Calculus Vct Regulatory News (CLC)

CALCULUS VCT PLC

ANNUAL FINANCIAL REPORT

For the year to 28 February 2017

Investment Objective

Calculus VCT plc ("the Company") is a Venture Capital Trust ("VCT") listed on the London Stock Exchange. The Company's principal objectives for investors are to:

• invest in a portfolio of Venture Capital Investments that will provide investment returns sufficient to allow the Company to maximise annual dividends and with the goal of capital growth over the medium to long term;

• generate sufficient returns from a portfolio of qualifying investments to provide attractive long-term returns within a tax efficient vehicle;

• review the appropriate level of dividends annually to take account of investment returns achieved and future prospects; and

• maintain VCT status to enable qualifying investors to retain their income tax relief of up to 30 per cent on the initial investment and receive tax-free dividends and capital growth.

Full details of the Company's investment policy can be found within the Strategic Report.

* Ordinary and C shareholders will receive their pro rata entitlement to the final recommended dividend announced on the D shares by virtue of the share class merger. In addition, a special dividend has been announced in relation to the year to 28 February 2018 of 7.0 pence and 3.0 pence per Ordinary and C share respectively.

Strategic Report

The Strategic Report has been prepared in accordance with the requirements of Section 414A of the Companies Act 2006 (the "Act"). Its purpose is to inform members of the Company and help them assess how the Directors have performed their legal duty under Section 172 of the Act, to promote the success of the Company.

Chairman's Statement

I am pleased to present your Company's results for the year ended 28 February 2017.

The net asset value per Ordinary share was 20.6 pence as at 28 February 2017 (2016: 31.4 pence). Total dividends paid to date are 77.1 pence giving accumulated shareholder value of 97.7 pence (2016: 101.4 pence). Total dividends include a special dividend of 7.0 pence paid to Ordinary shareholders in November 2016 following the profitable sales of both Metropolitan Safe Custody Limited and Human Race Group Limited.

The net asset value per C share was 26.0 pence as at 28 February 2017 (2016: 77.3 pence). Total dividends paid to date are 70.1 pence giving accumulated shareholder value of 96.1 pence per share (2016: 95.3 pence). Total dividends include a final dividend paid in August 2016 of 4.5 pence per share and a special dividend paid in February 2017 of 47.6 pence per share following the sale of the final Structured Product from the portfolio and the sale of equity holdings in Metropolitan Safe Custody Limited, Venn Life Science Holdings plc, Scancell Holdings plc and Solab Group Limited loan stock.

The net asset value of the D shares as at 28 February 2017 was 92.4 pence (31 August 2016: 97.6 pence). Of the 7,511,697 D shares at the year end, 3,813,555 shares are eligible for the final dividend for the year ended 28 February 2017 and 3,698,142 shares are not eligible for this dividend. Eligible shareholders are those who invested prior to 1 January 2017. Taking account of the recommended dividend of 4.25 pence per share, the attributable NAV as at 28 February 2017 for the D shares is 94.52 pence per share for those entitled to the dividend and 90.27 pence per share for those who are not entitled to the dividend (investors who invested after 1 January 2017). The fall in the net asset value of the D shares was due to a fall in the AIM quoted share prices of certain qualifying investments. We believe these investments to have made considerable progress in the period during which they have been held and it is disappointing not to see this reflected in their AIM share prices.

To date the Company has pursued a policy of returning capital to Ordinary and C shareholders as early as possible. Although the targeted income expectations of investors have been exceeded, the early sale and distribution of some of the more profitable and liquid investments before these had had an opportunity to build value has reduced the potential for further capital growth.

The D share offer was first launched in late 2015 and has successfully raised the maximum sought of £7.1 million. Following the resignation of Investec as joint investment manager, the Company has set out a less aggressive future dividend policy which aims to pay a tax free dividend of 4.5% of net asset value. The success of the recent offering shows the investor enthusiasm for a venture capital trust offering with a more appropriate mix of income and capital growth.

The net asset values of the Ordinary shares, C shares and the D shares were 20.6, 26.0 and 92.1 pence per share respectively as at 31 March 2017.

Non Qualifying Portfolio

The final structured product in the C share portfolio was sold in February 2017 to raise funds towards paying the special interim dividend. The structured product returned 82% on cost. Investec ceased to act as Manager when the final structured product was sold.

The D share portfolio has invested £880,000 in each of three money market funds in order to earn interest while qualifying investments are made. Further details can be found in the Investment Portfolio section which follows the Investment Manager's report.

Venture Capital Investments

Calculus Capital Limited manages the portfolio of VCT qualifying investments made by the Company.

During the year, a number of realisations were made from the Ordinary and C share portfolios. In September 2016, Metropolitan Safe Custody Limited was sold from the Ordinary and C share portfolios achieving a return of 81% including dividends. Also in September 2016, Human Race Group Limited was sold to Amaury Sports Organisation (ASO), the owner de Tour de France, achieving a return of 32%.

At the end of 2016, Corfe Energy Limited and Dryden Human Capital Group Limited were both sold from the Ordinary share portfolio for nominal value. These investment were valued at £19,000 in aggregate at 31 August 2016.

