23 Aug 2012 14:33
CORPORATE POLICY AND PERFORMANCE SUMMARY
Objective
Neptune-Calculus Income and Growth VCT is a tax efficient listed company which has 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 Company's 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 Company does not invest in start-up and seed capital situations. The qualifying investments are managed by Calculus Capital Limited, and the balance of the Company's investments can be invested in a combination of Neptune income funds and a portfolio of similar income generating UK listed shares and money market instruments.
Performance summary | |
Six months to | |
30 June 2012 | |
Deficit per Ordinary Share | (0.9)p |
Net asset value per Ordinary Share | 56.2 p |
Cumulative dividends paid per Ordinary Share | 18.5 p |
Proposed interim dividend | 1.0 p |
As at | |
31 July 2012* | |
Net asset value per Ordinary Share | 56.6 p |
*Being the latest practicable date prior to publication and including net revenue after 30 June 2012.
CHAIRMAN'S STATEMENT
I present your Company's results for the six months ended 30 June 2012. Net assets per Ordinary Share on 30 June 2012 were 56.2 pence compared with 58.9 pence as at 31 December 2011. The major part of the movement is attributable to the dividend of 2.0 pence per Ordinary Share paid in June. The dividend payment is outlined in the section below, and took the total cumulative dividends paid on the Ordinary Shares since inception to 18.5 pence.
Our qualifying investments, which include both unquoted and AIM companies, are managed by Calculus Capital Limited. Over the period under review, the overall value of the quoted companies rose on a like-for-like basis by approximately 4.5 per cent, although the AIM market itself, was down by over 2.7 per cent. The value of the unquoted portfolio fell by 6.5 per cent on a like-for-like basis during the period because the Company's holding in Heritage House Media Limited was written down to nil.
In March 2012, RMS Group Holdings Limited redeemed its preference shares. The proceeds of £200,000 were reinvested in April as part of the Company's investment in Participate Sport Limited. The investment was made to support the acquisition of Human Race Limited, thereby creating the UK's largest and most diverse mass participation sports company. The combined group, which adopted the name Human Race Group Limited, owns and delivers over 55 events to over 100,000 participants of all abilities and ages.
In May 2012, Triage Holdings Limited redeemed just under £93,000 of the Company's holding of preference shares.
At 30 June 2012, our non-qualifying investments comprised holdings in the Neptune Income Fund and Neptune Quarterly Income Fund as well as £68,000 held in cash funds. These investments are managed by the Board to ensure that the Company has the required amount of liquidity available to it at any point in time. £200,000 of the Neptune Funds were sold during the period. The Neptune Funds, which have a bias towards income generating large cap stocks, showed a small increase in value over the period. Since the period end we have reduced further our holdings of the Neptune Funds and increased our holding of liquidity funds.
A more detailed analysis of qualifying investment performance can be found in the Investment Managers' Review following this statement.
Dividends
The 2011 final dividend of 2.0 pence per Ordinary Share was paid in June following shareholder approval at the AGM. In line with our policy of maximizing tax-free dividends to shareholders, the Directors are pleased to declare an interim dividend of 1 penny per Ordinary Share, payable on 17 October 2012 to shareholders on the register on 21 September 2012.
Share Buybacks
In order to return further cash to shareholders, the Board has exercised its powers to buy back shares during the period. In the six months to 30 June 2012, the Company repurchased a total 283,163 Ordinary Shares for cancellation at an average price of 52.5 pence per Ordinary Share. As at 30 June 2012 there were 11,351,880 Ordinary Shares in issue.
Outlook
Official figures for the UK economy indicate that the outlook remains uncertain and Europe continues to be a concern. Smaller companies can be a good lead indicator of underlying economic activity and the performance of those in our portfolio indicates that the economy may fare better over the rest of 2012 than is generally predicted.
Philip Stephens
Chairman
23 August 2012
INVESTMENT MANAGER'S REVIEW (QUALIFYING INVESTMENTS)
Calculus Capital advises the Company in respect of qualifying investments made by the Company.
Portfolio developments
At 30 June 2012 the portfolio of qualifying investments comprised 16 companies, made up of both AIM quoted and unquoted stocks. The Company continues to meet the requirements for approved VCT status.
During the period the Company made no further quoted investments. We are pleased to report that the quoted portfolio went up in value despite the AIM market itself falling by 2.7 per cent.
