TIDMION1
RNS Number : 6654F
IONA Environmental VCT PLC
29 July 2016
Annual Review
2 Financial Highlights
3 Chairman's Statement
5 Overview of Investments
6 Investment Manager's
Review
Company Information
8 Contact Details
9 Board of Directors
Accounts
10 Strategic Report
12 Report of the
Directors
14 Corporate Governance
17 Statement of
Directors' responsibilities
18 Directors' remuneration
report
20 Report of the
Independent Auditors
22 Statement of
Comprehensive
Income
24 Statement of
Changes in Equity
25 Statement of
Financial Position
26 Statement of
Cash Flows
27 Statement of
Accounting Policies
31 Notes to the
Accounts
Notice of AGM
Letters to Shareholders
Notice of Annual
General Meeting
Year ended Year ended 31
31 March 2016 March 2015
----------------------- -----------------------
Ordinary B Shares Ordinary B Shares
& A Shares & A Shares
------------ --------- ------------ ---------
Net Assets
Net Assets GBP3.6m GBP0.7m GBP3.8m GBP1.3m
------------ --------- ------------ ---------
Net asset value per
Ordinary Share 67.0p - 69.2p -
Net asset value per
A share 1.4p - 1.4p -
Net asset value per
B share - 88.9p - 149.8p
------------ --------- ------------ ---------
Dividends
Dividends paid per
Ordinary Share 1.4p - 4.4p -
Dividend paid per
A Share 0.1p - 0.1p -
Dividend paid per
B Share - 1.5p - 1.5p
------------ --------- ------------ ---------
Cumulative return
to shareholders since
launch
Dividends paid per
Ordinary Share since
launch 5.8p - 4.4p -
Dividends paid per
A Share since launch 0.2p - 0.1p -
Dividends paid per
B Share since launch - 3.0p - 1.5p
------------ --------- ------------ ---------
Net asset value plus
dividends paid per
Ordinary share 72.8p - 73.6p
Net asset value plus
dividends paid per
A share 1.6p - 1.5p
Total asset value
per Ordinary and A
share 74.4p - 75.1p
Net asset value plus
dividends paid per
B share - 91.9p 151.3p
Total asset value
per B share - 91.9p 151.3p
------------ --------- ------------ ---------
Introduction Results
I present the report For the year ended
and accounts for the 31 March 2016, the
year ended 31 March 2016. net loss attributable
to Ordinary and A
Portfolio activity Shares was GBP59,000
During the year we completed (2015: loss of GBP1,024,000)
our committed investment and the net loss attributable
of GBP232,000 in JFS to B shares was GBP493,000
Wray House Biogas Ltd (2015: profit of GBP498,000).
and all four Anaerobic As at 31 March 2016,
Digestion ("AD") plants the Net Asset Value
we have invested in are per Ordinary Share
now operational and exporting was 67.0p (2015: 69.2p),
power to the national the Net Asset Value
grid. per A Share was 1.4p
(2015: 1.4p) and the
In my half year statement, Net Asset Value per
I reported my concern B Share was 88.9p
over the underperformance (2015: 149.8p).
of JFS Howla Hay Biogas Risks
Ltd and highlighted that The Directors believe
we were working closely the Company is exposed
with our co-investor, to market risk, investment
Iona Environmental Infrastructure risk, credit risk
LP, on a plan to improve and interest rate
its performance. I am risk. As all transactions
pleased to report that occur in pounds sterling
the first steps taken the Company is not
were completed early exposed to exchange
November and recent performance rate risk. The Company
has been very positive. is also exposed to
JFS Howla Hay Biogas UK legislative and
Ltd is now operating regulation changes
at full capacity and applicable to VCTs.
we are currently in the The risks associated
process of installing with the Company are
a second engine to increase set out in full detail
its capacity further. in the Strategic Report
and financial instruments
Three of the four AD risks, in Note 15
plants are now starting to the Accounts.
to generate some cash
flows as they reach a Share buybacks
steady state of operations. On 21 August 2015
JFS Home Farms Biogas a special resolution
Ltd has experienced some was passed by the
delays and difficulties shareholders to authorise
over the past year, and the Company to purchase
the board continues to up to 400,000 of its
monitor its performance issued share capital,
closely along with the representing 2.8%
other three plants. of the Company's issued
share capital, such
In line with our accounting authority lasting
policies, a formal valuation until the end of the
for each of the existing next annual general
portfolio investments meeting of the Company
has been undertaken. or, if earlier, on
These valuations have the expiry of 15 months
been based on the most from the date of the
recent available individual resolution.
company forecasts and
have been reviewed by 85,000 Ordinary and
the Investment Manager. 44,600 A shares were
Overall valuations have redeemed at 48.18p
been adversely impacted and 1.15p respectively
by delays in bringing per share representing
the plants to full operational 0.9% of the Company's
status and a lower cost issued share capital.
of energy than was projected VCT legislation
at the time of investment. The Finance Bill published
on 15 July 2015, following
the second 2015 UK
budget, includes a
number of proposed
changes to the VCT
rules. These are mainly
designed to bring
the legislation in
line with the EU State
Aid Risk Finance Guidelines,
which were revised
last year.
The changes predominately
focus around the type
of investments VCTs
will be permitted
to make going forward
and as the Company
is no longer pursuing
investment opportunities,
your Board believes
that these changes
will not have an adverse
impact on the Company
Outlook
We believe that, as consequence
of the continuing lower
energy prices and the
costs of operating a
small VCT of the size
of Iona Environmental
VCT plc, it is in the
best interests of the
shareholders to realise
the Company's remaining
assets. Following the
completion of a disposal
of the remaining four
assets, we would make
a dividend distribution,
which we anticipate will
be tax free for all shareholders
qualifying for the income
exemption for dividends,
in accordance with current
VCT legislation, Income
Tax (Trading and Other
Income) Act 2005 s 709.
After the distribution
we propose a solvent
voluntary liquidation
as the best means of
closing the VCT.
The Board have received
an offer of GBP4.2m,
which is in line with
the Directors' valuation,
for the Company's remaining
four assets. An independent
accountancy firm has
been appointed to perform
an independent review
of the offer. This offer
will be equivalent to
65p per Ordinary and
A Share and 82.03p per
B Share, which when combined
with cumulative dividends
per share will yield
71p and 85.03p for the
Ordinary and A and B
shareholders respectively.
