VEN.L Regulatory News (VEN)

30 Oct 2007 07:01

Ventus VCT plc30 October 2007 Ventus VCT plc Half-yearly Financial Report For the six month period ended 31 August 2007 Registered No: 5205442 Ventus VCT plc (the "Company") presents its half yearly financial report for theperiod ended 31st August 2007 as required by the UK Listing Authority'sDisclosure and Transparency Rule 4.2. A full version of the report will be available on the Company's website atwww.ventusvct.com. A copy of the above document is to be submitted to the UK Listing Authority, andwill shortly be available for inspection at the UK Listing Authority's DocumentViewing Facility, which is situated at: Financial Services Authority25 The North ColonnadeCanary WharfLondon E14 5HS Directors and advisersDirectorsD Pinckney (Chairman)A MooreP ThomasC Wood Secretary and registered officeCapita Company Secretarial Services LimitedThe Registry34 Beckenham RoadBeckenhamKentBR3 4TU AuditorBaker Tilly UK Audit LLPChartered Accountants2 Bloomsbury StreetLondonWC1B 3ST BankersHSBC Bank Plc27-32 PoultryLondonEC2P 2BX Investment ManagerClimate Change Capital Limited3 More London RiversideLondonSE1 2AQ RegistrarsCapita RegistrarsThe Registry34 Beckenham RoadBeckenhamKentBR3 4TU BrokerBrewin Dolphin Securities Limited34 Lisbon StreetLeedsLS1 4LX VCT status advisersPricewaterhouseCoopers LLP1 Embankment PlaceLondonWC2N 6RH SolicitorsBerwin Leighton Paisner LLPAdelaide HouseLondon BridgeLondonEC4R 9HA Chairman's statement I am pleased to present the half-yearly financial report of Ventus VCT plc (the"Company") for the six month period ended 31 August 2007. Net asset value and results At the period end, the net asset value per share of the Company stood at 93.7pence. Revenue attributable to shareholders for the period was £260,000 or 1.73pence per share. The capital loss attributable to shareholders for the periodwas £124,240 or 0.83 pence per share, resulting in a total return toshareholders for the period of £135,760 or 0.90 pence per share. The main sourceof revenue was interest earned on mezzanine loan stock, UK Government TreasuryBills and cash deposits. The Company declared and paid an annual dividend of 2.40 pence per share for theyear to 28 February 2007. This was paid as an interim dividend of 1.00 pence pershare on 15 February 2007 and a final dividend of 1.40 pence per share on 6August 2007. Dividends to shareholders are accounted for in the period in whichthe Company is liable to pay them, rather than in the period in respect of whichthey are declared. The Company has declared a further dividend for the half year to 31 August 2007of 1.50 pence per share which will be paid to shareholders on 16 January 2008. Principal risks Under the UK Listing Authority's Disclosure and Transparency Rules, theDirectors are required to identify those material risks to which the Company isexposed and take appropriate steps to mitigate those risks. Described below arethose risks which the Directors consider to be material and the steps that theDirectors have taken to identify and mitigate those risks. • Failure to meet the investment requirements for compliance with HMRevenue and Customs VCT regulations The Board mitigates this risk by regularly reviewing investment managementactivity and by obtaining pre-approval from HM Revenue and Customs for eachinvestment. • Inadequate control environment at service providers The Board mitigates this risk by only appointing service providers of a highstanding under agreements that set out their responsibilities and by obtainingassurances from them that all exceptions have been reported to the Board. • Non-compliance with UK Listing Authority Rules, Companies Act Legislation, HM Revenue and Customs VCT regulations and other applicable regulations The Board mitigates this risk by employing external advisers fully conversantwith applicable statutory and regulatory requirements who report regularly tothe Board on the Company's compliance. VCT qualifying status The Company retains PricewaterhouseCoopers to review its compliance with VCTregulations, and the most recent review was undertaken prior to the publicationof the last Annual Report. The Directors are satisfied that the Company hascontinued to fulfil the conditions for maintaining VCT status. Responsibility statement The Directors confirm that to the best of their knowledge: (a) the half-yearly financial statements have been prepared in accordancewith standards issued by the UK Accounting Standards Board and give a true andfair view of the assets, liabilities, financial position and profit of theCompany as required by the Disclosure and