TIDMLEF
RNS Number : 0262M
Ludgate Environmental Fund Limited
12 September 2012
Ludgate Environmental Fund Limited (the "Company")
Final Results for the year ended 30(th) June 2012
CHAIRMAN'S STATEMENT
I am pleased to report to our shareholders on the performance of
Ludgate Environmental Fund Limited in the year to 30th June
2012.
Financial Review
As foreseen at the launch of the Company as a limited life
investment company in 2007 and confirmed with our major
shareholders during the year, 2012 was the end of our investment
cycle and the beginning of our expected return of capital. An
interim dividend of 1.75p was paid in August 2011, a special
dividend of 12p in October 2011 and an interim dividend proposed
for the current year of 1.9p. As at 30th June 2012, the net asset
value of the Company, after the return of capital, was
GBP45,570,496 (2011: GBP58,843,944) equivalent to 81p (2011:
GBP1.05) per ordinary share outstanding.
Recognising the return of capital, fair value accounting and
continued investment, the Company made a loss of GBP5,537,728
(2011: GBP4,459,594 income).
At year end the Company held cash of GBP15.2 million. The
Company has agreed to invest GBP14.1 million into further
investments, of which GBP5.94 million has been invested as to date.
Consistent with ensuring that the Company has sufficient capital to
maintain operations through its life we shall return capital by
dividends and the purchase of our own shares.
Portfolio Review
During the year to 30th June 2012, we made new investments
across the portfolio in accordance with our established strategy of
diversification in the cleantech and environmental sector, expected
financial performance and anticipated cash distribution horizon
within the life of the company. We invested in Lumicity (GBP1.0
million) which, despite the government's unheralded and punitive
amendment of the feed in tariffs supporting the solar industry, has
managed to develop certain legacy assets. We committed GBP7 million
to Tamar, a well supported and capitalised developer of anaerobic
digestion plants in the UK; we believe that this business has the
combined strengths of diversified good locations, contracted
feedstock and offtake arrangements, sound and proven management and
engaged, committed and significant shareholders. Similarly, we were
pleased to sponsor Ignis Biomass and commit GBP3.1 million to its
first biomass district heat and power project at Wick, Scotland;
other opportunities have been identified for this management team
and company elsewhere in the UK. We also committed GBP4.1 million
to Micropelt, a German high technology company developing small
scale thermoelectric generators which harvest waste heat to obviate
batteries; the technology is proven, installed and capable of
industrial commercial exploitation.
Rapid Action Packaging ("RAP"), of which we own 45% (fully
diluted and converted), improved its revenue significantly,
increased its product and customer range and expanded its
production capabilities with a new machine expected to come on
stream in the third quarter. We are confident that RAP's improving
commercial performance will give the Company an attractive economic
return. While ECO Plastics has successfully expanded capacity with
our investment of last year and now has attractions to identified
strategic acquirors, the appropriate fair value accounting have
caused us to reduce the NAV to GBP4.2 million. Terra Nova has
established and proven production for new process technology in a
critical sector; however, the difficulty of financing projects and
working capital in France, largely contingent on the enduring
capital constraints on domestic banks, have affected the company
and development has been slower than expected. Necessarily this
will delay divestment; NAV has been adjusted to reflect fair value
(GBP1.6 million). We increased our shareholding in STX, the
environmental financial products broker, to 29.3%; the company
diversified its product range within the sector, increased its
repeat client transactions and enjoyed profits significantly ahead
of budgets. Our interests in New Earth (GBP5.9 million) were
reorganised to allow progressive sales at an agreed return 1.2x
greater than original cost for the 50% redeemed to date. We
continued to receive enhanced dividends on our original investment.
Sadly, our holdings in the listed companies, Hydrodec, Hightex,
Renewable Energy and Phoslock all, in different ways, continue to
disappoint despite the strategic reasons for each investment and
management discussions through which we have sought to promote the
interests of the Company. We shall be looking to dispose of our
holdings in a timely manner.
Strategy
We would expect the progressive return of capital and the
increased expectation of performance from the remaining assets to
narrow the discount to NAV over the remaining life of the fund. We
will continue to consider, in consultation with our major
shareholders, the optimum means of return.
Over our investment period the Company has developed
considerable experience and expertise in the active management of
companies specialised in resource efficiency. With the adviser we
have built a sustainable business of industry knowledge,
connections and diversified and yet coherent portfolio. As a
limited life investment company the worth of such sustainability to
our shareholders can only be in realisations of financial assets at
greater value than published NAV. We also need to ensure that we
are not bound at the end of the company's life to sell assets at
prices which do not reflect their intrinsic value. We have
nominated directors on the boards of most of our unlisted holdings;
their principal roles are both to ensure that the companies budget,
perform and invest in a manner consonant with our expected disposal
of interests and to engage with other shareholders to pursue these
ends. We will continue to monitor and assess the performance of the
adviser on their discharge of these responsibilities and on their
management and recommendation for the divestment of assets,
consistent with the sustainable interests of the Company itself. We
have considered the competence and economic viability of the
present adviser to act through the period of divestment and
management for value and concluded from their creation,
understanding and management of the portfolio companies that they
should.
To ensure the adviser is appropriately incentivised to realise
assets in a timely manner prior to the end of the Company's life
whilst maximising value, the Company has entered into negotiations
with the adviser to amend the existing agreement, including
rebasing the NAV for the purposes of calculating the performance
fee. Following conclusion of these negotiations, the board expects
to put the proposed changes to the adviser's agreement for approval
by shareholders at the next AGM of the Company.
Outlook
The Company has grown and developed through times of enduring
financial distress particularly for small companies needing bank
finance for working capital or projects. There is no current sign
of this easing. Though only 15% of current NAV is held in Eurozone
countries and only in those among the strongest in the region, in
all our geographic markets the availability and certainty of bank
finance has weakened requiring greater equity subscriptions to
sustain companies, the practical effect, perhaps, on our portfolio
of worldwide deleveraging. In turn this depresses anticipated
returns from the portfolio and leads to questions about the
appropriate cost and under pricing of equity. The weakening of some
commodity prices also reduces short term interest in efficiency
investments. Across Europe the volatility of energy, planning and
tariff policies has added to political risks in the portfolio again
reducing returns and access to capital. We also consider the
capability of our partners and co-investors to continue to support
each of our financial assets in this context. At each statement of
NAV we have rigorously applied fair value methodologies under
International Financial Reporting Standards reflecting, as each
does, the value of our assets compared with publicly traded
companies discounted for illiquidity and size. For this reason we
consider that the realised value of our assets should, over the
remaining life of the company, exceed the current NAV.
I wish to thank my fellow board members for a level of
engagement with the Company, its assets and advisers exceptional
for an investment company, contributing significantly to our
sustainability. Donald Adamson left us during the year; we are very
grateful for his advice, sagacity and commitment over five years.
Ronald Green joined the board and we look to his experience to help
guide us through the period of value management.
The Company has shown that there is an investable universe of
cleantech and environmental assets and that we have created a
sustainable and well supported company.
For further information contact:
Ludgate Environmental Fund Limited +44 (0) 1534 609034
John Shakeshaft, Chairman
Ludgate Investments Limited +44 (0) 20 7621 5770
Bill Weil
PricewaterhouseCoopers LLP (Nomad) +44 (0) 20 7212 1798
Chris Clarke
Matrix Corporate Capital LLP (Broker) +44 (0) 20 3206 7175
Paul Fincham
STATEMENT OF INVESTMENT POLICY
The Ludgate Environmental Fund is looking to make active
investments in a diverse portfolio of cleantech companies that
require capital growth
The Fund focuses on the following core areas within the
cleantech sector:
* Waste and recycling
* Renewable energy
* Energy efficiency
* Water
Our target cleantech companies demonstrate the following
attributes:
* Clear environmental improvement
* Proven technology with a scalable business model
* Revenue generation or clear, near-term visibility to substantial sales
* Experienced management with technical expertise and track record of delivery
* Defensible, differentiable intellectual property or know-how
* Significant potential market with high existing, or expected, growth rates
* Clear exit strategy within the anticipated life of the fund
No single investment at subscription has a value greater than
15% of the net assets of the Company. No individual holding is
reduced or increased due to either relative growth or reductions of
the Company's other investments; the Board remains conscious of the
risk profile and expected returns from the portfolio.
The Company may borrow up to an amount equivalent to 25% of its
net assets to finance investments or for any other purpose. The
Board does not contemplate making any significant borrowing until
and unless the portfolio is substantially invested in financial
assets in the cleantech sector.
Seeking to provide significant total return to shareholders over
the expected life of the Company to August 2015, the Directors may
recommend that there should be a distribution of income received or
capital realised from investment securities by way of dividend or
other means as they have for the years ended 30th June 2009 to
2012.
INVESTMENT ADVISER'S REPORT
Highlights and Key Financial Data
-- Net assets decreased to GBP45.6 million at 30th June 2012,
with a NAV per share of 81.0 pence (2011: GBP58.8 million and 104.6
pence).
-- Cash balances were GBP15.2 million as at 30th June 2012.
-- The Company is now over 90 per cent invested including commitments.
-- Before realisations, GBP51.5 million had been invested into
16 companies by 30th June 2012 (2011: GBP38.3 million into 11
companies).
-- During the year investments totalling GBP18.2 million were made into nine companies.
-- GBP3.0 million was realised from the sale of 50 per cent of
the Company's interest in New Earth.
-- Interest and dividend income receivable of GBP1.0 million
from investments and cash deposits.
-- An interim dividend of 1.75 pence per share was paid on 12th
August 2011 (2011: a final dividend of 1.65 pence per share) and a
special dividend of 12 pence per share was paid on 27th October
2011.
At the Balance Sheet Date, the Company had outstanding
commitments to invest up to GBP9.65 million into Ignis Biomass
Limited, Micropelt and Tamar Energy of which GBP1.6 million has
subsequently been drawn down by Ignis Biomass Limited. Subsequent
to the balance sheet date, GBP0.2 million was invested into a
convertible unsecured loan note in ECO Plastics.
Net Asset Valuation summary
The table below summarises the position of the Company as at
30th June 2012. Investments made subsequent to year end are not
included.
Currency: GBPm Investment Amount % of
Company Activity Equity Convertible/Other Total Valuation NAV
Rapid Action
Packaging Food packaging 5.0 2.5 7.5 7.6 16.7
Plastic bottle
ECO Plastics recycling 5.0 - 5.0 4.2 9.2
Hydrodec Group Oil recycling 3.5 3.0 6.5 4.5 9.9
Environmental
STX Services broking 0.9 - 0.9 2.9 6.4
New Earth Recycling
& Renewables Waste treatment 2.9 - 2.9 3.2 6.9
Electronic
Terra Nova waste recycling 2.7 1.3 4.0 1.5 3.3
Thermogenerator
Micropelt Manufacturer - 2.2 2.2 2.2 4.8
Anaerobic
Tamar Energy Digestion 1.8 - 1.8 1.8 3.9
Lumicity Solar developer 0.5 0.8 1.3 0.5 1.1
Phoslock Water
Solutions Water treatment 0.4 - 0.4 0.3 0.7
Renewable Energy
Generation Wind developer 0.7 - 0.7 0.4 0.9
Biomass
Ignis developer 0.5 0.3 0.8 0.8 1.8
Hightex Group Solar cooling 0.7 - 0.7 0.1 0.2
Emergya Wind Turbine
Technologies manufacturer 4.5 - 4.5 - -
Subtotal 29.1 10.1 39.2 30.0 65.8
===================================== ===================================== =====================================
Cash at bank 15.2 33.3
Other
assets/liabilities 0.4 0.9
45.6 100.0
===================================== ====================================
Advisor to the Company
Ludgate Investments Limited (LIL) acts as adviser to the
Company. LIL was established in 2001 and has built a record as a
specialist private equity investor in resource efficiency
investment.
During the year Gijs Voskamp succeeded Nick Pople as chief
executive of LIL. Gijs is also managing partner and a shareholder
of Ocean Capital Holdings, the majority shareholder of LIL. Ocean
also holds 10.38% directly and indirectly in the Company. Bill
Weil, the chief investment officer of LIL, was appointed as a
director of LIL. Charles Sebag Montefiore became chief financial
officer and head of compliance for LIL. Nick Curtis remains as a
senior investment director and Matthew Sheppee as investment
analyst.
Dr. Bernie Bulkin and Ms. Ekaterina Sharashidze joined the board
of LIL as non executive directors. Further information of the above
can be obtained from www.ludgate.com.
MAJOR INVESTMENTS
Rapid Action Packaging
Food packaging solutions
Valuation at 30th June 2012 (method): GBP7.6 million (fair
value)
Investment: GBP5.0 million (ordinary shares) and GBP2.5 million
(12.0 per cent convertible loan notes).
Ownership: 36.3 per cent; 45.0 per cent after conversion of CULS
and fully diluted after warrants
Date(s) of investment: Q2 2008; Q3 2010; Q3 2011
Company summary:
Specialists in the design, manufacture and supply of innovative,
cost effective and environmentally responsible packaging systems
particularly for the "food on the move" marketplace.
Further information can be found at www.rapuk.com.
Investment during the year:
No further investment was made during the year.
Significant events during the year:
-- Financial results to year end September 2011 showed a 29.1
per cent increase in revenues to GBP16.1 million (2010: GBP12.5
million).
-- Turnover in the first nine months of the financial year to
June 2012 was 16 per cent ahead of the equivalent period in the
previous year.
-- The increase in turnover reflects the strong performance of
the Freshpack product with further supermarket launches announced
earlier in the year.
