Trading Emissions PLC Regulatory News (TRE)

Trading Emissions PLC

Annual Report & Financial Statements

Trading Emissions PLC ("TEP" or "the Company"), a closed ended investment company that specialises in renewable energy projects and emissions instruments, today announces its results for the financial year ended 30 June 2017.

Enquiries:

Chairman's Statement

Dear Shareholder

The Board of Trading Emissions PLC ("TEP" or the "Company") is cautiously optimistic that the execution of the Company's Investing Policy is approaching its conclusion.

Although the attached Financial Statements relate to the year ended 30 June 2017, the comments in this report cover both the past financial year and subsequent months.

Investments

At the end of the financial year, the Company's remaining investments were its Private Equity interests in TEP (Solar Holdings) Limited ("TEP Solar") and TEP (Renewables Holding) Limited ("TEP Renewables").

TEP Solar

At the beginning of the financial year, TEP Solar held five operating subsidiaries in Italy. During the year ended 30 June 2017, we completed the sale to a member of the Sonnedix group ("Sonnedix") of two of those subsidiaries, generating net proceeds of €9.6 million (including dividends). Two further subsidiaries were sold to Sonnedix following the year end for aggregate net proceeds of €3.0 million. Of the aggregate sale proceeds from the four subsidiaries, which together own seven plants, €3.0 million is held in escrow. Conditional on no claims being received from Sonnedix, €1.0 million will be released to TEP Solar in December 2017 and €2.0 million in December 2018. The Company is currently in advanced negotiations in relation to the sale of its fifth solar subsidiary, Solar Energy Italia 1 S.r.l. ("SEI1"), but there is no certainty as to whether these negotiations will lead to a sale.

TEP Renewables

In mid-2014, TEP Renewables sold its equity interest in EWG Slupsk, the developer of one of the largest wind farms in northern Poland, to a special purpose vehicle established by Winergy Last Mile Wind Limited ("Winergy"). A portion of the sales consideration was deferred, contingent on the project being built.

Winergy is facing an increasingly uncertain investment and operating environment for wind projects in Poland. During 2017, the populist Government, led by the Law and Justice Party, has continued to favour coal-fired power generation over renewable sources. Under Poland's Renewable Energy Law enacted in 2016, at least one auction of renewable energy sources must take place annually. TEP Renewables' receivable was again restructured during the financial year in order to prepare and support Winergy for a competitive auction in 2017 for the supply of wind power by EWG Slupsk. However, a decision made by the Polish Council of Ministers in late September 2017 cancelled all remaining auctions in 2017 for the supply of various types of renewable energy, including wind power. To date there has been no indication as to when and on what basis auctions might resume, nor regarding new policies, laws or regulations governing the sale of wind energy in Poland.

Winergy is currently facing the challenge of managing its operations in Poland, including retaining in place EWG Slupsk's building permits and land leases with all of the associated costs, for an uncertain period until the market for the supply of wind power in Poland clarifies.

Financial highlights

Cash of £1.3 million held by the Company at financial year end comprised 13% of the net asset value. The fair value at 30 June 2017 of TEP's investments in TEP Solar and TEP Renewables was £9.1 million (3.66 pence per Share) compared with £12.9 million (5.18 pence per Share) at 30 June 2016.

The holdings in TEP Solar and TEP Renewables accounted for 91% of the £10.0 million of the Company's net asset value at that date. The fair valuations of these investments are based on the net realisation proceeds estimated to be received upon the completion of their disposals. The valuations include costs, expenses and taxes estimated to be incurred to complete the realisations and also reflect various market, commercial, regulatory and other risk factors.

Distributions

During the financial year, TEP distributed to Shareholders £6.2 million, equivalent to 2.5 pence per Share. Following the year end, TEP distributed a further £2.5 million equivalent to 1.0 pence per Share.

From 2013 to date, TEP has distributed an aggregate of £93.7 million, equivalent to 37.5 pence per Share.

Operating costs

During the year, in addition to the sale of the two subsidiaries of TEP Solar, the Company commenced or finalised voluntary solvent liquidation proceedings in relation to five subsidiaries. The relatively high continuing level of operating costs compared with the value of the remaining portfolio is reviewed in detail quarterly by the Board and is expected to reduce significantly if completion of the sale of SEI1 is achieved. A certain level of costs associated with ongoing technical support in Italy and the Isle of Man will be necessary to ensure that any claims in relation to the sale of the solar portfolio are dealt with appropriately and the funds held in escrow are released.

Shareholders will be aware that TEP has a track record of providing surprises. Previously unrecorded and unprovided Irish VAT liability dating back to 2011 in relation to the activities of TEP Solar and TEP Renewables was discovered. TEP estimates that the liability amounts to an aggregate of €0.3 million. We have made the appropriate preliminary disclosures and payments to the Irish Revenue and the amounts have been accounted for in the Financial Statements for the year ended 30 June 2017.

Shareholder consultations

Following a sale of SEI1, the Company intends to consult with Shareholders regarding ways in which costs could be reduced, including delisting, reducing the size of the Board and other ways of streamlining the Company's operations.

Future of the Company

Although there is no assurance that the current negotiations in relation to SEI1 will lead to a successful realisation, the Board is optimistic that a sale will occur one way or another by the time the funds are released from escrow at the end of 2018.

Following completion of a sale of SEI1, the Board expects to convene a Shareholder meeting to approve a distribution, potentially cancel the admission to trading of TEP's Shares on AIM and, in due course, appoint a liquidator of the Company.

Martin M. Adams

Chairman

1 December 2017

Directors' Report

The Directors present their report and the audited Financial Statements of Trading Emissions Plc ("TEP" or the "Company") for the year ended 30 June 2017.

Principal activities, trading review and future developments

The Company is a closed-ended investment company, incorporated on 15 March 2005 in the Isle of Man as a public limited company. The Company's Ordinary shares ("Shares") were admitted to trade on AIM (formerly the Alternative Investment Market) of the London Stock Exchange on 21 April 2005.

The Company invested in environmental and emission assets, companies providing products and services related to the reduction of green-house gas emissions and associated financial products. On 13 September 2010, Shareholders amended the Investing Policy such that TEP is committed to realising assets and distributing the net proceeds as soon as practicable to Shareholders, subject to retaining sufficient cash to meet current and future liabilities.

On 22 December 2011, the Company re-registered as a company under the Isle of Man Companies Act 2006.

The Company has no employees.

Results and distributions

The results for the year ended 30 June 2017 are set out in the Statement of Comprehensive Income.