Transparency Rules ('DTR') 4.2.4R; (b) the report includes a fair review of the information required by DTR4.2.7R; and (c) the report includes a fair review of the information required by DTR4.2.8R. Investments The Company's Investment Manager, Climate Change Capital Limited, continues toidentify and negotiate potential investment opportunities. The investments madeand the dividends paid constitute the important events of the period. As at the date of this report, the Company has made investments in six companiestotalling £7.8 million which will be held as long term investments. This hasincreased from £4.2 million in six companies as at 28 February 2007. The Company has also contractually committed to invest and/or holds exclusivityagreements with two companies representing potential further investments of £1.6million. Investments made of £7.8 million represent 83% of the amount requiredto be invested in qualifying investments by March 2008 in order for the Companyto comply with HM Revenue and Customs VCT regulations. The Investment Manager's Report on page 4 provides details of the investmentsmade as at 31 August 2007 and the amounts committed or under exclusivityagreements as at the date of this report. All investments will be structured soas to be treated as qualifying holdings for the purposes of VCT regulationsunless otherwise stated. David PinckneyChairman30 October 2007 Investment Manager's report As at the date of this report, the Company has made investments in sevencompanies totalling £7.8 million which will be held as long term investments.The Company also holds exclusivity agreements with two companies representingpotential further investments of £1.5 million. Investments made of £7.8 millionrepresent 83% of the amount required to be invested in qualifying investments byMarch 2008 in order for the Company to comply with HM Revenue and Customs VCTregulations. The following table shows the investments made as at 31 August 2007, theinvestments made since the end of the period and the total amount committed orunder exclusivity agreements as at the date of this report. All investments todate have been or will be structured so as to be treated as qualifying holdingsfor the purposes of VCT regulations unless stated otherwise. Invested, Committed and/or Under Investment Investment Exclusivity as at as at as at 31 August 2007 30 October 2007 30 October 2007Company Name Details £000 £000 £000 Fenpower Limited 6 megawatt 1,299 1,299 1,299 wind farmFenpower Limited 4 megawatt wind farm 770 770 770Craig Wind 10 megawatt 2,093 2,093 2,093Farm Limited wind farmFirefly Power Renewable energy company 1,591 - -*Holdings plcFirefly Energy Renewable energy company 1,000 2,000 2,000LimitedA7 Greendykeside 4 megawatt 1,536 1,536 1,536Limited wind farmA7 Lochhead Limited 6 megawatt - - 800 wind farmAchairn Energy 6 megawatt 80 80 800Limited wind farm Olgrinmore Limited 4 megawatt wind farm - - 32* (pre-consent) _______ _______ _______Total 8,369 7,778 9,330 ------- ------- ------- * see commentary below Fenpower Limited The Company holds an investment in Fenpower Limited, a company operating a 6megawatt wind farm in Cambridgeshire. The Company has provided a mezzanine loanfacility of £991,480 and made an investment in ordinary shares of £307,687, fora one-third ownership of Fenpower Limited. The three turbines at this wind farm became operational in May 2007 and areproducing electricity in line with budget expectations. The first payment ofmezzanine loan interest by Fenpower Limited is expected in March 2008, subjectto continued satisfactory operational performance. Fenpower Limited is expectedto commence paying dividends to shareholders in September 2009. Fenpower Limited - Extension The Company has invested a further £770,000 in Fenpower Limited by way of asecond mezzanine loan facility to finance a 4 megawatt extension to the existingoperational wind farm. This mezzanine loan facility ranks pari-passu with theloan of £991,480 advanced in respect of the existing 6 megawatt development. Construction work has commenced on the extension to the wind farm and the twoadditional turbines are expected to be delivered to site in December 2007, threemonths ahead of schedule. It is anticipated that the wind farm extension will becompleted and generating electricity early in 2008. Craig Wind Farm Limited The Company has completed its investment in Craig Wind Farm Limited, a companyoperating a 10 megawatt wind farm in the Scottish Borders. The Company hasinvested a total of £2,092,934 in Craig Wind Farm Limited by way of a £1,014,000mezzanine loan facility and £1,078,934 invested in ordinary