Neptune-Calculus Income & Growth Regulatory News (NEP)

Neptune-Calculus Income and Growth VCT plc Results for the year ended 31 December 2015

½ Accumulated shareholder value represents net asset value per share plus cumulative dividends paid per share.

The results for the year ended 31 December 2015 showed a decline in net assets to 39.3 pence per share from 51.6 pence. Of this decline in value, 8.5 pence per share is attributable to dividends which were paid to shareholders during the year. The remainder of the fall of 3.8 pence per share was largely attributable to the fall in the share price of Epistem Holdings plc ("Epistem") and the write off of value of our investment in Hembuild Group Limited ("Hembuild") due to the company's entering administration.

The Company continues to meet its requirements to qualify as a VCT. Our qualifying investments are managed by Calculus Capital Limited and are in a combination of unquoted and AIM companies.

During the year the Company made one qualifying investment of £150,000 in Solab Group Limited ("Solab") (previously Hampshire Cosmetics Limited) and in May 2015, Hembuild repaid £235,000 of its qualifying loans. In January 2016, the Company made a £100,000 investment in Arcis Biotechnology Holdings Limited ("Arcis"). Arcis is a Cheshire based, research and development ("R&D") company which has used its technology platform to develop innovative products in the DNA extraction, agriculture and hygiene markets.

The value of the qualifying portfolio decreased by 14.0 per cent. on a like for like basis during 2015. The improved performance of Dryden Human Capital Group Limited ("Dryden") and Solab was offset by the aforementioned poor performance of Hembuild and Epistem. The Board are disappointed by Epistem's drop in share price but remain confident about the company's long term prospects. RMS Group Holdings Limited ("RMS") and Human Race Group Limited ("Human Race") continue to perform satisfactorily.

During the year, the Company made a £150,000 loan facility available to MicroEnergy Generation Services Limited ("MicroEnergy") to enable it to acquire 15 additional installed wind turbines. The loan was subsequently repaid out of profits.

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

Our non-qualifying investments comprise holdings in the Neptune Income Fund, the Neptune Quarterly Income Fund and liquidity funds. Our investments in the Neptune Income Fund increased by 0.9 per cent and in the Neptune Quarterly Income Fund by 2.8 per cent over the year, compared with a decrease of 4.9 per cent in the FTSE 100 Index.

During the year the Company invested £225,000 in each of the liquidity funds held with Goldman Sachs Asset Management, Aberdeen Global Liquidity Funds and Fidelity Fund Management.

Although the Company was prepared to undertake share buybacks in the market, no share buybacks were carried out during the year. In line with its policy of returning cash to shareholders, the Company may carry out limited share buybacks in the future if it considers it to be in the best of interests of all shareholders.

The Company paid a special interim dividend for 2014 of 5 pence per Ordinary Share in March 2015. The Company also paid the 2014 final dividend of 2 pence per share in June 2015 and an increased interim dividend for 2015 of 1.5 pence per share in October 2015. The total dividends paid to an ordinary shareholder to date are 34.0p.

The directors are pleased to propose a final dividend for 2015 of 2 pence per Ordinary Share which, subject to shareholder approval, will be payable on 10 June 2016 to shareholders on the register on 6 May 2016.

Last year saw a series of regulatory changes which affect how VCTs can invest. It is no longer possible for VCTs to undertake management buyouts either as a purchase of equity or as a purchase of a company's trade and its assets. Subject to certain caveats, companies must also be under seven years old (ten years for knowledge intensive companies) to be eligible for investment and there is a lifetime investment limit on the amount any single company can receive of £12million (£20 million for knowledge intensive companies). Other changes to the legislation mean that new investment in reserve power businesses will no longer qualify and, from 6th April 2016, any new investment into the energy generation sector will also not qualify for relief. HMRC has also indicated that it will be more cautious about giving approval for companies that are clearly set up with the intention of not having a long term future, so called 'limited life' companies. These changes in the legislation have affected individual VCTs to differing extents. Investment for the purposes of growth and development, which is Calculus Capital Limited's core model, is, by and large, unaffected by the changes other than the prohibition on investment in companies older than seven years that have not previously raised tax advantaged funding within seven years of first commercial sale.