-- Customer trials on the modified atmosphere tray and Softpacks
continue with launches planned during the Autumn of 2012.
-- Record production levels as management action to improve
manufacturing efficiencies are delivered.
-- The new production equipment is expected to be operational in
September 2012, increasing capacity by between 150 - 200 million
units.
The Company has the right to two seats on the board of RAP and
has appointed Nick Curtis and Nick Pople, of the Investment
Adviser, as its directors.
ECO Plastics
Plastic bottle recycling
Valuation at 30th June 2012 (method): GBP4.2 million (fair
value)
Investment: GBP5.0 million (ordinary shares)
Ownership: 17.1 per cent; 16.6 per cent fully diluted
Date(s) of investment: Q3 2011
Company summary:
ECO Plastics is Europe's largest recycler of mixed plastic
bottles. Operating the most technically advanced plastics recycling
facility in Europe, it produces 11 different streams of plastics,
including food-grade recycled PET (rPET) suitable for soft drinks
packaging.
Further information can be found at www.ecoplasticsltd.com.
Investment during the year:
In July 2011, the Company completed an investment of GBP5.0
million into ECO Plastics alongside GBP5.0 million from Coca-Cola
Enterprises and a debt package from Close Brothers bringing the
funding to GBP24.0 million committed during this round. The
Company's investment was structured as ordinary shares.
Significant events during the year:
-- Plant expansion to increase processing capacity by 50 per cent to 150,000 tonnes.
-- Final Coca-Cola Enterprises (CCE) milestone was met with
approval received on 25th May 2012. ECO Plastics is the first
supplier of rPET to have received validation on first
application.
-- ECO Plastics will supply rPET to CCE for all their bottles at the Olympic Games.
-- Agreement reached with London Organising Committee of the
Olympic and Paralympic Games (LOCOG) to take all waste plastic
bottles from the venues.
-- Winner of 'deal of the year' at the New Energy Awards.
-- Additional 'cost plus' deal signed for rPET and significant
'cost plus' deal signed for HDPE outputs into an industrial
product.
-- Engagement with a second major international brand for rPET supply.
-- A further 10,000 tonnes per annum of contracted feedstock supply agreed.
The Company has the right to a seat on the Board of ECO Plastics
and has appointed Bill Weil, of the Investment Adviser, as its
director.
Hydrodec (AIM:HYR)
Specialist oils recycling
Valuation at 30th June 2012 (method): GBP4.5 million (market
value)
Investment: GBP3.5 million (ordinary shares); GBP3.0 million
(8.0 per cent convertible loan notes)
Ownership: 3.4 per cent; 6.9 per cent fully diluted
Date(s) of investment: Q4 2007; Q1/Q2/Q4 2008; Q1/Q2 2009
Company summary:
Hydrodec's technology is a patented sustainable oil refining
process that takes existing spent oil as feedstock to produce new
specialty oils thus creating a virtuous green cycle. The process is
closed loop and produces no harmful emissions.
Further information can be found at www.hydrodec.com.
Investment during the year:
No further investment was made during the year.
Significant events during the year:
-- Revenues in 2011 increased 26 per cent to $22.6 million (2010: $17.8 million).
-- The Environmental Protection Agency has issued Hydrodec with
a final permit for the storage and treatment of polychlorinated
biphenyl (PCB) contaminated used transformer oil in the US.
-- In June 2012 Hydrodec reported that sales volumes were
significantly up, gross unit margins have continued to improve and
plant use was 70 per cent compared with 55 per cent in the same
period last year.
-- Mexico's national electricity utility has awarded Hydrodec a
joint mandate to export and process 900,000 litres of PCB
contaminated oil at the group's plant in Australia.
-- Ian Smale appointed CEO and Chris Ellis CFO, based in London.
Paul Manchester will step down from the Board but remain with the
company, based in Sydney.
-- The Company's investment in Hydrodec's convertible unsecured
loan notes may be converted into ordinary shares at any time prior
to 1st November 2012. Those elements not converted into shares by
this date are repayable, at the Company's determination, between
1st November 2012 and 31st October 2014 and carry an interest rate
of 8 per cent p.a.
Convertible unsecured loan stock holders, including the Company,
have the right to nominate a director to the board. No appointment
has yet been made.
STX Services
Environmental product broking
Valuation at 30th June 2012 (method): GBP2.9 million (fair
value)
Investment: GBP0.9 million (ordinary shares)
Ownership: fully diluted 29.3 per cent
Date(s) of investment: Q4 2007; Q1and Q2 2008; Q1 2012
Company summary:
STX Services (STX) is a broker specialising in environmental
financial products with a particular focus on the carbon markets.
It has mostly been active in EU Emission Allowances but has
diversified into Certified Emission Reduction, Biofuel Tickets,
Green Certificates and other environmental trading. STX is
Amsterdam-based and active across the European markets.
Further information can be found at www.stxservices.com.
Investment during the year:
In March 2012, the Company invested a further GBP0.2 million in
STX by acquiring ordinary shares from another shareholder.
Significant events during the year:
-- In March 2012 the Company increased its shareholding in STX
Services from 23.8 per cent to 29.3 per cent.
-- STX continues its strong revenue and top line growth. The
number of brokers grew from 20 in March to 33 in July 2012.
-- The company has further diversified its product portfolio and
is now trading over 40 different environmental commodities.
-- First company to provide electronic brokerage services for
Green Certificates with the launch of its exclusive auction
model.
-- In July 2012, STX paid the Company a dividend of GBP0.2
million, bringing the total received to date from STX in interest
payments and dividends to GBP1.9 million.
The Company has the right to nominate a member on the
supervisory board of STX and has nominated Gijs Voskamp, of the
Investment Adviser.
New Earth Recycling & Renewables (Infrastructure)
Waste treatment and renewable energy
Valuation at 30th June 2012 (method): GBP3.2 million (market
value)
Original Investment: GBP5.0 million (preferred B ordinary shares
and CULS in New Earth Solutions Group) exchanged for shares in New
Earth Recycling & Renewables (Infrastructure) at a subscription
value of GBP5.9 million
Realised: GBP3.0 million (50 per cent realised)
Ownership: n/a
Date(s) of investment: Q3 2011
Date(s) of divestment: Q3 2011; Q2 2012
Company summary:
New Earth Recycling & Renewables (Infrastructure) plc is an
open-ended fund with a net asset value currently in excess of
GBP120.0 million and registered as a specialist fund with the Isle
of Man Financial Supervision Commission (Isle of Man Company
Number: 123613C), which was created principally to finance the
recycling facilities of New Earth Solutions Group Limited, a waste
treatment and renewable energy specialist providing sustainable
waste treatment processes to local authority and commercial
customers across the UK.
Further information about New Earth Solutions can be found at
www.newearthsolutions.co.uk.
Investment/Divestment during the year:
In October 2011, the Company exchanged its shares in New Earth
Solutions Group in consideration for the issue of an equivalent
value of shares in New Earth Recycling & Renewables
(Infrastructure) at a subscription value of GBP5,882,689. The
initial investment of GBP5.0 million into New Earth Solutions Group
was transferred into New Earth Recycling & Renewables
(Infrastructure), recognizing an increase in value of circa 17.6
per cent. In November 2011 and April 2012 the Company redeemed 25
per cent of its holding in New Earth Recycling & Renewables
(Infrastructure) at each time leaving it with 50 per cent
remaining.
Significant events during the year:
-- First redemption of 25 per cent of holding completed,
realising GBP1.5 million on 7th November 2011, and second
redemption of a further 25 per cent, realising GBP1.5 million on
10th April 2012.
-- New Earth Recycling & Renewables has now exceeded
GBP120.0 million in assets, as at 11th July 2012, and was featured
in Investor Chronicle's "Top 100 Funds".
-- Construction of New Earth's first commercial scale energy
recovery plant continues to progress on-time and on-budget at a
site next to the MBT facility in Avonmouth. It will use Advanced
Thermal technology to process 120,000 tonnes per annum of
refuse-derived fuel (RDF) and export around 13MW of power, enough
to meet the needs of nearly 25,000 homes in the Bristol area.
-- Community engagement activities in support of a planning
application for Anaerobic Digestion (AD) at New Earth's Blaise
facility have begun. The addition of AD will cover the full range
of technologies appropriate for the treatment of organic wastes at
the site.
-- Planning permission granted for the Scottish Borders facility
and a 24 year feedstock contract signed for 65,000 tonnes.
Terra Nova
Electronic waste recycling
Valuation at 30th June 2012 (method): GBP1.6 million (fair
value)
Investment: GBP2.7 million (preference shares); GBP1.3 million
convertible unsecured loan notes
Ownership: 25.1 per cent; 27.0 per cent fully diluted and after
conversion of loan notes
Date(s) of investment: Q4 2009; Q4 2011; Q1/Q2 2012
Company summary:
Terra Nova developed, constructed and now operates a printed
circuit board treatment and recycling business. The company has a
30,000 tonne per annum pyrolysis plant to pre-treat recovered
metals from waste electronics for the major metal smelters.
Further information can be found at www.terranovametal.com.
Investment during the year:
The Company subscribed to three tranches of 6 per cent
convertible loan notes totalling GBP1.3 million during the
year.
Significant events during the year:
-- Construction of 30,000 ton per annum pre-treatment and recycling plant complete.
-- Commissioning challenges required refinement of plant design,
leading to circa 6 month delay.
-- Wide international network of feedstock supply relationships established.
-- Delays in initial market acceptance, however significant,
long-term contracts now signed with Metallo Chimique (Belgium), LS
(South Korea), KGHM (Poland), with others in advanced trials;
material international shipments have commenced.
-- Research and development contract with Nyrstar from 2009 to
design, help build and ramp up a full industrial process for indium
recovery has successfully completed and will now provide material
royalty income stream.
-- Opportunities for further expansion, both to the existing
process and into the recycling of other metals.
-- Winner of a regional prize for innovation.
The Company has the right to one seat and one observer on the
board of Terra Nova and has appointed Charles DesForges (adviser to
the Investment Adviser), who has been named Chairman and Bill Weil,
of the Investment Adviser, respectively as its director and
observer.
Micropelt
Waste heat recovery
Valuation at 30th June 2012 (method): GBP2.2 million (cost)
Investment: GBP2.2 million (convertible loan notes) with a
further GBP1.9 million committed; GBP280 (ordinary shares)
Ownership: 30.3 per cent fully drawn, 27.3 per cent fully
diluted
Date(s) of investment: Q2 2012
Company summary:
Micropelt is a developer and producer of the world's smallest
thermal energy harvesting chips, with operations in Germany. The
thermoelectric microchips are based on a patented and scalable
thin-film technology which reduces component size while maximising
power density. The chips scavenge free electric power from waste
heat to replace or recharge batteries in wireless sensor networks
and micro actuators.
Further information can be found at www.micropelt.com.
Investment during the year:
In May 2012, the Company completed an investment of GBP2.2
million as part of a GBP2.8 million round into Micropelt structured
as convertible loan notes. The total commitment by the Company is
GBP4.1 million.
Significant events during the year:
-- GBP5.3 million raised in May 2012 from the Company,
Mitsubishi UJF Capital Co. Ltd and existing shareholders.
-- As part of the Company's investment Micropelt's balance sheet
was re-structured and strengthened.
-- Presenter at 2012 Munich Energy Harvesting Congress.
-- Japanese branch office opened for intensification of business development.
-- Starting serial production at site in Halle, Germany, in August 2012.
-- Joint presentation at Techno-Frontier exhibition in Tokyo with Hitachi High Tech Materials.
-- ISO 9000 Quality Management and ISO 14000 Environmental
Monitoring Systems preparations aiming for September
certification.
The Company has the right to a seat on the board of Micropelt
and has appointed Bill Weil, who has been named Chairman.
Tamar Energy
Biogas project developer, owner and operator
Valuation at 30th June 2012 (method): GBP1.8 million (cost)
Investment: GBP1.8 million (ordinary shares) with a further
GBP5.2 million committed
Ownership: 7.8 per cent fully drawn, 7.1 per cent fully
diluted
Date(s) of investment: Q2 2012
Company summary:
Tamar Energy is biogas project developer, owner and operator
planning a UK network of over 40 Anaerobic Digestion (AD) plants to
generate 100MW of green electricity over the next five years.
Further information can be found at www.tamar-energy.com.
Investment during the year:
In May 2012, the Company completed an investment of GBP1.8
million into Tamar as part of a GBP7.0 million commitment. The
Company's investment was structured as ordinary shares.
Significant events during the year:
-- First round of equity fundraising closed at end of July 2012,
with GBP95.8 million committed including RIT Capital Partners, Fajr
Capital, Sainsbury's and the Duchy of Cornwall.
-- Experienced management team now in place with an initial
focus on securing feedstock and developing the pipeline.
-- Build started on first plant in Holbeach Hurn, Lincolnshire,
with a further six to seven planned (15-17MW) to be under
construction by 31st March 2013.
-- Strategic options being considered by management to secure
feedstock and sites in London, South East and East Anglian
regions.
The Company has the right to a seat on the board of Tamar and a
seat on the investment committee and has appointed Bill Weil and
Nick Curtis respectively, of the Investment Adviser.
Lumicity
Solar project developer
Valuation at 30th June 2012 (method): GBP0.5 million (fair
value)
Investment: GBP0.5 million (preference shares) and GBP0.8
million (unsecured loan notes)
Ownership: 45.8 per cent
Date(s) of investment: Q3 2010; Q3 2011
Company summary:
Lumicity is a renewable energy company that develops projects
across solar, wind and biomass. The company is a sector specialist
in the planning, finance, construction and management of renewable
energy projects.
Further information can be found at www.lumicity.com.