shares. The finalsubscription for shares took place in June 2007. The Company owns 37.5% of theissued ordinary shares in Craig Wind Farm Limited. The wind farm became operational in October 2007 after a period of delay causedby the grid operating company. The first payment of mezzanine loan interest byCraig Wind Farm Limited is expected in March 2008, subject to satisfactoryoperational performance. Craig Wind Farm Limited is expected to commence payingdividends to shareholders in September 2009. Firefly Power Holdings plc (formerly Geotrupes Energy plc) and Firefly EnergyLimited In April 2007 the Company purchased the entire issued share capital of GeotrupesEnergy plc. The Company already held an investment in Geotrupes Energy plc of£350,881 in preference and ordinary shares, owning 15% of the issued ordinaryshare capital. Following the purchase, the total amount invested by the Companyin Geotrupes Energy plc and its subsidiary companies was £1,560,888. Followingthe acquisition, Geotrupes Energy plc has been renamed Firefly Power Holdingsplc. In October 2007 the entire issued share capital of Firefly Power Holdings plcwas sold to a new company, Firefly Energy Limited, which is wholly owned by theCompany. Firefly Energy Limited was formed and funded with an investment of£2,000,000 from the Company by way of a £200,000 subscription for ordinaryshares and a £1,800,000 shareholder loan. It is the Investment Manager's intention to arrange the issue of additionalshares by Firefly Energy Limited to a third-party investor to make theinvestment a qualifying holding under VCT regulations. The Company's long terminvestment in Firefly Energy Limited will be a qualifying holding of £2,000,000. Notwithstanding the reorganisation of the ownership structure, the Firefly groupcontinues to specialise in the sale and purchase of electricity and associatedbenefits from UK renewable energy schemes. As of the date of this report thetrading subsidiaries of the group have entered into long term contracts withcustomers for 41.7 megawatts of generating capacity across five wind farmdevelopments. The Company has realised an accrued dividend of £90,512 on its holding ofpreference shares in Firefly Power Holdings plc, which was paid on 5 October2007. A7 Greendykeside Limited The Company has invested £1,535,841 in the form of ordinary shares and mezzaninedebt in A7 Greendykeside Limited, a company developing a 4 megawatt wind farm inScotland. The Company has subscribed for 50% of the ordinary shares in A7Greendykeside Limited for a total consideration of £915,841 and has alsoprovided a mezzanine loan facility of £620,000. This investment has now beenfully committed with the final subscription for shares taking place in June2007. The 2 turbines have been erected at the site and are undergoing finaltests prior to the site becoming operational on schedule early in November 2007. Achairn Energy Limited The Company is finalising contract negotiations to invest up to £800,000 inAchairn Energy Limited, a company developing a 6 megawatt wind farm inCaithness, Scotland. This site has full planning consent and has been providedwith an offer for a grid connection. The Company has already invested £80,000 inordinary shares to facilitate the payment of preliminary site development costs.We are continuing to work with the developer and its consultants to secure thecontracts necessary to commence construction. The wind farm is expected tobecome operational in the second half of 2008. A7 Energy Lochhead The Company has entered into a long term exclusivity agreement with A7 EnergyLimited in respect of the 6 megawatt Lochhead wind farm development inLanarkshire, Scotland. A7 Energy Limited has secured planning consent for thiswind farm, as well as an offer for connection to the grid. We are continuing towork with the developer and its consultants to secure the contracts necessary tocommence construction. The wind farm is expected to start generating early in2009. This project is expected to require an investment of approximately£800,000 from the Company. Olgrinmore Limited The Company has committed to make an initial investment of £32,000 in OlgrinmoreLimited, a company developing a 4 megawatt wind farm in Caithness, Scotland.Olgrinmore Limited is in the process of seeking planning permission for a twoturbine scheme from the local authority and expects to lodge an applicationearly in 2008. The investment will be used to contribute towards the planningapplication costs. Olgrinmore Limited has accepted an offer for connection tothe grid and has secured the land for the development under an option. Ifplanning