A review of the Company's activities is contained in the Chairman's Statement.

The following distributions were declared and paid during the financial year and to date:

The transfers to and from reserves are as set out in the Statement of Changes in Equity.

Particulars of the authorised and issued share capital are set out in note 15 Share capital of the Financial Statements.

Directors

The Directors holding office during the financial year and to date were as follows:

Martin Adams (Chairman)

Neil Duggan

Mark Lerdal

Philip Scales

No Director holding office at 30 June 2017 or 30 June 2016 respectively had any interest in the Shares of the Company.

Company Secretary

The Company Secretary holding office throughout the financial year and to date was Philip Scales.

Auditor

KPMG Audit LLC, being eligible, has expressed its willingness to continue in office.

Subsequent events

For a summary of significant events occurring subsequent to 30 June 2017, please refer to note 19 Subsequent Events, of the Financial Statements.

By Order of the Board

Philip Scales

Company Secretary

1 December 2017

Statement of Directors' Responsibilities in Respect of the Directors' Report and Financial Statements

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

Company law requires the Directors to prepare Financial Statements for each financial year. Under that law they have elected to prepare the Financial Statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU), as applicable to an Isle of Man company.

Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of its profit or loss for that period. In preparing the Financial Statements, the Directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgements and estimates that are reasonable, relevant and reliable;

· state whether they have been prepared in accordance with IFRSs as adopted by the EU;

· assess the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and

· use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

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 Financial Statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website.

By Order of the Board

Philip Scales

Company Secretary

1 December 2017

Corporate Governance Statement

The Directors recognise the value of the Principles of Good Governance and Code of Best Practice.

The Board communicates frequently and meets at regular intervals, and at these meetings the Directors are responsible for approval of the overall strategy and major developments of the Company. The Board directs the Company's activities through its regular Board meetings and monitors performance through timely and relevant reporting procedures.

The members of the Board, all of whom are non-executive, have met regularly throughout the financial year, as detailed in Table 1 below. Accurate and detailed minutes are taken at each meeting. In addition to formal Board and Committee meetings, Directors also attend a number of informal meetings to consider the Company's interests.

It is the Board's policy that any appointment of a new Director is considered and, if appropriate, approved by the full Board.

The Company Secretary, to whom all Directors have access, attended all Board and Committee meetings, and ensured compliance with relevant procedural obligations, as well as being available for the provision of advice to the Company and Directors.

Table 1 - Directors' meetings

Of the four non-executive Directors who held office during the financial year, three are considered independent. These are Martin Adams, Neil Duggan and Mark Lerdal. Philip Scales is not considered independent as he is a director and shareholder of FIM Capital Limited ("FIM"). FIM is the Company's administrator.

Each Director shall retire at the annual general meeting held in the third calendar year following the year in which he was elected or last re-elected by the Company.

Each Director (other than the Chairman) shall retire at each general meeting following the ninth anniversary of the date on which he was appointed or elected (as the case may be).

The Company maintains Directors' & Officers' insurance.

Committees of the Board

The Board operated one committee: the Nomination and Remuneration Committee ("the Committee"). The Company Secretary acts as Secretary to the Committee.

Nomination and Remuneration Committee

The Committee was established in February 2012 and makes recommendations to the Board, which retains the right of final decision.

The Committee determines and agrees with the Board the framework or broad policy for the nomination of the Company's non-executive Directors and, in the event that the Board decides to appoint a new Director, the Committee will consider candidates on merit and against objective criteria, prior to making a recommendation to the Board.

The Committee determines and agrees with the Board the framework or broad policy for the remuneration of the Company's non-executive Directors, ensures that the Company's non-executive Directors are provided with appropriate incentives to encourage enhanced performance and attract, motivate and retain non-executive Directors of the highest calibre needed to enhance the Company's performance and to reward them for improving Shareholder value.

No Director plays a part in any discussion about his own remuneration.

The Committee has met as required since its formation. The Chairman of the Committee is Philip Scales.

The only meeting of the Committee held during the financial year was on 12 January 2017 and was attended by Neil Duggan and Philip Scales.

Significant issues

The valuation of Private Equity is undertaken in accordance with the accounting policies, disclosed in note 2, and the processes disclosed in Note 6, of the Financial Statements. The audit includes an independent review of valuation models used for reasonableness and verification of supporting documentation. All Private Equity has been categorised as Level 3 within the IFRS 13 fair value hierarchy.

Relations with Shareholders

The Company is committed to good investor communications and seeks to build and maintain good relationships with its Shareholders. The Company values the views of Shareholders and recognises their interests in the Company's strategy and performance.

Meetings with Shareholders are held on a regular basis and briefings are held with analysts, primarily following the announcement of interim and final results, as well as at other times during the financial year, as appropriate.

Care is taken to ensure that any price sensitive information is released to all Shareholders at the same time in accordance with AIM requirements.

The Company has implemented procedures to comply with the Market Abuse Regulation.

Communication is also provided through the Annual Report, the Interim Report and the investor relations section on the Company's website (www.tradingemissionsplc.com). The Company's website provides information as required by Rule 26 of the AIM Rules in addition to general corporate and investor information. All material public and regulatory announcements are reviewed by the Board and the Company's Nominated Adviser prior to release and publication.

Philip Scales

Director and Company Secretary

1 December 2017

Independent Auditor's Report to the Members of

Trading Emissions PLC

1 Our opinion is unmodified

We have audited the Financial Statements of Trading Emissions PLC ("the Company") for the year ended 30 June 2017, which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity, the Statement of Cash Flows and the related notes, including the accounting policies in note 2.

In our opinion the Financial Statements:

· give a true and fair view of the state of Company's affairs as at 30 June 2017 and of its profit for the year then ended;

· have been properly prepared in accordance with International Financial Reporting Standards as adopted by the European Union, as applicable to an Isle of Man company; and

· have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the Company in accordance with, UK ethical requirements including FRC Ethical Standard. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.

2 Key audit matters: our assessment of risks of material misstatement

Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the Financial Statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. We summarise below the key audit matter (unchanged from 2016) in arriving at our audit opinion above, together with our key audit procedures to address that matter and our findings ("results") from those procedures in order that the Company's members as a body may better understand the process by which we arrived at our opinion. This matter was addressed, and our results are based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the Financial Statements as a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on this matter.