The Board will be seeking
to hold a General Meeting
in October 2016 to approve
both the sale of the
assets and the orderly
wind up of the VCT.
Annual General Meeting
I look forward to meeting
you at our Annual General
Meeting at 11:00am on
31 August 2016 at Marriot
Harrison, 11 Staple Inn,
London.
David Eades
Chairman
27 July 2016
JFS Home Farm Biogas Ltd operates
in the anaerobic digestion
market in conjunction with
Home Farm in Northallerton,
North Yorkshire. Waste products
from the farm are converted
into renewable energy for distribution
into the local network.
Iona Environmental Infrastructure
LP, a partnership managed by
Iona Capital Ltd, also subscribed
for GBP1,113,289 of the loan
notes of JFS Home Farm Biogas
Ltd.
Date of November Date 30 September
investment 2013 of accounts 2015
Shares GBP402,500
Loan notes GBP172,500 Net assets GBP500,168
Total GBP574,500 Turnover GBP210,266
initial
cost
Fair value GBP700,000 Loss GBP(29,125)
at 31 before
March tax
2016
-----------------------------------------------------------
JFS Howla Hay Biogas Ltd operates
in the anaerobic digestion
market in conjunction with
a farm in Guisborough, North
Yorkshire. Waste products from
the farm are converted into
renewable energy for distribution
into the local network.
Iona Environmental Infrastructure
LP, a partnership managed by
Iona Capital Ltd, also subscribed
for GBP1,397,673 of the loan
notes of JFS Howla Hay Biogas
Ltd.
Date of March Date 30 September
investment 2013 of accounts 2015
Shares GBP350,000
Loan notes GBP450.000 Net assets GBP214,760
Total GBP800,000 Turnover GBP142,832
initial
cost
Fair value GBP1,118,000 Loss GBP(105,566)
at 31 before
March tax
2016
-----------------------------------------------------------
JFS Wray House Biogas Ltd operates
in the anaerobic digestion
market in conjunction with
Wray House Farm in Marishes,
Malton, North Yorkshire. Waste
products from the farm are
converted into renewable energy
for distribution into the local
network.
Iona Environmental Infrastructure
LP, a partnership managed by
Iona Capital Ltd, also subscribed
for GBP2,734,723 of the loan
notes of JFS Wray House Biogas
Ltd.
Date of January Date 31 March
investment 2015 of accounts 2016
Shares GBP560,000
Loan notes GBP232,594 Net assets GBP402,966
Total GBP792,594 Turnover GBP287,154
initial
cost
Fair value GBP870,000 Loss GBP(140,388)
at 31 before
March tax
2016
-----------------------------------------------------------
Stanley Renewable Energy Ltd
operates in the anaerobic digestion
market in conjunction with
a farm in Cumbria. Waste products
from the farm are converted
into renewable energy for distribution
into the local network.
Iona Environmental Infrastructure
LP, a partnership managed by
Iona Capital Ltd, also subscribed
for GBP1,891,431 of the loan
notes of Stanley Renewable
Energy Ltd.
Date of December Date 31 March
investment 2012 of accounts 2016
Shares GBP350,000
Loan notes GBP450,000 Net assets GBP141,339
Total GBP800,000 Turnover GBP385,981
initial
cost
Fair value GBP1,512,000 Loss GBP(225,697)
at 31 before
March tax
2016
Qualifying Equity Loan Valuation Unrealised Total Total
investments Cost Cost at 31 gains unpaid redemption
March interest premium
2016 capitalised recognised
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------- ------- ---------- ----------- ------------- ------------
JFS Howla
Hay Biogas
Ltd 350 450 1,118 218 72 28
Stanley Renewable
Energy Ltd 350 450 1,512 673 11 28
JFS Home Farm
Biogas Ltd 403 172 700 97 28 -
JFS Wray House
Ltd 560 233 870 72 2 3
------- ------- ---------- ----------- ------------- ------------
1,663 1,305 4,200 1,060 113 59
------- ------- ---------- ----------- ------------- ------------
Note that unrealised gains in the table above are cumulative
from the date of investments.
Total income recognised for the year ended 31
March 2016 relating to qualifying investments
Loan note Other Total
interest
GBP000 GBP000 GBP000
---------- ------- -------
Gradone Products Limited* 65 - 65
JFS Howla Hay Biogas Ltd 54 - 54
Stanley Renewable Energy
Ltd 62 - 62
JFS Home Farm Biogas Ltd 24 - 24
JFS Wray House Ltd 25 - 25
---------- ------- -------
230 - 230
---------- ------- -------
*Interest charges during the year in respect of the loan
advanced to Gradone Products Limited has been fully impaired.
Summary JFS Home Farm Biogas
The company has maintained Ltd ("Home Farm"),
four active investments Home Farm is located
for the reporting period. in Newby Wiske, North
Allerton, is an AD plant
During the year there using UTS technology.
has been the need to This has had a series
make some additional of contamination issues
investments within our and associated feedstock
portfolio companies treatment concerns throughout
to enhance performance. the period. The plant
has performed below budget.
The table below highlights Significant management
the environmental impact time has been spent resolving
our plants are making the feed stock supply
through renewable energy problems and investments
contribution and diversion made in process improvement
from landfill and other equipment.
disposal solutions.
Facility Annual Electrical Planned Heat JFS Wray House Biogas
Designed Power Extension Use Ltd ("Wray House")
Throughput Wray House (pictured
(Tonnes) below) located in Malton,
------------ ------------ ----------- ----------- ----- North Yorkshire and has
Home 6,200 200 No Yes an installed capacity
Farm kW of 500kW.
------------ ------------ ----------- ----------- -----
Wray 17,300 499 No Yes The plant is now performing
House kW satisfactorily, however
------------ ------------ ----------- ----------- ----- to maximise performance
Howla 8,247 250 124 Yes it will require additional
Hay kW kW investment.
------------ ------------ ----------- ----------- -----
Stanley 8,894 250 190 Yes
Renewables kW kW
------------ ------------ ----------- ----------- -----
Total 40,641 1,199 314 n/a
kW kW
------------ ------------ ----------- ----------- -----
Iona Capital Ltd
When the commissioning 27 July 2016
of the additional combined
heat and power (CHP)
units is complete the
total electrical power
across the four sites
will be 1,513 kW (electrical).