As mentioned in the previous section, 2015 saw a number of changes affecting VCT legislation. Although the new legislation may affect some of our investment opportunities and brings greater complexity, the Board does not believe the changes will materially impact our ability to invest in UK growth companies. As set out in the Manager's Report, a number of portfolio companies are at important inflexion points in their development. Whilst the general economic outlook for 2016 may be uncertain for the UK, we are optimistic, nonetheless, that the constituents of the portfolio have considerable upside potential and we hope to see further progress during the coming year.

Philip Stephens

Chairman

15 March 2016

Calculus Capital Limited manages the Company's qualifying portfolio.

The FTSE 100 fell by 4.9 per cent during 2015. It was outperformed by the AIM All-Share Index, which rose by 5.1 per cent over the same period.

At the year end, the portfolio of qualifying investments comprised 12 companies, made up of both unquoted and AIM stocks. Whilst many of the companies in both the quoted and unquoted portfolios have made significant progress during the year, valuations have, by and large, not reflected underlying performance of the companies in the portfolio.

The quoted portfolio, which consists entirely of AIM companies, has shown an overall decrease in value for the year of 57.8 per cent which is predominantly attributable to Epistem. At 31 December 2015, the quoted portfolio was valued at £236,000 compared with £560,000 on a like for like basis as at 31 December 2014. No new quoted investments were made in 2015.

The unquoted portfolio has shown a decrease in value of 3.6 per cent, largely because gains from Dryden and Solab were offset by the losses from Hembuild. A new qualifying investment of £150,000 was made during the year in Solab which comprised £10,000 equity and £140,000 loan stock. The section on unquoted portfolio companies on pages 8 and 9 of the Report and Accounts contains further information.

Epistem

Epistem is a personalised medicine and biotechnology company developing innovative diagnostics and biomarkers alongside providing contract research services to drug development companies. The company has three divisions, Personalised Medicine, Preclinical Research Services and Novel Therapies. The company is increasingly transitioning towards a focus on the Genedrive® diagnostics system. In Genedrive®, Epistem has created a significant new diagnostic platform targeting Point of Care diagnostics. This development has been achieved with very modest resources. The Genedrive® platform and its first tuberculosis ("TB") test has been launched in India and the Indian sub-continent. The Genedrive® TB test product is simultaneously undergoing clinical studies in countries across the world. Beyond launching its TB test, excellent progress has been made in the development of a Genedrive® 'Hepatitis C' (HCV) blood test in collaboration with the Pasteur Institute and for pathogen detection in conjunction with the US Department of Defence. A Genedrive® Hepatitis C test will be launched for research use only in 2016 and a CE marked version will be launched in 2017. It will represent the first truly low cost rapid molecular Hepatitis C test to reach the market. The revenues of the contract research division underpin the company's current revenues and there has been no new investment in the Novel Therapies division although the position is kept under review. In August 2015, it was announced that Matthew Walls was leaving his position as CEO. David Budd has been appointed as CEO. David previously served as Commercial Director at Leica Biosystems, with global responsibility for marketing, market research and product launches for diagnostics tests.

Infrastrata PLC (Infrastrata)

Infrastrata is an independent gas storage company with some exploration interests. Its primary focus in 2016 is the development of the gas storage project at Islandmagee in County Antrim where the company completed the drilling of a well to obtain salt cores and subsequent testing and engineering work on time and within budget. Infrastrata received a €2.5million (£1.9m) grant from the European Union's Connecting Europe Facility being 50 per cent. of the cost of the £3.8million programme. This reflects a recognition of the project's contribution to energy security within the EU. In November 2015, Infrastrata disposed of substantially all of its exploration interests to Corallian Energy Limited in exchange for £240,000 cash with a further £300,000 contingent upon the completion of the funding of the Woodburn Forest-1 well and a Net Profits Interest in the assets sold, providing upside in the event of successful exploration. InfraStrata expects to retain a 10 per cent interest in the Larne licence, and is fully carried through the Woodburn Forest-1 well which is planned to be drilled in early 2016. The funding of drilling the Woodburn Forest-1 well is now fully in place and site preparation will commence in Q1 2016.