EpiStem Holdings plc ("EpiStem") continues to show year on year growth in revenues and earnings, and in March 2012, announced a three year biomarker collaboration with GlaxoSmithKline in the field of fibrosis research. Also in March, EpiStem signed a sales and marketing agreement with Xcelris Limited, one of India's leading Diagnostics testing companies, for its rapid molecular test for tuberculosis ("TB"). India has the largest number of TB sufferers in the world with two million new patients developing TB every year.
Pressure Technologies plc develops high pressure equipment for the oil and gas, biogas and defence industries. The company is now seeing improved activity from the oil and gas industry and also expects to see continued growth in its engineered products division following the acquisitions of Al-Met Limited and Hydratron Limited. Both Al Met (which manufactures engineered alloys for high pressure valves), and Hydratron (which manufacturers pumps and hydraulic control panels), supply products that can be used on existing rigs as well as new ones, and have profited from increased industry investment on existing rigs.
At 30 June 2012, the value of the unquoted companies was £3,504,683. The portfolio fell by 6.5 per cent over the period on a like-for-like basis due to the investment in Heritage House Media being written down to nil in April after the company appointed administrators following withdrawal of its overdraft facility at short notice.
The Company invested £400,000 in Human Race Group Limited in April ("Human Race"), formerly Participate Sport Limited. Human Race is now the UK's largest and most diverse mass participation sports events company. The portfolio of events includes the Toshiba Windsor Triathlon, Cycletta, the Eton Triathlon Super Sprints, Festival of Sport Cornwall, Wiggle Dragon Ride, Etape Cymru, Off Road Winter Series, the Speedo Open Water Swimming Series and a partnership with the British 10k Run powered by Nike+. The group's objective is to be a leader in the ownership and delivery of mass participation sports events internationally. The mass participation industry has grown strongly over the past decade and its rapid growth has been relatively unaffected by the recent economic recession. The team behind Human Race is the team behind Quintus Group Limited ("Quintus"), a previous investment by the Company, which owned and managed a number of sporting events. Quintus was sold to IMG, the world's largest sports rights company in 2007.
Terrain Energy Limited ("Terrain") continues to make good progress, and the fair value of the investment has increased to reflect this. In February, Terrain acquired a 12.5 per cent equity interest in the Burton on the Wolds licence in the East Midlands from Egdon Resources and Celtique Energie in a 2:1 farm in. Terrain currently has interests in six petroleum licences: Keddington, Kirklington, Dukes Wood, Kelham Hills, Burton on the Wolds and Larne in Northern Ireland in which Terrain has a 10 per cent interest. The main prospect is a conventional gas play thought to be a geological extension of the Morecambe Bay gas field. A 2D seismic survey of 399 line kilometres has been completed and a number of structural leads have been identified. Terrain also has a 10 per cent interest in a Nautical Petroleum operated application in the 27th licensing round.
Developments since the period end
There have not been any significant developments in the qualifying portfolio since the period end.
Outlook
The outlook for the UK economy remains uncertain. Overall, we are encouraged by the resilience of the companies in both the quoted and unquoted portfolios and believe they are well placed to benefit as the economy recovers.
John Glencross
Calculus Capital Limited
23 August 2012
INVESTMENT PORTFOLIO | |||
The ten largest holdings by value are included below: As at 30 June 2012 | |||
Cost | Valuation | Percentageof portfolio | |
£ | £ | % | |
AIM investments (quoted equity) | |||
EpiStem Holdings plc* | 251,261 | 788,435 | 12.5% |
Pressure Technologies plc | 200,402 | 206,976 | 3.3% |
Other AIM investments* | 1,942,037 | 69,929 | 1.1% |
Unquoted equity investments | |||
Terrain Energy Limited | 413,633 | 557,113 | 8.8% |
Waterfall Services Limited | 50,129 | 530,464 | 8.4% |
Lime Technology Limited | 213,958 | 459,625 | 7.3% |
RMS Group Holdings Limited | 92,339 | 430,155 | 6.8% |
Human Race Group Limited | 100,000 | 100,000 | 1.6% |
Other unquoted equity investments | 970,242 | 35,000 | 0.6% |
Triage Holdings Limited* | 50,589 | 0 | 0.0% |
Unquoted preference shares | |||
Triage Holdings Limited preference shares ‡ | 265,013 | 334,711 | 5.3% |
Unquoted bonds | |||
Waterfall Services Limited loan stock | 333,333 | 333,333 | 5.3% |
Human Race Group Limited | 300,000 | 300,000 | 4.8% |
Lime Technology Limited loan stock | 200,000 | 200,000 | 3.2% |
Other unquoted bonds | 620,436 | 120,000 | 1.9% |
Triage Holdings Limited loan stock | 74,280 | 74,280 | 1.2% |
Terrain Energy Limited loan stock | 75,000 | 75,000 | 1.2% |
Non-qualifying equity investments and loan stock | -334,878 | -86,654 | -1.4% |
Total qualifying investments | 5,817,774 | 4,528,367 | 71.8% |
Quoted funds | |||
Neptune Quarterly Income Fund Income Units | 851,658 | 834,050 | 13.2% |
The Neptune Income Fund Income A Class | 833,013 | 791,134 | 12.5% |
Unquoted funds | |||
SWIP Global Liquidity Fund | 42,000 | 42,000 | 0.7% |
Fidelity Sterling Fund distributing shares class A | 26,155 | 26,155 | 0.4% |
GS Sterling Liquid Reserves | 378 | 378 | 0.0% |
Non-qualifying equity investments and loan stock | 334,878 | 86,654 | 1.4% |
Total non-qualifying investments | 2,088,082 | 1,780,371 | 28.2% |
Total investments | 7,905,856 | 6,308,738 | 100% |
‡ The valuation of Triage Holdings Limited preference shares includes a redemption premium which is non-qualifying. This cost £nil and is valued at £69,698.