This is the equivalent
of the electricity requirements
for over 3,000 homes
according to ofgem-publications
on domestic energy consumption.
The waste heat produced
by the CHP engines are
also being used on the
sites, this will be
equivalent to approximately
1,500 kW (thermal),
which is sufficient
to heat 600 homes.
Income directly attributable
to electricity sales,
as opposed to the FiTs
tariffs have unfortunately
been significantly down
against budget which
is a reflection of the
overall market.
Investments
Stanley Renewable Energy
Ltd ("Stanley"),
Stanley is located in
Seascale, Cumbria, and
has an installed capacity
of 250kW.
This has performed well
throughout the period,
with gas yields consistent
with budgets.
An additional CHP unit
was purchased during
the year and the expectation
is this will improve
yields going forward
and hence electricity
income.
JFS Howla Hay Biogas
Ltd ("Howla Hay")
Howla Hay is located
in Guisborough, North
Yorkshire, and has an
installed capacity of
410kW.
The plant has suffered
from operational performance
issue during the year
but these were identified
and the required feedstock
remediation plan put
in place.
Iona Environmental VCT
Plc
Board of Directors
David Eades (Chairman)
Philip Ling
Michael Dunn
Investment Manager and
Administrator
Iona Capital Ltd
86 Jermyn Street
London, SW1Y 6JD
Telephone: +44 (0) 20
7064 3300
Web: www.ionacapital.co.uk
Enquiries: info@ionacapital.co.uk
Secretary and Registered
Office
Iona Capital Ltd
86 Jermyn Street
London, SW1Y 6JD
Telephone: +44 (0) 20
7064 3300
Company Number 07049290
Registered Independent
Auditors
Moore Stephens LLP
150 Aldersgate Street,
London, EC1A 4AB
Telephone: +44 (0) 20
7334 9191
VCT Status Advisor
Philip Hare & Associates
Staple Inn,
London, WC1V 7QH
Telephone: +44 (0) 20
3141 9108
Solicitors
Marriott Harrison LLP
11 Staple Inn
London, WC1V 7QH
Telephone: +44 (0) 20
7209 2000
Registrar and Transfer
Office
The City Partnership
(UK) Limited
Thistle House
21 Thistle Street
Edinburgh EH2 1DF
Telephone: +44 (0) 131
243 7210
Any change of address
of a shareholder or other
relevant amendment to
shareholder details should
be communicated to the
Company's Registrar,
The City Partnership
(UK) Limited.
David Eades, Appointed a Director
Chairman on 12 November 2009
David is a Qualified
Chartered Certified
Accountant and an experienced
executive who has led
businesses from start-up
through to IPO. David
is also non-executive
director of a number
of small private companies.
Philip Ling Appointed a Director
on 15 April 2010
Philip is a non-executive
Chairman of a number
of small private companies.
Past non-executive directorships
have included Ibstock
Johnsen plc, PE Consulting
plc and Elderstreet
Millennium VCT.
Michael Dunn Appointed a Director
on 31 May 2011
Michael is the Company's
sector expert having
previously held board
positions with Shanks
Group and Veolia Environmental
Plc (Onyx). He currently
holds non-executive
directorship at London
Waste Limited, which
operates one of the
largest energy from
waste facilities in
the UK, sits on the
board of Chartered Institute
of Waste Management
(CIWM) Business Services
Limited and is a voting
member of the London
Waste and Recycling
Board(LWARB).
Michael has a Master's
degree in finance from
the London Business
School
Investment Objectives The key performance indicators
The Company's objective ('KPIs') used to measure
is to maximise tax free the progress and performance
capital gains and income of the Company are established
to Shareholders from industry measures and
dividends and capital are as follows:
distributions by investing * The movement in net asset value per share;
the Company's funds substantially
in:
* a portfolio of Qualifying Investments, primarily in * The movement in share price; and
UK unquoted companies specialising in environmental
infrastructure focusing on organic waste recycling in
the UK; and * The movement of net asset value and share price
performance compared to the FTSE All-Share Index.
-- fixed income funds,
securities and cash deposits
within the regulations As at 31 March 2016,
imposed on venture capital the Net Asset Value per
trusts ('VCTs'). Ordinary Share was 67.0p
Investment Strategy (2015: 69.2p), the Net
The Company seeks to Asset Value per A Share
invest in investee companies was 1.4p (2015: 1.4p)
that it believes are and the Net Asset Value
materially de-risked per B Share was 88.9p
and will provide shareholders (2015: 149.8p). For the
with a reliable source year ended 31 March 2016,
of tax free income. These the net loss attributable
investee companies will to Ordinary and A Shares
generally reflect the was GBP59,000 (2015:
following criteria: loss of GBP1,024,000)
* a well-defined business plan and ability to and the net loss attributable
demonstrate strong demand for its products and to B shares was GBP493,000
services; (2015: profit of GBP498,000).
Details of the KPIs are
shown in the Financial
* products or services which are cash generative; Highlights on page 2
and through a graph comparing
the Company's total return
* objectives of management and shareholders which are on a share price and
similarly aligned; net asset value basis
over the year ended 31
March 2016 with the FTSE
* adequate capital resources or access to further All-Share Index total
resources to achieve the targets set out in its return over the same
business plan; period as set out in
the Directors' Remuneration
Report on page 18.
* access to high calibre management teams; and The Board recognises
that it is in the long
term interests of shareholders
* be companies where the Investment Manager believes to minimise discount
there are reasonable prospects of an exit, either volatility and believes
through a trade sale or flotation, in the medium that the prime driver
term. of discounts over the
longer term is performance.