Terrain Energy Limited ("Terrain")

Terrain has taken advantage of attractive prices in the current market and has recently completed the acquisition of interests in the Whisby and Lidsey licences and increased its interest in Keddington. It has also been awarded Louth in the 14th Licensing Round. Terrain now has interests in twelve petroleum licences; Keddington, Kirklington, Dukes Wood, Burton on the Wolds, Whisby and Louth in the East Midlands, Larne and an offshore licence to the north of Larne in Northern Ireland, Brockham and Lidsey in the Weald Basin and Egmating and Starnberger See in Germany. The company is currently producing from wells at Keddington, Brockham and Lidsey. New wells at Larne, Whisby and Lidsey as well as sidetracks at Keddington and Brockham are due to be drilled in 2016. The first well on the PL1/10 Larne licence targeting the Woodburn prospect, with P50 recoverable prospective resources of 40mmbo (4mmbo net to Terrain) is now fully permitted with funding partners in place and is scheduled to be drilled in April 2016.

Dryden

Dryden is headquartered in the UK and specialises in the actuarial, insurance and compliance recruitment sector. Since raising funds in February 2015, the company has made significant progress in implementing new systems and working processes thereby delivering operational improvement. Performance for the fiscal year to date is ahead of prior year results. Further improvement is expected as operational improvements feed through to business results and as newly hired recruitment consultants are fully on-boarded. The company will continue to invest in efficiency improving systems, processes and training, and recruit new high performing recruitment consultants who are aligned with management's strategy of growth and continuous performance improvement.

Solab

Solab is a long established manufacturer of fragrances, shampoos and skincare products for third party customers, including L'Oreal and Penhaligon. More recently it has been broadening its activities, particularly into animal care products. The cosmetics business of Solab has been affected by difficult market conditions and a significant reduction in volumes from its largest customer, The Body Shop. The Body Shop is due to make a decision to in-source manufacturing to French factories following its acquisition by L'Oreal. Business has not been lost to a competitor. New business from third parties has, to date, only partially replaced that lost turnover; it is, however, expected to be fully recovered in 2016 and early 2017. The company has sought more balance to its portfolio by investing in its animal care and veterinary orientated activities. Revenues from this area have increased substantially, with near break-even achieved in 2015 and profitability anticipated in 2016.

Human Race

Human Race owns and operates over 60 events for over 90,000 participants of all abilities and ages. This makes the business the largest owner and deliverer of mass participation events in the UK. The portfolio of events includes the London Winter Run, Windsor Triathlon, Wiggle Dragon Ride, Run or Dye series, Tour de Yorkshire Ride (alongside ASO - owners of the Tour de France), the Eton Triathlon Super Sprints, Kingston Breakfast Run, and an off road winter series. A greater emphasis is being put on the larger flagship events likely to attract maximum interest and drive growth through larger scale and profit. This is bearing fruit with the launch of the London Winter Run - the largest inaugural 10k run ever in the UK with 14,000 entries in year one. A roll out of the Winter Run concept is now planned throughout the UK and beyond, with 2016 events having taken place in Liverpool & Manchester. In addition, an exciting partnership is being forged with ASO with a venture alongside the Tour de Yorkshire (a pro ride over 3 days) and the acquisition of a smaller established sportive called the Lionheart Ride. Other concepts are also being looked at for 2016. Human Race continues to grow steadily and made its first profit before tax for 2015.

RMS

The Company maintains its ordinary equity investment in RMS. RMS provides port services from six locations on the Humber Estuary, the UK's busiest trading estuary. The group's services cover shipping, stevedoring, storage/warehousing and support logistics for import and export cargoes moving between Northern Europe, the Baltic, Russia, the Iberian Peninsula and the Mediterranean. In 2014, activity returned to pre-recession levels as UK economic growth continued. Trading this year however has been difficult primarily due to low prices in the steel and timber industries and high stock levels at steel and wood stockholders. RMS continues to be stable and cash generative.

MicroEnergy

Following the acquisition of an additional 15 turbines in April 2015, which was supported by a £150,000 loan from the Company which has been fully repaid, MicroEnergy now owns and operates a fleet of 168 small onshore wind turbines (

Hembuild

Hembuild, the award winning provider of fast track, sustainable building systems has appointed administrators. The company won the Ashdown Award for its Cheshire Oaks superstore construction for Marks & Spencer. Hembuild has built some notable low carbon/high performance buildings, including the Science Museum's large object archive; the Cheshire Oaks superstore, which is Marks & Spencer's largest purpose-built store; a temperature controlled warehouse for the Wine Society, a corporate archive and storage centre for GlaxoSmithKline; Adnam's Brewery's Southwold distribution centre and many social and private housing developments. All have shown remarkable performance in terms of both sustainability (due to hemp based products), temperature and moisture control. More generally, however, the company struggled to gain acceptance from large contractors which prefer to follow more standard building methods. There is unlikely to be any return to shareholders. £235,000, representing 50 per cent. of the Company's holding of Hembuild loan notes, were repaid at par in May 2015. As a secured creditor for the remaining loan notes, the Company estimates a likely recovery in the region of 25 pence in the pound although the administrator's work is at an early stage.