Investment during the year:
In August 2011, the Company completed an investment of GBP1.0
million into Lumicity structured as a combination of preference
shares and unsecured loan notes.
Significant events during the year:
-- The announcement in October 2011 by the Department of Energy
and Climate Change of a reduction in the UK solar feed-in tariffs
significantly impacted the initial strategy of Lumicity and
required a shift of focus.
-- Diversified focus across three renewable energy sectors:1)
large scale, ground-based solar; 2) small scale (sub-200kW)
biomass; 3) small / medium scale (sub 250kw) wind.
-- First 13 solar projects with exclusivities signed, now entering planning.
-- Exclusivities signed on a further 93 MW cumulative of solar projects.
-- Established two key partnerships with Lightsource/Octopus
Ventures and Hazel Capital for further funding of these
projects.
-- Signed JV agreement with Endurance to develop, fund and sell wind portfolio.
The Company has the right to a seat on the board of Lumicity and
has appointed Bill Weil, of the Investment Adviser with Nick Curtis
as his alternate.
Ignis Biomass
Biomass project developer, owner and operator
Valuation at 30th June 2012 (method): GBP0.8 million (cost)
Investment: GBP0.5 million (ordinary shares), GBP0.3 million
loan
Ownership: 100 per cent
Date(s) of investment: Q2 2011; Q2 2012
Company summary:
Ignis Biomass is developer, owner and operator of biomass heat
and power projects, providing UK business and public sector
organisations with local solutions for energy, waste management and
CO2 emissions reduction.
Further information can be found at www.ignis-biomass.com.
Investment during the year:
The Company has invested total of GBP0.8 million into Ignis as
part of a GBP3.1 million commitment. The Company's investment is
structured as ordinary shares, a development loan and convertible
loan notes. After year end a further GBP1.65 million was drawn
down.
Significant events during the year:
-- On 31st May 2012 Ignis Biomass subsidiary Ignis Wick Ltd took
over the district heating scheme in Wick from the Highland
Council.
-- Ignis Wick is now supplying heat to 165 homes with many more customers expected to sign up.
-- Plans are in progress to convert the system from oil to
locally sourced wood chip in order to reduce operating costs.
-- A contract with the local whisky distillery for steam supply
has been signed and will commence after the new boiler has been
installed, which is expected to take place in Q4 2012.
The Company has the right to two seats on the board of Ignis and
has appointed Bill Weil and Nick Curtis of the Investment
Adviser.
INVESTMENT REALISATION
The Company exchanged its initial investment of GBP5.0 million
in New Earth Solutions Group in consideration for the issue of an
equivalent value of shares in New Earth Recycling & Renewables
(Infrastructure) for the value of GBP5.9 million. Subsequently a
partial sale of the Company's interest in New Earth Recycling &
Renewables (Infrastructure) occurred during the year, realising
GBP3.0 million. This realisation related to 50 per cent of the
shares issued from the Company's original investment of GBP5.0
million and represents a 1.2x multiple and 9% IRR to the
Company.
REPORT OF THE DIRECTORS
The Directors present their report and the audited financial
statements for the year ended 30th June 2012.
INCORPORATION
Ludgate Environmental Fund Limited (the "Company") was
incorporated in Jersey, Channel Islands on 7th June 2007.
ACTIVITIES
The Company is a closed-ended investment company investing in
the cleantech sector including waste management and recycling,
renewable energy, energy efficiency, water treatment and
management.
RESULTS AND DIVIDENDS
The decrease in net assets attributable to shareholders from
operations before dividends for the year amounted to GBP5,537,728
(2011: increase of GBP4,459,594).
The Company paid an interim dividend of 1.75 pence per share at
a total cost of GBP984,546 (2011: an interim dividend of 1.65 pence
per share) on 12th August 2011 and on 27th October 2011 paid a
special dividend of 12 pence per share at a cost of GBP6,751,174
(2011: GBPnil).
Subsequent to the balance sheet date, the Directors recommended
an interim dividend of 1.9 pence per share at a cost of
GBP1,068,936 (2011: 1.75 pence per share) on shares in issue as at
27th July 2012, paid on 10th August 2012.
GOING CONCERN
The Directors are of the opinion that the Company is a going
concern, and the financial statements have been prepared on that
basis.
CORPORATE GOVERNANCE
As a Jersey incorporated company and under the AIM Rules for
Companies, the Company is not required to comply with the UK
Corporate Governance Code published by the Financial Reporting
Council in May 2010 (the "Code"). However, it is the Company's
policy to comply with best practice on good corporate governance
that is applicable to investment companies.
The Board has therefore considered the principles and
recommendations of the AIC's Code of Corporate Governance (the "AIC
Code") by reference to the AIC Corporate Governance Guide for
Investment Companies (the "AIC Guide"). The AIC Code can be found
on www.theaic.co.uk. The AIC Code, as explained by the AIC Guide,
addresses all the principles set out in Section 1 of the Code, as
well as setting out additional principles and recommendations on
issues specific to investment companies.
The Board considers that it is appropriate to report against the
principles and recommendations of the AIC Code and by reference to
the AIC Guide and that the Company has complied with the principles
and recommendations throughout the accounting period, except where
indicated below on pages 21-22 in respect of the chief executive,
executive directors' remuneration, a senior independent director,
Board Committees and an internal audit function. The following
statements describe how the relevant principles of governance are
applied to the Company.
THE BOARD
The Board consisted of five non-executive Directors and the
Chairman was John Shakeshaft. The Directors consider that the
Chairman is independent for the purposes of the AIC Code. The
Directors do not consider the appointment of a senior independent
director to be appropriate due to the size of the Board and the
Company.
Up to 31st March 2012, Donald Adamson was a director of the
Company when he resigned. On 12th April 2012, Ronald Green was
appointed as a non-executive Director.
The Company has no executive directors and no employees.
However, the Board has engaged external companies to undertake
investment advisory and administrative activities of the Company
together with the production of the Annual Report and Financial
Statements which are independently audited. Clearly documented
contractual arrangements are in place with these external companies
that define the areas where the Board has delegated responsibility
to them and their contracts are reviewed on an annual basis. Whilst
the Board delegates responsibility, it retains accountability for
the functions it delegates and is responsible for the systems of
internal control.
The Board meets at least four times a year and between these
formal meetings there is regular contact with the Adviser, Nomad
and Broker. The Directors are kept fully informed of investment and
financial controls, and other matters that are relevant to the
business of the Company and that should be brought to the attention
of the Directors.
The Board has a breadth of experience relevant to the Company
and they have access to independent professional advice at the
Company's expense where they deem it necessary to discharge their
responsibility as Directors. The Directors believe that any changes
to the Board's composition can be managed without undue disruption.
With any new appointment of a Director to the Board, consideration
is given as to whether a formal induction process is appropriate
and if any relevant training is required.
The Board considers agenda items laid out in the notice and
agenda which are formally circulated to the Board in advance of a
meeting as part of the Board papers and therefore Directors may
request any agenda items to be added that they consider appropriate
for Board discussion. Additionally, each Director is required to
inform the Board of any potential or actual conflicts of interest
prior to Board discussion.
All members of the Board are expected to attend each Board
meeting and to arrange their schedules accordingly, although
non-attendance may be unavoidable in certain circumstances. Members
of the Board are deemed to be in attendance when present at
meetings in jurisdictions where they may participate in the
discharge of the Company's business. All members of the Board may
observe meetings from other jurisdictions but neither participate
in the conduct of business, vote or be considered for quoracy.
During the year under review the Board met ---sixteen times. Of
those sixteen meetings, John Shakeshaft attended eleven, Donald
Adamson attended thirteen, Matt Christensen attended fourteen,
Ronald Green attended one, Sian Hansen attended ten and David
Pirouet attended fifteen.
The Board has been continuously engaged in a review of the
Company's strategy with the Adviser to ensure the deployment of
appropriate strategies under prevailing market, political and
economic conditions at any particular time, within the overall
investment restrictions of the Company.
To support the review of the strategy, the Board has focused at
Board Meetings on a review of individual investments and returns,
country exposure, the overall portfolio performance and associated
matters such as gearing and pipeline investment opportunities.
Additionally a strong focus of attention is given to
marketing/investor relations, risk management and compliance, peer
group information and industry issues.
The Board evaluates each Director's own performance on an annual
basis and believes that the mix of skills, experience, ages and
length of service are appropriate to the requirements of the
Company and in accordance with the AIC Code. Directors shall retire
and stand for re-election at intervals of no more than three years.
Each Director is appointed subject to the provisions of the
Articles of Association in relation to retirement.
BOARD RESPONSIBILITIES
The Board meets at least four times a year to consider, as
appropriate, such matters as:
-- The overall objectives for the Company;
-- Risk assessment and management, including reporting, monitoring, governance and control;
-- Any shifts in strategy that may be appropriate in light of changes in market conditions;
-- The appointment, and ongoing monitoring, through regular
reports and meetings of the Adviser, Administrator
and other service providers;
-- Review of the Company's investment performance;
-- Share price performance;
-- Statutory obligations and public disclosure;
-- The shareholder profile of the Company; and
-- Transactional and other general matters affecting the Company.
These matters are discussed by the Board to clearly demonstrate
the seriousness with which the Directors take their fiduciary
responsibilities and as an ongoing means of measuring and
monitoring the effectiveness of their actions.
COMMITTEES OF THE BOARD
The Board has not deemed it necessary to appoint a nomination or
remuneration committee as, being comprised wholly of non-executive
Directors, the whole Board considers these matters.
AUDIT COMMITTEE
The Board operates an Audit Committee which consists of Donald
Adamson (up to 31st March 2012), Matt Christensen, Ronald Green
(from 13th July 2012), Sian Hansen, David Pirouet and John
Shakeshaft. David Pirouet serves as the Chairman of the Committee.
The Audit Committee operates within defined terms of reference as
agreed by the Board which are available from the Secretary upon
request. Due to the Company's size, the Board considers it
appropriate that all of the Board may sit on the Audit Committee
but that the Committee is chaired by one of the independent
non-executive Directors other than the Company's Chairman. The
Audit Committee's function is to ensure the Company's financial
performance is properly reported on and monitored and the Audit
Committee reviews the following:
-- The Annual and Interim Financial Statements;
-- Internal control systems and procedures;
-- Accounting policies of the Company;
-- The Auditor's effectiveness and independence; and
-- The Auditor's remuneration and engagement, as well as any non-audit services provided by them.
When required the Audit Committee meetings are also attended by
the Administrator and the Company's Auditors. The Audit Committee
meets at least twice a year.
During the year under review the Committee met three times. Of
those three meetings, Matt Christensen, Sian Hansen, David Pirouet
and John Shakeshaft attended three and Donald Adamson attended
two.
INTERNAL CONTROLS
The Board is ultimately responsible for the Company's system of
internal control and for reviewing its effectiveness. The Board
confirms that there is an ongoing process for identifying,
evaluating and managing the significant risks faced by the Company.
This process has been in place for the year under review and up to
the date of approval of this Annual Report and Financial
Statements. In line with general market practice for investment
companies, the Directors do not conduct a formal annual review of
the internal controls. However, the Board does conduct an annual
review of the financial reporting procedures and corporate
governance controls and feels that the procedures employed by the
service providers adequately mitigate the risks to which the
Company is exposed.
The key procedures which have been established to provide
effective internal controls are as follows:
-- The Directors of the Company clearly define the duties and
responsibilities of their agents and advisers in the terms of their
contracts;
-- The Board reviews financial information produced by the
Administrator and the Adviser on a regular basis; and
-- The Company does not have an internal auditor. All of the
Company's management functions are delegated to independent third
parties and it is therefore considered that there is no need for
the Company to have an internal auditor.
The internal control systems are designed to meet the Company's
particular needs and the risks to which it is exposed. Accordingly,
the internal control systems are designed to manage rather than
eliminate the risk of failure to achieve business objectives and by
their nature can only provide reasonable and not absolute assurance
against misstatement and loss.
RELATIONSHIPS WITH SHAREHOLDERS
The Directors, Adviser, Nomad and Broker maintain a regular
dialogue with major shareholders, the feedback from which is
reported to the Board. In addition, Board members will be available
to respond to shareholders' questions at the Annual General
Meeting.
The Board monitors the trading activity and shareholder profile
on a regular basis.
Shareholder sentiment is also ascertained by the careful
monitoring of the premium/discount that the shares are traded in
the market when compared to those experienced by similar companies.
Major shareholders are contacted directly by the Adviser on a
regular basis.
The Company reports formally to shareholders twice a year and a
proxy voting card is sent to shareholders with the Annual Report
and Financial Statements. Additionally, current information is
provided to shareholders on an ongoing basis through the Company's
website. The Secretary monitors the voting of the shareholders and
proxy voting is taken into consideration when votes are cast at the
Annual General Meeting. Shareholders may contact the Directors via
the Secretary.
DIRECTORS
The Directors who held office during the year and subsequently
(except where stated) were:-
J. Shakeshaft (Chairman)
D. Adamson (resigned 31st March 2012)
M. Christensen
R. Green (appointed 12th April 2012)
S. Hansen
D. Pirouet
SECRETARY
The Secretary is State Street Secretaries (Jersey) Limited of 22
Grenville Street, St. Helier, Jersey, JE4 8PX.
INDEPENDENT AUDITORS
The Company's auditors, BDO Alto Limited, were succeeded by BDO
Limited on 1st January 2012 and BDO Limited have been the appointed
auditors to the Company from that date. BDO have expressed their
willingness to continue in office.