Risk Management
Business Model Since the Company is
The Company's investments seeking to invest in
are managed by Iona Capital a particular industry
Ltd ('Iona Capital'), sector, there is a significant
which is authorised and level of in-built risk.
regulated by The Financial There are also a number
Conduct Authority ('FCA'). of specific risks associated
Iona Capital was also with the investment strategy
appointed as Company of the Company as set
Secretary and Administrator, out on page 6 of the
and manages the day-to-day Prospectus issued on
activities of the Company. 4 July 2011 which include
Current and Future Development site identification,
The Board regularly reviews acquisition and planning
the development and strategic permission risk, construction
direction of the Company. risk, plant performance
and technology risk,
As noted in the Chairman's contract risk, electricity
Statement, due to the price risk, renewable
continuing lower energy obligation scheme risk
prices and the costs and regulatory risk.
of operating a VCT of These risks could have
the size of Iona Environmental a materially negative
VCT plc, the Board believe effect on any investment
that it is in the best made by the Company.
interests of the shareholders However, to provide a
to realise the remaining level of diversification,
assets, to distribute the Company is restricted
in full the proceeds to investing no more
by way of a dividend than 15% of the value
and to carry out an orderly of its total assets at
winding up of the VCT. the time of investment
in any one individual
The Board have received qualifying investment
an offer of GBP4.2m for or non-qualifying investment.
the remaining four assets The key risks facing
and have appointed and the Company include Market
independent accountancy Risk, Interest Rate Risk,
firm to perform an independent Financial Credit Risk
review of the offer. and Liquidity Risk as
It is the Board's belief further set out in Note
that the offer should 16 in the Notes to the
be accepted. Accounts.
In addition, the Company
The Board intends to is also focused on the
write to shareholders following key risks:
in September setting Macroeconomic risks
out details of the proposals The performance of the
and a date in October Company's underlying
for a General Meeting investment portfolio
to be held at which the can be influenced by
proposals can be voted a combination of economic
on by the shareholders. growth, interest rates,
the availability of well-priced
Performance debt finance, the number
A number of performance of active trade and private
measures are considered equity buyers and the
by the Board and Investment general level of merger
Manager in assessing and acquisition activity.
the Company's success All of these factors
in achieving its objectives. affect the Company's
ability to invest, its
ability to exit from
its underlying portfolio
and the levels of profitability
achieved on exit.
Long-term strategic risk
The Company is subject
to the risk that its
long-term strategy and
its level of performance
fail to meet the expectations
of its shareholders.
The Company constantly
monitors the level of
discount of the share
prices of its Ordinary
Shares, A Shares and
B Shares to their respective
Net Asset Values and
considers the most effective
methodologies to keep
this at a minimum including
a share buy-back policy.
Government policy and Operational risks
regulation risk The Company's investment
The Company carries on management, custody of
business as a VCT under assets and all administrative
section 274 of the Income systems are provided or
Tax Act 2007. Continuation arranged for the Company
of this status is subject by Iona Capital. Therefore,
to the Company directing the Company is exposed
its affairs in line with to a range of operational
the relevant requirements risks at Iona Capital
of the legislation. Expected which can arise from inadequate
and actual changes in or failed processes, people
government policy and and systems or from external
related tax treatment factors affecting these.
of VCTs are closely monitored, The Company's system of
as are other changes internal control mainly
which could affect results comprises the monitoring
of operations or financial of the services provided
position. by Iona Capital, including
Iona Capital, the Investment the operational controls
Manager, is an authorised established by it, to
person under the Financial ensure they meet the Company's
Services and Markets business objectives, as
Act 2000 and is regulated set out further in the
by the FCA. Changes to Corporate Governance Statement
the regulatory framework on page 14.
under which Iona Capital Legislative, regulatory
operates are closely and VCT qualifying status
monitored by Iona Capital risk
and reported upon as The Company is governed
necessary by Iona Capital by the current VCT legislation
to the Company. and has to comply with
Investment risks all the conditions stipulated
The Company operates in the Income Tax Act
in a very competitive 2007 at all times in order
market. Changes in the to maintain its approved
number of market participants, VCT status.
the availability of funds Changes to the UK legislation
within the market, the could have an adverse
pricing of assets, or effect on the Company's
in the ability of Iona ability to achieve satisfactory
Capital to access deals returns on investments
on a proprietary basis, whilst retaining its approved
could have a significant VCT status. The Board
effect on the Company's and the Investment Manager
competitive position monitor political developments
and on the sustainability and where appropriate
of returns. seek to make representations
In order to source and either directly or through
execute good quality relevant government bodies.
investments the Company The loss of VCT approval
relies on Iona Capital status could also lead
having the ability to to: (i) the Company losing
attract and retain people its exemption from corporation
with the requisite investment tax on capital gains;
experience whose compensation (ii) the investors being
is aligned with the Company's liable to pay income tax
objectives. on dividends distributed
Once invested, the performance by the Company and; (iii)
of the Company's portfolio the investors being called
is dependent upon a range to repay the initial income
of factors. These include tax relief on their investment
but are not limited to: in certain circumstances.
(i) the quality of the The Investment Manager
initial investment decision regularly monitors the
described above; (ii) Company's VCT qualifying
the ability of the investee status and reports to
company to execute successfully the Board on a quarterly
its business strategy; basis. The Board has also
and (iii) actual outcomes engaged Philip Hare &
against the key assumptions Associates to undertake
underlying the investee an independent VCT status
company's financial projections. monitoring role.
Any one of these factors People, Social, Economic
could affect the valuation and Environmental Matters
of an investee company The Company had no employees
and the Company's ability during the year other
to make a profitable than its Directors. All
exit from the investment three Directors of the
within the desired timeframe. Company are male. Details
A process is put in place of each Director are shown
by Iona Capital for managing on page 9.
the relationship with As the Company is managed
each investee company by Iona Capital, it is
including regular asset not directly responsible
reviews and board representation for any greenhouse gas
by one of Iona Capital's emissions.
executives. The Investment Due to the nature of its
Committee of Iona Capital business, the Company
evaluates all prospective is not exposed to any
investments prior to human rights issues and
Board approval. The Committee the Company does not have
also undertakes regular a human rights policy.
monitoring of investment On behalf of the Board
performance and valuation. of Directors
The Company reviews both
the performance of Iona
Capital and its incentive
arrangements on a regular David Eades
basis to ensure that Chairman
both are appropriate Registered Office:
to the objectives of 86 Jermyn Street
the Company. London, SW1Y 6JD
27 July 2016
To the Members of Iona Directors
Environmental VCT Plc The Directors who held
The Directors of Iona office during the period
Environmental VCT Plc are detailed on page
('the Company') present 8. Mr DW Eades, Mr PH
the audited accounts Ling and Mr MB Dunn
and their report on will each be required
its affairs for the to resign as a director
year ended 31 March of the Company at the
2016. Company's Annual General
Investment Company Status Meeting to be held in
Throughout the period 2016, and will stand
under review the Company for re-election at that
was an investment company Annual General Meeting.
as defined under Section Short biographical details
833 of the Companies of all the Directors
Act 2006. are provided on page
VCT Status 9.