* The valuations of certain investments include small non-qualifying investments. These cost £20,260 and are valued at £16,955.
UNAUDITED INCOME STATEMENT
for the six months to 30 June 2012
Six months to 30 June 2012 | Six months to30 June 2011 | Year to 31 December 2011* | ||||||||
Revenue | Capital | Total | Revenue | Capital | Total | Revenue | Capital | Total | ||
Note | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Losses on investments at fair value | - | (83) | (83) | - | (362) | (362) | - | (604) | (604) | |
Investment income | 94 | - | 94 | 96 | - | 96 | 223 | - | 223 | |
Investment management fee | (11) | (34) | (45) | (9) | (27) | (36) | (21) | (62) | (83) | |
Other expenses | (66) | - | (66) | (90) | - | (90) | (158) | - | (158) | |
Return/(deficit) on ordinary activities before finance charges and taxation | 17 | (117) | (100) | (3) | (389) | (392) | 44 | (666) | (622) | |
Finance charges | - | - | - | - | - | - | - | - | - | |
Taxation on ordinary activities | - | - | - | - | - | - | - | - | - | |
Return/(deficit) attributable to Ordinary shareholders | 17 | (117) | (100) | (3) | (389) | (392) | 44 | (666) | (622) | |
Return/(deficit) per Ordinary Share | 3 | 0.15p | (1.02)p | (0.87)p | (0.02)p | (3.24)p | (3.26)p | 0.37p | (5.63)p | (5.26)p |
*These figures are audited.
The total column of this statement 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 revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the period.
There is no statement of recognised gains and losses as there were no other gains and losses.
The accompanying notes are an integral part of this statement.
UNAUDITED RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the six months to 30 June 2012
Share capital | Share premium | Capital Special redemption reserve reserve | Capitalreserve | Revenue reserve | Total | ||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
For the period 1 January 2012 to 30 June 2012 | |||||||
1 January 2012 | 1,163 | 631 | 9,255 | 77 | (4,319) | 45 | 6,852 |
Cancellation of own shares | (28) | - | (150) | 28 | - | - | (150) |
Net deficit after taxation for the period | - | - | - | - | (117) | 17 | (100) |
Equity dividends paid | - | - | (182) | - | - | (45) | (227) |
30 June 2012 | 1,135 | 631 | 8,923 | 105 | (4,436) | 17 | 6,375 |
For the period 1 January 2011 to 30 June 2011 | |||||||
1 January 2011 | 1,230 | 631 | 10,039 | 10 | (3,653) | 165 | 8,422 |
Cancellation of own shares | (67) | - | (401) | 67 | - | - | (401) |
Net deficit after taxation for the period | - | - | - | - | (389) | (3) | (392) |
Equity dividends paid | - | - | (267) | - | - | (163) | (430) |
30 June 2011 | 1,163 | 631 | 9,371 | 77 | (4,042) | (1) | 7,199 |
For the year 1 January 2011 to 31 December 2011* | |||||||
1 January 2011 | 1,230 | 631 | 10,039 | 10 | (3,653) | 165 | 8,422 |
Cancellation of own shares | (67) | - | (401) | 67 | - | - | (401) |
Net (deficit)/return after taxation for the year | - | - | - | - | (666) | 44 | (622) |
Equity dividends paid | - | - | (383) | - | - | (164) | (547) |
31 December 2011 | 1,163 | 631 | 9,255 | 77 | (4,319) | 45 | 6,852 |
*These figures are audited.