Solab Group Limited (previously Hampshire Cosmetics Limited) redeemed £20,000 of its loan stock at par from the C share portfolio and both Venn Life Science Holdings plc and Scancell Holdings plc were sold from the C share portfolio to the D share portfolio at market value in order raise funds for the special interim dividend on the C shares.

The D share portfolio made ten qualifying investments in the year, further details of which can be found in the Investment Manager's report which follows this statement.

Share Class Merger

At the Extraordinary General Meetings in November 2015, shareholders approved mergers of the Ordinary and C share classes into a single class with the D shares following realisation or liquidation of the structured products investments attributable to those classes. As the final structured product was sold from the C share portfolio in February 2017, the Directors are pleased to announce that the share class merger has now been scheduled to take place on 30 May 2017 (or on a date as soon as possible thereafter when HMRC clearance for the share class merger is received) based on the respective adjusted 28 February 2017 net assets values of the share classes adjusted to reflect the special dividends to be paid to the holders of Ordinary and C shares prior to the merger and to account for the additional dilution in relation to Eligible D Shares. The board believe the merged share class will benefit all shareholders. Not only will costs be reduced, but all shareholders will benefit from access to a diversified and larger portfolio of growing companies.

D Share Issue

The Board was pleased to announce that, in connection with the offer for subscription for D shares of 1p each that opened on 25 November 2016, full subscription was reached by 2 February 2017 and the offer closed early. Aggregate subscriptions received from the issue of D shares are £7.1 million.

Dividend

In line with our policy to return cash to shareholders, the Directors are pleased to announce a special dividend of 7 pence per Ordinary share which will be paid on 16 June 2017 to shareholders on the register on 19 May 2017 and will take cumulative dividends paid to 84.05 pence per Ordinary share.

The Directors are also pleased to announce a special dividend of 3 pence per C share which will be paid on 16 June 2017 to shareholders on the register on 19 May 2017 and will take cumulative dividends paid to 73.1 pence per C share.

The Directors are also pleased to announce a final dividend of 4.25 pence per D share to be paid to all Eligible D Shareholders. Subject to shareholder approval, the D share dividend will be paid on 4 August 2017 to Eligible D Shareholders on the register on 14 July 2017. The D share dividend will be paid after the share class merger out of the combined distributable reserves.

Outlook

The UK economy remains strong though it is difficult to assess what impact the commencement of formal 'Brexit' negotiations may have and a general election has been called for 8th June 2017. Overall, although uncertainties may have increased, the outlook for young growing companies remains positive and should support future growth in the portfolio and provide opportunities for new investment.

Michael O'Higgins

Chairman

11 May 2017

Investment Manager's Review

(Qualifying Investments)

Calculus Capital Limited manages the portfolio of qualifying Investments made by the Company. To maintain its qualifying status as a Venture Capital Trust, the Company needed to be greater than 70 per cent invested in qualifying Investments by the end of the relevant third accounting period and to maintain it thereafter. At 28 February 2017, the qualifying percentage for the combined Ordinary and C Share portfolios was 100 per cent. The new D Shares issued in 2016 and in the year to 28 February 2017 will need to meet the test from 1 March 2019.

During the year under review, there were two profitable divestments. Metropolitan Safe Custody Limited and Human Race Group Limited which were sold from the Ordinary and C Shares portfolios. Corfe Energy Limited ("Corfe") and Dryden Human Capital Group Limited ("Dryden") were sold from the Ordinary Shares portfolio at a loss. The original investment costs of Corfe and Dryden were approximately £76,000 and £100,000 respectively.

During the year under review, the D Share portfolio made ten qualifying investments, as we seek to build a diversified portfolio.

• In April 2016, £50,000 was invested in immunotherapy company Scancell Holdings plc ("Scancell"). The D Share portfolio then acquired a further £64,000 of shares in Scancell from the C share portfolio.

• In July 2016, £75,000 was invested in personalised medicine and biotechnology company Genedrive plc ("Genedrive").

• in September 2016, £75,000 was invested in Manchester based drug discovery and development company, C4X Discovery Holdings plc ("C4X").

• In November 2016, the D Shares invested in £150,000 loan stock in Terrain Energy Limited ("Terrain").

In December 2016, three investments were completed.

• £100,000 was invested in trampoline park operator Air Leisure Group Limited (trading as Jumptastic).

• £100,000 was invested in internet and phone services provider, Origin Broadband Limited ("Origin").

• £100,000 was invested In cleantech company Weeding Technologies Limited ("Weedingtech").

In February 2017, two investments were completed.

• The D share portfolio acquired the holding in Venn Life Sciences Holdings plc ("Venn") from the C shares portfolio.

• £150,000 was invested in Park Street Shipping Limited ("Park Street"), a company operating in the second hand dry bulk vessel market.

Further detail on the qualifying investments can be found below.

Air Leisure Group Limited ("Jumptastic") - D share portfolio

In the period under review, the Company made an unquoted investment in Air Leisure Group Limited. Air Leisure Is the owner and the operator of trampoline parks In the UK and Europe. The company's first site opened in Gloucester in October 2015, trading under the brand name Jumptastic. Its second site in Denmark opened in February 2017. These sites incorporate approximately 90 interlinked trampolines and the Gloucester site has traded profitably since inception. The team has a strong pipeline of potential sites identified across Scandinavia which it will look to open in 2017 and 2018.