HM Revenue and Customs Directors' Interests
has granted the Company The beneficial interests
approval under Section of the Directors in
274 of the Income Tax the shares of the Company
Act 2007 as a VCT, the and Director's acquisitions
approval being effective of Shares of the Company
from the first day on during the period are
which the Company's disclosed in the Directors'
Ordinary and A Shares Remuneration Report.
were listed on the London Save as disclosed, no
Stock Exchange, being Director had any notifiable
22 April 2010. interest in the securities
As at 31 March 2016 of the Company. No options
the Company had various over shares in the capital
VCT-qualifying investments, of the Company have
with the balance of been granted to the
unused funds held in Directors.
cash, as permitted by Directors' Remuneration
the regulations governing Report
VCTs. The Board continues An Ordinary Resolution
to direct the affairs to approve the Directors'
of the Company to enable Remuneration Report
it to maintain its approval will be put to the Annual
as a VCT. General Meeting on 30
Share Capital August 2016.
The share capital of Contracts with Directors
the Company comprises As a result of being
Ordinary Shares of 0.1p a Director and shareholder
each, A Shares of 0.1p of Iona Capital Ltd,
each and B Shares of Mr MB Dunn is deemed
0.1p each. The Ordinary to have an interest
Shares, A Shares and in the Management Contract
B Shares have voting between the Company
rights attached, and and Iona Capital Ltd.
the holders of these Directors' and Officers'
are entitled to receive Liability Insurance
notice of and attend Directors' and Officers'
shareholder meetings Liability Insurance
and to receive dividends is maintained on behalf
once declared and approved. of the Directors in
The other rights and respect of their positions
obligations attaching as Directors of the
to the Ordinary Shares, Company.
A Shares and B Shares Substantial Shareholders
are set out in the Company's At the date of this
Articles of Association. report the Directors
The Company does not had not been notified
hold any shares in treasury. of any interests of
In accordance with the 3% or more in the Company's
Special Resolution passed issued share capital,
at the AGM held on 21 excluding the Manager's
August 2015, the Company interest in the A Shares,
launched a share buy-back further details of which
programme, thereby enabling are on the next page.
shareholders to realise Independent Auditors
their investment in A resolution to appoint
the Company. On 29 January Moore Stephens LLP as
2016 the Company repurchased auditors to the Company
85,000 Ordinary and will be proposed at
44,600 A shares for the Annual General Meeting
a total consideration in August 2016. A separate
of GBP40,953 and GBP512.90 resolution will be proposed
respectively, representing at the Annual General
0.9% of issued share Meeting in 2016 authorising
capital. the Directors to fix
At 31 March 2016 a total the remuneration of
of 5,260,499 (2015: the auditors.
5,345,499) Ordinary The Directors confirm
Share, 7,973,646 (2015: that so far as each
8,018,246) A Shares Director is aware, there
and 835,360 (2015: 835,360) is no relevant audit
B Shares were in issue. information of which
Results and Dividend the Company's auditors
The net loss attributable are unaware and that
to shareholders amounted each Director has taken
to GBP552,000 (2015: all the steps that he
loss of GBP526,000). ought to have taken
The Board declared an as a Director in order
interim dividend payment to make himself aware
of 1.5p per Ordinary of any relevant audit
and A Shares and 1.5p information and to establish
per B share. This dividend that the Company's auditors
was paid on 23 October are aware of that information.
2015 to those shareholders Financial risk management
on the register on 9 policies
October 2015 (being Details of the company's
the Record Date). In financial risk management
accordance with the policies are included
Company's articles, in the Strategic Report.
dividends per Ordinary
and A Shares will be
allocated 97% to Ordinary
Shares and 3% to A Shares.
The 0.045p per A Share
will be accumulated
until such time as the
accumulated total reaches
0.25p per A Share, at
which point they will
become payable.
In light of the Board's
decision to seek to
realise the remaining
four assets and to commence
with the orderly closure
of the VCT no final
dividend has been declared
for the year ended 31
March 2016.
Management Fees and Going Concern
Arrangements Following the receipt
Iona Capital was appointed of an offer of GBP4.2m
as Investment Manager for the four remaining
under an agreement dated assets, it is the Board's
19 November 2009. The intention to seek approval
agreement was for an of the sale of the
initial period of six assets and orderly
years and thereafter wind up of the VCT
could be terminated at a General Meeting
by either party giving to be held in October
not less than one year's 2016.
notice. It is envisaged that
Annual Running Costs the disposal and the
(annual costs and expenses appointment of a liquidator
incurred by the Company, will be completed in
including irrecoverable the current financial
VAT but excluding exceptional year and accordingly
and extraordinary costs) the accounts have been
of the Fund are capped prepared on a break-up
at 3.6% of their net basis.
asset value. Any excess The Directors do not
will be refunded by believe the costs of
way of a reduction of winding up the business
management fees payable will be significant
to the Investment Manager. and therefore no provision
The Board is satisfied for costs of closure
with the Investment have been included
Manager's strategy, in the accounts. In
approach and procedures addition, the Directors
in providing investment have reclassified its
management services investments as current
to the Company and is assets and along with
of the opinion that the other assets considered
the continuing appointment their carrying value.
of Iona Capital Ltd The Directors consider
as Investment Manager the assets to be held
remains in the best at their realisable
interests of shareholders. value.
Incentive Schemes Annual General Meeting
To give effect to the The Annual General
Performance Incentive Meeting of the Company
described below, each will be held on 31
investor received one August 2016.
Ordinary Share and one Corporate Governance
A Share at the subscription The Company's compliance
prices of 99.9p for with The UK Corporate
each Ordinary Share Governance Code October
and 0.1p for each A 2014 issued by the
Share. Management received Financial Reporting
a number of A Shares Council ('the Code')
in the Company such (www.frc.org.uk) is
that at the close of shown on pages 14 to
the offer they owned 16.
one-third of the issued Global Greenhouse Gas
A Shares in the share Emissions
capital of the Company. The Company does not
Subject to the achievement have any greenhouse
of the hurdle, being gas emissions to report
a Performance Value from its operations,
of at least 120p per nor does it have responsibility
Share and the payment for any other emissions
of Shareholder Proceeds producing sources under
of at least 20p per the Companies Act 2006
Share, the Management (Strategic Report and
A shareholders will Directors' Report)
receive 1% of the first Regulations 2013.