Since the year the Company has made a qualifying investment of £100,000 in Arcis. Arcis is an R&D company with expertise in the development and commercialisation of a wide range of innovative, effective anti-microbial application technologies.

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

John Glencross

Calculus Capital Limited

15 March 2016

The ten largest holdings by value are included below:

* The valuations of certain investments include small purchases made which are non-qualifying investments. These cost £12,750 and are valued at £6,404.

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

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

RMS is a Humberside based port operator, and provides customers with shipping, stevedoring and storage warehousing. The group also has a national logistics division.

Terrain was established by Calculus Capital Limited in 2009 to develop a portfolio of onshore oil and gas producing assets in the UK.

Other funds managed by Calculus Capital Limited have invested in this company and have combined voting rights of 5.4 per cent.

MicroEnergy is a company set up by Calculus Capital Limited in 2012 to acquire renewable, microgeneration facilities.

Founded in the 1970s, Hampshire develops and manufactures a comprehensive range of products covering fragrances, body treatments, skincare and shampoos. 

Human Race own and operate over 60 mass participation sports events including triathlon, cycling, running, duathlon, aquathlon and open water swimming.

Dryden is headquartered in the UK and specialises in the actuarial, insurance and compliance recruitment sector across UK, Europe and the Far East.

1 In the year to March 2014 £5.3m share capital was classified as a financial liability in the audited accounts. In the year to March 2015 this was reclassified as equity 

This report has been prepared by the directors in accordance with the requirements of Section 414A of the Companies Act 2006. The Company's independent auditor is required by law to report on whether the information given within the strategic report is consistent with the financial statements. The auditor's report is set out on pages 25 to 28 of the Report and Accounts.

The Company is a VCT listed on the London Stock Exchange. The principal activity of the Company is investing in unquoted or AIM traded companies in the UK with the objective of generating long term capital growth and tax free dividends for investors. The Company is managed as a VCT in order that shareholders may benefit from the tax reliefs available.

The Board of directors is responsible for the overall stewardship of the Company including investment, dividend, borrowing and purchase of own shares policies, corporate strategy and governance and risk management. All the directors, whose details are set out on page 13 of the Report and Accounts, are non-executive. The Board has appointed Calculus Capital Limited to manage its qualifying portfolio and to provide certain administrative services. Details of the management agreement are set out under "Management" in the Directors' Report. Calculus Capital Limited engages with companies invested in by the Company on corporate governance matters to encourage good practice. This includes engagement on significant social and environmental issues where these may impact shareholder value.

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.

The investment policy is to invest approximately 75 per cent of the Company's funds in a diversified portfolio of holdings in qualifying investments, whether unquoted or traded on AIM. Investments are made selectively across a diverse range of sectors in companies which have the potential to generate growth and enhance their value. The balance of approximately 25 per cent of the Company's funds can be invested in a combination of Neptune Income Funds, a portfolio of income generating UK quoted shares, and money market instruments.

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

The qualifying investments in a particular company may be made in equity shares, loan stocks and/or preference shares where it is felt this would enhance shareholder return. It is intended that no one company shall represent more than 10 per cent of the portfolio and no sector shall represent more than 20 per cent of the total portfolio, in both cases at the date of investment. The Company's policy is not to invest in start-up or seed capital situations. To meet the requirements of a VCT qualifying investment, at least 10 per cent by value of the total investments in any one qualifying company must be in ordinary shares which carry no preferential rights. In addition, the companies in which qualifying investments are made must be UK companies that have no more than £15 million of gross assets at the time of investment (or £7 million if the funds being invested were raised after 5 April 2006). There are also restrictions on the age of the qualifying company and on the total amount of funds it can raise.