3 Emphasis of matter - valuation of private equity investments

We draw attention to note 6 to the financial statements concerning the valuation of private equity investments of £9,133,000. These assets are deemed to be level 3 under the fair value hierarchy and are stated at Directors' valuation based on valuation techniques stated therein. Due to the inherent significant uncertainty associated with the determination of the valuations, the amount realised on the disposal of private equity investments may differ materially from the amount at which they are stated in the financial statements. The impact of such uncertainty cannot be quantified. Our opinion is not modified in respect of this matter.

4 Our application of materiality and an overview of the scope of our audit

Materiality for the Company Financial Statements as a whole was set at £373,000 (2016: £400,000), determined with reference to a benchmark of Company's net assets, of which it represents 4% (2016: 4%).

Whilst our audit procedures are designed to identify misstatements (including disclosure misstatements) which are material to our opinion on the financial statements as a whole, we nevertheless report any misstatements of lesser amounts to the extent that these are identified by our audit work.

Under ISA 260, we are obliged to report omissions or misstatements (including disclosure misstatements) other than those which are 'clearly trivial' to those charged with governance. ISA 260 defines 'clearly trivial' as matters that are clearly inconsequential, whether taken individually or in aggregate and whether judged by any quantitative or qualitative criteria.

We agreed to report to the Board of Directors any corrected or uncorrected identified misstatements exceeding £19,000 for Company's Financial Statements, in addition to other identified misstatements that warranted reporting on qualitative grounds.

5 We have nothing to report on going concern

We are required to report to you if we have concluded that the use of the going concern basis of accounting is inappropriate or there is an undisclosed material uncertainty that may cast significant doubt over the use of that basis for a period of at least twelve months from the date of approval of the Financial Statements. We have nothing to report in these respects.

6 We have nothing to report on the other information in the Annual Report

The Directors are responsible for the other information presented in the Annual Report together with the Financial Statements. Our opinion on the Financial Statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether, based on our Financial Statements audit work, the information therein is materially misstated or inconsistent with the Financial Statements or our audit knowledge. Based solely on that work we have not identified material misstatements in the other information.

Directors' Report

Based solely on our work on the other information:

· we have not identified material misstatements in the Directors' Report; and

· in our opinion the information given in that report for the financial year is consistent with the Financial Statements.

7 Respective responsibilities

Directors' responsibilities

As explained more fully in their statement, the Directors are responsible for: the preparation of the Financial Statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error; assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities

Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor's report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Financial Statements.

A fuller description of our responsibilities is provided on the FRC's website at www.frc.org.uk/auditorsresponsibilities.

8 The purpose of our audit work and to whom we owe our responsibilities

This report is made solely to the Company's members, as a body, in accordance with Section 80(C) of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.

KPMG Audit LLC

Chartered Accountants

Heritage Court

41 Athol Street

Douglas

Isle of Man IM99 1HN 

Statement of Comprehensive Income

The notes form an integral part of the Financial Statements.

Statement of Financial Position

The notes form an integral part of the Financial Statements.

The Financial Statements were approved and authorised for issue by the Board on 1 December 2017 and signed on its behalf by:

Neil Duggan Philip Scales

Director Director

Statement of Changes in Equity

The notes form an integral part of the Financial Statements.

Statement of Cash Flows

The notes form an integral part of the Financial Statements.

Notes to the Financial Statements

for the year ended 30 June 2017

1 General information

Trading Emissions Plc (the "Company") invests in environmental and emissions assets, companies providing products and services related to the reduction of greenhouse gas emissions and associated financial products.

The Company is a closed-ended investment company domiciled in the Isle of Man. The address of its registered office is IOMA House, Hope Street, Douglas, Isle of Man. The Company incorporated on 15 March 2005 in the Isle of Man as a public limited company quoted on the AIM and regulated by the London Stock Exchange. In December 2011, the Company re-registered under the Isle of Man Companies Act 2006.

2 Significant accounting policies

The Company has consistently applied the following accounting policies to all years presented in the Financial Statements.

2.1 Basis of accounting

The Financial Statements have been prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union ("EU").

The Financial Statements have been prepared on the historical cost basis, except for Private Equity investments, which are accounted for on a fair value measurement basis.

a) New standards and interpretations issued but not effective

A number of new standards and amendments to standards are effective for annual periods beginning after 1 July 2016 and earlier application is permitted. The one new standard potentially relevant to the Company is detailed below.

IFRS 9 Financial Instruments 

The standard replaces IAS 39 Financial Instruments: Recognition and Measurement. It includes revised guidance on classification and measurement of financial instruments, a new expected credit loss model for calculating impairment on financial assets and new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39.

IFRS 9 will be effective for accounting periods beginning on or after 1 January 2018. The Company does not plan to adopt this standard early.

Based on an initial assessment, this standard is not expected to have a material impact on the Company. This is because the financial instruments currently measured at fair value through profit or loss ("FVTPL") will continue to be measured at FVTPL under IFRS 9 and those currently measured at amortised cost will continue to be measured at amortised cost under IFRS 9.

2.2 Classification as an investment entity

The Board concluded that the Company meets the essential elements of the definition of an investment entity because:

(a) The Company obtained funds for the purpose of providing Shareholders with investment management services.

(b) The Company's initial Investing Policy, which was communicated directly to Shareholders, is investment solely for returns from capital appreciation and investment income.

(c) The performance of investments is measured and evaluated on a fair value basis.

In addition, the Company has the following typical characteristics of an investment entity:

(a) It has more than one investment.

(b) It has more than one Shareholder.

(c) It has Shareholders that are not related parties of the entity.

(d) It has ownership interests in the form of equity or similar interests.

2.3 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, which is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board.

2.4 Foreign currency translation

Transactions in foreign currencies are translated into Pounds Sterling (£) at the exchange rate at the date of the transactions.

Monetary assets and liabilities denominated in foreign currencies are translated into Pounds Sterling at the exchange rate at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated into Pounds Sterling at the exchange rate at the date on which the fair value was determined.

Foreign currency differences arising on translation are recognised in profit or loss as net foreign exchange gains/(losses), except those arising on financial instruments at FVTPL, which are recognised as a component of net gain/loss from financial instruments at FVTPL.

"Functional currency" is the currency of the primary economic environment in which the Company operates. If indicators of the primary economic environment are mixed, then the Board uses its judgement to determine the functional currency that most faithfully represents the economic effect of the underlying transactions, events and conditions. The Company's Ordinary shares ("Shares") are denominated in Pounds Sterling and dividends are paid in Pounds Sterling. Most of the other operating expenses are denominated and paid in Pounds Sterling. Most of the Company's cash is held in Pounds Sterling. Accordingly, the Board has determined that the functional currency of the Company is Pounds Sterling.