* Other funds managed by Calculus Capital Limited have combined voting rights of 48.3 per cent.

** These are the results of Air Leisure UK Limited, Jumptastic's trading subsidiary. No accounts have yet been filed for Jumptastic, a holding company which was incorporated in April 2016.

AnTech Limited ("AnTech") - Ordinary share portfolio

AnTech Limited is a specialist oil and gas engineering company both manufacturing products and providing services for directional coiled tube drilling. AnTech's Products Division supplies customised and standard products used mainly in production; its largest product category is technically advanced well head outlets. Sales from this division have declined over the last 2 years because of pressure on its customers from the low oil price but recent months have seen an increase in both sales and sales enquiries suggesting that the trend may have changed.

Its Coiled Tube Drilling Services Division has developed a new generation of directional drilling tools. These tools, COLT and POLARIS, are effective for interventions in existing wells to enhance production yield and extend well life. As well as extensive testing, these tools have been used twice commercially with good results to date.

* Other funds managed by Calculus Capital Limited have combined voting rights of 31.0 per cent.

Brigantes Energy Limited ("Brigantes") - Ordinary share portfolio

The failure and cost overrun of Woodburn Forest-1 on PL1/10 and the withdrawal its funding partners from P1918 have put Brigantes in a difficult situation. As such, its directors have agreed to sell the company's remaining assets and liquidate the company. It is not expected that there will be a return to shareholders. The initial cost of Investment was £127,000.

* Other funds managed by Calculus Capital Limited have combined voting rights of 25.6 per cent.

 C4X Discovery Holdings plc ("C4X") - D share portfolio

In September 2016, the Company invested £75,000 on behalf of the D Shareholders in C4X as part of a £3 million equity investment by funds managed by Calculus Capital Limited. C4X is an innovative company in the discovery, design and development of small molecule drugs. The company was spun out of the University of Manchester in July 2007. During 2016, the company enhanced its drug discovery engine through acquisitions and continued to broaden its portfolio of proprietary drug programmes. Approximately two-thirds of new drugs originate from smaller biotech companies. C4X continues to build and progress its pipeline of programmes in a variety of therapeutic areas including addiction, diabetes, inflammatory diseases and cancer.

Genedrive plc - D share portfolio

Beyond the human healthcare market, funded trials for white spot detection in farmed shrimp have yielded very positive results. Sales of the TB assay have been slow due to sample preparation complexities in the field specifically related to the TB assay. Genedrive's HCV assay to identify Hepatitis C achieved outstanding results in an independent trial of 950 patients and the company has applied European CE certification. Pathogen detection projects, most notably for the US Department of Defense, have underpinned revenue growth in the period.

 MicroEnergy Generation Services Limited ("MicroEnergy") - Ordinary share portfolio

MicroEnergy owns and operates a fleet of 166 small onshore wind turbines (

* Other funds managed by Calculus Capital Limited have combined voting rights of 5.8 per cent.

Origin Broadband Limited ("Origin") - D share portfolio

The Company invested £100,000 in Origin in December 2016, a provider of internet and phone services, based in Yorkshire. Since launch in 2011, when Origin acquired for no cost part of the Digital Europe network built with EU and government funding which Digital Europe was proposing to close, Origin has developed its own infrastructure and now has the sixth largest broadband network in the UK measured by points of presence. As an operator of its own physical network, Origin is able to deal directly with Openreach, the BT division that maintains the UK's main telecoms network. This gives the company greater control over the underlying circuits and equipment; allowing it to provide a better service level than a pure reseller and making it easier to give commitments on speed. The company's core network is composed of over 50 points of presence, together with diverse network links to locations including Manchester, London and datacentres including Telecity North and Telecity 8/9 Harbour Exchange.

Origin is seen as an agile alternative to the unwieldy corporate giants, with a focus on providing faster broadband speeds, a competitive pricing model and first-class customer service. Current clients include Amazon - where Origin is the preferred provider for all new warehouse and corporate sites, NHS Sheffield and various UK universities.

* Other funds managed by Calculus Capital Limited have combined voting rights of 0.3 per cent.

Park Street Shipping Limited ("Park Street") - D share portfolio

Funds managed by Calculus Capital invested £4.75m in Park Street in February 2017, of which £150,000 came from the Company. Park Street was established to purchase and operate second hand dry bulk vessels. Calculus Capital Limited set up the business in conjunction with Clarksons, the world's leading provider of integrated shipping services, and Nordic Hamburg, a technical manager which runs a feet of over 30 ships with in-house technical and crewing services. 

We believe the current investment environment in the shipping industry is attractive, with second hand asset prices at historic lows and charter rates which are rising off historic lows. Park Street Shipping has already purchased MV Nordic London, a 7 year old, South Korean built, 35,000 dwt Handysize bulk carrier, with an average age of 11 years for the class. Younger vessels are more economical to run, attracting premium charter rates and lower operating expenses. These factors, in addition to the reputation of South Korean shipyards, should ensure a strong resale market for the vessel as the market recovers. Nordic Hamburg and Clarksons have an equity interest.