The Company's investment policy is designed to ensure that it continues to meet the requirements for approved VCT status. Amongst other conditions, the Company may not invest more than 15 per cent, by value at the time of investment, 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.

To give a degree of investment flexibility and to meet short term liquidity requirements, borrowing is permitted by the Company's Articles of a sum which does not exceed 10 per cent of the Company's share capital and reserves. The Company has not utilised these powers to date and does not plan to utilise this ability at the current time.

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

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

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

In addition, the Company is subject to other price risk constituting uncertainty about the future prices of financial instruments held by the Company. This risk is in part mitigated by diversifying the Company's portfolio. The Company has invested in loan stocks and as a result is subject to credit risk. Credit risk is also included within market risk. The company mitigates this risk through Calculus Capital Limited's regularly monitoring financial performance of investee companies.

The majority of the loan stocks are fixed rate so the Board does not consider interest rate risk to be material. The Company has no exposure to foreign currency risk, nor does it have any interest bearing liabilities. Further comment is provided on the financial instruments risks of the Company in note 18 to the accounts.

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

The key performance indicators are those that communicate the financial performance and strength of the Company as a whole; these being principally the total return per Ordinary Share and net asset value per Ordinary Share. Further key performance indicators are those which show the Company's position in relation to the VCT tests which it is required to meet to maintain its VCT status.

In addition to the above, the Board considers performance against the Company's closest benchmark, the FTSE AIM All-share Index. The performance measures for the year are included in the Financial Highlights on page 1 and reported on in the Chairman's statement on page 2 of the Accounts.

The key strategic issues considered during the year were:

The value and nature of investments made and realised during the year to ensure these were in accordance with the investment policy and/or whether any changes should be proposed to the investment policy.

The Investment Manager's Review (Qualifying Investments) on pages 4 to 6 of the Accounts provides commentary on the performance of the Company during the year.

The Board considered the level of dividends to be proposed and the use of proceeds arising from the sale of one of the Company's investments.

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 managers (details of the management agreement is 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 relationships with suppliers, the Company aims to conduct itself responsibly, ethically and fairly.

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.

By order of the Board

Lesley Watkins

Company Secretary

15 March 2016

The directors are responsible for preparing the Annual Financial Report and the Company's Accounts in accordance with applicable law and regulations.

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

• select suitable accounting policies and then apply them consistently;

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

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

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

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the accounts and the remuneration report 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 complies with that law and those regulations.

The directors are responsible for the integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of accounts may differ from legislation in other jurisdictions.

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 auditors accept no responsibility for any changes that have occurred to the accounts since they were initially presented on the website. Visitors to the website need to be aware that legislation in the United Kingdom covering the preparation and dissemination of the accounts may differ from legislation in their own jurisdiction.

We confirm that, to the best of our knowledge: (a) the Accounts, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and deficit of the Company; and (b) 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

Philip StephensChairman

15 March 2016

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.

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

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

The notes to the financial statements on pages 33 to 46 of the Accounts form an integral part of this statement.

The notes to the financial statements on pages 33 to 46 of the Accounts form an integral part of this statement.

The notes to the financial statements on pages 33 to 46 of the Accounts form an integral part of this statement.

The financial statements on pages 29 to 46 were approved by the Board of directors on and were signed on its behalf by:

Philip Stephens

Director

15 March 2016

The notes to the financial statements on pages 33 to 46 of the Accounts form an integral part of this statement.

The financial statements have been prepared on a basis compliant with applicable United Kingdom accounting standards, including Financial Reporting Standard 102 - The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland ('FRS102') and with the Act. The financial statements have been prepared on the historical cost basis except for the modification to a fair value basis for certain financial Instruments as specified in the accounting policies below. The directors have prepared the financial statements on a basis compliant with the recommendations of the Statement of Recommended Practice November 2014 ("the SORP") for Investment Trust Companies and Venture Capital Trusts produced by the Association of Investment Companies ("AIC").

This is the first year in which the financial statements have been prepared under FRS102. However there are no changes to any prior year balances.

The adoption of FRS 102 has introduced some presentational changes. The statement of cash flows now refers to cash or cash equivalents.

The financial statements are presented in Sterling (£).

Going concern

After reviewing the Company's forecasts and projections, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. The Company therefore continues to adopt the going concern basis in preparing its financial statements.