REGISTERED OFFICE
22 Grenville Street, St. Helier, Jersey, JE4 8PX
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE
FINANCIAL STATEMENTS
The Directors are responsible for preparing the Directors'
Report and the financial statements in accordance with applicable
law and regulations.
The Directors are required to prepare financial statements for
each financial year under the Companies (Jersey) Law 1991. As
permitted by that law, the Directors have elected to prepare the
financial statements in accordance with International Financial
Reporting Standards (IFRSs) as issued by the International
Accounting Standards Board. The financial statements are required
to give a true and fair view of the state of affairs of the Company
and the profit or loss of the Company for that period.
International Accounting Standard 1 requires that financial
statements present fairly for each financial year the company's
financial position, financial performance and cash flows. This
requires the faithful representation of the effects of
transactions, other events and conditions in accordance with the
definitions and recognition criteria for assets, liabilities,
income and expenses set out in the International Accounting
Standards Board's "Conceptual Framework for Financial Reporting".
In virtually all circumstances, a fair presentation will be
achieved by compliance with all applicable IFRSs.
However, directors are also required to:
* properly select and apply accounting policies;
* present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
* provide additional disclosures when compliance with the
specific requirements in IFRSs are insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity's financial position and financial
performance; and
* make an assessment of the company's ability to continue as a going concern.
The Directors are also responsible for keeping adequate
accounting records that are sufficient to show and explain its
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 (Jersey) Law
1991. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors confirm they have complied with the above
requirements throughout the year and subsequently.
BY ORDER OF THE BOARD
Authorised Signatory
State Street Secretaries (Jersey) Limited
Secretary
Date
BALANCE SHEET
AS AT 30TH JUNE 2012
Notes 2012 2011
ASSETS
Non-current assets
Financial assets at fair value through 7,
profit or loss 22 29,179,682 24,170,394
----------- -----------
Current assets
Derivatives at fair value through 7,
profit or loss 8 143,167 208,362
Loans receivable 10 804,357 745,388
Trade and other receivables 11 537,434 236,298
Cash and cash equivalents 9 15,217,724 33,801,516
16,702,682 34,991,564
TOTAL ASSETS GBP 45,882,364 GBP 59,161,958
=========== ===========
LIABILITIES
Non-current liabilities
Retention of performance 3,
fees 13 190,033 187,384
----------- -----------
Current liabilities
Trade and other payables 12 121,835 130,630
----------- -----------
TOTAL LIABILITIES 311,868 318,014
----------- -----------
NET ASSETS ATTRIBUTABLE TO
EQUITY SHAREHOLDERS 45,570,496 58,843,944
----------- -----------
TOTAL LIABILITIES AND NET ASSETS ATTRIBUTABLE
TO EQUITY SHAREHOLDERS GBP 45,882,364 GBP 59,161,958
=========== ===========
GBP GBP
Net asset value per ordinary share outstanding 0.81 1.05
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30TH JUNE 2012
Notes 2012 2011
INCOME:
Deposit interest income 224,387 205,354
Income on financial assets at
fair value through profit or
loss 817,721 1,249,095
Other income 108,956 149,449
Gain on financial assets and
derivatives at fair value through
profit or loss 7, 8 - 4,053,856
Movement on foreign exchange - 546,939
1,151,064 6,204,693
-------------- ---------------
EXPENSES:
Loss on financial assets and
derivatives at fair value through
profit or loss 7, 8 3,792,672 -
Legal fees 15,594 52,415
Professional fees 332,152 236,487
Adviser fees 18 1,047,557 1,106,616
Administration and accountancy
fees 161,259 100,990
Directors' fees and expenses 4 170,125 161,688
Provision for loans receivable 265,315 -
Provision for interest receivable 65,137 -
Withholding tax 48,132 55,627
Audit fees 31,045 19,080
Miscellaneous fees 12,682 12,196
Movement on foreign exchange 747,122 -
6,688,792 1,745,099
-------------- ---------------
TOTAL COMPREHENSIVE (LOSS)/ INCOME GBP (5,537,728) GBP 4,459,594
============== ===============
(Loss)/gain per ordinary share 6 GBP (0.10) GBP 0.08
STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO EQUITY SHAREHOLDERS
FOR THE YEAR ENDED 30TH JUNE 2012
Change in
net Total net
Ordinary
shares assets
and assets attributable attributable
warrants to equity to equity
Notes issued shareholders shareholders
------ ----------- ---- -------------------- ---- --------------
FOR THE YEAR ENDED 30TH JUNE
2012
Opening balance as at 1st
July 2011 57,566,436 1,277,508 58,843,944
Total comprehensive loss - (5,537,728) (5,537,728)
Dividends paid to equity
shareholders 5 - (7,735,720) (7,735,720)
Closing balance as at 30th
June 2012 14 GBP 57,566,436 GBP (11,995,940) GBP 45,570,496
=========== ==================== ==============
FOR THE YEAR ENDED 30TH JUNE
2011
Opening balance as at 1st
July 2010 47,729,427 (2,423,640) 45,305,787
Issue of ordinary shares 10,000,009 - 10,000,009
Total comprehensive income - 4,459,594 4,459,594
Placement fees (163,000) - (163,000)
Dividends paid to equity
shareholders 5 - (758,446) (758,446)
Closing balance as at 30th
June 2011 14 GBP 57,566,436 GBP 1,277,508 GBP 58,843,944
=========== ==================== ==============
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30TH JUNE 2012
Notes 2012 2011
Cash flows from operating activities 17 (1,628,769) (1,294,161)
------------- ------------
Cash flows from investing activities
Purchase of investments 7 (17,650,196) (6,694,632)
Sale of investments 7 8,913,431 13,772,337
Interest and dividends received 588,868 1,265,525
Loan finance provided 10 (876,672) (745,388)
Loan finance repaid 10 552,388 1,200,000
(8,472,181) 8,797,842
------------- ------------
Cash flows from financing activities
Dividends paid to equity shareholders 5 (7,735,720) (758,446)
Proceeds from issue of ordinary shares
during the year - 9,837,009
(7,735,720) 9,078,563
------------- ------------
Net (decrease)/ increase in cash
and cash equivalents (17,836,670) 16,582,244
Effects from changes in exchange
rates on cash and cash equivalents (747,122) 546,939
Cash and cash equivalents at beginning
of the year 33,801,516 16,672,333
Cash and cash equivalents at end
of the year 9 GBP 15,217,724 GBP 33,801,516
============= ============
1. REPORTING ENTITY
The Company was registered as a public company on 7th June 2007
with registered number 97690 under the Companies (Jersey) Law 1991.
The Company joined the Alternative Investment Market ("AIM") on 2nd
August 2007. The registered office of the Company is 22 Grenville
Street, St Helier, Jersey, JE4 8PX.
The Company will have a life of approximately eight years from
admission to AIM, expiring on 30th June 2015 (the "Proposed Wind-up
Date"). The Directors may, not less than three months prior to the
Proposed Wind-Up Date, propose a special resolution to extend the
life of the Company by four years. Further such resolutions may
then be proposed in the same manner not less than three months
prior to the expiry of each such four year period.
2. ACCOUNTING POLICIES
a) Basis of preparation
These financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") adopted by the
European Union and International Accounting Standards Board
("IASB"), and its predecessor body, as well as interpretations
issued by the International Financial Reporting Interpretation
Committee ("IFRIC") and its predecessor body. The more significant
policies are set out below:-
New Accounting Standards, amendments to existing Accounting
Standards and/or interpretations of existing Accounting Standards
(separately or together, "New Accounting Requirements") adopted
during the current year
The Directors have assessed the impact, or potential impact, of
all New Accounting Requirements. In the opinion of the Directors,
there are no mandatory New Accounting Requirements applicable in
the current year that had any material effect on the reported
performance, financial position, or disclosures of the Company.
Consequently, no mandatory New Accounting Requirements are listed.
The Company has not adopted any New Accounting Requirements that
are not mandatory.
Non-mandatory New Accounting Requirements not yet adopted
The following applicable New Accounting Requirements have been
issued. However, these New Accounting Requirements are not yet
mandatory and have not yet been adopted by the Company. All other
non-mandatory New Accounting Requirements are either not yet
permitted to be adopted, or would have no material effect on the
reported performance, financial position, or disclosures of the
Company and consequently have neither been adopted, nor listed.
IAS 1, "Presentation of Financial Statements" (amendments)
The main change resulting from these amendments that is relevant
to the Company is a requirement for entities to group items
presented in other comprehensive income ("OCI") on the basis of
whether they may potentially be reclassified to profit or loss
subsequently (reclassification adjustments). The amendments do not
address which items are presented in OCI.
The revised standard is effective for accounting periods
commencing on or after 1st July 2012, but early adoption is
permitted at any time prior to this date.
IFRS 9, "Financial Instruments" (Replacement of IAS 39,
"Financial Instruments: Recognition and Measurement")
IFRS 9 was issued in November 2009 and October 2010 and
addresses the classification, measurement and recognition of
financial assets and financial liabilities. It replaces the parts
of IAS 39 that relate to the classification and measurement of
financial instruments. IFRS 9 requires financial assets to be
classified into two measurement categories: (i) those measured at
fair value; and, (ii) those measured at amortised cost. The
determination is made at initial recognition. The classification
depends on the entity's business model for managing its financial
instruments and the contractual cash flow characteristics of the
instrument.
For financial liabilities, the standard retains most of the IAS
39 requirements. The main change is that, in cases where the fair
value option is taken for financial liabilities, the part of a fair
value change due to an entity's own credit risk is recorded in
other comprehensive income rather than the statement of
comprehensive income, unless this creates an accounting mismatch.
The standard also results in one impairment method replacing the
numerous impairment methods in IAS 39 that arise from the different
classification categories.
The standard is mandatory for accounting periods commencing on
or after 1st January 2015, but early adoption is permitted at any
time prior to this date.
IFRS 10, "Consolidated Financial Statements"
IFRS 10 is effective for annual periods beginning on or after
1st January 2013 and builds on existing principles by identifying
the concept of control as the determining factor in whether an
entity should be included within the consolidated financial
statements of the parent company. The standard provides additional
guidance to assist in the determination of control where this is
difficult to assess.
IFRS 12, "Disclosure of interest in other entities"
IFRS 12 is effective for annual periods beginning on or after
1st January 2013 and includes the disclosure requirements for all
forms of interest in other entities, including joint arrangements,
associates, special purpose vehicles and other off balance sheet
vehicles.
IFRS 13, "Fair Value Measurement"
IFRS 13 was issued in May 2011 and aims to improve consistency
and reduce complexity by providing a precise definition of fair
value and a single source of fair value measurement and disclosure
requirements for use across IFRSs. The requirements do not extend
the use of fair value accounting, but provide guidance on how it
should be applied where its use is already required or permitted by
other standards within IFRSs.
The standard is mandatory for accounting periods commencing on
or after 1st January 2013, but early adoption is permitted at any
time prior to this date. IFRS 13 also requires certain additional
disclosures for financial instruments categorised within Level 3 of
the fair value hierarchy.
The Directors have made an assessment of the potential impact of
early adoption of all of the standards listed above. In the
Directors' opinion, early adoption of any of these standards would
have no material effect on the reported performance, financial
position, or disclosures of the Company.
b) Basis of measurement
These financial statements have been prepared on a historical
cost basis as modified by the revaluation of financial assets and
liabilities held at fair value through profit or loss. The policies
have been consistently applied to both periods presented.
Financial instruments at fair value through profit or loss and
derivatives at fair value though profit and loss are measured at
fair value and changes therein are recognised in the statement of
comprehensive income. Information about significant areas of
estimation, uncertainty and critical judgements in applying
accounting policies that have the most significant effect on the
amounts recognised within the financial statements are included in
Note 2 Section o 'Determination of fair values'.
c) Functional and presentation currency
These financial statements are presented in sterling, which is
the Company's functional and presentation currency.
d) Use of estimates and judgements
The preparation of financial statements in accordance with IFRS
requires the Board to make judgements, estimates and assumptions
that affect the application of policies and the reported amounts of
assets and liabilities, income and expenses. These estimates and
associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the
judgements about carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ
from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future
periods.
e) Foreign currencies
Transactions in foreign currencies, other than sterling, are
translated at the foreign currency exchange rate ruling at the date
of the transaction. Monetary assets and liabilities denominated in
foreign currencies are translated to sterling at the foreign
currency closing exchange rate ruling at the balance sheet date.
Foreign currency exchange differences arising on translation and
realised gains and losses on disposals or settlements of monetary
assets and liabilities are recognised in the statement of
comprehensive income. Non-monetary assets and liabilities
denominated in foreign currencies that are measured at fair value
are translated to sterling at the foreign currency exchange rates
ruling at the dates that the values were determined. Foreign
currency differences arising on retranslation are recognised in the
statement of comprehensive income.
f) Financial instruments
Financial assets and financial liabilities are initially
recognised on the Company's balance sheet when the Company becomes
party to the contractual provisions of a given instrument.
Purchases and sales of financial instruments are recognised on
the trade date. Gains and losses are recognised from that date.
Financial assets cease to be recognised when the contractual
rights to cash flows from the assets expire or the Company
transfers the financial assets and substantially all of the risks
and rewards of ownership have been transferred. Financial
liabilities cease to be recognised when the liabilities are
extinguished.
Financial instruments comprise investments in equity and debt
securities, warrants, loans receivable, trade and other
receivables, cash and cash equivalents, trade and other payables
and performance fees retained.
Financial instruments are recognised initially at fair value.
Subsequent to initial recognition financial instruments are
measured as described below.