2.5 Gains/(losses) from financial instruments at FVTPL

Gains/(losses) from financial instruments at FVTPL includes all realised and unrealised fair value changes and foreign exchange differences, but excludes interest and dividend income.

The realised gain/(loss) from financial instruments at FVTPL represents the difference between the carrying amount of a financial instrument at the beginning of the reporting period, or the transaction price if it was purchased in the current reporting period, and its settlement price.

The unrealised gain/(loss) represents the difference between the carrying amount of a financial instrument at the beginning of the reporting period, or the transaction price if it was purchased in the current reporting period, and its carrying amount at the end of the reporting period.

2.6 Financial assets and financial liabilities

(a) Recognition and initial measurement

Financial assets and financial liabilities at FVTPL are initially recognised on the trade date, which is the date on which the Company becomes a party to the contractual provisions of the instrument. Other financial assets and liabilities are recognised on the date on which they originated.

Financial assets and liabilities at FVTPL are initially recognised at fair value, with transaction costs recognised in profit or loss.

Financial assets and liabilities not at FVTPL are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue.

(b) Classification

The Company classifies financial assets and liabilities into the following categories.

Financial assets at FVTPL:

· Designated as at FVTPL: TEP Investment Companies included in Private Equity investments. See note 5, Financial risk management for definitions of TEP Investment Companies and Private Equity.

Financial assets at amortised cost:

· Loans and receivables: cash and cash equivalents and trade and other receivables. Trade and other receivables are classified as current assets if receipt is due within one year or less. If not, they are presented as non-current assets.

Financial liabilities at amortised cost:

· Other liabilities: trade and other payables. Trade and other payables are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

The Company designates all equity instruments at FVTPL on initial recognition because it manages them on a fair value basis.

(c) Fair value measurement

"Fair value" is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Company has access at that date. The fair value of a liability reflects its non-performance risk.

When available, the Company measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as "active" if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an on-going basis. The Company measures instruments quoted in an active market at a mid-price, because this price provides a reasonable approximation of the exit price.

If there is no quoted price in an active market, then the Company uses valuation techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction.

The Company recognises transfers between levels of the fair value hierarchy as at the end of the reporting period during which the change has occurred.

(d) Amortised cost measurement

The amortised cost of a financial asset or liability is the amount at which the financial asset or liability is measured at initial recognition, minus the principal repayment, plus or minus the cumulative amortisation using the effective interest method of any difference between the initial amount recognised and the maturity amount, minus any reduction for impairment. Trade and other receivables and trade and other payables are accounted for at their nominal values due to their short-term duration.

(e) Impairment

A financial asset not classified at FVTPL is assessed at each reporting date to determine whether there is objective evidence of impairment. A financial asset or a group of financial assets is 'impaired' if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset(s) and that loss event(s) had an impact on the estimated future cash flows of that asset(s) that can be estimated reliably.

Objective evidence that financial assets are impaired includes significant financial difficulty of the borrower or issuer, default or delinquency by a borrower, restructuring of the amount due on terms that the Company would not otherwise consider, indications that a borrower or issuer will enter bankruptcy, or adverse changes in the payment status of the borrowers.

An impairment in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective interest rate. Impairments are recognised in profit or loss and deducted from the gross value of the associated assets. Interest on the impaired asset continues to be recognised. If an event occurring after the event was recognised causes the amount of impairment loss to decrease, then the decrease in impairment loss is reversed through profit or loss.

(f) Derecognition

The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.

On derecognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset that is derecognised) and the consideration received (including any new asset obtained less any new liability assumed) is recognised in profit or loss. Any interest in such transferred financial assets that is created or retained by the Company is recognised as a separate asset or liability.

The Company derecognises a financial liability when its contractual obligations are discharged, cancelled, or expire.

(g) Offsetting

Financial assets and financial liabilities are offset and the net amount presented in the Statement of Financial Position when, and only when, the Company has a legal right to offset the amounts and it intends to either settle on a net basis or to realise the asset and settle the liability simultaneously.

Income and expenses are presented on a net basis for gains and losses from financial instruments at FVTPL and foreign exchange gains and losses.

(h) Cash and cash equivalents

Cash and cash equivalents comprise deposits with banks.

2.7 Interest

Interest income, including interest income from non-derivative financial assets at FVTPL, is recognised in profit or loss, using the effective interest method. The effective interest rate is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial instrument (or, when appropriate, a shorter period) to the carrying amount of the financial instrument on initial recognition. When calculating the effective interest rate, the Company estimates future cash flows considering all contractual terms of the financial instrument, but not future credit losses.

Interest received or receivable, is recognised in profit or loss as interest income.

2.8 Going concern

In assessing the going concern basis of preparation of the Financial Statements, the Directors, with the assistance of the administrator, have prepared cash-flow forecasts, and stress-tested the assumptions in those forecasts. The conclusion reached is that while there will always remain inherent uncertainty within the cash flow forecasts, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future, and for a period of at least 12 months from the date of signing of the Financial Statements. Accordingly, they continue to adopt the going concern basis in preparing the Financial Statements.

2.9 Income tax

Income tax is recognised in profit or loss except to the extent that it relates to items recognised directly in equity.

Income tax comprises the expected tax payable or receivable on the taxable income or loss for the financial year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax arising from dividends.

2.10 Share capital

Shares are classified as equity. Incremental costs attributable to the issue of new Shares are shown in equity as a deduction from the proceeds.

Share premium represents the difference between the original issue price of £1 of the Shares and the par value of 1 pence. Amounts are recorded net of issuance costs.

2.11 Provisions

Provisions comprise liabilities of uncertain timing or amount that may arise. Provisions are recognised when there is a present obligation, legal or constructive, because of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Provisions are measured at the present value of the expenditure expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as a finance cost.

2.12 Expenses

Expenses are recognised in profit or loss when the risks and rewards of goods are transferred to the Company or when services are received. Expenses are accounted for on an accruals basis.

2.13 Distributions

Distribution payments to Shareholders are recognised as a liability in the Financial Statements in the period in which the distribution is approved by the Board.

3 Use of judgements and estimates

In preparing the Financial Statements, the Board has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from those estimates.