Significant judgements and estimates

Preparations of the financial statements requires management to make significant judgements and estimates. The items in the financial statements where these judgements and estimates have been made are in the valuation of unquoted investments. The valuation methodologies used when valuing unquoted investments provide a range of possible values. Judgments are used to estimate where in the range the fair value lies. The sensitivity analysis in note 18 demonstrates the impact on the portfolio of applying alternative values in the upside and downside.

As at 31 December 2015 the value of unquoted investments included within the Company's investment portfolio was £2,193,518 (2014 £2,425,776). These investments are valued in accordance with the accounting policy disclosed under note 3 investments.

Principal accounting policies

The Company has adopted FRS 102 11 and 12 for the recognition of financial instruments. The Company's business is investing in financial assets with a view to profiting from their total return in the form of increases in fair value. Fair value is the amount for which an asset can be exchanged between knowledgeable, willing parties in an arm's length transaction. The Company manages and evaluates the performance of these investments on a fair value basis in accordance with its investment strategy, and information about the investments is provided on this basis to the Board of directors.

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

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

Aggregate transaction and dealing costs included in disposals and additions are disclosed in note 9 to the financial statements, as recommended by the SORP. All purchases and sales of quoted investments are accounted for on the trade date basis. All purchases and sales of unquoted investments are accounted for on the date that the sale and purchase agreement becomes unconditional.

For quoted investments and money market instruments fair value is established by reference to bid, or last, market prices depending on the convention of the exchange on which the investment is quoted at the close of business on the balance sheet date.

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

Premiums on loan stock investments and preference shares are accrued at fair value when the Company has the right to receive the premium and expects to do so. Redemption premiums are allocated to the revenue column of the Income Statement.

Cash comprises cash on hand and demand deposits. Cash equivalents does not include liquidity fund investments as the Company does not consider the risk associated with changes in value to be insignificant.

Short term debtors are measured at transaction price, less any impairment.

Short term trade creditors are measured at the transaction price.

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

Interest income on loan stock and dividends on preference shares are accrued on a daily basis. Provision is made against this income where recovery is doubtful.

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

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

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

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

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

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

- expenses associated with the issue of shares are deducted from the share premium account.

Capital reserve - other

The following are accounted for in this reserve:

- gains and losses on disposal of investments;

- transaction costs which are incidental to the acquisition of investments;

- 75% of investment management fee expenses, together with the related tax effect, is charged to the capital column of the Income Statement in accordance with the above policies; and

- 100% of performance incentive fees.

Capital reserve - investment holding loss

The following are accounted for in this reserve:

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

Under FRS 102, deferred tax must be recognised in respect of all timing differences that have originated but not reversed at the reporting date where transactions or events that result in an obligation to pay more tax in the future have occurred at the reporting date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversals of the underlying timing differences can be deducted. Timing differences are differences between the Company's taxable profits and its results as stated in the financial statements.

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

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

Any tax relief obtained in respect of management fees allocated to capital is reflected in the capital reserve - other and a corresponding amount is charged against revenue. The relief is the amount by which corporation tax payable is reduced as a result of capital expenses.

Dividends to shareholders are accounted for in the year in which they are paid or approved in general meetings. Dividends payable to equity shareholders are recognised in the Statement of Changes in Equity when they are paid, or have been approved by shareholders in the case of a final dividend and become a liability of the Company.

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

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 management fee

For the year ended 31 December 2015, Calculus Capital Limited waived £68,455 (2014: £24,912) of its fees. At 31 December 2015, there was £5,259 due to Calculus Capital Limited (31 December 2014: due to Calculus Capital Limited £65,556). Details of the terms and conditions of the investment management agreement are set out under "Management" in the Directors' Report.

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

6 Taxation on ordinary activities

On 1 April 2015, the Corporation Tax rate decreased from 21% to 20%. The rate remained at 20% for the rest of 2015.

At 31 December 2015, the Company had £1,444,298 (31 December 2014: £1,351,017) of excess management expenses to carry forward against future taxable profits. The deferred tax asset of £259,974 (31 December 2014: £270,203) has not been recognised due to the fact that it is unlikely the excess management fees will be set off in the foreseeable future.