Financial assets at fair value through profit or loss
An instrument is classified at fair value through profit or loss
if it is held for trading or designated as such upon initial
recognition. The Company has designated its investment holdings as
at fair value through profit or loss as permitted by International
Accounting Standard 39 Financial Instruments: Recognition and
Measurement. These financial assets are designated on the basis
that they form part of a group of financial assets which are
managed and have their performance evaluated on a fair value basis.
Upon initial recognition attributable transaction costs are
recognised in the statement of comprehensive income when incurred.
Financial instruments at fair value through profit or loss are
measured at fair value, and changes therein are recognised in the
statement of comprehensive income.
Derivatives at fair value through profit or loss
The warrants held by the Company are classified as derivative
financial instruments held for trading. Therefore they are
recognised at fair value, with realised and unrealised gains and
losses being recognised in the statement of comprehensive income.
The derivatives are derecognised when the rights to receive cash
flows from it have expired or the Company has transferred
substantially all risks and rewards of ownership.
Loans and receivables
These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They
are initially recognised at fair value plus directly attributable
transaction costs and are subsequently carried at amortised cost
using the effective interest rate method, less provision for
impairment. Impairment provisions are recognised when there is
objective evidence that the Company will be unable to collect all
of the amounts due under the terms of the receivable. The Company's
loans and receivables comprise loans receivable, trade and other
receivables and cash and cash equivalents.
Financial liabilities
All liabilities are classified as other financial liabilities
and are measured at amortised cost using the effective interest
rate method.
Cash and cash equivalents
Cash comprises fixed deposits, cash balances and call deposits
with banks. Cash equivalents are short-term highly-liquid
investments that are readily convertible to known amounts of cash,
are subject to an insignificant risk of changes in value, and are
held for the purpose of meeting short-term cash commitments rather
than for investment or other purposes.
Ordinary shares
Financial instruments issued by the Company are treated as
equity only to the extent that they do not meet the definition of a
financial liability.
The Ordinary Shares of the Company are treated as equity as they
entitled the shareholder to a pro rata share of the Company's net
assets in the event of the Company's liquidation.
g) Provisions
A provision is recognised if, as a result of a past event, the
Company has a legal or constructive obligation that can be reliably
estimated, and it is probable that an outflow of economic benefits
will be required to settle the obligation. Provisions are
determined by discounting the expected future cash flows at a
pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to that liability.
h) Revenue and expenses
Revenue is recognised to the extent that it is possible that
economic benefits will flow to the Company and the revenue can be
reliably measured. Expenses are accounted for on an accruals
basis.
i) Finance income and expenses
Finance income comprises interest income on funds invested
(including debt securities at fair value through profit or loss),
interest income and loan interest income. Interest income and loan
interest income are recognised as they accrue in the statement of
comprehensive income, using the effective interest rate method.
Dividend income is recognised in the statement of comprehensive
income on the date the Company's right to receive payments is
established which is usually the ex-dividend date.
Finance expenses comprise interest expense on borrowings and
unwinding of discounts on provisions.
Foreign currency gains and losses are reported in the statement
of comprehensive income on a net basis.
j) Earnings per share ("EPS") and net asset value ("NAV") per
share
The Company presents basic EPS and NAV data for its ordinary
shares. Basic EPS is calculated by dividing the comprehensive
income attributable to equity shareholders from operations by the
weighted average number of ordinary shares in issue during the
year. (For further details see note 6). NAV per equity share is
calculated by dividing net assets attributable to equity
shareholders by the number of equity shares outstanding at the year
end.
k) Transaction costs
Expenses incurred by the Company that are directly attributable
to the offering of new shares have been taken to statement of
changes in net assets attributable to equity shareholders.
l) Taxation
Profits arising in the Company are subject to Jersey Income Tax,
currently at the rate of 0%.
The Company is registered under the Reporting Fund regime
Regulation 51 of The Offshore Fund (Tax) Regulations 2009 in the
United Kingdom effective 1st July 2009.
m) Dividends payable
Dividends payable to ordinary shareholders are accounted for
when a legal obligation arises.
Dividends payable, if any, on ordinary shares are recognised in
the statement of changes in net assets attributable to equity
shareholders.
n) Offsetting
Financial assets and liabilities are offset and the net amount
is reported within assets and liabilities where there is a legally
enforceable right to set off the recognised amounts and there is an
intention to settle on a net basis, or realise the asset and settle
the liability simultaneously.
o) Determination of fair values
A number of the Company's accounting policies and disclosures
require the determination of fair values for the financial assets
and liabilities. Fair value is the amount for which an asset or
liability could be exchanged or settled between knowledgeable,
willing parties in an arms length transaction. Fair values have
been determined for disclosure purposes based on the following
methods. When applicable, further information about the assumptions
made in determining fair values is disclosed in the notes specific
to that asset or liability.
Financial assets for which quoted closing prices are available
from a third party in a liquid market are valued on the basis of
quoted bid prices. Where there are no available quoted prices the
fair values will be determined in accordance with International
Private Equity and Venture Capital Valuation Guidelines ("IPEVCV"
Guidelines) as amended from time to time.
As at the balance sheet date, the fair values of quoted equities
are based on quoted bid prices at the year end. Unquoted equities
and unquoted securities are valued using a variety of methods as
follows:
- Rapid Action Packaging Limited Ordinary Shares have been
valued based on a multiple of sales in line with market multiples.
This metric has been discounted to reflect the company's non-listed
status. The unsecured convertible loan stock is valued at cost.
- Hydrodec Group plc Convertible Bonds are valued using the
Black Scholes option valuation method, which is carried out by an
independent broker.
- STX Services B.V. shares have been valued based on a multiple
of profit after tax for the year.
- New Earth Recycling and Renewables (Infrastructure) Plc is
valued at the most recent published monthly valuation published by
the fund administrator.
- Terra Nova SAS shares are valued on a discounted cash flow
basis. The unsecured loan stock is valued at cost.
- ECO Plastics Limited shares are valued based on a multiple of
sales in line with market multiples less net debt. This metric has
been discounted to reflect the company's non-listed status.
- Lumicity Limited shares and loan valuation is based on its
estimated net realisable value.
- Tamar Energy Limited shares are valued at cost, given the
short period of time between acquisition and the year end.
- Ignis Biomas Limited shares and unsecured loan stock are
valued at cost, given the short period of time between acquisition
and the year end.
- Micropelt GmbH unsecured loan stock is valued at cost , given
the short period of time between acquisition and the year end.
Investments are made in companies that may be subject to a high
degree of operating and financial risk. The values assigned to
investments are based upon available information and do not
necessarily represent amounts that might ultimately be realised.
Because of the inherent uncertainty of valuations, estimated
carrying values may differ significantly from the values that would
have been realised had a ready market for the investments existed,
and these differences could be material.
The fair value of financial liabilities is calculated based on
the present value of future principal and interest cash flows,
discounted at the market rate of interest at the balance sheet
date.
The fair value of derivatives at fair value through profit or
loss is derived using the Black Scholes Option Pricing Model.
p) Non-consolidation
The Directors do not believe that the Company has the power to
exercise control over the investments, except for Ignis Biomas
Limited, as set out in the provisions of paragraph 12 of
International Accounting Standard 27 (Consolidated Financial
Statements and Accounting for Investments in Subsidiaries), or
under the Standard Interpretations Committee pronouncement Number
12 (SIC 12 - Consolidation: Special Purpose Entities). The
Directors have arrived at this opinion because the Company in any
of its investments with the exception of Ignis Biomass Limited and
its wholly owned subsidiary Ignis Wick Limited:
- does not hold a controlling stake;
- does not have the power to govern the financial and operating
policies;
- does not have the power to remove the majority of the members
of the Board of Directors; and
- does not have the power to cast the majority of votes at
meetings of the Board of Directors.
Ignis Biomas Limited and Ignis Wick Limited were not
consolidated in these financial statements as the Directors
considered that these subsidiary companies are immaterial to the
Group as a whole. Therefore in the opinion of the Directors, the
Company has no material subsidiaries and consequently there is no
requirement to present consolidated financial statements.
q) Associates
Associates are all entities over which the Company has
significant influence but not control, generally accompanying a
shareholding of between 20% and 50% of the voting rights.
As the Company operates as a venture capital organisation it
uses the scope exemption of IAS 28 'Investment in Associates' and
designates upon initial recognition some investments that would
otherwise be equity accounted as investments at fair value through
profit or loss with subsequent changes in fair value recognised in
the statement of comprehensive income in the period of the
change.
r) Segmental reporting
An operating segment is a component of the Company that engages
in business activities from which it may earn revenues and incur
expenses. The Directors perform regular reviews of the operating
results of the Company and make decisions using financial
information at the entity level only. Accordingly, the Directors
believe that the Company has only one reportable operating
segment.
The Directors are responsible for ensuring that the Company
carries out business activities in line with the transaction
documents. They may delegate some or all of the day to day
management of the business, including the decisions to purchase and
sell securities, to other parties both internal and external to the
Company. The decisions of such parties are reviewed on a regular
basis to ensure compliance with the policies and legal
responsibilities of the Directors. Therefore, the Directors retain
full responsibility as to the major allocation decisions of the
Company.
3. PERFORMANCE FEES RETAINED AND PAYABLE
2012 2011
Performance fees GBP nil GBP nil
payable
===== =====
Performance fees are payable to the Adviser with reference to
the increase in adjusted net asset value per share over the course
of each performance period. The Adviser becomes entitled to receive
a performance fee if the following conditions are met:
a) The adjusted net asset value per share at the end of the
performance period exceeds the Performance Hurdle. The Performance
Hurdle is an amount equal to the placing price increased at a rate
of 8% per annum on a compounded basis up to the end of the relevant
performance period; and
b) The adjusted net asset value per share at the end of the
performance period exceeds the High Watermark. The High Watermark
is the highest previously recorded adjusted net asset value per
share at the end of a performance period for which a performance
fee was last earned.
If the above conditions are met the Adviser is entitled to
receive a fee equal to 20% of the amount by which the adjusted net
asset value exceeds the higher of (i) the performance hurdle and
(ii) the relevant High Watermark multiplied by the time-weighted
average number of shares in issue since the end of the last
performance period for which a performance fee was earned.
The conditions for payment of performance fees were not met for
the performance years ended 30th June 2012 and 30th June 2011.
20% of performance fees earned by the Adviser shall be retained
and deposited in a Reserve Account (see note 9). The Reserve Amount
shall only be released on the final calculation date when the
Administrator will calculate the Reserve Release Amount in
accordance with Schedule 1 of the Advisory Agreement.
4. DIRECTORS' REMUNERATION AND INTERESTS
2012 2011
Directors' fees 159,236 154,094
Directors' expenses 10,889 7,594
GBP 170,125 GBP 161,688
======== ========
The details of the Directors' remuneration is as follows:
2012 2011
J. Shakeshaft (Chairman) 60,000 58,297
D. Adamson 18,750 22,871
M. Christensen 25,000 24,319
R. Green 5,486 -
S. Hansen 25,000 24,319
D. Maccabe - 1,417
D. Pirouet 25,000 22,871
GBP 159,236 GBP 154,094
======== ========
As at the balance sheet date, the following Ordinary Shares and
Warrants of the Company were held by the Directors, the Directors
of the Adviser, the Investment Adviser and the Principals of the
Investment Adviser.
Ordinary Manager
Shares Warrants Warrants
30TH JUNE 2012
Directors
J. Shakeshaft 115,445 12,500 -
M. Christensen 10,000 2,500 -
Investment Adviser and related
principals
Ludgate Investments
Limited 664,000 166,000 775,250
T. Cooke 50,000 12,500 25,000
J.N.B. Curtis 15,000 - -
N. Pople 50,000 12,500 95,000
C. Sebag-Montefiore - - 70,000
B. Weil - - 40,000
30TH JUNE 2011
Directors
J. Shakeshaft 115,445 12,500 -
D. Adamson 50,000 12,500 25,000
M. Christensen 10,000 2,500 -
Investment Adviser and related
principals
Ludgate Investments
Limited 664,000 166,000 775,250
T. Cooke 50,000 12,500 25,000
J.N.B. Curtis 15,000 - -
N. Pople 50,000 12,500 95,000
C. Sebag-Montefiore - - 70,000
B. Weil - - 40,000
Principals of Ludgate Investments Limited include Directors and
senior management.
5. DIVIDENDS
2012 2011
Interim dividend 984,546 758,446
Special dividend 6,751,174 -
GBP 7,735,720 GBP 758,446
========== ========
The Company paid an interim dividend of 1.75 pence per share at
a total cost of GBP984,546 (2011: an interim dividend of 1.65 pence
per share) on 12th August 2011 and on 27th October 2011 paid a
special dividend of 12 pence per share at a cost of GBP6,751,174
(2011: GBPnil).
Subsequent to the balance sheet date, the Directors recommended
an interim dividend of 1.9 pence per share at a cost of
GBP1,068,936 (2011: 1.75 pence per share) on shares in issue as at
27th July 2012, paid on 10th August 2012.
6. EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share is
based on the following information:
2012 2011
Total comprehensive (loss)/ income GBP (5,537,728) GBP 4,459,594
============ =============
Number Number
Weighted average number of equity shares
for the purposes of basic earnings per
share 56,259,784 55,244,548
Basic and diluted (loss)/ income per
equity share GBP (0.10) GBP 0.08
Outstanding Warrants are not dilutive for both periods presented
as the exercise price of the Warrants exceeded the average market
price of Ordinary Shares issued.
7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
As noted above the Company has designated its investment
holdings in cleantech companies at fair value through profit or
loss. Financial assets are initially recognised on the Company's
balance sheet at fair value when the Company becomes party to the
contractual provisions of a given instrument and changes thereafter
are recognised in the statement of comprehensive income.