20p of Shareholder Proceeds
and 20% of Shareholder By order of the Board
Proceeds thereafter. of Directors
The offer for subscription
closed on 18 November
2010.
A B Share prospectus
was published on 4 July Iona Capital Ltd
2011 which has separate Secretary
incentive arrangements Registered Office:
as described below. 86 Jermyn Street
The amount of the performance London, SW1Y 6JD
incentive fee is based 27 July 2016
wholly on the Net Asset
Value of the B Shares
in the Company and on
the payment of Shareholder
Proceeds in relation
to the B Shares. If
by the end of a financial
year (commencing no
earlier than close of
the 2014 financial year),
Shareholder Proceeds
per B Share have reached
20p in aggregate and
if the Performance Value
at that date exceeds
120p per B Share, a
performance incentive
fee equal to 20% of
the excess of such Performance
Value over 100p per
B Share will be payable
to the Investment Manager.
If, on a subsequent
financial year end,
the Performance Value
of the Company falls
short of the Performance
Value on the previous
financial year end,
no incentive fee will
arise. If, on a subsequent
financial year end,
the performance exceeds
the previous best Performance
Value of the Company,
the Investment Manager
will be entitled to
20% of such excess in
aggregate. The offer
for subscription closed
on 1 June 2012.
Corporate Governance Performance Appraisal
Directors' attendance The Board carries out
at scheduled meetings a formal appraisal of
of the Board and Committees its own and of its Committees'
of the Board is detailed operation and performance
below. DW PH MB during the year. This
Eades Ling Dunn is implemented by means
------------------ ------- ------ ------ of questionnaires circulated
Schedules to the Directors, the
Board 6 6 6 results of which are
------------------ ------- ------ ------ then reviewed by the
Attended Board. Issues covered
Board 6 6 5 included Board composition,
------------------ ------- ------ ------ meeting arrangements
Scheduled and communication. The
audit committee - 2 2 process established
------------------ ------- ------ ------ is considered by the
Attended Board to be constructive
audit committee - 2 2 in identifying areas
------------------ ------- ------ ------ for improving the functioning
Scheduled and performance of the
remuneration Board and of its Committees.
committee 1 1 - The Chairman also carries
------------------ ------- ------ ------ out a formal appraisal
Attended of each of the Directors
remuneration during the year and
committee 1 1 - the Board, and the Senior
------------------ ------- ------ ------ Independent Director
similarly appraises
the Chairman. Relevant
In addition, a number matters to be considered
of Directors attended include the attendance
further Board meetings and participation at
at short notice to address Board and Committee
specific issues. meetings, commitment
The Board of Directors to Board activities
The Board, which meets and the effectiveness
regularly, comprised three of the contribution
Directors at 31 March made by the relevant
2016 all of whom are non-executive Director. As a result
directors. All of the of this process the
Directors who held office Chairman confirms whether
on 31 March 2016, apart the performance of each
from Mr MB Dunn, have of the Directors being
been considered by the proposed for re-election
Board to be independent continues to be effective
from the Investment Manager. and whether each of
The Board has nominated them continues to show
Mr PH Ling as the Senior commitment to his role.
Independent Director. Election of Directors
The Board believes that In accordance with the
each of the Company's Code's provisions and
Directors, apart from the Company's Articles,
Mr MB Dunn, continues all of the current Directors
to be wholly independent will retire at the Annual
under the UK Corporate General Meeting of the
Governance Code ('the Company to be held in
Code') issued by the Financial August 2016 and will
Reporting Council in 2014, offer themselves for
notwithstanding the directorships re-election at that
noted on page 9. Independence meeting.
is a state of mind and Independent Professional
the character and judgement Advice
which accompany this are Individual Directors
distinct from and, in may seek independent
the Board's opinion, not professional advice
compromised by holding in furtherance of their
such directorships. duties at the Company's
The Board has agreed a expense within certain
schedule of matters reserved parameters. All Directors
for its specific approval, have access to the advice
which includes a regular and services of the
review of the Company's Company Secretary. Any
Management Agreement with appointment or removal
Iona Capital, together of the Company Secretary
with the monitoring of would be a matter for
the performance thereunder. consideration by the
The Management Agreement entire Board.
sets out the matters over The Audit Committee
which Iona Capital has The Board has an Audit
authority in accordance Committee established
with the policies and in compliance with the
directions of the Board. Code. It comprises all
The Board meetings consider the Directors other
as appropriate such matters than the Chairman of
as overall strategy, investment the Board, with Mr PH
performance, share price Ling as Chairman of
performance, share price the Committee. The Board
discount and communication notes that at least
with shareholders. The one member of the Committee
Board considers that it should have recent and
meets sufficiently regularly relevant experience
to discharge its duties and is satisfied that
effectively. The number the Committee is properly
of scheduled meetings constituted in this
of the Board, the Audit respect. The Committee's
Committee and the Remuneration responsibilities include:
Committee are shown in * monitoring and reviewing the integrity of the
the table above. All of accounts, the internal financial controls and
the Directors expect to the
attend the Annual General independence, objectivity and effectiveness of
Meeting. the
The Board receives information external auditors;
that it considers to be
sufficient and appropriate
to enable it to discharge
its duties. Each Director
receives board papers
in advance of each scheduled
board meeting and is able
to consider in detail
the Company's performance
and any issues to be discussed
at the relevant meeting.
The Directors believe
that the Board has the
balance, skills and experience
which enable it to provide
effective strategic leadership
and proper governance
of the Company. Information
about the Directors, including
their relevant experience,
can be found on page 9.
The Nomination Committee
* making recommendations to the Board in relation to The Nomination Committee
the appointment of the external auditors and meets on an ad hoc
approving their remuneration and terms of engagement; basis to consider
suitable candidates
for appointment as
* developing and implementing the Company's policy on Director. It comprises
the provision of non-audit services by the external all the Directors
auditors; apart from Mr MB Dunn,
with Mr DW Eades as
Chairman of the Committee.