The Company paid a special dividend in March 2015 of 5.0p per Ordinary Share (2014: nil), a final dividend in June 2015 of 2.0p per Ordinary Share (2014: 2.0p) and an interim dividend in October 2015 of 1.5p per Ordinary Share (2014:1.0p). The directors are proposing a final dividend of 2.0p per Ordinary Share in respect of the year ended 31 December 2015 (2014: 2.0p). Subject to shareholder approval, this dividend will be paid on 10 June 2016 to shareholders on the register on 6 May 2016.

Basic and diluted earnings per Ordinary Share is based on the net revenue deficit on ordinary activities attributable to the Ordinary Shares of £31,000 (2014: deficit of £55,000) and on 11,311,329 (31 December 2014: 11,311,329) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the year.

Basic and diluted capital deficit per Ordinary Share is based on the net capital deficit for the year of £400,614 (2014: return of £746,407) and on 11,311,329 (31 December 2014: 11,311,329) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the year.

Basic and diluted total deficit per Ordinary Share is based on the total deficit on ordinary activities attributable to the Ordinary Shares of £430,553 (2014: return of £691,080) and on 11,311,329 (31 December 2014: 11,311,329) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the year.

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

In the year to 31 December 2015, Hembuild Group Limited was written down by £103,523 due to it entering administration.

There have not been any transaction costs in the year to 31 December 2015, nor in the year to 31 December 2014.

Note 18 to the financial statements provides a detailed analysis of investments held at fair value through profit or loss.

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

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

The basic and diluted net asset value per Ordinary Share is based on net assets (including current year revenue) of £4,446,002 (31 December 2014: £5,838,033) and on 11,311,329 (31 December 2014: 11,311,329) Ordinary Shares, being the number of Ordinary Shares in issue at the end of the year.

At 31 December 2015 and 2014 the Company did not have any financial commitments which had not been accrued.

The objective of the Company is to generate long term capital growth and tax free dividends for investors. The investment policy is to invest approximately 75 per cent of the Company's funds in a diversified portfolio of holdings in qualifying investments, whether unquoted or traded on AIM. Investments are made selectively across a diverse range of sectors in companies which have the potential to generate growth and enhance their value. The investments in a particular company may be made in loan stocks or preference shares as well as equity shares where it is felt this would enhance shareholder return. In accordance with the Company's risk averse approach, the investment manager will only invest when it believes it has identified the right investment opportunity. The balance of approximately 25 per cent of the Company's funds can be invested in a combination of Neptune income funds, a portfolio of similar income generating UK listed shares and money market instruments.

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

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

The Company has no exposure to foreign currency risk.

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

- Market price risk

- Interest rate risk

- Liquidity risk

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

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

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

The Company does not use derivative instruments to hedge against market price risk. The maximum potential exposure to market price risk is the value of the investment portfolio as at 31 December 2015 of £4,085,000 (31 December 2014: £3,949,000).

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

The table below shows the impact upon profit and net assets if there were to be a 10 per cent (31 December 2014: 10 per cent) movement in overall share prices, and assumes:

- that each of the shares and the Neptune funds held by the Company produces an overall movement of 10 per cent, and

- the values of the loan stocks and liquidity funds are not affected by a market movement of this size, and

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

If overall share prices fell/rose by 10 per cent (2014: 10 per cent), with all other variables other than the investment management fees held constant:

A decrease of £271,354 (31 December 2014: £301,081) in the net assets of the Company would have decreased investment management fees payable to the investment manager for the financial year under review by £9,497 (31 December 2014: £10,538). An increase of £271,354 (31 December 2014: 301,081) would have increased investment management fees payable by £9,497 (31 December 2014: £10,538).

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

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

All quoted shares of the Company which are traded on a recognised exchange are held by Reyker Securities plc, the Company's custodian. The Board regularly monitors the Company's risk by reviewing assessments of the custodian submitted by the investment manager.

Interest is earned on cash balances and money market funds and is linked to the banks' variable deposit rates. The Board does not consider interest rate risk to be material. Interest rate risk arising on loan stock instruments is not considered significant, as the main risks on these investments are credit risk and market price risk. The interest rate earned on the loan stock instruments has be disclosed below:

On 31 December 2015, there was £4,747 in loan stock interest overdue from Dryden Human Capital Group Limited.

The Company does not have any interest bearing liabilities.

