnotconsiderinterestraterisktobematerial.Interestrateriskarisingonloanstockinstrumentsisnotconsidered significant,asthemainrisksontheseinvestmentsarecreditriskandmarketpricerisk.Theinterestrateearnedonthe loanstockinstrumentshasbeendisclosedbelow:

Effective Interest rate

on 31 December 2016

%

Solab Group Limited

12.0

Dryden Human Capital Group Limited

15.0

On31December2016,therewas8,507(2015:4,747)inloanstockinterestoverduefromDrydenHumanCapital GroupLimited.

The Company does not have any interest bearing liabilities.

Ananalysisoffinancialassetsandliabilities,whichidentifiestheriskoftheCompany'sholdingofsuchitemsisprovided. 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 tablebelow:

Year Ended

31 December 2016

Year Ended

31 December 2015


Fair value interest rate

risk

Cash flow interest rate

risk

Fair value interest rate

risk

Cash flow interest rate

risk


'000

'000

'000

'000

Loan stock

240

-

599

-

Money market funds

-

329

-

678

Cash

-

37

-

392


240

366

599

1,070

Thevariablerateisbasedonthebanks'depositrate,andappliestocashbalancesheldandthemoneymarketfunds. The benchmark rate which determines the interest payments received on interest bearing cash balances is the Bank of Englandbaseratewhichwas0.25percentasat31December2016(31December2015:0.5percent).

(iii) Liquidityrisk

TheinvestmentstheCompanyholdsincludeAIMquotedsecuritieswheretheliquidityisgenerallybelowthatofsecurities listed/quotedonthemainmarketanditalsoholdsunquotedinvestmentswherethereisnoreadymarketforthesecurities. TheabilityoftheCompanytorealisepositionsmaythereforeberestrictedwhentherearenowillingpurchasers.

The Board, which monitors the Company's overall liquidity risk, seeks to ensure that an appropriate proportion of the Company'sinvestmentportfolioisinvestedincashandreadilyrealisablesecurities,whicharesufficienttomeetany fundingcommitmentsthatmayarise.

At31December2016,theCompanyheld1,364,000(31December2015:2,048,000)incashandreadilyrealisable securities(includingtheinvestmentsintheNeptuneIncomeFundandNeptuneQuarterlyIncomeFund)topayaccounts payableandaccruedexpenses.


Fairvaluehierarchy InvestmentsheldatfairvaluethroughprofitandlossarevaluedinaccordancewithIPEVCguidelinesasfollows:

Valuation Methodology

Year ended

31 December 2016

Year ended

31 December 2015


'000

'000

Quoted market bid price

1,660

1,892

Expected recoverable amount

240

59

Discounted cash flow

719

27

Earnings multiple

-

599

Recent investment price

300

-

Sales multiple

-

475

Precedent transaction multiple

-

257

Reserves multiple

726

776


3,645

4,085

Thevaluationmethodusedwillbethemostappropriatevaluationmethodologyforaninvestmentwithinitsmarket,with regardtothefinancialhealthoftheinvestmentandtheIPEVCAguidelines.

Inordertoprovidefurtherinformationonthevaluationtechniquesusedtomeasureassetscarriedatfairvalue,the measurementbasesarecategorisedintoa"fairvaluehierarchy"asfollows:

- Quotedmarketpricesinactivemarkets-"Level1"

InputstoLevel1fairvaluesarequotedpricesforidenticalassetinanactivemarket.Quotedinanactivemarketinthis contextmeansquotedpricesarereadilyandregularlyavailableandthosepricesrepresentactualandregularlyoccurring markettransactionsonanarm'slengthbasis.Thequotedpriceisusuallythecurrentbidprice.TheCompany'sinvestments inAIMquotedequities,moneymarketfundsandthequotedNeptunefundsareclassifiedwithinthiscategory.

- Valued using models with significant observable market inputs - "Level2"

InputstoLevel2fairvaluesareinputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheasset, eitherdirectlyorindirectly.TheCompanyhasnoinvestmentsclassifiedwithinthiscategory.

- Valued using models with significant unobservable market inputs - "Level3"

InputstoLevel3fairvaluesareunobservableinputsfortheasset.Unobservableinputsmayhavebeenusedtomeasure fairvaluetotheextentthatobservableinputsarenotavailable,therebyallowingforsituationsinwhichthereislittle,if any,marketactivityfortheassetatthemeasurementdate(ormarketinformationfortheinputstoanyvaluationmodels). Assuch,unobservableinputsreflecttheassumptionstheCompanyconsidersthatmarketparticipantswouldusein pricingtheasset.TheCompany'sunquotedequities,preferencesharesandloanstockareclassifiedwithinthiscategory. Asexplainedinnote1,unquotedinvestmentsarevaluedinaccordancewiththeIPEVCAguidelines.