* reviewing the arrangements in place within Iona The Committee is responsible
Capital whereby its staff may, in confidence, raise for identifying and
concerns about possible improprieties in matters of nominating, for the
financial reporting or other matters insofar as they approval of the Board,
may affect the Company; candidates to fill
board vacancies to
maintain a balanced
* considering annually whether there is a need for the Board. Letters of
Company to have its own internal audit function. appointment, which
specify the terms
of appointment, are
The Committee has agreed issued to new Directors.
that all non-audit work The current Directors
to be carried out by the of the Company were
external auditors must appointed with regard
be approved by the Audit to their independence,
Committee and that any suitability for the
special projects must position and their
be approved in advance. experience in related
Tax compliance work was business areas.
carried out during the Corporate Diversity
year. The Board supports
Significant Issues Considered the principles of
During the year, the Committee diversity in the boardroom.
considered and addressed It acknowledges the
the following significant benefits of having
issues in relation to greater diversity,
the accounts: including gender,
* Valuation of investments. Due to the nature of the and considers this
Company, its performance and capital position are in seeking to ensure
heavily dependent on the valuations attributed to that the overall balance
each of its investments. During the year, the of skills and knowledge
Company's investments have been revalued in that the Board has
accordance with its accounting policies. The remains appropriate
methodologies used are as prescribed in the so that it can continue
International Private Equity and Venture Capital to operate effectively.
Valuation Guidelines issued in December 2012. In The Board's director
addition, the Board has instructed a top accountancy selection policy will,
firm to perform an independent review of the offer of first and foremost,
GBP4.2m received for the four remaining assets. The seek to identify the
offer of GBP4.2m is in line with the Directors' person best qualified
valuation of the four assets. to become a director
of the Company, but
in so doing, consideration
Internal Audit will be given to diversity,
Following the review carried including gender.
out by the Audit Committee The Board has so far
as to whether there is not utilised any external
a need for the Company executive recruitment
to have its own internal firm, however will
audit function, the Board certainly do so when
has considered this and the need arises.
continues to believe that The Company's Relationship
the internal control systems with its Shareholders
in place within Iona Capital The Company principally
provide sufficient assurance communicates with
that a sound system of its shareholders through
internal control, which Iona Capital's website
safeguards shareholders' (at www.ionacapital.co.uk),
investment and the Company's which contains information
assets, is maintained. on the wider market
An internal audit function, and the individual
specific to the Company, investments made by
is therefore considered the Company.
unnecessary. At the Annual General
External Audit Meeting all shareholders
Moore Stephens LLP were are welcome to attend
appointed as external and have the opportunity
auditors in 2010 following to put questions to
a formal tender process. the Board.
The Audit Committee has The notice of the
considered the guidance Annual General Meeting
in relation to auditor and related papers
rotation and the Committee are sent to shareholders
considers that the relationship at least 21 working
with the auditors is working days before the meeting.
well and is satisfied A separate resolution
with their effectiveness. is proposed on each
The Audit Committee has substantially separate
not considered it necessary issue including the
to require Moore Stephens annual report and
LLP to re-tender for the accounts.
external audit work. There All proxy votes are
are no contractual obligations counted and, except
restricting the Company's where a poll is called,
choice of external auditor. the level of proxies
Moore Stephens LLP provided lodged for each resolution
tax compliance services is announced at the
to the Company. Meeting and is published
on Iona Capital's
website (www.ionacapital.co.uk).
The Chairman and the
Senior Independent
Director can always
be contacted either
through the Company
Secretary or care
of the Company's registered
office at 86 Jermyn
Street, London SW1Y
6JD.
Internal Control
The Code requires the The Board keeps under
Directors to review the review the effectiveness
effectiveness of the Company's of the Company's system
system of internal control of internal control
and report to shareholders by monitoring the operation
that they have done so. of key controls of
The Code extended the Iona Capital.
earlier reporting requirements Voting Policy
and now includes financial, Iona Capital's voting
operational and compliance policy as agent for
controls and risk management. the Company has been
The Board confirms that adopted. It applies
it has an on-going process the Statement of Principles
for identifying, evaluating drawn up by the Institutional
and managing the significant Shareholders Committee,
risks faced by the Company. when it considers these
This process has been in its reasonable judgement
in place throughout the to best serve the financial
period and has continued interests of the Company's
since the period end and shareholders. Iona
up to the date of this Capital's voting policy
report. It is reviewed has been reviewed and
at regular intervals by endorsed by the Board
the Board and accords The Directors confirm
with the Financial Reporting that, other than as
Council's 'Internal Control: noted above, during
Revised Guidance for Directors the period under review
on the Combined Code'. the Company has complied
The Board is responsible with the Code issued
for the Company's system by the Financial Reporting
of internal control which Council in 2014.
is designed to manage, Annual Report
rather than eliminate, The Directors consider
the risk of failure to the Annual Report and
achieve business objectives Accounts for the year
and can only provide reasonable ended 31 March 2016,
and not absolute assurance taken as a whole, to
against material misstatement be fair, balanced and
or loss. understandable and
Since investment management, believe that this provides
custody of assets and the information necessary
all administrative services for shareholders to
are provided or arranged assess the Company's
for the Company by Iona performance, business
Capital, the Company's model and strategy.
system of internal control
mainly comprises the monitoring By order of the Board
of services provided by of Directors
Iona Capital, including
the operating controls
established by it, to
ensure they meet the Company's
business objectives. The
key elements designed
to provide effective internal Iona Capital Ltd
control for the Company Secretary
are as follows: Registered Office:
* Financial Reporting - regular and comprehensive 86 Jermyn Street
review by the Board of key investment and financial London, SW1Y 6JD
data including management accounts, revenue
projections, analyses of transactions and performance 27 July 2016
comparisons.
* Investment Strategy - agreement by the Board of the
Company's investment strategy and monitoring of all
large investments.
* Management Agreements - the Board regularly monitors
the performance of Iona Capital as the Investment
Manager to ensure that the Company's assets and
affairs are managed in accordance with the guidelines
determined by the Board.
* Investment Performance - the investment transactions
and performance of the Company's assets and affairs
are managed in accordance with the guidelines
determined by the Board.
* Management Systems - Iona Capital's system of
internal control includes clear lines of
responsibility, delegated authority, control
procedures and systems. Iona Capital's compliance
function monitors compliance with the Financial
Conduct Authority rules.