Estimates and underlying assumptions are reviewed on an on-going basis. Changes in estimates are recognised through profit or loss.

a) Judgements

Information about judgements made in applying accounting policies that have the most significant effects on the amounts recognised in the Financial Statements is included in the following notes:

· Note 2.2, Classification as an investment entity - the Company's classification as an Investment Entity;

· Note 2.4, Foreign currency translation - determination of functional currency;

· Note 2.8, Going concern - determination of the going concern basis of the Company;

· Note 4, Segment Reporting - determination of the Company's operating segments;

· Note 6, Fair value of financial instruments - determination of significant unobservable inputs into valuation models of Level 3 financial instruments; and

b) Assumptions and estimation uncertainties

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment for the year ended 30 June 2017 are included in note 6, Fair value of financial instruments and relate to the determination of fair value of financial instruments with significant unobservable inputs.

4 Segment reporting

The Board has determined the operating segments based on the reports and financial information provided to it by the administrator, FIM Capital Limited ("FIM"). These reports are used by the Board to make strategic decisions. The Board manages the assets across two segments, being Private Equity and Corporate. Historically and in the prior financial year, Carbon was determined as a reportable segment and has been included below for comparative purposes, where appropriate. The reportable segments are made up as follows:

Private Equity

The Private Equity segment consists of financial assets at FVTPL - Private Equity at the reporting date of £9,133,000 (as at 30 June 2016: £12,997,000). See note 5, Financial risk management for the definition of Private Equity investments and note 7, Realised gain/(loss) on disposal of financial assets at FVTPL - Private Equity.

Corporate

The Corporate segment comprises all assets and liabilities not otherwise attributable to the Private Equity segment and includes cash at the reporting date of £1,342,000 (as at 30 June 2016: £3,426,000).

4 Segment reporting (continued)

5 Financial risk management

The Company has exposure to the following risks from financial instruments:

· Credit risk;

· Liquidity risk;

· Market risk; and

· Operational risk.

This note presents information about the Company's objectives, policies and processes for measuring and managing risk, and the Company's management of capital.

Financial instruments held by the Company consist of Private Equity investments. These are "TEP Investment Companies" which are all companies in which TEP holds an ownership interest greater than 20%.

5.1 Risk management framework

The Company maintains positions in a variety of Private Equity investments.

The Board manages the Company's assets in line with the Investing Policy objective of the orderly realisation of investments.

5.2 Credit risk

"Credit risk" is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company, resulting in a financial loss to the Company. It arises principally from cash and cash equivalents. For risk management reporting purposes, the Company considers and aggregates all element of credit risk exposure (such as counterparty default risk and country risk).

The Company manages credit risk by minimising its exposure to counterparties with perceived higher risk of default. The Company's credit risk is monitored by the Board.

The Company's activities may give rise to settlement risk. "Settlement risk" is the risk of a loss due to the failure of an entity to honour its obligations to deliver cash, securities or other assets as contractually agreed.

The Company's main exposure to credit risk arises in respect of the following:

· Cash and cash equivalents;

· Amounts receivable from TEP Investment Companies.

Cash and cash equivalents

The Company's policy is to deposit cash with banks with a Standard and Poor's minimum long term credit rating of BBB+. The following table shows the split between the institutions (or their subsidiaries) that the Company's cash is deposited with:

Amounts receivable from TEP Investment Companies

The Company recognises TEP Investment Companies as financial assets designated at FVTPL.

5.3 Liquidity risk

"Liquidity risk" is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset.

The Company tries to ensure that as far as possible, it will always have sufficient liquidity to meet its liabilities when due, under both normal and stress conditions, without incurring unacceptable losses or risking damage to the Company's reputation or financial integrity.

The Company's financial assets include Private Equity investments, which are generally illiquid. As a result, the Company may not be able to liquidate some of its financial assets in these investments in due time to meet its liquidity requirements.

The Company's liquidity risk is managed on a daily basis by FIM in accordance with policies and procedures in place.

The Company's overall liquidity position is monitored on a quarterly basis by the Board. Cash flow forecasting is performed on a quarterly basis. The forecasting takes into consideration the strategy of the Investing Policy of achieving an orderly realisation of assets and return capital to Shareholders. The Board monitors liquidity requirements to ensure there is sufficient cash to meet the Company's operational needs.

The Company maintains most of its liquid assets in cash and cash equivalents in order to meet its future financial commitments. As at 30 June 2017 the Company held cash and cash equivalents of £1,342,000 (as at 30 June 2016: £3,426,000).

The tables below show the contractual maturities of financial liabilities at the reporting dates. The amounts are gross and undiscounted, and include estimated interest payments. The liabilities are based on cash flows at the earliest possible contractual maturity dates; the expected cash flows on these instruments do not vary significantly from this analysis.

5.4 Market risk

"Market risk" is the risk that changes in market prices - such as interest rates, foreign exchange rates, equity prices and credit spreads - will affect the Company's income or fair value of its holding of financial instruments.

The Company's strategy for the management of market risk is driven by the Company's Investing Policy.

The Company's market risk is managed by the Board in accordance with policies and procedures in place. The Company's market positions are monitored by the Board.

(a) Interest rate risk

The Company is exposed to the risk that the fair value or future cash flows of its financial instruments will fluctuate as a result of changes in market interest rates. In respect of the Company's interest-bearing financial instruments, the Company's policy is to transact in financial instruments that mature or re-price in the short-term i.e. no longer than 3 months. Accordingly, the Company is subject to limited exposure to fair value or cash flow interest rate risk due to fluctuations in prevailing levels of market interest rates.

Internal procedures require FIM to manage interest rate risk on a quarterly basis in accordance with the policies and procedures in place. The Company's interest rate risk is monitored on a quarterly basis by the Board. If the interest rate risk is not in accordance with the Investing Policy and guidelines of the Company, then FIM is required to rebalance the portfolio.

The sensitivity analysis reflects how net assets would have been affected by changes in the relevant risk variable that were reasonably possible at the reporting date. The Board has determined that a fluctuation in interest rates of 5 basis points is reasonably possible, considering the economic environment in which the Company operates.

The Company's main exposure to interest rate risk arises in respect of the cash and cash equivalents.

During the financial year interest income was received on cash and deposits with financial institutions of £1,000 (year ended 30 June 2016: £20,000). If during the financial year interest rates on average had increased/decreased by 5 basis points with all other variables held constant, the total comprehensive profit/(loss) for the financial year would decrease/increase by £Nil (during the year ended 30 June 2016 an increase/decrease of 5 basis point would have resulted in an increase/decrease of £15,000).

 (b) Currency risk

The Company invests in financial instruments and enters into transactions that are denominated in currencies other than its functional currency, primarily in US Dollars ($) and Euros (€). Consequently, the Company is exposed to risk that the exchange rate of its functional currency relative to other foreign currencies may change in a manner that has an adverse effect on the fair value or future cash flows of the Company's financial assets or financial liabilities denominated in currencies other than Pounds Sterling.