Handysize vessels are smaller bulk carriers, often, as is the case with MV Nordic London, equipped with their own cranes. This, and their shallow draught, allows them to transport a wide variety of bulk commodities to a large selection of ports around the world. The flexibility this provides gives a degree of insulation from weak growth in major dry bulk trade volumes, as Handysize vessels are also able to transport minor bulk (such as steel, fertiliser, grains, etc.), a group of commodities that saw growth across 2016. Simon Beechinor, a Master Mariner with significant experience as CEO and Commercial Operations Director of several maritime companies, has been recruited as a director and has responsibility for commercial management and technical oversight.

Financials are not available for Park Street Shipping Limited.

Pico's Limited ("Benito's Hat") - C share portfolio

Offering tailor-made burritos, tacos and salads, Benito's Hat is a Mexican-themed restaurant brand centred on an authentic experience and high-quality food, at an affordable price point. The brand has a devoted customer following and has won many accolades from food critics. In light of an overheated commercial property market in London, the business has focused mainly on improving its existing estate rather than new site openings. Heads of terms have been agreed for a new site outside London as the business looks to continue its expansion.

* Other funds managed by Calculus Capital Limited have combined voting rights of 38.2 per cent.

Quai Administration Services Limited ("Quai") - C share portfolio

Quai provides platform technology combined with back office administration services for the high-volume personal savings industry. Quai's platform administers thousands of individual savings plans at a fraction of the cost incurred by established insurance companies and wealth managers. In October 2016 Punter Southall Aspire, the leading workplace pensions and savings business, selected Quai as the out-sourced investment administrator for its forthcoming Master Trust. At the same time, Punter Southall Aspire made a strategic investment in Quai, taking a small minority stake. Punter Southall Aspire provides actuarial advice, pensions' consultancy, administration, risk and investment services for pension scheme trustees, employers, private clients, Lloyd's insurers and other institutions. In total the Punter Southall Aspire group administers pensions for more than 320,000 members and manages £24bn of assets.

Scancell Holdings plc ("Scancell") - D share portfolio

Scancell is developing two distinct immune-oncology platforms, ImmunoBody® and Moditope®, each with broad applications. Both platforms are targeting multi-billion dollar markets. SCIB1 (based on the ImmunoBody® platform) has achieved unprecedented survival rates in a phase I/II clinical trial covering twenty patients for malignant melanoma. The initial results show survival and progression free data well beyond established norms. A phase II combination trial of SCIB1 together with Keytruda, a checkpoint inhibitor, is planned to 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 University of Colorado. The two drugs work in different ways and Keytruda is relatively toxic whilst SCIB-1 is far less so on evidence to date. It is believed that a combination treatment of the two drugs will significantly increase the success rate in the treatment of advanced melanoma beyond current norms without significant additional toxicity. A phase I trial for Modi-1 (based on the Moditope® platform) targeting triple negative breast cancer, osteosarcoma and ovarian cancer is scheduled for 2018. Scancell is also developing SCIB2 (based on the ImmunoBody® platform) for the treatment of non-small cell lung cancer (NSCLC) in combination with a checkpoint inhibitor. In January 2017, Scancell announced a collaboration with The Addario Lung Cancer Medical Institute and the Bonnie J. Addario Lung Cancer Foundation to evaluate the use of SCIB2 to treat NSCLC.

Solab Group Limited (formerly Hampshire Cosmetics Limited) ("Solab") - Ordinary and C share portfolio

Solab is a long established manufacturer of fragrances, shampoos and skincare products for third party customers, including Penhaligon's and Philip Kingsley.

This cosmetics business has been affected by difficult market conditions generally and by a significant reduction in volumes from its largest customer, The Body Shop, as a result of L'Oreal's decision to in-source manufacturing to French factories following its acquisition of The Body Shop. New business from third parties has, to date, partially replaced that lost turnover and Solab has also had some success in enlarging existing customer accounts. Solab has introduced several initiatives to increase revenues further and is currently installing a new highly automated production line targeting high volume, continuous production runs. These initiatives are expected to return the cosmetics business to profitability in 2017.

* Other funds managed by Calculus Capital Limited have combined voting rights of 1.23 per cent.

Terrain Energy Limited ("Terrain") - Ordinary, C and D share portfolio

Terrain has interests in eleven petroleum licences: Keddington, Kirklington, Dukes Wood, Burton on the Wolds, Whisby and Louth in the East Midlands, Larne in Northern Ireland, Brockham and Lidsey in the Weald Basin and Egmating and Starnberger See in Germany. The Whisby-6 well was successfully drilled in 2016 and encountered a good oil-saturated basal sandstone with initial production of 168 barrels of oil per day ("bopd") (of which Terrain receives 85%). The operator is currently working to optimise production from this well following a waxing issue. The company is producing from wells at Keddington and Whisby; Brockham and Lidsey are currently shut-in pending drilling or, in the case of Brockham, analysis of recent drilling results. A new well at Lidsey is due to be drilled in 2017, with Keddington and Louth to follow in 2018. Terrain sold half of its interest in the Brockham licence to Angus Energy (the operator) in December 2016 (reducing Terrain's interest to 10%) in return for a cash consideration and carrying Terrain's remaining interest in the licence for the costs associated with the well. Angus has the option for a similar transaction in relation to Lidsey which would mean Terrain's costs would also be carried for this well. From the evidence so far, the drilling at Brockham appears to indicate a similar structure to the oil bearing Kimmeridge sections in the nearby Horse Hill-1 well (this well produced over 1600bopd on test). A geothermal well at Holzkirchen, which is on the Egmating licence, drilled in 2016 encountered overpressured gas which had to be fared for 4 days before the well was brought back under control. This could be a significant discovery on Terrain's licence - interpretation of the limited data available to date suggests the potential for as much as 75BCF of gas to be present at approximately 4000 metres (equivalent to approximately 10 million barrels of oil). A first well on the Larne licence targeting the Woodburn prospect was drilled in May/June 2016, but did not encounter any hydrocarbon accumulation. The data collected in the well is being evaluated to decide where to focus future exploration activity in the basin.