Investments: 2012 2011
Opening cost of investments 28,460,639 31,619,268
Cost of Loan Notes converted into Preference/Ordinary
Shares - (4,500,000)
Purchases/(disposals) during
the year:
New investments acquired 17,650,196 6,694,632
Conversions - 4,500,000
Investments sold (7,901,313) (9,853,261)
Closing cost of investments GBP 38,209,522 GBP 28,460,639
============ ============
2012 2011
Opening fair value
of investments 24,170,394 26,719,866
Cost of Loan Notes converted into Preference/Ordinary
Shares - (4,500,000)
Purchases/(disposals) during
the year:
New investments acquired 17,650,196 6,694,632
Conversions - 4,500,000
Proceeds on disposal (8,913,431) (13,772,337)
Fair value movement (3,727,477) 4,528,233
Closing fair value of investments GBP 29,179,682 GBP 24,170,394
============ =============
Further details of the investments held can be found in note 22
to these financial statements.
IFRS 7 requires the Company to classify fair value measurements
using a three level fair value hierarchy that reflects the
significance of the inputs used in making the measurements. The
fair value hierarchy has the following levels:
Level 1 - Quoted prices (unadjusted) in active markets for
identical assets or liabilities.
Level 2 - Inputs other than quoted prices included within Level
1 that are observable for the asset or liability, either directly
or indirectly.
Level 3 - Inputs for the asset or liability that are not based
on observable market data.
The level in the fair value hierarchy within which the fair
value measurement is categorised in its entirety is determined on
the basis of the lowest level input that is significant to the fair
value measurement in its entirety. For this purpose, the
significance of an input is assessed against the fair value
measurement in its entirety. If a fair value measurement uses
observable inputs that require significant adjustment based on
unobservable inputs, that measurement is a Level 3 measurement.
Assessing the significance of a particular input to the fair value
measurement in its entirety requires judgement, considering factors
specific to the asset or liability.
The determination of what constitutes 'observable' requires
significant judgement by the Company. The Company considers
observable data to comprise market data that is readily available,
regularly distributed or updated, reliable and verifiable, not
proprietary, and provided by independent sources that are actively
involved in the relevant market.
The following table analyses within the fair value hierarchy the
Company's financial assets measured at fair value at 2012 and
2011.
2012 Level Level Level 3 Total
1 2
GBP GBP GBP GBP
Financial assets
at fair value through
profit or loss 2,295,944 3,034,200 23,849,538 29,179,682
========== ========== =========== ===========
Derivatives at fair
value through profit
or loss - - 143,167 143,167
========== ========== =========== ===========
2011
Financial assets
at fair value through
profit or loss 2,525,070 3,123,420 18,521,904 24,170,394
========== ========== =========== ===========
Derivatives at fair
value through profit
or loss - - 208,362 208,362
========== ========== =========== ===========
Financial assets whose values are based on quoted market prices
in active markets, and therefore classified within Level 1, include
mainly actively listed equities. The Company does not adjust the
quoted market price for these.
Financial assets that trade in markets that are not considered
to be active but are valued based on quoted market prices, dealer
quotations or alternative pricing sources supported by observable
inputs are classified within Level 2. Level 2 includes mainly
convertible bonds. As Level 2 bonds are not traded in an active
market, valuations are based on an option valuation method which
was carried out by an independent broker.
Financial assets classified within Level 3 have significant
unobservable inputs, as they trade infrequently. Level 3 includes
equities and convertible loan notes. As the observable prices are
not available for these equities and convertible loan notes, the
Company has used valuation methods as described in note 2 (o).
The movement in Level 3 financial assets for the year ended 30th
June 2012 and 30th June 2011 by class of financial assets were as
follows:
Unquoted Unquoted
2012 Derivatives equities securities Total
Opening balance 208,362 16,226,571 2,295,333 18,730,266
Total (losses) (realised/unrealised)
included in the statement
of comprehensive
income (65,195) (4,359,238) (62,292) (4,486,725)
Purchases, sales,
issuances, and settlements
(net) - 6,079,687 3,669,477 9,749,164
Closing balance GBP 143,167 GBP 17,947,020 GBP 5,902,518 GBP 23,992,705
============ ============ ============ ============
2011
Opening balance 681,608 16,087,725 4,500,000 21,269,333
Total (losses)/gains
(realised/unrealised)
included in the statement
of comprehensive
income (473,246) 5,059,077 - 4,585,831
Purchases, sales,
issuances, and settlements
(net) - (4,920,231) (2,204,667) (7,124,898)
Closing balance GBP 208,362 GBP 16,226,571 GBP 2,295,333 GBP 18,730,266
========== ============ ============ ============
For unquoted equities, if the multiple used or the recent market
transaction price used in the valuation had increased by 5%, this
would have resulted in an increase in value of GBP914,294 (2011:
GBP811,329). A decrease of 5% would have resulted in a decrease in
value of GBP914,294 (2011: GBP811,329).
Evidence or confirmation of title of financial assets at fair
value through profit or loss are held by the following parties:
2012 2011
Walker Crips Stockbrokers
Limited 2,011,812 1,953,427
State Street (Jersey)
Limited 26,883,738 21,680,324
Computer Share (Australia) 284,132 536,643
GBP 29,179,682 GBP 24,170,394
=========== ===========
8. DERIVATIVES AT FAIR VALUE THROUGH PROFIT OR LOSS
2012 2011
Rapid Action Packaging Limited - 2,250
warrants (2011: 2,250) GBP 143,167 GBP 208,362
======== ========
As noted above, the warrants have been valued using the Black
Scholes Option Pricing Model.
9. CASH AND CASH EQUIVALENTS
2012 2011
Royal Bank of Scotland International -
current account GBP 263,893 215,805
Royal Bank of Scotland International -
current account EUR 17,928 167,749
Royal Bank of Scotland International -
current account AUD 1 1
Royal Bank of Scotland International -
reserve account - 186,977
Walker Crips Stockbrokers Limited 21,554 2,980
Barclays - reserve account 189,668 -
Cash held on fixed term deposit:
Fixed term deposits held with Barclays
(GBP) 3,136,767 6,379,203
Fixed term deposits held with Barclays
(EUR) - 1,783,951
Fixed term deposits held with ABN AMRO
(GBP) - 7,502,928
Fixed term deposits held with ABN AMRO
(EUR) - 4,515,488
Fixed term deposits held with HSBC (GBP) 5,087,913 -
Fixed term deposits held with Lloyds (GBP) 4,000,000 6,030,118
Fixed term deposits held with Lloyds (EUR) - 4,515,488
Fixed term deposits held with Royal Bank
of Scotland International (GBP) 2,500,000 2,500,828
GBP 15,217,724 GBP 33,801,516
=========== ===========
The Company has permission to borrow sums equivalent to 25% of
the net asset value in accordance with its Articles of Association.
At the balance sheet date, no such facility had been entered into
(2011: GBPnil). The Board of the Company have taken care to
minimise the credit risk associated with cash and cash equivalents.
The cash held in fixed term deposits has been diversified across a
number of reputable financial institutions.
The cash held on the Reserve Account represents 20% of the
performance fees earned by the Adviser to date. The balance on this
account can only be released on the final calculation date when the
Administrator will calculate the Reserve Release Amount in
accordance with Schedule 1 of the Advisory Agreement.
Cash and cash equivalents are held by the following banks and
brokers:
Bank/Broker 2012 2011
Walker Crips Stockbrokers Limited 21,554 2,980
Royal Bank of Scotland International 2,781,822 3,071,360
Barclays 3,326,435 8,163,154
Lloyds 4,000,000 10,545,606
ABN AMRO - 12,018,416
HSBC 5,087,913 -
GBP 15,217,724 GBP 33,801,516
=========== ===========
10. LOANS RECEIVABLE
2012 2011
Rapid Action Packaging Limited - 254,388
Lumicity Ltd 484,685 298,000
Ignis Wick Limited 319,672 193,000
GBP 804,357 GBP 745,388
======== ========
On 28th September 2010, the Company entered into an Investment
Agreement with Lumicity Limited whereby the Company advanced an
unsecured and interest free loan of GBP298,000 which was converted
into 149,000 A Preference Shares on 18th August 2011.
On 18th August 2011, the Company purchased additional 125,000
Lumicity A Preference Shares and GBP750,000 unsecured Series B Loan
Notes which bear interest of 10% (maximum of GBP3 million). In the
accounts to 30th June 2012, a fair value provision of GBP265,315
has been made against this loan, which accordingly has a fair value
of GBP484,685.
The Company entered into a Loan Agreement with Ignis Wick
Limited to fund the development costs of the Wick project up to
GBP779,000. The loan is unsecured and bears interest at 8% p.a. As
at 30th June 2012, GBP319,672 (2011: GBP193,000) has been
drawn.
The Company originally entered into a Loan Facility Agreement in
2009 with Rapid Action Packaging Limited ("RAP"). This Loan
Facility was repaid in full on 13th June 2011 and the proceeds were
used to acquire additional shares and convertible unsecured loan
note in RAP. On the same date, the Company provided a GBP254,388
unsecured and interest free loan note to RAP. On 19th July 2011,
the Company converted the loan note into 180 ordinary shares of
GBP417.03 each and the remaining GBP179,323 to convertible loan
notes.
11. TRADE AND OTHER RECEIVABLES
2012 2011
Fixed deposit interest receivable 39,668 60,550
Investment income receivable 394,350 165,497
Prepayments and other receivables 103,416 10,251
GBP 537,434 GBP 236,298
======== ========
12. TRADE AND OTHER PAYABLES
2012 2011
Directors' fees and expenses payable 18,056 35,371
Professional fees payable 51,039 22,414
Audit fees payable 16,500 14,800
Administration and accounts payable 25,000 20,000
Other creditors 11,240 38,045
GBP 121,835 GBP 130,630
======== ========
All expenses are payable on presentation of an invoice.
13. PERFORMANCE FEE RETENTION
2012 2011
Retention of performance fees GBP 190,033 GBP 187,384
======== ========
For further details please refer to note 3. The above figures
include accrued interest as at 30th June.
14. STATED CAPITAL ACCOUNT
2012 2011
AUTHORISED:
Ordinary Shares of no par value each Unlimited Unlimited
The authorised stated capital of the Company comprises an
unlimited number of voting, Ordinary Shares which are neither
redeemable nor convertible and which have no par value.
No. of No. of
No. of investor manager
ordinary shares warrants warrants
Opening balance
at 1st July 2011 56,259,784 6,683,775 1,285,250
Closing balance at 30th
June 2012 56,259,784 6,683,775 1,285,250
================ ========== ==========
Opening balance
at 1st July 2010 45,966,419 6,683,775 1,285,250
Issued during the
year 10,293,365 - -
Closing balance at
30th June 2011 56,259,784 6,683,775 1,285,250
================ ========== ==========
Two Ordinary Shares of GBP1.00 each were issued on
incorporation. The initial public offering ("IPO") of Ordinary
Shares on 2nd August 2007 was priced at GBP1.00 per share.
Subscribers for the Ordinary Shares received one investor warrant
for every four Ordinary Shares subscribed. Each investor warrant
entitles the holder to subscribe for additional Ordinary Shares in
the Company at a subscription price of GBP1.50 until the final
subscription date of 31st October 2012.
A second placing of shares occurred on 22nd February 2008.
2,673,509 Ordinary Shares of no par value were issued at a price of
GBP1.12 per share. On 10th November 2008 a further issue of
16,557,807 Ordinary Shares were placed at a price of GBP1.09 per
share. On 5th August 2010 a further issue of 10,293,365 Ordinary
Shares were placed at a price of GBP0.97 per share. No warrants
were attached to these shares issued subsequent to the IPO. The
Ordinary Shares and investor warrants are listed and traded on AIM.
The manager warrants are not listed.
The Ordinary Shares carry the right to vote at general meetings,
dividends and the surplus assets of the Company on winding-up. All
holders of the Ordinary Shares have the same voting rights.
2012 2011
Stated Stated
Capital Capital
Opening balance 57,566,436 47,729,427
Issued during the year - 10,000,009
Placement fees - (163,000)
Closing balance GBP 57,566,436 GBP 57,566,436
=========== ===========
WARRANTS: 2012 2011
Investor Warrants:
Issue of warrants at IPO (1:4
exercisable for ordinary shares) Number 6,683,775 6,683,775
Exercise price GBP1.50 GBP1.50
Manager Warrants:
Issue of Manager Warrants
at IPO Number 1,285,250 1,285,250
Exercise price GBP1.75 GBP1.75 GBP1.75
The Investor Warrants entitle the holder to subscribe for one
ordinary share in the Company at a price of GBP1.50 up to the Final
Subscription Date of 31st October 2012. Investors who subscribed
for Shares pursuant to the placing received one Investor Warrant
for every four shares acquired.
The Manager Warrants were issued in registered form and entitle
the holder to subscribe for one share at a price of GBP1.75 until
the Final Subscription Date of 31st October 2012.
Warrants may only be exercised during the 28 days following the
date of publication of the Company's annual Audited Financial
Statements for any of the financial periods/years ended 30th June
2008 to 2011 inclusive and/or during the 28 days prior to the Final
Subscription Date of 31st October 2012.
15. SEGMENT INFORMATION
Geographical information
The Company's country of domicile is Jersey, Channel Islands.
All of the Company's revenues are generated from outside the
Company's country of domicile. Detailed geographical information is
disclosed in note 16 under "concentration risk".
Non-current assets
The Company has no non-current assets other than financial
instruments.