The Company's currency risk is managed on a daily basis by FIM in accordance with the policies and procedures in place. The Company's currency positions and exposures are monitored on a quarterly basis by the Board.

The Company's main exposure to currency risk arises in respect of the following:

· Cash and cash equivalents; and

· Private Equity investments.

Cash and cash equivalents

Significant cash balances held are denominated in Pounds Sterling, US Dollars and Euros. For cash held in US Dollars at 30 June 2017 a 10% strengthening of Pounds Sterling against the US Dollar would result in a £11,000 decrease in cash and cash equivalents (year ended 30 June 2016: £5,000). For cash held in Euros at 30 June 2017 a 10% strengthening of Pounds Sterling against the Euro would result in a £2,000 decrease in cash and cash equivalents (year ended 30 June 2016: £21,000).

Private Equity investments

TEP Investment Companies included in Private Equity investments are exposed to currency risk. Currency exposure arising from the net assets of TEP Investment Companies is monitored by the Board.

At the reporting date, the carrying amount of the Company's net financial assets and net financial liabilities held in individual currencies, expressed in Pounds Sterling were as follows:

(c) Other price risk

"Other price risk" is the risk that the fair value of financial instruments will fluctuate as a result of changes in market prices (other than those rising from interest rate risk or currency risk), whether caused by factors specific to an individual instrument or its issuer or factors affecting all instruments in the traded market.

Price risk is managed by the Board in accordance with the Company's Investing Policy of the orderly realisation of investments. Agreements entered into with third parties for the sale of Private Equity investments are negotiated by the Board in order to minimise other price risk.

The Company is exposed to other price risk in respect of Private Equity investments.

5.5 Operational risk

"Operational risk" is the risk of direct or indirect loss arising from a wide variety of causes associated with processes, technology and infrastructure supporting the Company's activities with financial instruments, either internally within the Company or externally at the Company's service providers, and from external factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements.

The Company's objective is to manage operational risk so as to balance the limiting of financial losses and damage to its reputation with achieving its Investing Policy objective of the orderly realisation of financial instruments and generating returns to Shareholders.

The primary responsibility for the development and implementation of controls over operational risk rests with the Board, which is assisted in this regard by FIM. The responsibility is supported by the development of overall standards for the management of operational risk, which encompasses the controls and processes at the service providers, in the following areas:

· documentation of controls and procedures;

· requirements for:

- appropriate segregation of duties between various functions, roles and responsibilities;

- reconciliation and monitoring of transactions;

· compliance with regulatory and other requirements;

· ethical and business standards; and

· risk mitigation, including insurance if this is effective.

The Board's assessment of the adequacy of the controls and processes in place at the service providers with respect to operational risk is carried out via regular discussions with the service providers.

5.6 Capital risk management

Capital is defined as total equity. The objectives in managing capital are to safeguard the Company's ability to continue as a going concern in order to provide returns for Shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to adjust the capital structure, the Company effects the distributions to Shareholders. The Company is not subject to externally imposed regulatory capital requirements.

The Company's cash balance as at 30 June 2017 was £1,342,000 (30 June 2016: £3,426,000). During the financial year a distribution was paid to Shareholders of 2.5 pence per Share, equivalent to £6,245,000 in total, see note 17, Distributions paid and declared.

6 Fair value of financial instruments

6.1 Valuation models

The fair values of financial assets and financial liabilities that are traded in active markets are based on prices obtained directly from an exchange on which the instruments are traded or obtained from a broker that provides an unadjusted quoted price from an active market for an identical instrument. For all other financial instruments, the Company determines fair values using other valuation techniques.

For financial instruments that trade infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgement depending on liquidity, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument.

The Company measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements.

Level 1: Inputs that are quoted market prices (unadjusted) in active markets for identical instruments.

Level 2: Inputs other than quoted prices included within Level 1 that are observable either directly (i.e. prices) or indirectly (i.e. derived from prices). This category includes instruments valued using: quoted market prices in active markets for similar instruments, quoted prices for identical or similar instruments in markets that are considered less active, or other valuation techniques in which all significant inputs are directly or indirectly observable from market data.

Level 3: Inputs are unobservable. This category includes all instruments for which the valuation technique includes inputs not based on observable data and the unobservable inputs have an effect on the instrument's valuation. This category includes instruments that are valued based on quoted

market prices for similar instruments but for which significant unobservable adjustments or assumptions are required to reflect differences between the instruments.

A market is regarded as active if quoted prices are readily and regularly available from an exchange. The quoted market price used for assets held is the mid-price at the date of valuation.

The categorisation of a financial asset or liability within the hierarchy is based upon the pricing transparency of the asset or liability and does not necessarily correspond to the perceived risk. A financial asset or liabilities Level within the fair value hierarchy is based on the lowest Level of any input that is significant to the fair value measurement. However, the determination of what constitutes "observable" requires significant judgement by the Board.

Valuation techniques include net present value and risk-adjusted cash flow models. Assumptions and inputs used in valuation techniques include factors used in risk -adjustments, equity prices and foreign currency exchange rates.

The objective of valuation techniques is to arrive at a fair value measurement that reflects the price that would be received to sell an asset or paid to transfer the liability in an orderly transaction between market participants at the measurement date.

The Company uses widely recognised valuation models for determining the fair value of common and simple financial instruments. The availability of observable market prices and model inputs reduces the need for the Board's judgement and estimation and reduces the uncertainty associated with the determination of fair values. The availability of observable market prices and inputs varies depending on the products and markets and is prone to changes based on specific events and general conditions in the financial market.

For more complex instruments, the Company uses proprietary valuation models, which are usually developed from recognised valuation techniques and methodologies. Some or all of the significant input into these models may not be observable in the market, and are derived from market prices or rates or are estimated based on assumptions. Valuation models that employ significant unobservable inputs require a higher degree of the Board's judgement and estimation and are usually required for the selection of the appropriate valuation techniques and methodologies to be used, determination of expected future cash flows on the financial instrument being valued, the determination of the probability of counterparty defaults and prepayments and selection of appropriate discount rates.

Valuation estimates obtained from models are adjusted for any other factors, such as liquidity risk or model uncertainties; to the extent the Board believes that a third party market participant would take them into account in a pricing transaction. Fair values reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the Company and the counterparty where appropriate.

Models and values are calibrated against historical data and forecasts and, when possible, against current or recent observed transactions. This calibration process is inherently subjective and yields ranges of possible inputs and estimates of fair value, and the Board's judgement is required to select the most appropriate point in the range.