* Other funds managed by Calculus Capital Limited have combined voting rights of 8.91 per cent.

The One Place Capital Limited ("Money Dashboard") - C share portfolio

Money Dashboard (the trading name of The One Place Capital Limited) empowers consumers to take control of their finances. Money Dashboard has built a database of over 100,000 users whose financial transactions from all their accounts (bank current and savings accounts, credit cards, store cards, etc.) are automatically updated in one secure place, providing these consumers with a free-to-use view of their financial lives. Money Dashboard aggregates this data on an anonymous basis to analyse consumer spending trends which can be sold to institutional investors and others (the Data Insights product). Over the last 12 months, new product developments have included introducing (1) a white label version of the core Money Dashboard product for financial advisers, which will increase the database size by accessing the adviser's customers; and (2) a new mortgage affordability assessment product for mortgage brokers, which not only reduces the broker's workload by automating the process, but also provides an audit trail for this regulator-required assessment. Separately, cash flow generation has significantly improved both from a reduced cost base and from growth in the Data Insights' pipeline underpinned by large recurring contracts with global institutional investor clients.

Money Dashboard won the Best Personal Finance App at the British Bank Awards 2017.

Tollan Energy Limited ("Tollan") - Ordinary share portfolio

Tollan owns a portfolio of solar systems on roof tops in Northern Ireland. The solar generating capacity, which is installed on residential and some commercial roofs in the Belfast area, benefits from Northern Ireland Renewable Obligation Certificates (NIROCs). In addition, the company benefits from the export tariff for any surplus electricity not used by the homeowner that is exported to the grid. Due to a change in legislation some of Tollan's systems are now considered oversized and the company has been conducting a programme to reduce the size of these systems before 31st March 2017 when the Renewables Obligation (RO) closes to all new generating capacity. The systems have demonstrated stable generation levels for the last two years of c. 975,000kWh per year but total generation will be reduced to c. 720,000kWh per annum following the resizing programme. The valuation has been adjusted downwards to reflect this.

Venn Life Sciences Holdings plc ("Venn") - D share portfolio

Venn is a Contract Research Organisation providing drug development, clinical trial management and resourcing solutions to pharmaceutical, biotechnology and medical device organisations. With dedicated operations in France, Germany, the Netherlands, the UK and Ireland providing Europe-wide representation, Venn specialises in rapid deployment and management of multisite projects. Following a number of small acquisitions to complete its product offering and geographic footprint in previous years, 2016 represented a year of strong growth for Venn with sales of €18m (2015: €11m). The strong momentum enjoyed by the business in 2016 has continued into 2017 to date, with new business contracts signed to the value €5.7m in the first two months of the year.

In October 2016 Venn announced the divestiture of its subsidiary Innovenn UK Limited, an innovation vehicle dedicated to the development and marketing of healthcare products and technologies, in particular Labskin, a living skin model and an anti-acne formulation. The transaction will allow Venn to concentrate on its core activities of drug development and clinical research services, as well as strengthening its cash position.

* Continuing operations only.

Weeding Technologies Limited ("Weedingtech") - D share portfolio

Weedingtech is a cleantech company focused on replacing toxic herbicides, particularly in the municipal market, but with potential in the agricultural and domestic markets. Weedingtech's technology treats weed and moss using environmentally friendly hot foam (which keeps the heat on long enough to kill the weed or moss) rather than herbicides such as Glyphosate.

Increasingly, governments and regulators around the world are considering, or are already, banning the use of certain chemical herbicides (e.g. glyphosate, as used in Roundup, which studies have shown to be potentially carcinogenic) amid concerns about the risks they pose to human health and the environment. Globally, the herbicide market is estimated to grow at 6% a year to reach $31bn by 2020 (Allied Market Research, October 2014), with glyphosate accounting for around three quarters of the total. As such there is huge potential for herbicide-free alternatives to increase their share as concerns around glyphosate grow.

Funds managed by Calculus Capital Limited invested £3m into Weedingtech in December 2016 of which £100,000 came from the Company on behalf of the D Shareholders.

* Other funds managed by Calculus Capital Limited have combined voting rights of 0.7 per cent.

Developments since the year end

In March 2017 an investment of £70,000 was made in Quai Administration Services Limited on behalf of the D share portfolio.

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

Calculus Capital Limited

11 May 2017

Investment Portfolio

as at 28 February 2017

Ordinary Share Fund

\* The valuations of Brigantes Energy Limited includes a small purchase made which was a non-qualifying investment.