Financial assets at fair value through

profit or loss for year ended 31 December

2016


Level 1

Level 2

Level 3

Total


'000

'000

'000

'000

Equity investments

333

-

1,745

2,078

Fixed interest investments

-

-

240

240

Preference share investments

-

-

-

-

Money market funds

329

-

-

329

Quoted Neptune income funds

998

-

-

998


1,660

-

1,985

3,645

Financial assets at fair value through profit or loss for year ended 31 December

2015


Level 1

Level 2

Level 3

Total


'000

'000

'000

'000

Equity investments

236

-

1,595

1,831

Fixed interest investments

-

-

598

598

Preference share investments

-

-

-

-

Money market funds

678

-

-

678

Quoted Neptune income funds

978

-

-

978


1,892

-

2,193

4,085

Inordertomaintaindisclosuresinlinewithprioryear,theCompanyhasearlyadoptedthechangestoFRS102published bytheFRCinMarch2016.

Invaluingtheunquotedportfolio,theinputsincludethediscountrateusedwhenperformingthediscountedcashflow analysisandthemultipleappliedinuniversaltransactionandcomparablecompanyanalysis.Theportfoliohasbeen reviewedandbothdownsideandupsidereasonablepossiblealternativeassumptionshavebeenidentifiedandapplied tothevaluationofeachoftheunquotedinvestments.Applyingthedownsidealternativesthevalueoftheunquoted investmentportfoliowouldbe86,293(31December2015:565,003)or7.9percent(31December2015:25.8per cent)lower.Usingtheupsidealternativesthevalueoftheunquotedinvestmentportfoliowouldbeincreasedby96,225 (31December2015:715,134)or8.9percent(31December2015:32.6percent)higher.

Financialliabilities

TheCompanyfinancesitsoperationsthroughitsissuedsharecapitalandexistingreserves.Theonlyfinancialliabilitiesof theCompanyarecreditorsallofwhicharesterlingdenominatedandareduewithinoneyear.Thecreditorsaredisclosed innote12.Nointerestispaidontheseliabilities.

Capital management policies andprocedures

TheCompany'scapitalmanagementobjectivesaretoensurethatitwillbeabletocontinueasagoingconcernandto maximisetheincomeandcapitalreturntoitsOrdinaryshareholders.

TheBoard,withtheassistanceoftheinvestmentmanagermonitorsandreviewsthebroadstructureoftheCompany's capitalonanongoingbasis.Thisreviewincludestheplannedlevelofgearing,whichtakesaccountoftheManager's viewsonthemarket;theneedfornewissuesofequityshares;andtheextenttowhichrevenueinexcessofthatwhich isrequiredtobedistributedshouldberetained.ThecapitaloftheCompanyismadeupofcalledupsharecapitaland reservesasdetailedonthestatementoffinancialpositiononpage33oftheReportandAccounts.


19 Related PartyTransactions

CalculusCapitalLimitedreceivesaninvestmentmanager'sfeefromtheCompany.AsdisclosedinNote4,fortheyear ended31December2016,CalculusCapitalLimitedwaived61,826(2015:68,455)ofitsfees,andcontributeda further6,144(2015:nil)towardstheexpensesoftheCompany.At31December2016,therewas6,144dueback fromCalculusCapitalLimited(31December2015:duetoCalculusCapitalLimited5,259).

20 Other Transactions with the InvestmentManager

TheCompany'squalifyinginvestmentsaremanagedbyCalculusCapitalLimited.JohnGlencross,adirectorofthe Company,hasaninterestinCalculusCapitalLimitedandisadirectorofTerrainEnergyLimited.

CalculusCapitalLimitedreceivesannualfeesformonitoringandfortheprovisionofadirectorfromTerrainEnergy Limited, Human Race Group Limited and Solab Group Limited. Calculus Capital Limited receives a monitoring fee from ArcisBiotechnologyHoldingsLimitedandMicroEnergyGenerationServicesLimited.CalculusCapitalLimitedalsoreceived afeefromTerrainEnergyLimitedforofficesupportservices.Intheyearto31December2016,CalculusCapitalLimited receivedanarrangementfeerelatingtotheinvestmentoffundsmanagedbyitinArcisBiotechnologyHoldingsLimited.

Intheyearended31December2016,theamountpayabletoCalculusCapitalLimitedwhichwasattributabletothe investmentintheCompanywasnil(2015:700)forDrydenHumanCapitalGroupLimited,1,205(2015:nil)from ArcisBiotechnologyHoldingsLimited,1,170(2015:829)forSolabGroupLimited,2,409(2015:3,178)fromHuman RaceGroupLimited,2,503(2015:2,681)fromTerrainEnergyLimitedand311(2015:954)fromMicroEnergy GenerationServicesLimited(allexcludingVAT).

Nature of financial Information

These are not full accounts in terms of Section 434 of the Companies Act 2006. Full accounts for the year ended 31 December 2015 have been lodged with the Registrar of Companies.The Annual Report and Financial Statements for the year ended 31 December 2016 and the Notice of Annual General Meeting will be posted 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 onwww.calculuscapital.com, a website maintained by the Company's Investment Manager, Calculus Capital Limited. A copy of the Annual Report and Financial Statements will also be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at:http://www.morningstar.co.uk/uk/NSM.

The audited financial statements for the year ended 31 December 2016 contain an unqualified audit report.

Page numbers and cross-references in this announcement refer to page numbers and cross-references in the Annual Report and Financial Statements for the year ended December 2016.


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