An analysis of financial assets and liabilities, which identifies the risk of the Company's holding of such items is provided. The Company's financial assets comprise equity and preference shares, loan stock, cash and debtors. The interest rate profile of the Company's financial assets is given in the table below:

The variable rate is based on the banks' deposit rate, and applies to cash balances held and the money market funds. The benchmark rate which determines the interest payments received on interest bearing cash balances is the Bank of England base rate which was 0.5 per cent as at 31 December 2015 (31 December 2014: 0.5 per cent).

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

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

At 31 December 2015, the Company held £2,048,000 (31 December 2014: £2,942,000) in cash and readily realisable securities (including the investments in the Neptune Income Fund and Neptune Quarterly Income Fund) to pay accounts payable and accrued expenses.

Investments held at fair value through profit and loss are valued in accordance with IPEVC guidelines as follows:

The valuation method used will be the most appropriate valuation methodology for an investment within its market, with regard to the financial health of the investment and the IPEVCA guidelines.

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

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

Inputs to Level 1 fair values are quoted prices for identical asset in an active market. Quoted in an active market in this context means quoted prices are readily and regularly available and those prices represent actual and regularly occurring market transactions on an arm's length basis. The quoted price is usually the current bid price. The Company's investments in AIM quoted equities, money market funds and the quoted Neptune funds are classified within this category.

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

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

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

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

In order to maintain disclosures in line with the prior year, the Company has early adopted the changes to FRS 102 published by the FRC in March 2016.

In valuing the unquoted portfolio, the inputs include the discount rate used when performing the discounted cash flow analysis and the multiple applied in universal transaction and comparable company analysis. The portfolio has been reviewed and both downside and upside reasonable possible alternative assumptions have been identified and applied to the valuation of each of the unquoted investments. Applying the downside alternatives the value of the unquoted investment portfolio would be £565,003 (31 December 2014: £163,000) or 25.8 per cent (31 December 2014: 6.6 per cent) lower. Using the upside alternatives the value of the unquoted investment portfolio would be increased by £715,134 (31 December 2014: £166,000) or 32.6 per cent (31 December 2014: 6.7 per cent) higher.

The Company finances its operations through its issued share capital and existing reserves. The only financial liabilities of the Company are creditors all of which are sterling denominated and are due within one year. The creditors are disclosed in note 12. No interest is paid on these liabilities.

All assets and liabilities are carried at fair value.

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

The Board, with the assistance of the Investment Manager monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes the planned level of gearing, which takes account of the Manager's views on the market; the need for new issues of equity shares; and the extent to which revenue in excess of that which is required to be distributed should be retained. The capital of the Company is made up of called up share capital and reserves as detailed on the statement of financial position on page 31 of the Report and Accounts.

The Company's qualifying investments are managed by Calculus Capital Limited. John Glencross, a director of the Company, has an interest in Calculus Capital Limited and is a director of Terrain Energy Limited.

Calculus Capital Limited receives annual fees for monitoring and for the provision of a director from Terrain Energy Limited, Human Race Group Limited and Solab Group Limited. Calculus Capital Limited receives a monitoring fee from Hembuild Group Limited and from MicroEnergy Generation Services Limited. Calculus Capital Limited receives a fee from Dryden Human Capital Group for the provision of a director. Calculus Capital Limited also received a fee from Terrain Energy Limited for office support services.

In the year ended 31 December 2015, the amount payable to Calculus Capital Limited which was attributable to the investment in the Company was £700 (2014: £2,875) for Dryden Human Capital Group Limited, £829 (2014: £699) for Solab Group Limited, £3,178 (2014: £3,138) from Human Race Group Limited, £598 (2014: £5,780) from Hembuild Group Limited, £2,681 (2014: £2,640) from Terrain Energy Limited and £954 (2014: £235) from MicroEnergy Generation Services Limited (all excluding VAT).

These are not full accounts in terms of Section 434 of the Companies Act 2006. Full audited accounts for the year ended 31 December 2014 have been lodged with the Registrar of Companies. The Report and Accounts for the year ended 31 December 2015 will be sent to shareholders shortly and will be available for inspection at 104 Park Street, London, W1K 6NF, the Company's registered office, and will be published on www.calculuscapital.com, a website maintained by the Company's Investment Manager, Calculus Capital Limited. A copy of the Annual Report and Accounts 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 accounts for the year ended 31 December 2015 contain an unqualified audit report.