C Share Fund

D Share Fund

Other Statutory Information

Company activities and status

The Company is registered as a public limited company and incorporated in England and Wales with registration number 07142153. Its shares have a premium listing and are traded on the London Stock Exchange.

On incorporation, the Company was an investment company under section 833 of the Companies Act 2006. On 18 May 2011, investment company status was revoked by the Company. This was done in order to allow the Company to pay dividends to shareholders using the special reserve (a distributable capital reserve), which had been created on the cancellation of the share premium account on 20 October 2010.

Company business model

The Company's business model is to conduct business as a VCT. Company affairs are conducted in a manner to satisfy the conditions to enable it to obtain approval as a VCT under sections 258-332 of the Income Tax Act 2007 ("ITA 2007").

Investment policy

Shareholders voted in favour for a change in investment policy at the Extraordinary General Meeting in November 2015. The principal change of investment policy is to increase the options for non-qualifying investments.

It is intended that a minimum of 75 per cent of the monies raised by the Company will be invested in a variety of investments which will be selected to preserve capital value, whilst generating income, and may include:

• Bonds issued by the UK Government; and

• Fixed income securities issued by major companies and institutions, liquidity funds and fixed deposits with counterparty credit rating of not less that A minus (Standard & Poor's rate)/A3 (Moody's rated).

The Company's policy is to build a diverse portfolio of Qualifying Investments of primarily established unquoted companies across different industries and investments which may be by way of loan stock and/or fixed rate preference shares as well as Ordinary shares to generate income. The amount invested in anyone sector and anyone company will be no more than 20 per cent and 10 per cent respectively of the qualifying portfolio. These percentages are measured as at the time of investment. The Board and its Investment Manager, Calculus Capital Limited, will review the portfolio of investments on a regular basis to assess asset allocation and the need to realise investments to meet the Company's objectives or maintain VCT status.

Where investment opportunities arise in one asset class which conflict with assets held or opportunities in another asset class, the Board will make the investment decision. Under its Articles, the Company has the ability to borrow a maximum amount equal to 25 per cent of the aggregate amount paid on all shares issued by the Company (together with any share premium thereon). The Board will consider borrowing if it is in the shareholders' interests to do so. In particular, because the Board intends to minimise cash balances, the Company may borrow on a short-term to medium-term basis for cashflow purposes and to facilitate the payment of dividends and expenses in the early years.

Long term viability

In assessing the long term viability of the company, the Directors have had regard to the guidance issued by the Financial Reporting Council. The Directors have assessed the prospects of the Company for a period of five years, which was selected because this is the minimum holding period for the newly issued D shares. The Board's strategic review considers the Company's income and expenses, dividend policy, liquid investments and ability to make realisations of qualifying investments. These projections are subject to sensitivity analysis which involves flexing a number of the main assumptions underlying the forecast both individually and in unison. Where appropriate, this analysis is carried out to evaluate the potential impact of the Company'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 as they fall due over the five-year period of their assessment. The principal assumptions used are as follows: i) Calculus Capital Limited pays any expenses in excess of 3.0 per cent of the aggregate gross amounts raised under the Ordinary and C share offers and 3.4 per cent of the aggregate gross amounts raised on the D share offer as set out on page 22 of the Report and Accounts; ii) the level of dividends paid are at the discretion of the Board; iii) the Company's liquid investments which include cash, money market instruments and quoted shares can be realised as permitted by the Company's investment policy; iv) the illiquid nature of the qualifying portfolio. 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 as they fall due.

In making this statement the Board carried out a robust assessment of the principal risks facing the Company including those that might threaten its business model, future performance, solvency or liquidity.

Alternative investments 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.

Risk diversification

The Board controls the overall risk of the Company. Calculus Capital Limited will ensure the Company has exposure to a diversified range of Qualifying Investments from different sectors.

Since November 2015, the types of non-qualifying investment include:

• Bonds issued by the UK Government; and

• Fixed income securities issued by major companies and institutions, liquidity funds and fixed deposits with counterparty credit rating of not less that A minus (Standard & Poor's rate)/A3 (Moody's rated).

The Board believe this change will provide further diversification.

VCT regulation

The Company's investment policy is designed to ensure that it will meet, and continue to meet, the requirements for approved VCT status from HM Revenue & Customs. Amongst other conditions, the Company may not invest more than 15 per cent (by value at the time of investment) of its investments in a single company and must have at least 70 per cent by value of its investments throughout the period in shares or securities in qualifying holdings, of which 30 per cent by value must be Ordinary shares which carry no preferential rights ("eligible shares"). For funds raised from 6 April 2011, the requirement for 30 per cent to be invested in eligible shares was increased to 70 per cent.

The Board has also identified the following additional risks and uncertainties:

- Regulatory risk

The Company has received approval as a VCT under ITA 2007. Failure to meet and maintain the qualifying requirements for VCT status could result in the loss of tax reliefs previously obtained, resulting in adverse tax consequences for investors, including a requirement to repay the income tax relief obtained, and could also cause the Company to lose its exemption from corporation tax on chargeable gains.

The Board receives regular updates from the Investment Manager and financial information is produced on a monthly basis. The Investment Manager monitors VCT regulation and presents its findings to the Board on a quarterly basis. The Investment Manager builds in 'headroom' when making investments to allow for changes in valuation. This 'headroom' is reviewed prior to making and realising qualifying investments.