The Company has established a control framework with respect to the measurement of fair values. This framework includes a portfolio valuation function, which reports to the Board, who have overall responsibility for fair value measurements. Specific controls include:

· verification of observable pricing inputs;

· re-performance of model valuations;

· a review and approval process for new models and changes to such models; and

· review of unobservable inputs and valuation adjustments.

When third party information, such as discounted cash flow models, is used to measure fair value, then the portfolio valuation function assesses and documents the evidence obtained from the third parties to support the conclusion that such valuations meet the requirement of IFRS. This includes understanding how the fair value is arrived at and the extent to which it represents actual market transactions.

6.2 Fair value hierarchy - financial instruments measured at fair value

The Company holds no Level 1 or Level 2 financial instruments.

The financial instruments included within Level 3 are Private Equity investments.

There were no transfers of financial assets between Levels during the year ended 30 June 2017 (year ended 30 June 2016: no transfers).

The table below analyses financial instruments measured at fair value at the reporting date by the level in the fair value hierarchy into which the fair value measurement is categorised. The amounts are based on the values recognised in the statement of financial position. All fair value measurements below are recurring.

6.3 Significant unobservable inputs used in measuring fair value

The table below sets outs the information about significant unobservable inputs used at 30 June 2017 in measuring financial instruments categorised as Level 3 in the fair value hierarchy.

Fair value of financial assets at FVTPL - Private Equity:

Significant unobservable inputs include:

· Risk-adjusted discount rates, which represent the rates used to discount forecast cash flows and estimated recovery values for investments to their present values as part of the calculation of fair value for the investment. The Board uses its judgement to determine a rate that reflects the illiquidity, currency risk and credit risk of counterparties for each specific instrument.

· Actual transaction terms, including binding agreements with third parties for the purchase of Private Equity.

· Risk-adjusted proposed transaction terms, including non-binding offers received from third parties for the purchase of Private Equity, which form the basis of current negotiations. An adjustment may be applied to non-binding offers to reflect the risk of non-completion of a transaction, potential amendments to proposed offers and other risk factors.

· Risk-adjusted forecast cash flows, based on projections by the Company and management of TEP Investment Companies which consider various operational scenarios and transaction terms, the amount to be paid or received under each scenario and the probability of each scenario. The Board uses its judgement to determine adjustments that reflect the illiquidity, currency risk and credit risk of counterparties for each specific instrument.

· Estimated recovery value, which estimated recovery value is the amount estimated by the Board to be realised on an investment in a disposal or liquidation scenario.

Level 3 reconciliation:

The table below presents the changes in Level 3 financial instruments for the years ended 30 June 2017 and 30 June 2016. There have been no transfers between Levels during either year.

Financial assets at FVTPL

6.4 Sensitivity of fair value measurement to changes in unobservable inputs

Although the Board believes that its estimates of fair value are appropriate, the use of different methodologies or assumptions could lead to different measurements of fair value. For fair value measurements in Level 3, changing one or more of the assumptions used to reasonably possible alternative assumptions would have the following effects on net assets.

· If the discount rates applied were increased, this would have an unfavourable impact on the value of Private Equity. The Board has determined that it would be reasonably possible for the risk-adjusted discount rate under each valuation model to be increased or decreased by an arbitrary 5 per cent, the effects of which are shown in the table below.

· If the risk-adjustment factor applied to proposed transaction terms would increase, this would have an unfavourable impact on the value of Private Equity. The Board has determined that it would be reasonably possible for the risk-adjustment factor applied to non-binding offers under each valuation model to be increased or decreased by an arbitrary 25 per cent, the effects of which are shown in the table below.

6.5 Financial instruments not measured at fair value

Financial assets not measured at fair value include cash and cash equivalents and trade and other receivables. These are short-term financial assets whose carrying amounts approximate fair value, because of their short-term nature and the high credit quality of counterparties.

7 Realised gain/(loss) on disposal of financial assets at fair value through profit or loss - Private Equity

TEP (Solar Holdings) Limited

On 1 September 2016 TEP (Solar Holdings) Limited ("TEP Solar") executed a Sales and Purchase Agreement ("SPA") with a member of the Sonnedix group ("Sonnedix") in respect of the sale of its entire interest in two Italian subsidiaries, Etuno S.r.l. ("Etuno") and Solar Energy Italia 6 S.r.l. ("SEI 6"), which were ultimately wholly owned by the Company.

Prior to the completion date of the sale TEP Solar received a net distribution of cash from SEI 6 of €984,000. It was agreed in advance with Sonnedix that this distribution would form part of the sales proceeds in accordance with the terms of the SPA.

On 14 December 2016 the sale completed and an aggregate net proceeds from the sale of the two Italian subsidiaries, after allowing for outstanding transaction costs (including those paid directly by the Company), of €8,613,000 were received. Of the payment by Sonnedix €3,000,000 was deposited in escrow, to be released to TEP Solar as to €1,000,000 on 14 December 2017 and the remaining €2,000,000 on 14 December 2018, subject to no claims having been received pursuant to indemnities provided by TEP Solar customary for this type of transaction.

Carbon Capital Markets Limited

During the year ended 30 June 2017 the liquidation of Carbon Capital Markets Limited was completed. Final liquidation proceeds of £70,000 were received by the Company compared to the valuation of £60,000 giving a realised gain on liquidation of £10,000 (year ended 30 June 2016: £nil).

In addition to the liquidation of Capital Markets Limited, Santa Rita Limited Partnership was dissolved and three TEP Investment Companies were placed into liquidation. See also Note 18, Related party transactions.

8 Administration fees

The Company appointed FIM, a fund administration and investment management company incorporated in the Isle of Man, to provide administration and secretarial services including financial accounting and company secretarial services to the Company. Under the Administration and Secretarial Agreement, FIM received an administration fee of £212,000 per annum up to 31 March 2017. From 1 April 2017, FIM receives an administration fee of £180,000 per annum. Administration fees paid to FIM for the year ended 30 June 2017 were £204,000 (year ended 30 June 2016: £227,000). The Administration and Secretarial Agreement can be terminated by the Company with 6 months' notice.

9 Directors' fees

The Company paid the following fees to Directors during the financial year:

* Isle of Man resident

The annual non-executive Directors' fees (excluding any additional fees) are currently £60,000 for the Chairman and £40,000 for the other non-executive Directors other than for Philip Scales who receives an annual fee of £5,000. The Directors are also reimbursed for travel and out of pocket expenses

incurred.