Sources of income
The Company's sources of net income were interest and dividends
from financial assets and deposits. The majority of the income
during the year was derived from investments in Hydrodec Group plc,
Rapid Action Packaging Limited, STX Services B.V. and fixed term
deposits.
16. FINANCIAL RISK MANAGEMENT
The Board of Directors is responsible for the establishment and
oversight of the Company's risk management framework. Policies are
established to identify and analyse the risks faced by the Company,
to set appropriate risk limits and controls and to monitor risks
and adherence to limits. These are reviewed regularly to reflect
changes in market conditions and the Company's activities.
The Company maintains positions in a variety of financial
instruments dictated by its investment management strategy. The
Company's investment portfolio comprises quoted and unquoted equity
investments, unquoted debt securities and cash which the Company
intends to hold for an indefinite period (subject to the life of
the Company). Asset allocation is determined by the Board who
manages the distribution of the assets to achieve the investment
objectives.
The Directors are aware that substantially all of the current
business of the Adviser is accounted for in the services provided
to the Company under the Advisory Agreement. In reviewing the
performance of the Adviser, the Directors have paid particular
attention to the risks to the Company of the reputation, financial
standing, compliance and operation of each. They are satisfied that
there are sufficient controls in place to ensure that officers of
the Adviser cannot exercise undue influence over financial
reporting and that it is a going concern.
The nature and extent of the financial instruments outstanding
at the balance sheet date and the risk management policies employed
by the Company are discussed below.
Market Risk
Market risk is the risk that changes in market prices, such as
foreign exchange rates, interest rates and equity prices, will
affect the Company's income and or the value of its holdings in
financial instruments. The Adviser is responsible for monitoring,
measuring and reporting market risk.
The Company's exposure to market risk comes mainly from
movements in the value of its investments.
The Company's strategy on the management of investment risk is
driven by the Company's investment objective. The Company's
investment objective is to deliver to investors a significant level
of capital growth in the medium to long term by building a diverse
portfolio of investments in cleantech companies. The Company's
market risk is managed by the Adviser in accordance with the
policies and procedures in place.
The Company seeks to achieve its investment objective and
minimise investment risk through the identification of appropriate
technologies and companies within the cleantech sector using a
rigorous review and selection process; by adding value to companies
in the portfolio through active support at all stages of their
growth and by focusing on maximising returns for shareholders by
assisting companies in achieving an appropriate and timely
exit.
Potential investments are screened to ensure that investments
comply with the investment criteria, as described in the Admission
Document and described in the Investment Policy. A full review and
due diligence are undertaken before a potential investment can be
submitted for approval by the Screening Committee, Investment
Committee and the Adviser.
Monitoring of the portfolio is carried out on a quarterly basis
by the Adviser who reviews the investments against technology
developments, commercial progress, financial and trading results
including management accounts, management assessment, market
intelligence and anticipated planning and exit. Investment risk is
also reviewed at the time of any investment proposal, the
publication of the net asset values and any capital raising.
The Company's overall market positions are reviewed quarterly by
the Board of Directors. Details of the Company's investment
portfolio composition as at the balance sheet date are disclosed in
note 22 to these financial statements.
Interest Rate Risk
To the extent the Company incurs indebtedness, changes in
interest rates can affect the Company's net interest income, which
is the difference between the interest income earned on
interest-bearing assets and the interest expense incurred on
interest-bearing liabilities. Changes in the level of interest
rates can also affect, among other things, the Company's ability to
acquire loans and investments, the value of its investments and the
Company's ability to realise gains from the settlement of such
assets. Interest rate risk is mitigated by a policy of holding
diversified instruments with varied counterparties.
The majority of the Company's financial assets are fixed rate or
non-interest bearing and all of the Company's financial liabilities
are non-interest bearing. Therefore, the Directors believe that the
Company's exposure to interest rate risk is minimal. Any excess
cash and cash equivalents are invested in fixed term deposits with
maturities of 12 months or less. Investments in debt securities are
in fixed rate instruments and therefore the Company has limited
exposure to prevailing interest rates. Any adverse movement in
interest rates would negatively affect the return on cash deposits
over time. The amount of cash held on fixed term deposits is
expected to reduce over the forthcoming years in accordance with
the Company's stated investment objectives.
The Company's overall interest rate risk is reviewed by the
Board on at least a quarterly basis.
Interest Rate Profile: 2012
Effective
Interest charging interest
basis rate Amount
Financial assets:
Cash and cash equivalents Fixed 1.47% 15,217,724
Financial assets at fair value
though profit or loss:
Unquoted securities Fixed 8.00% 3,034,200
Unquoted securities Fixed 12.00% 4,653,164
Unquoted securities Fixed 6% 1,249,354
Non-interest
Quoted equities bearing n/a 2,295,944
Non-interest
Unquoted equities bearing n/a 17,947,020
Derivatives at fair value Non-interest
through profit or loss bearing n/a 143,167
Loan receivable Fixed 8.00% 319,672
Loan receivable Fixed 10.00% 484,685
Non-interest
Trade and other receivables bearing n/a 537,434
GBP 45,882,364
===========
Financial liabilities:
Non-interest
Trade and other payables bearing n/a 121,835
Retention of performance
fees Floating 0.19% 190,033
GBP 311,868
===========
2011
Effective
Interest charging interest
basis rate Amount
Financial assets:
Cash and cash equivalents Fixed 0.61% 33,801,516
Financial assets at fair value
though profit or loss:
Unquoted securities Fixed 8.00% 3,123,420
Unquoted securities Fixed 12.00% 2,295,333
Non-interest
Quoted equities bearing n/a 2,525,070
Non-interest
Unquoted equities bearing n/a 16,075,423
Unquoted equities Fixed 8.16% 151,148
Derivatives at fair value Non-interest
through profit or loss bearing n/a 208,362
Loan receivable Fixed 8.00% 193,000
Non-interest
Loan receivable bearing n/a 552,388
Non-interest
Trade and other receivables bearing n/a 236,298
GBP 59,161,958
===========
Financial liabilities:
Non-interest
Trade and other payables bearing n/a 130,630
Retention of performance
fees Floating 0.66% 187,384
GBP 318,014
===========
Interest rate sensitivity
IFRS 7 Financial Instruments: Disclosures ("IFRS 7") requires a
sensitivity analysis for each type of risk to which the entity is
exposed at the balance sheet date, showing how the profit or loss
and equity would have been affected by changes in the relevant risk
variable that are reasonably possible.
As disclosed above, the majority of the Company's financial
assets and financial liabilities are non-interest bearing or fixed
rate. During the year, the Company's interest income from fixed
deposits was GBP224,387 (2011: GBP205,354) of which GBP39,668
(2011: GBP60,550) is outstanding at the end of the year. Had
interest rates been 50 basis points higher throughout the year the
Company would have decreased its loss by GBP76,089 (2011: increase
profit of 169,008), with a corresponding increase had interest
rates been 50 basis points lower (2011: decrease in profit of
GBP169,008).
Currency Risk
The Company may invest in financial instruments and enter into
transactions that are denominated in currencies other than its
functional currency, sterling. 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 value of that portion of the Company's assets
and liabilities denominated in currencies other than sterling.
The Company's policy is to accept a limited amount of currency
risk within the portfolio. It does not hedge either the fair value
of its foreign currency investments nor the cashflows, if any,
arising from such investments. Any gain or loss, recognised as a
result of the Company's investment and valuation policies is
recognised in the statement of comprehensive income. When the
Company has entered into a definitive contract to purchase or sell
securities denominated in foreign currency it purchases forward
contracts; any ineffectiveness in this hedging would also be
recognised in the statement of comprehensive income. The Company's
overall currency risk and exposure is monitored on a quarterly
basis by the Board of Directors. The Directors intend to keep this
policy under quarterly review as the portfolio becomes more fully
invested. The Directors further consider that investment in
currencies is a separate asset class and not as such part of the
normal trading business of the Company.
As at the balance sheet date the Company had the following
currency risk exposure:
2012 2011
Financial assets at fair value through
profit or loss
Unquoted equities and securities denominated
in EUR 6,654,932 5,531,554
Quoted equities denominated in AUD 302,439 571,220
GBP 6,957,371 GBP 6,102,774
========== ==========
2012 2011
Cash and cash equivalents
Cash and cash equivalents denominated
in EUR 17,928 10,982,676
Cash and cash equivalents denominated
in AUD 1 1
GBP 17,929 GBP 10,982,677
======== ===========
Trade and other receivables:
Trade receivables denominated in EUR GBP 113,807 GBP -
======== ===========
Trade and other payables:
Trade payables denominated in EUR 3,259 521
Trade payables denominated in USD - 37,411
GBP 3,259 GBP 37,932
======== ===========
Currency sensitivity
As at 30th June 2012 if GBP had strengthened against the EUR by
5%, with all other variables held constant, the loss for the year
as per the statement of comprehensive income would have increased
and the net assets of the Company would have decreased by
GBP323,033 (2011: decrease in income and decrease in net assets of
GBP786,367). A 5% weakening of GBP against the EUR would have
resulted in a decrease in the loss for the year as per the
statement of comprehensive income and an increase in net assets of
the Company of GBP357,036 (2011: increase in income and increase in
net assets of GBP869,143), with all other variables held
constant.
As at 30th June 2012 if GBP had strengthened against the AUD by
5%, with all other variables held constant, the loss for the year
as per the statement of comprehensive income would have increased
and the net assets of the Company would have decreased by GBP14,402
(2011: decrease in income and decrease in net assets of GBP27,201).
A 5% weakening of GBP against the AUD would have resulted in a
decrease in the loss for the year as per the statement of
comprehensive income and an increase in the net assets of the
Company of GBP15,918 (2011: increase in income and increase in net
assets of GBP30,064), with all other variables held constant.
The movement in foreign exchange, excluding foreign exchange
movements on financial assets at fair value through profit or loss
which are reflected in the statement of comprehensive income as
part of losses or gains on financial assets at fair value through
profit or loss, for the year ended 30th June 2012 was a loss of
GBP747,122 (2011: gain of GBP546,939). This movement has been
largely caused by the variance in the EUR:GBP exchange rate during
the year on deposits held in EUR. The EUR:GBP exchange rate moved
from 1.1073 as at 1st July 2011 to 1.236 as at 30th June 2012.
Other price risk
Market price risk is the risk that the value of an instrument
will fluctuate as a result of changes in market prices (other than
those arising due to currency risk or interest rate risk) whether
caused by factors specific to an individual investment, its issuer
or all factors affecting all instruments traded in the market. As
the majority of the Company's financial instruments are held at
fair value with changes in fair value being recognised in the
statement of comprehensive income, all changes in market conditions
will directly affect the profit for the period and the Company's
net assets. Price risk is monitored and reviewed by the Directors
on a quarterly basis, at any valuation event and at each investment
committee meeting, whichever is the more frequent.
Risk is mitigated in a thematic portfolio diversified by
securities, assets, geography and industrial sector. No single
investment can account for more than 15% of ungeared NAV at the
time of investment. No single investment held for short term
trading can be more than GBP750,000. The following table breaks
down the investment assets held by the Company:
2012 2011
percentage percentage
Financial assets at fair value through of net of net
profit or loss assets assets
Equity investments:
Quoted 5.04% 4.29%
Unquoted 39.38% 27.58%
Debt investments:
Unquoted 19.61% 9.21%
Market price risk sensitivity
6.83% of the Company's investment assets are listed on European
stock exchanges (2011: 8.08%). 1.04% of the Company's investments
are listed on the Australian stock exchange (2011: 2.36%). A 10%
increase in stock prices as at 30th June 2012 would have decreased
the loss for the year and would have increased the net assets of
the Company by GBP229,594 (2011: increased the profit and increase
the net assets by GBP252,507). An equal change in the opposite
direction would increase the loss and decrease the net assets of
the Company by an equal but opposite amount.
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. The carrying amount of
financial assets best represents the maximum exposure at the
balance sheet date. At the reporting date the Company's financial
assets exposed to credit risk amounted to the following:
2012 2011
Preference share holdings 301,677 3,163,179
Unquoted securities 8,936,718 5,418,753
Loans receivable 804,357 745,388
Trade and other receivables 537,434 236,298
Cash and cash equivalents 15,217,724 33,801,516
Total financial assets exposed to credit
risk GBP 25,797,910 GBP 43,365,134
=========== ===========
The Company and its Adviser seek to mitigate credit risk by
actively monitoring the underlying credit quality of the Company's
investment holdings. As noted above, monitoring of the portfolio is
carried out on a quarterly basis by the Adviser who will review the
investments against milestones of technology developments,
commercial progress, financial and trading results including
management accounts, management assessment, market intelligence and
anticipated planning and exit. Any indications of credit risk will
be reported to the Board who will also review the portfolio and the
related credit risk at least on a quarterly basis. The Company
holds no hedges or insurance against counterparty risk. The
Directors believe that the purchase of credit insurance would
expose the Company to an unapproved asset class of derivatives.
The Company holds fixed term deposits of varying maturities with
a number of banks each with a minimum long term credit rating from
Standard and Poors, Moody's, or Fitch of AA- through a pooled
account. This service is entitled "Cash2". All transactions are in
the name of State Street (Jersey) Limited Client Nominee, operated
by State Street (Jersey) Limited. The Company is the beneficial
owner of these deposits. There is no additional payment, liquidity,
or settlement risk associated with the pooling.
The Company analyses the credit concentration based on the
counterparty, industry and geographical location of the financial
assets that the Company holds. The Company's financial assets
exposed to credit risk were concentrated in the following
industries:
2012 2011
Cleantech industries 41.01% 22.05%
Banks/financial services 58.99% 77.95%
All of the Company's financial assets exposed to credit risk
which were held at the balance sheet date are European.