The Board has appointed an independent adviser to monitor and advise on the Company's compliance with the VCT rules.

Key strategic issues considered during the year

Performance

The Board reviews performance by reference to a number of key performance indicators ("KPIs") and considers that the most relevant KPIs are those that communicate the financial performance and strength of the Company as a whole, being;

• total return per share

• net asset value per share

• share price and discount/premium to net asset value

The financial highlights of the Company can be found after the contents page of the Report and Accounts.

Further KPIs are those which show the Company's position in relation to the VCT tests which it is required to meet in order to meet and maintain its VCT status. A summary of these tests are set out on page 1 of the Report and Accounts. The Company has received approval as a VCT from HM Revenue & Customs.

Principal risks and uncertainties facing the Company and management of risk

The Company is exposed to a variety of risks. The principal financial risks, the Company's policies for managing these risks and the policy and practice with regard to financial instruments are summarised in note 16 to the Accounts.

- Qualifying investments

There are restrictions regarding the type of companies in which the Company may invest and there is no guarantee that suitable investment opportunities will be identified.

Investment in unquoted companies and AIM-traded companies involves a higher degree of risk than investment in companies traded on the main market of the London Stock Exchange. These companies may not be freely marketable and realisations of such investments can be difficult and can take a considerable amount of time. There may also be constraints imposed upon the Company with respect to realisations in order to maintain its VCT status which may restrict the Company's ability to obtain the maximum value from its investments.

Calculus Capital Limited has been appointed to manage the qualifying investments portfolio, and has extensive experience of investing in this type of investment. Regular reports are provided to the Board and a representative of Calculus Capital Limited is on the Company's board. Risk is managed through the investment policy which limits the amount that can be invested in any one company and sector to 10 per cent and 20 per cent of the qualifying portfolio respectively at the time of investment.

- Liquidity/marketability risk

Due to the holding period required to maintain up-front tax reliefs, there is a limited secondary market for VCT shares and investors may therefore find it difficult to realise their investments. As a result, the market price of the shares may not fully reflect, and will tend to be at a discount to, the underlying net asset value. The level of discount may also be exacerbated by the availability of income tax relief on the issue of new VCT shares. The Board recognises this difficulty, and has taken powers to buy back shares, which could be used to enable investors to realise investments.

Employees, environmental, human rights and community issues

The Company has no employees and the Board comprises entirely non-executive directors. Day-to-day management of the Company's business is delegated to the Investment Manager (details of the management agreement are set out in the Directors' Report) and the Company itself has no environmental, human rights, or community policies. In carrying out its activities and in its relationships with suppliers, the Company aims to conduct itself responsibly, ethically and fairly.

Gender Diversity

The Board of directors comprised three male directors and one female Director during, and at the end of, the year to 28 February 2017.

Statement regarding annual report and accounts

The Directors consider that taken as a whole, the Annual Report and Accounts is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

On behalf of the Board Michael O'Higgins Chairman

11 May 2017

Board of Directors

Michael O'Higgins (Chairman)*

Kate Cornish-Bowden (Audit Committee

Chairman)*

John Glencross

Steve Meeks*

*independent of the Investment Manager

Investment Manager

Calculus Capital

Calculus Capital Limited is the Venture Capital Investments portfolio manager

Extract from the Directors' Report

The Directors present their Annual Report and Accounts for the year ended 28 February 2017.

Corporate Governance

The Board is accountable to shareholders for the governance of the Company's affairs and is committed to maintaining high standards of corporate governance and to the principles of good governance as set out in the UK Corporate Governance Code (the "Code") issued by the Financial Reporting Council ("FRC") in September 2014, a copy of which can be found at www.frc.org.uk.

Pursuant to the Listing Rules of the Financial Conduct Authority, the Company is required to provide shareholders with a statement on how the main and supporting principles set out in the Code have been applied and whether the Company has complied with the provisions of the Code. The Board has established corporate governance arrangements that it believes are appropriate to the business of the Company as a venture capital trust. The Board has reviewed the Code, and considers that it has complied throughout the period, except as disclosed below:

• Directors are not appointed for a specified term as all directors are non-executive and the Articles of Association require that all directors retire by rotation at Annual General Meetings of the Company.

• In light of the responsibilities retained by the Board and its Committees and the responsibilities delegated to the Investment Manager, the Administrator, the Registrars and legal advisers, the Company has not appointed a chief executive officer, deputy chairman or senior independent director.

• Given the structure of the Company and the Board, the Board does not believe it necessary to appoint separate remuneration or nomination committees, and the roles and responsibilities normally reserved for these committees will be a matter for the full Board.

• The Company does not have an internal audit function as all of the Company's management functions are performed by third parties whose internal controls are reviewed by the Board. However, the need for an internal audit function will be reviewed annually.

A full statement on Corporate Governance and the Company's compliance with the UK Corporate Governance Code can be found at http://www.calculuscapital.com/ cms/media/Corporate-Governance-Statement-2017.pdf

Dividends

Details of the dividends recommended by the Board are set out in the Strategic Report on page 2 of the Report and Accounts.

Directors' fees

A report on directors' remuneration is set out in the Report and Accounts.

Directors' and officers' liability insurance

Directors' and officers' liability insurance cover is provided at the expense of the Company.