The Company operates a Directors' Incentive Plan ("DIP") which entitles Participating Directors to 2% of distributions made to Shareholders. Participation in the DIP is granted at the discretion of the Nomination and Remuneration Committee at the time each distribution is made. The table below shows the DIP payments paid and accrued during the years ended 30 June 2017 and 30 June 2016:

The DIP amounts retained will be paid to the Participating Directors at a later date.

Other than as detailed above, none of the Directors is entitled to any cash or non-cash benefits in kind, pensions, bonus or share scheme arrangements.

10 Other operating expenses

* Audit and other assurance fees for the financial year includes £1,000 in relation to Group reporting services provided to the Company (year ended 30 June 2016: £22,000 in relation to the 31 December 2015 interim audit and Group reporting services).

11 Taxation

During the financial year and under the current system of taxation in the Isle of Man, the Company is subject to income tax at a rate of 0% (year ended 30 June 2016: 0%).

12 Trade and other receivables

13 Trade and other payables

14 NAV per Share and earnings/(loss) per Share

The NAV per Share is calculated by dividing the net assets attributable to the Shareholders by the number of Shares in issue at as 30 June 2017 and 30 June 2016 respectively.

14.1 NAV per Share

14.2 Earnings per Share

(a) Basic

The basic earnings per Share is calculated by dividing the earnings attributable to the Shareholders by the weighted average number of Shares in issue during the financial year.

(b) Diluted

Diluted earnings per Share is calculated by adjusting the weighted average number of Shares outstanding to assume conversion of all dilutive potential Shares. As at 30 June 2017 and 30 June 2016 the Company had no dilutive potential Shares.

15 Share capital

The total number of authorised and issued Shares at 30 June 2017 and 30 June 2016 together with their rights is explained below.

All issued Shares of 249,800,202 are fully paid, and each Share carries the right to one vote. Shareholders are entitled to receive notice of, and vote at general meetings of the Company.

16 Reserves

17 Distributions declared and paid

On 20 December 2016 the Company declared a distribution to Shareholders of £6,245,000. The distribution was paid on 13 January 2017 and financed from the distributable reserves account. During the year ended 30 June 2016 the Company declared and paid a distribution to Shareholders of £12,490,000. The distribution was financed from the share premium account. See also Note 19, Subsequent events.

18 Related party transactions

Parties are considered to be related if one party has the ability to control the other party or to exercise significant influence over the other party in making financial or operational decisions. The Directors, including certain Directors of TEP Investment Companies who meet the definition of "key management personnel" in IAS 24 are considered to be related parties.

18.1 Directors

Directors' fees, the DIP and other transactions with the Directors during the financial year are explained in note 9, Directors' fees.

Philip Scales was a Director throughout the financial year. He receives an annual fee of £5,000 and is also reimbursed for travel and out of pocket expenses incurred. Mr Scales is a Director of FIM and has a beneficial ownership interest in FIM. During the financial year FIM received fees of £204,000 (year ended 30 June 2016: £227,000). FIM also received reimbursements for out of pocket expenses. Administration fees are explained in note 8, Administration fees.

18.2 TEP Investment Companies

Trading Emissions Limited

On 15 July 2016 Trading Emissions Limited ("TEL") was placed into liquidation. During the year ended 30 June 2016 an agreement was entered into between the Company and TEL whereby the Company would cover any of TEL's future costs, which are expected to be incurred solely in relation to TEL's liquidation. Costs covered by the Company under this agreement during the financial year amounted to £1,000 (year ended 30 June 2016: £6,000).

TEP (Renewables Holding) Limited

The Company entered into a Fees and Expenses Agreement with TEP Renewables on 6 December 2010. Under the terms of the agreement the Company will reimburse TEP Renewables for any 'agreed company expenses'. During the financial year fees and expenses reimbursed by the Company to TEP Renewables amounted to €43,000 (year ended 30 June 2016: €61,000).

On 6 December 2010 the Company also entered into a Total Return Swap Agreement ("TRS") with TEP Renewables. The TRS is for a period of 20 years with a termination date of 6 December 2030 or such earlier date as may be specified by written notice by TEP Renewables to the Company. Under the terms of the TRS, TEP Renewables will make investments in target companies and investment gains and losses are recharged through the TRS loan to TEP. On termination of the TRS any amounts in the cash account from the TRS or investments made must be paid to the Company by TEP Renewables. As at 30 June 2017 the balance on the TRS stands at €114,000 (30 June 2016: €326,000).

Surya PLC

During the financial year, Surya PLC made a payment to TEP against the equity originally invested by the Company of £5,454,000. This payment was funded from a receipt from the sale by its subsidiary, TEP Solar of Etuno and SEI 6, as detailed in note 7, Realised gain/(loss) on disposal of financial assets at fair value through profit or loss - Private Equity.

Billiter Participações Ltda

During the year the Company advanced £6,000 (30 June 2016: £132,000) to Billiter Participações Ltda to cover its on-going operating expenses. Billiter Participações Ltda was sold during the financial year.

Other liquidations of subsidiaries

On 3 May 2017 Trading Emissions (Isle of Man) Limited, TEP (Carbon Holdings) Limited and TEP (Hydro Holdings) Limited were placed into liquidation. On the same date Santa Rita Limited Partnership was dissolved.

19 Subsequent events

TEP (Solar Holdings) Limited

On 21 July 2017 TEP Solar executed a SPA with Sonnedix in respect of the sale of its entire interest in two Italian subsidiaries, RGP Puglia 1 S.r.l. and Florasolar S.r.l., which were ultimately wholly owned by the Company.

Although no new escrow arrangement was created, certain claims following the sale may be made against the sums that were placed in escrow pursuant to the sale of Etuno and SEI 6 (see note 7, Realised gain/(loss) on disposal of financial assets at fair value through profit or loss - Private Equity). To date, there have been no claims against the amounts held in escrow.

On 8 August 2017 the sale completed and an aggregate net proceeds from the sale of the two Italian subsidiaries, after allowing for outstanding transaction costs (including those paid directly by the Company), of €3,035,000 were received.

Shareholder distribution

On 29 August 2017 the Company declared a distribution to Shareholders of 1.0 pence pence per Share, equivalent to £2,498,000 in total. The distribution was paid on 20 September 2017 and financed from the distributable reserves account.

Receipt of TEL liquidation proceeds

On the 21 July 2017 the Company received £2,000 in respect of the liquidation of TEL. TEL has not yet been dissolved. No further proceeds are expected from the liquidation.