Concentration Risk
The Company may be exposed at any given time to a degree of
concentration risk. To the extent that the Company's investments
are concentrated in any one sub-sector of the cleantech sector,
country or asset class downturns affecting the source of
concentration may result in total or partial loss on such
investments, which will reduce the Company's net asset value. The
Directors consider the sector a diversified asset class and that
effective hedging could be achieved by replication in purchasing
differentiated securities but that the cost of these transactions
would negate the value of the protection. The Company's investments
are concentrated as follows:
2012 2011
Investment in cleantech industries 100.00% 100.00%
Geographical area - Holland 10.03% 10.42%
Geographical area - France 5.32% 12.46%
Geographical area - UK 76.14% 74.75%
Geographical area - Australia 1.04% 2.37%
Geographical area - Germany 7.47% -
Liquidity Risk
Liquidity risk is the risk that the Company will not be able to
meet its financial obligations as they fall due.
The Company may face liquidity risks. Most of the investments in
which the Company invests are relatively illiquid i.e. private
companies which require a long-term capital commitment. A
substantial amount of the Company's funds are concentrated in a
limited number of investments subject to legal and other
restrictions on resale, transfer, pledge or other disposition or
that are less liquid than publicly traded securities. The
illiquidity of these investments may make it difficult to sell
investments if the need arises or the Investment Adviser determines
that such a sale would be in the Company's interests.
The Directors monitor liquidity risk at least quarterly and
perform going concern tests before the semi-annual publication of
the financial statements. As an operating practice the Company is
expected to hold at least sufficient working capital for a year's
continuous operation on a rolling basis. The Company also holds
sums equivalent to three months' forward operating expenses in call
accounts. The Directors review this policy regularly. The Company
also has permission to borrow sums equivalent to 25% of NAV in
accordance with the terms of its Articles of Association.
Maturity profile
The tables below show the maturity of the current borrowings
under the facilities, rather than the maturity over the whole life
of the facilities and the expected maturity of the securities,
rather than the legal maturity date.
2012 2011
Within One to Within One to five
one year five years one year years
------------ -------------- ------------ --------------
GBP GBP GBP GBP
Financial assets:
Cash and cash equivalents 15,217,724 - 33,801,516 -
Financial assets at
fair value through profit
or loss - 29,179,682 - 24,170,394
Derivatives at fair
value through profit
or loss 143,167 - 208,362 -
Loans receivable 804,357 - 745,388 -
Trade and other receivables 537,434 - 236,298 -
16,702,682 29,179,682 34,991,564 24,170,394
============ ============== ============ ==============
Financial liabilities:
Trade and other payables 121,835 - 130,630 -
Retention of performance
fee - 190,033 - 187,384
121,835 190,033 130,630 187,384
============ ============== ============ ==============
Financial instruments by category
Amounts recognised in balance sheet according
to IAS 39
Fair value
recognised
Carrying Amortised in
Category in accordance amount Cost profit or Fair value
with IAS 39 loss
GBP GBP GBP GBP
At 30th June 2012:
Loans and receivables 16,559,515 16,559,515 - 16,559,515
Fair value through
profit or loss 29,322,849 - 29,322,849 29,322,849
Other liabilities 311,868 311,868 - 311,868
At 30th June 2011:
Loans and receivables 34,783,202 34,783,202 - 34,783,202
Fair value through
profit or loss 24,378,756 - 24,378,756 24,378,756
Other liabilities 318,014 318,014 - 318,014
Disclosure of material income, expenses, gains and losses
resulting from financial assets and financial liabilities:
Fair value Financial
Loans and through liabilities
at
receivables profit or amortised
loss cost
GBP GBP GBP
-------------- -------------- ----------------------
30th June 2012:
Loss on financial assets
and derivatives at fair
value through profit or
loss - (3,792,672) -
Investment income 224,387 817,721
Foreign exchange
loss - (747,122)
224,387 (3,722,073)
============== ============== ======================
30th June 2011:
Gain on financial assets
and derivatives at fair
value through profit or
loss - 4,053,856 -
Interest income 205,354 908,986 -
Dividend income - 284,482 -
Foreign exchange 546,939 - -
gain
752,293 5,247,324 -
============== ============== ======================
Capital Management
The Company is an investment company listed on AIM in London.
Capital can only be increased either by the issue of new shares at
net asset value or by borrowing up to the permitted limit of 25% of
NAV. Capital can only be reduced by the repurchase and cancellation
of shares or the payment of special dividends both of which require
shareholder resolution. The Company seeks to provide long term
capital return in accordance with its stated investment policy from
a diversified portfolio of securities of cleantech companies. The
Company does not hold or intend to hold any derivatives other than
those which may be embedded in or between the assets in the
portfolio.
The Company will at all times maintain sufficient liquidity to
cover at least twelve months' anticipated operating expenses. The
Directors will also assure themselves that the NAV of the Company
is sufficient for the cost effective management of the portfolio
and the Company's objectives.
17. CASH GENERATED FROM OPERATIONS
2012 2011
Total comprehensive (loss)/ income (5,537,728) 4,459,594
Adjustments for:
Loss/(gain) on financial assets and
derivatives at fair value through profit
or loss 3,792,672 (4,053,856)
Movement on foreign exchange: cash
and cash equivalents 747,122 (546,939)
Interest and dividends on investments (817,721) (1,193,468)
Provision against loan receivable 265,315 -
Increase in trade and other receivables (72,283) (47,149)
(Decrease)/increase in trade and other
payables (8,795) 86,437
Increase in retention of performance
fees 2,649 1,220
CASH FLOW FROM OPERATIONS GBP (1,628,769) GBP (1,294,161)
============ ============
NON-CASH MOVEMENTS 2012 2011
Purchase of investments:
Conversion of Loan Notes to Preference/Ordinary
Shares - 4,500,000
GBP - GBP 4,500,000
============ ============
18. RELATED PARTY DISCLOSURE
Directors' remuneration and expenses payable for the year ended
30th June 2012 are disclosed in note 4 and note 12.
The terms and conditions of any transactions with key management
personnel and their related parties are no more favourable than
those available, or which might reasonably be expected to be
available, on similar transactions to non-key management personnel
related entities on an arm's length basis.
Under the Investment Advisory Agreement the Adviser is entitled
to receive a management fee from the Company at a rate of 2% per
annum of the Company's net asset value calculated for each three
month period ending on 31st March, 30th June, 30th September and
31st December each year on the basis of the Company's net asset
value at the end of the preceding period and payable quarterly in
advance.
During the year the Adviser's fee was GBP1,047,557 (2011:
GBP1,104,454). No accrued Adviser's fees were outstanding as at the
year end (2011: GBP nil). During the year the Adviser's expenses
were GBPnil (2011: GBP2,162).
No placing fees were paid to LIL by the Company during the year
(2011: GBP163,000). Such fees are charged on normal commercial
terms.
Under the terms of the Investment Adviser's Agreement the
Adviser is also entitled to a performance fee which is payable in
arrears in respect of each annual period ending 30th June. The
first calculation period began on the admission date and ended on
30th June 2008. The performance fee is dependent on the Company's
performance and amounted to GBP nil for the year ended 30th June
2012 (2011: GBP nil). Further details are disclosed in note 3.
From time to time members of the LIL group may provide corporate
financial services to the Company and investee companies. The
Directors ensure that such services are pre-approved, provided on
an arm's length basis and at market terms and that any possible
conflicts of interest are disclosed.
In the year ended 30th June 2012, LIL provided directors fee
services to certain portfolio companies and these fees were
reimbursed to the Company. The total paid by portfolio companies
for various corporate services to LIL for the year ended 30th June
2012 was GBP89,793 (2011: GBP408,634). Out of this sum, LIL
reimbursed the Company GBP89,793 (2011: GBP149,449).
19. IMMEDIATE HOLDING COMPANY AND ULTIMATE CONTROLLING PARTY
In the opinion of the Directors there is no single ultimate
controlling party since the criteria contained within the
definition of "control" in IAS 24 - Related Party Disclosures are
not satisfied by any one party.
20. SUBSEQUENT EVENTS
Subsequent to the year end the Directors recommended an interim
dividend of 1.9 pence per share on shares in issue as at 27th July
2012.
Also, subsequent to the year end, the Company has invested a
further GBP1.65 million into Ignis Biomass Limited and GBP0.24
million into unsecured loan notes of ECO Plastics Limited.
21. SHAREHOLDERS' INTERESTS
As at the Balance Sheet Date, the registered holdings of the
Company of at least 3% of the total share capital as far as the
Board is aware comprised:
AS AT 30TH JUNE 2012 Ordinary Percentage
shares
held shareholding
Morstan Nominees Limited 8,019,271 14.25%
BNY Mellon Nominees Limited 7,568,308 13.45%
HSBC Global Custody Nominee (UK) Limited
(786698) 5,839,757 10.38%
Flintshire County Council 5,791,288 10.29%
Harewood Nominees Limited 5,220,999 9.28%
Quintain Estates and Development
PLC 4,000,000 7.11%
Chase Nominees Limited 3,809,939 6.77%
HSBC Global Custody Nominee (UK) Limited
(771096) 3,669,094 6.52%
BNY (OCS) Nominees Limited 2,159,000 3.84%
AS AT 30TH JUNE 2011 Ordinary Percentage
shares
held shareholding
Morstan Nominees Limited 8,019,271 14.25%
BNY Mellon Nominees Limited 7,568,308 13.45%
HSBC Global Custody Nominee (UK) Limited
(786698) 5,839,757 10.38%
Flintshire County Council 5,791,288 10.29%
Harewood Nominees Limited 4,632,013 8.23%
Quintain Estates and Development PLC 4,000,000 7.11%
Chase Nominees Limited 3,809,939 6.77%
HSBC Global Custody Nominee (UK) Limited
(771096) 3,669,094 6.52%
22. INVESTMENTS 2012 2012 2011 2011
Cost Fair value Cost Fair value
Quoted equity securities:
Hydrodec Group plc Ordinary
Shares 3,498,417 1,455,355 3,498,417 970,237
Renewable Energy Generation
Ordinary shares 720,241 423,150 720,241 433,613
Phoslock Water Solutions Limited
Ordinary shares 443,713 302,439 443,713 571,220
Hightex Group plc Ordinary
Shares 730,000 115,000 730,000 550,000
Total quoted equities: 5,392,371 2,295,944 5,392,371 2,525,070
----------- ----------- ----------- -----------
Unquoted equities:
STX Services B.V. Ordinary
Shares 917,068 2,925,393 692,162 2,368,375
Rapid Action Packaging Limited
Ordinary Shares 5,035,903 5,129,548 4,960,838 4,812,370
Emergya Wind Technologies B.V.
Preference Shares 4,471,385 - 4,471,385 151,148
New Earth Solutions Ordinary
Shares - - 4,959,968 5,882,647
Terra Nova SAS Preference
Shares 2,688,582 301,677 2,688,582 3,012,031
New Earth Recycling & Renewables
(Infrastructure) plc 2,941,344 3,165,924 - -
Lumicity Limited Class A Preference
Shares 548,000 - - -
ECO Plastics Limited Ordinary
Shares 5,000,059 4,174,198 - -
Tamar Energy Limited Ordinary
Shares 1,750,000 1,750,000 - -
Ignis Biomas Limited Ordinary
Shares 500,000 500,000 - -
Micropelt Ordinary Shares - 280 - -
Total unquoted equities: 23,852,341 17,947,020 17,772,935 16,226,571
----------- ----------- ----------- -----------
Unquoted securities:
Hydrodec Group plc 8% Convertible
Loan Notes 3,000,000 3,034,200 3,000,000 3,123,420
Rapid Action Packaging Limited
12% Convertible Loan Notes 2,474,656 2,474,656 2,295,333 2,295,333
Micropelt GmbH 12% CULS 2,188,519 2,178,508 - -
Terra Nova SAS 6% Convertible
Loan Notes 1,301,635 1,249,354 - -
Total unquoted securities: 8,964,810 8,936,718 5,295,333 5,418,753
----------- ----------- ----------- -----------
Total investments: GBP 38,209,522 GBP 29,179,682 GBP 28,460,639 GBP 24,170,394
=========== =========== =========== ===========
23. COMMITMENTS
As at the Balance Sheet Date, the Company had outstanding
commitments of GBP9.65 million to make further investments into
Ignis, Micropelt and Tamar Energy, of which GBP1.65 million has
subsequently been drawn down.
KEY PARTIES
NOMINATED ADVISER
PricewaterhouseCoopers LLP,
7 More London Riverside,
London, SE1 2RT.
REGISTRAR
Computershare Investor Services (Channel Islands) Limited,
Queensway House
Hilgrove Street, St. Helier, JE1 1ES.
BROKER
Matrix Corporate Capital LLP
One Vine Street,
London, WIJ 0AH.
BANKERS
Royal Bank of Scotland International Limited
71 Bath Street,
St. Helier,
Jersey, JE4 8PQ.
LAWYERS
Norton Rose,
3 More London Riverside,
London, SE1 2AQ.
Carey Olsen,
47 Esplanade,
St. Helier,
Jersey, JE1 0BD.
INVESTMENT ADVISER
Ludgate Investments Limited,
80 Cannon Street,
London, EC4N 6HL.
ADMINISTRATOR
State Street (Jersey) Limited,
22 Grenville Street,
St. Helier,
Jersey, JE4 8PX.
INDEPENDENT AUDITOR
BDO Limited,
Windward House,
La Route de la Liberation,
St Helier, Jersey, JE1 1BG.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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