approval is granted the Company holds an option to make a furtherinvestment to contribute towards the construction costs on pre-agreed terms withthe other shareholders. Initially, the investment would not be a qualifyingholding in accordance with HM Revenue & Customs VCT regulations. If the Companycontributes further capital upon grant of planning it will be possible to makethe existing investment and any future investment qualifying. Investment pipeline We are actively assessing investment opportunities in over 30 individualcompanies developing in excess of 400 megawatts of generating capacity. TheCompany's investment strategy includes pursuing opportunities with companiesdeveloping small scale hydro-electric schemes, companies owning existingoperational assets and companies seeking planning permission for new schemes. On the basis of the current rate of investment and an assessment of thepotential investments in the pipeline, we are satisfied that sufficient projectsare available to fully invest the funds in accordance with the investmentstrategy and the time period required to satisfy HM Revenue and Customsrequirements in respect of maintaining the Company's VCT status. It is anticipated that the Company's VCT advisers, PricewaterhouseCoopers LLP,will conduct a review of the investment portfolio in December 2007 to ensurethat the relevant criteria will be met to comply with HM Revenue and Customs VCTregulations by March 2008. Market overview As at the date of this report the British Wind Energy Association (''BWEA'')database showed the following information about all UK onshore wind projectswhich are under construction, have planning consent or have been submitted forplanning consent and are awaiting a decision: Consented but not Awaiting planning yet under decisions Under construction construction Total Number of projects 30 103 221 354Total megawatts 822 1,942 7,873 10,637 In September 2007 the BWEA published their report 'Countdown to meeting the 10%UK renewable electricity target by 2010' which showed that renewable energycurrently generates just over 4.5% of the UK's total electricity supplyrequirement. The report states that the rate of installation of new renewablegeneration capacity is behind target and needs to more than double by 2010 tomeet the 10% target. The BWEA also predicts that onshore wind needs to accountfor almost half of this 10% target given limiting factors associated with othertechnologies. For onshore wind this equates to a target of approximately 6,000megawatts of total installed capacity. The UK currently has just over 2,000megawatts of onshore wind capacity installed and operational. Even if all projects under construction in the UK and those that are consentedbut not yet under construction are completed and added to the total existingoperational capacity, there would still be a shortfall, in relation to the 2010target, of almost 1,300 megawatts which would need to be met by new projects.The main barrier to the target being achieved is the increasing time taken toacquire planning consents, both locally and through central government planningauthorities. The following table summarises information published by the BWEA about thenumber of onshore wind projects in the planning system across the UK: Northern Ireland England Scotland Wales Total Number of projects 64 98 19 40 221Total megawatts 1,183 5,300 347 1,043 7,873 The rate of new approvals coming out of the planning system over the last twoyears has restricted the number of new investment opportunities in the consentedonshore wind sector, however the Company has made the majority of itsinvestments, or secured exclusivities, in developments where planning consenthas already been granted. As a key element of the Company's investment strategy, and alongside continuingto progress investment opportunities in onshore wind, we are working to identifyand assess a number of opportunities in the pre-planning sector, where there isthe potential to make earlier stage investments in companies developing projectsin return for an exclusive option to invest construction funding upon grant ofplanning consent at a later stage. This is expected to create investmentopportunities for the Company in future years. Climate Change Capital LimitedInvestment Manager30 October 2007 Income Statementfor the six month period ended 31 August 2007 Six months Six months ended ended Year ended 31 August 31 August 28 February 2007 2006 2007 (unaudited) (unaudited) (audited) Revenue Capital Total Revenue Capital Total Revenue Capital Total Notes £000 £000 £000 £000 £000 £000 £000 £000 £000 Income 468 - 468 338 - 338 782 - 782Net gains on investments - - - - - - - 104 104 ------ ------ ------ ------ ------ ------ ------ ------ ------ 468 - 468 338 - 338 782 104 886 ------ ------ ------ ------ ------ ------ ------ ------ ------ ExpenditureManagement fees 2 52 155 207 52 156 208 104 311 415Other expenses 91 - 91 82 - 82 156 - 156 ------ ------ ------ ------ ------ ------ ------ ------ ------ 143 155 298 134 156 290 260 311 571 ------ ------ ------ ------ ------ ------ ------ ------ ------ Return on ordinary activities before taxation 325 (155) 170 204 (156) 48 522 (207) 315Tax on ordinary activities 3 (65) 31 (34) (39) 30 (9) (95) 59 (36) ------ ------ ------ ------ ------ ------ ------ ------ ------Return attributable to equity shareholders 260 (124) 136 165 (126) 39 427 (148) 279 ------ ------ ------ ------ ------ ------ ------ ------ ------ Basic and diluted return per ordinary share (p) 4 1.73 (0.83) 0.90 1.10 (0.84) 0.26 2.85 (0.99) 1.86 All revenue and capital items in the above statement derive from continuingoperations. The Company has only one class of business and derives its income frominvestments made. The total columns of this statement are the profit and loss accounts of theCompany for the respective periods. The supplementary revenue and capitalcolumns have been prepared under guidance published by the Association ofInvestment Companies. There were no recognised gains and losses for the period other than those shownabove. Balance sheetas at 31 August 2007 31 August 2007 31 August 2006 28 February 2007 (unaudited) (unaudited) (audited) Notes £000 £000 £000Fixed assetsInvestments 5 8,452 2,364 4,273 --------- --------- --------- 8,452 2,364 4,273 --------- --------- ---------Current assetsDebtors 615 115 282Short term investments in UK treasury bills 4,949 10,812 9,406Cash at bank 154 822 237 --------- --------- --------- 5,718 11,749 9,925Creditors: amounts falling due within one year (119) (79) (73) --------- --------- ---------Net current assets 5,599 11,670 9,852 --------- --------- ---------Net assets 14,051 14,034 14,125 --------- --------- --------- Share Capital & ReservesOrdinary share capital 3,750 3,750 3,750Special reserve 10,437 10,437 10,437Capital reserve - realised (595) (345) (471)Capital reserve - unrealised 104 - 104Revenue reserve 355 192 305 --------- --------- ---------Shareholders' funds 14,051 14,034 14,125 --------- --------- --------- Basic and diluted net asset value per ordinary share 6 93.7 93.6 94.2(p) Cash flow statementfor the six month period ended 31 August 2007 Six months ended Six months ended Year ended 31 August 2007 31 August 2006 28 February 2007 (unaudited) (unaudited) (audited) £000 £000 £000 Net cash outflow from operatingactivitiesand returns on investments (316) (133) (119) Taxation - - (10) Capital expenditurePurchase of venture capital (4,179) (1,505) (3,310)investments Equity dividends paid (210) (113) (262) Management of liquid resourcesProceeds from maturity of UK treasury 16,565 10,930 10,930billsPurchase of UK treasury bills (11,943) (10,722) (9,357) --------------- --------------- ---------------Decrease in cash (83) (1,543) (2,128) --------------- --------------- --------------- Net cash outflow from operatingactivities and returns on investmentsReturn on ordinary activities before 170 48 315taxationIncrease in debtors (333) (80) (247)Increase/(decrease) in creditors 12 8 (15)Net unrealised gains on short term (165) (109) (68)investmentsNet unrealised gains on fixed asset - - (104)investments --------------- --------------- ---------------Net cash outflow from operating (316) (133) (119)activities and returns on investments --------------- --------------- --------------- Analysis of net fundsAt the beginning of the period 237 2,365 2,365Net cash flows for the period (83) (1,543) (2,128) --------------- --------------- ---------------At the end of the period 154 822 237 --------------- --------------- --------------- Reconciliation of movements in shareholders' fundsfor the six month period ended 31 August 2007 Six months ended Six months ended Year ended 31 August 2007 31 August 2006 28 February 2007 (unaudited) (unaudited) (audited) £000 £000 £000 Equity shareholders' funds at 14,125 14,108 14,108beginning of the periodReturn on ordinary activities 136 39 279after taxDividends paid in the period (210) (113) (262) --------------- --------------- ---------------Equity shareholders' funds at end 14,051 14,034 14,125of period --------------- --------------- --------------- Notes to the financial statementsfor the six month period ended 31 August 2007 (unaudited) 1. The unaudited half-yearly financial statements for the