The accompanying notes are an integral part of this statement.
UNAUDITED BALANCE SHEET
as at 30 June 2012
30 June 2012 | 30 June 2011 | 31 December 2011 | ||
Note | £'000 | £'000 | £'000 | |
Fixed Assets | ||||
Investments at fair value through profit or loss | 6,309 | 6,594 | 6,504 | |
Current Assets | ||||
Debtors | 46 | 354 | 41 | |
Cash at bank | 115 | 287 | 377 | |
161 | 641 | 418 | ||
Creditors: Amounts falling due within one year | ||||
Creditors | (95) | (36) | (70) | |
Net Current Assets | 66 | 605 | 348 | |
Net Assets | 6,375 | 7,199 | 6,852 | |
Represented by: CALLED UP SHARE CAPITAL AND RESERVES | ||||
Share capital | 1,135 | 1,163 | 1,163 | |
Share premium | 631 | 631 | 631 | |
Special reserve | 8,923 | 9,371 | 9,255 | |
Capital redemption reserve | 105 | 77 | 77 | |
Capital reserve - investment holding loss | (2,839) | (1,285) | (1,505) | |
Capital reserve - other | (1,597) | (2,757) | (2,814) | |
Revenue reserve | 17 | (1) | 45 | |
Total Ordinary shareholders' funds | 6,375 | 7,199 | 6,852 | |
Net asset value per Ordinary Share | 4 | 56.16p | 61.87p | 58.89p |
*These figures are audited
The accompanying notes are an integral part of this statement
UNAUDITED CASH FLOW STATEMENT
for the six months to 30 June 2012
Six monthsto 30 June2012 | Six monthsto 30 June2011 | Year to 31 December 2011* | ||
Note | £'000 | £'000 | £'000 | |
Operating activities | ||||
Investment income received | 92 | 115 | 247 | |
Other income received | - | 1 | 7 | |
Investment management fees paid | (18) | (54) | (85) | |
Administration fees paid | (11) | (11) | (17) | |
Other cash payments | (60) | (89) | (130) | |
Net cash inflow/(outflow) from operating activities | 5 | 3 | (38) | 22 |
Investing activities | ||||
Purchase of investments | (405) | (569) | (738) | |
Sale of investments | 516 | 1,279 | 1,594 | |
Net cash inflow from investing activities | 111 | 710 | 856 | |
Equity dividends paid | (227) | (431) | (547) | |
Financing | ||||
Shares bought back | (149) | (463) | (463) | |
Net cash outflow from financing | (149) | (463) | (463) | |
Decrease in cash | (262) | (222) | (132) |
*These figures are audited.
The accompanying notes are an integral part of this statement.
CONDENSED NOTES TO THE ACCOUNTS
1 Nature of Financial Information
The unaudited half-yearly financial information does not constitute statutory financial statements as defined in Section 434 of the Companies Act 2006 and has not been reviewed nor audited by the auditors. This information has been prepared on the basis of the accounting policies used in the statutory financial statements of the Company for the year ended 31 December 2011. The statutory financial statements for the year ended 31 December 2011, which contained an unqualified auditors' report, have been lodged with the Registrar of Companies, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report and did not contain statements under Section 498(2) or (3) of the Companies Act 2006.
2 Dividends
The Directors have declared an interim dividend of 1 penny per Ordinary Share. This dividend is payable on 17 October 2012 to shareholders on the register on 21 September 2012.
3 Return per Ordinary Share
Six months to 30 June 2012 | Six months to 30 June 2011 | Year to 31 December 2011 | |||||||
Revenue | Capital | Total | Revenue | Capital | Total | Revenue | Capital | Total | |
pence | pence | pence | pence | pence | pence | pence | pence | pence | |
Ordinary Share | 0.15 | (1.02) | (0.87) | (0.02) | (3.24) | (3.26) | 0.37 | (5.63) | (5.26) |
Revenue return per Ordinary Share is based on the net revenue return on ordinary activities attributable to the Ordinary Shares of £17,000 (30 June 2011: £3,000 deficit, 31 December 2011: £44,000 return) and on 11,476,347 (30 June 2011: 12,022,374, 31 December 2011: 11,827,117) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the period.