Share Capital

The capital structure of the company is set out in note 12 of the Accounts. At the year end, no shares were held in Treasury. During the year 7,511,697 D shares were issued. No shares were bought back during the year.

Substantial Shareholdings

As at 28 February 2017, there were no notifiable interests in the voting rights of the Company.

Management

Calculus Capital Limited is the qualifying Investments' portfolio manager. Calculus Capital Limited was appointed as Investment Manager pursuant to an agreement dated 2 March 2010, a supplemental agreement was entered into on 7 January 2011 in relation to the management of the C Share Fund and a further supplemental agreement entered into on 26 October 2015 in relation to the management of the D share fund and covers the addition of company secretarial duties (together, the "Calculus Management Agreements"). Pursuant to the Calculus Management Agreements, Calculus Capital Limited has agreed to meet the annual expenses of the Company in excess of 3.0 per cent of the aggregate gross amounts raised under the Ordinary share and C share offers, and 3.4 per cent of the aggregate gross amounts raised on the D share offer, all from 14 December 2015.

Pursuant to the Calculus Management Agreements, Calculus Capital Limited will receive an annual management fee of 1 per cent of the net asset value of the Ordinary Share Fund and C Share Fund, and 1.75 per cent of the net asset value of the D Share Fund, calculated and payable quarterly in arrears.

Calculus Capital Limited is also entitled to a fee of £15,000 per annum (plus VAT where applicable) for the provision of company secretarial services.

For the year to 28 February 2017, Calculus Capital Limited charged £62,838 in management fees, £18,000 in company secretarial fees, and contributed £20,492 to the expenses cap such that net fees earned were £60,346 (2016: charged £45,446 in management fees, £1,250 in company secretarial fees and contributed £10,521 to the expenses cap).

Investec Structured Products was appointed as Investment Manager pursuant to an agreement dated 2 March 2010, and a supplemental agreement was entered into on 7 January 2011 in relation to the management of the C Share Fund (together, the "Investec Management Agreements"). Investec Structured Products' appointment as Investment Manager terminated in February 2017 when the final Structured Product in the C share portfolio was sold.

A Performance Incentive Agreement between the Company, Calculus Capital Limited and Investec Structured Products dated 2 March 2010 in relation to the Ordinary Share Fund has been signed. Investec Structured Products and Calculus Capital Limited will each receive a performance incentive fee payable in cash of an amount equal to 10 per cent of dividends and distributions paid to Ordinary shareholders following the payment of such dividends and distributions provided that shareholders have received in aggregate distributions of at least 105p per Ordinary share (including the relevant distribution being offered).

A Performance Incentive Agreement between the Company, Calculus Capital Limited and Investec Structured Products dated 7 January 2011 in relation to the C Share Fund has also been signed pursuant to which Investec Structured Products and Calculus Capital Limited will be entitled to performance incentive fees as set out below:

• 10 per cent of C Shareholder Proceeds in excess of 105p up to and including Proceeds of 115p per C share, such amount to be paid within ten business days of the date of payment of the relevant dividend or distribution pursuant to which a return of 115p per C share is satisfied; and

• 10 per cent of C Shareholder Proceeds in excess of 115p per C share, such amounts to be paid within ten business days of the date of payment of the relevant dividend or distribution,

provided in each case that C shareholders have received or been offered the C Share Interim Return of at least 70p per C share on or before 14 March 2017 and at least a further 45p per C share having being received or offered for payment on or before the 14 March 2019. In addition, performance incentive fees in respect of the C Share Fund will only be payable in respect of dividends and distributions paid or offered on or before 14 March 2019.

Continuing Appointment of the Investment Manager

The Board keeps the performance of Calculus Capital Limited under continual review. A formal review of the Investment Manager's performance and the terms of their engagement has been carried out and the Board are of the opinion that the continuing appointment of Calculus Capital Limited as Investment Manager is in the interests of shareholders as a whole. The Board is satisfied with the performance of the Company to date. The Board is confident that the VCT qualifying tests will continue to be met.

Financial Risk Management

The principal financial risks and the Company's policies for managing these risks are set out in note 16 to the Accounts.

Going Concern

In assessing the going concern basis of accounting, the Directors have had regard to the guidance issued by the Financial Reporting Council. After making enquiries, and having reviewed the portfolio, balance sheet and projected income and expenditure for a period of twelve months from the date these financial statements were approved, the Directors have a reasonable expectation that the Company has adequate resources to continue in operation for the foreseeable future. The Directors have therefore adopted the going concern basis in preparing the Accounts.

The full Annual Report and Accounts contains the following statement regarding responsibility for the Accounts.

Directors' Responsibilities Statement

Statement of Directors' Responsibilities in respect of the Annual Report and the Accounts.

The directors are responsible for preparing the Annual 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 they have elected 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; and

• 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.

Under applicable law and regulations, the directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that comply with that law and those regulations, and for ensuring that the Annual Report includes information required by the Listing Rules of the Financial Conduct Authority.

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 Auditor does not involve consideration of the maintenance and integrity of this website and accordingly, the Auditor accepts 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 jurisdiction.

We confirm that to the best of our knowledge:

• the Accounts, prepared in accordance with UK accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

• the Annual Report including the Strategic 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