six months ended31 August 2007 do not constitute statutory accounts within the meaning ofSection 240 of the Companies Act and such statements have not been delivered tothe Registrar of Companies. The half-yearly financial statements, which have notbeen audited, have been prepared in accordance with UK Generally AcceptedAccounting Practice (UKGAAP) under the same accounting policies as the financialstatements for the year ended 28 February 2007. The half-yearly financialstatements have been prepared using the presentational guidance set out in theStatement of Recommended Practice (SORP) "Financial Statements of InvestmentTrust Companies" (revised in December 2005), to the extent that the guidance isconsistent with UKGAAP. The financial statements for the year ended 28 February2007 have been filed with the Registrar of Companies and received an unqualifiedaudit report. All investments are designated as "fair value through profit or loss" assets andare initially measured at cost. Thereafter the investments are measured atsubsequent reporting dates at fair value. Investments in unquoted companies are valued in accordance withInternational Private Equity and Venture Capital Valuation Guidelines. Underthese guidelines, the investments are valued at fair value at the reportingdate, except in situations where fair value cannot be measured reliably. In suchsituations, the investments are reported at the carrying value at the previousreporting date, unless there is evidence that an investment has since then beenimpaired. When an investee company has gone into receivership or liquidation, theinvestment, although physically not disposed of, is treated as being realised.It is not the Company's policy to exercise either significant or controllinginfluence over investee companies. Therefore the results of these companies arenot incorporated into the revenue account, except to the extent of any incomeaccrued. The majority of monies held pending investment are invested in financialinstruments with same day or two-day access and as such are treated as currentinvestments. These are valued at middle market prices as at 31 August 2007.Under FRS 26 investments should be valued at bid market prices. There is nomaterial difference between the valuation at bid prices and the valuation atmiddle market prices. 2. The Company pays the Investment Manager an annual management fee equalto 2.5% of the Company's net assets. The fee is exclusive of VAT and is payablequarterly in advance. The annual management fee is allocated 75% to capital and25% to revenue. 3. The half-yearly tax charge of £33,801 is based on the likely effectivetax rate for the year. This has been estimated at 20% and applied to the returnon ordinary activities for the half-year. 4. The basic and diluted return per share of 0.90 pence (six months ended31 August 2006: 0.26 pence; twelve months ended 28 February 2007: 1.86 pence) isbased on the profit for the period of £135,760 (six months ended 31 August 2006:£38,549; twelve months ended 28 February 2007: £279,467) and the number ofshares in issue during the period of 15,000,183 (six months ended 31 August2006: 15,000,183; twelve months ended 28 February 2007: 15,000,183). 5. Total investments per the balance sheet include revaluations of£104,000 and capitalised costs of £11,251. These amounts are excluded from thetotals described in the Investment Manager's report on page 4. The InvestmentManager's report includes £32,542, which is the value of a preference sharedividend purchased from the previous shareholders of Firefly Power Holdings plc(formerly Geotrupes Energy plc). This dividend has been paid since the end ofthe period. 6. The net asset value per share of 93.7 pence (31 August 2006: 93.6pence; 28 February 2007: 94.2 pence) is based on net assets of £14,050,851 (31August 2006: £14,034,178; 28 February 2007: £14,125,095) and the number ofshares in issue as at 31 August 2007 of 15,000,183 (31 August 2006: 15,000,183;28 February 2007: 15,000,183). 7. The half-yearly financial report was approved by the Directors on 30October 2007. 8. An interim dividend of 1.50 pence per share has been declared for theperiod ended 31 August 2007 which will be paid to shareholders on 16 January2008. A final dividend for the year ended 28 February 2007 of 1.40 pence pershare was paid in the period ended 31 August 2007. 9. Copies of this half-yearly financial report have been sent toshareholders and are available from the Company Secretary, c/o Capita CompanySecretarial Services Ltd, The Registry, 34 Beckenham Road, Beckenham, Kent, BR34TU. 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