Capital return per Ordinary Share is based on the net capital deficit for the period of £117,000 (30 June 2011: £389,000, 31 December 2011: £666,000) and on 11,476,347 (30 June 2011: 12,022,374, 31 December 2011: 11,827,117) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the period.
Total return per Ordinary Share is based on the total deficit on ordinary activities attributable to the Ordinary Shares of £100,000 (30 June 2011: £392,000, 31 December 2011: £622,000) and on 11,476,347 (30 June 2011: 12,022,374, 31 December 2011: 11,827,117) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the period.
4 Net asset value per Ordinary Share
30 June 2012 | 30 June 2011 | 31 December 2011 | |
pence | pence | pence | |
Ordinary Shares of 10p each | 56.16 | 61.87 | 58.89 |
The basic net asset value per Ordinary Share is based on net assets (including current period revenue) of £6,375,000 (30 June 2011: £7,199,000, 31 December 2011: £6,852,000) and on 11,351,880 (30 June 2011: 11,635,043, 31 December 2011: 11,635,043) Ordinary Shares, being the number of Ordinary Shares in issue at the end of the period.
5 Reconciliation of net deficit before taxation to net cash inflow/(outflow) from operating
Activities
Six months to 30 June 2012 | Six months to30 June 2011 | Year to 31 December 2011 | |
£'000 | £'000 | £'000 | |
Net deficit before taxation | (100) | (392) | (622) |
Net capital deficit | 117 | 389 | 666 |
(Increase)/decrease in debtors | (5) | 19 | 32 |
(Increase)/decrease in creditors | 25 | (26) | 9 |
Investment management fee charged to capital | (34) | (26) | (62) |
Income reinvested | - | (1) | (1) |
Net cash inflow/(outflow) from operating activities | 3 | (38) | 22 |
6 Related party transactions
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. The amounts payable to the Managers are disclosed below:
Six months to 30 June 2012 | Six months to 30 June 2011 | Year to 31 December 2011 | |
£'000 | £'000 | £'000 | |
Investment management and | |||
administration fees | 56 | 47 | 105 |
Calculus Capital Limited receives annual fees from Terrain, Lime Technology Limited ("Lime") and Human Race for the provision of John Glencross as a Director, as well as annual monitoring fees. Calculus Capital also receives an annual monitoring fee from MicroEnergy Generation Services Limited ("MicroEnergy"). Other funds under the management or advice of Calculus Capital Limited have also invested in Terrain, Lime, MicroEnergy and Human Race. In the six months to 30 June 2012, the amount payable to Calculus Capital Limited which was attributable to the investment made by the Neptune-Calculus Income and Growth VCT plc was £3,014 (31 December 2011: £6,438) (including VAT) from Terrain, £3,731 (31 December 2011: £5,470) (including VAT) from Lime, £531 (31 December 2011: £927) (including VAT) from MicroEnergy and £987 (31 December 2011: nil) (including VAT) from Human Race.
In the six months to 30 June 2012 Calculus Capital Limited received an arrangement fee of £12,000 (31 December 2011: nil) attributable to the Company's investment in Human Race. Total arrangement fees received as at 31 December 2011 were £17,526 attributable to the Company's investments in Heritage, Terrain, Lime and MicroEnergy.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The half-yearly financial report, which has not been audited or reviewed by auditors pursuant to the Auditing Practices Board Guidance on Review of Half-Yearly Financial Information is the responsibility of, and has been approved by, the Directors. The Directors confirm that to the best of their knowledge the half-yearly financial report, which has been prepared in accordance with the Disclosure and Transparency rules and in accordance with applicable accounting standards including the statement 'Half-yearly financial reports' issued by the UK Accounting Standards Board, gives a true and fair view of the assets, liabilities, financial position and the deficit of the Company as at 30 June 2012.
The Directors confirm that the Chairman's Statement, the Investment Managers' Reviews, and note 6, include a fair review of the information required by DTR 4.2.7R, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements and a description of the principal risks and uncertainties for the remaining six months of the financial year, and 4.2.8R of the Disclosure and Transparency Rules.
The Directors of Neptune-Calculus Income and Growth VCT plc are:
Philip Stephens
John Glencross
David Kempton
By order of the Board
Philip Stephens Chairman
23 August 2012
The half yearly report will shortly be posted to shareholders. Copies of the report will also be available from the Company's registered office at 104 Park Street, London, W1K 6NF or from the Qualifying Investment Manager's website at www.calculuscapital.com/neptunevct.aspx.