The Directors are responsible The accounts of the Company
for preparing the Annual are published on www.ionacapital.co.uk.
Report and the accounts Legislation in the United
in accordance with Kingdom governing the
applicable law and preparation and dissemination
regulations. of the accounts may differ
Company law requires from legislation in other
the Directors to prepare jurisdictions.
accounts for each financial In accordance with the
year. Under that law Financial Conduct Authority's
they have elected to Disclosure and Transparency
prepare the accounts Rules, the Directors
in accordance with confirm to the best of
UK Accounting Standards their knowledge that:
and applicable law * the accounts, prepared in accordance with UK
(UK Generally Accepted Generally Accepted Accounting Practice, give a true
Accounting Practice) and fair view of the assets, liabilities, financial
including Financial position and profit or loss of the Company; and the
Reporting Standard Strategic Report includes a fair review of the
102, the financial development and performance of the business and
reporting standard position of the Company together with a description
in the United Kingdom of the principal risks and uncertainties that it
and Republic of Ireland. faces.
Under Company law the
Directors must not
approve the accounts
unless they are satisfied
that they give a true On behalf of the Board
and fair view of the of Directors
state of affairs of
the Company and of
the profit or loss
of the Company for
that period. David Eades
In preparing these Chairman
accounts, the directors Registered Office:
are required to: 86 Jermyn Street
* select suitable accounting policies and then apply London, SW1Y 6JD
them consistently; 27 July 2016
* make judgements and estimates that are reasonable and
prudent;
* state whether applicable UK Accounting Standards have
been followed, subject to any material departures
disclosed and explained in the accounts; and
* prepare the accounts on the going concern basis
unless it is inappropriate to presume that the
Company will continue in business. For reasons stated
in the Strategic Report, Report of the Directors and
in the Statement of Accounting Policies, the Accounts
have not been prepared on a going concern basis.
The Directors are responsible
for keeping adequate
accounting records
that are sufficient
to show and explain
the Company's transactions
and disclose with reasonable
accuracy at any time
the financial position
of the Company and
enable them to ensure
that its accounts comply
with the Companies
Act 2006. They have
general responsibility
for taking such steps
as are reasonably open
to them to safeguard
the assets of the Company
and to prevent and
detect fraud and other
irregularities.
Under applicable law
and regulations, the
Directors are responsible
for preparing the Strategic
Report, the Directors'
Report and the accounts
in accordance with
applicable law and
regulations.
The Directors are responsible
for the maintenance
and integrity of the
Company's corporate
and financial information
included on www.ionacapital.co.uk
which is a website
maintained by the Company's
Investment Manager,
Iona Capital.
The Directors submit Performance Graph
this report in accordance The Company is required
with the requirements to show a graph of total
of Schedule 8 of the shareholder returns against
Large and Medium sized a suitable benchmark
Companies and Groups index since the date
(Accounts & Reports) on which the shares were
(Amendment) Regulations first listed, in its
2013. An Ordinary Resolution Directors' Remuneration
for the approval of Report.
this report together The graph below shows
with an Ordinary Resolution the Company's performance
for the approval of being measured in terms
the Directors' Remuneration of its Total Shareholder
Policy will be put Returns and the net asset
to members at the forthcoming value per Ordinary, A
Annual General Meeting. and B Share over the
The law requires the year ended 31 March 2016
Company's Auditors against the Total Shareholder
to audit certain of Return of the FTSE All-Share
the disclosures provided. Index.
Where disclosures have The graph has incorporated
been audited they are the change in net asset
indicated as such. value per share because
The Remuneration Committee changes in net asset
The Committee is responsible value per share relative
for the framework and to the FTSE All-Share
ongoing review of policy Index are an important
for remuneration of indicator of the performance
the Company's Chairman of the Company's assets.
and directors, compliance The Directors consider
with the law and regulation that since the Company's
with regards to remuneration, investment strategy is
and establishment of to invest in a particular
selection criteria industry sector, the
and appointment processes FTSE All-Share Index
of any remuneration is the most appropriate
consultants where appropriate. index against which to
During the period under compare the Company's
review the Remuneration performance.
Committee comprised
all the Directors of
the Company, other
than Mr MB Dunn, with
Mr PH Ling as Chairman
of the Committee and
met once during the
year.
The Committee has written
terms of reference
which are available
on Iona Capital's website
(www.ionacapital.co.uk).
Policy on Directors'
Remuneration
In accordance with
the Articles of Association
of the Company, the
aggregate remuneration
of the Directors may
not exceed GBP100,000
per annum or such higher
amount as may from
time to time be determined
by an Ordinary Resolution
of the Company. Subject
to this overall limit,
the Company's policy
is that remuneration
of non-executive Directors
should be sufficient
to attract and retain
the Directors needed
to oversee the Company
and reflect the specific
circumstances of the
Company, the duties
and responsibilities
of the Directors and
the value and amount
of time committed to
the Company's affairs.
It is intended that
this policy will continue
for the year ending
31 March 2017 and subsequent
years. Non-executive
Directors are not eligible
to receive bonuses,
pension benefits, share
options and other benefits.
Directors' Service
Contracts
None of the Directors
has a service contract
with the Company. No
arrangements have been
entered into between
the Company and the
Directors to entitle
any of the Directors
for compensation for
loss of office.
There is no employee The Company has not set
remuneration other out any formal requirements
than Directors' remuneration. or guidelines to directors
The table below indicates concerning their ownership
the relative importance of shares in the Company.
of spend on pay on Statement of Voting at
performance and on General Meeting
dividends. 31 31 Change The Committee is pleased
March March that last year the remuneration
2016 2015 report received a 93%
GBP000 GBP000 % shareholder vote in favour
--------------- ------- ------- --------- as set out below. Total %
Total votes
directors' --------------- ---------- ----
remuneration 30 30 - For 2,742,42 93
(Loss) Discretionary 119,760 4
on ordinary Against 39,880 1
activities Abstentions 46,950 2
before --------------- ---------- ----
taxation (552) (526) (4.9%) Total 2,948,632 100
Dividends --------------- ---------- ----
paid 95 245 (157.9%)
--------------- ------- ------- ---------
Statement by the Chairman
31 March 2016 of the Remuneration Committee
--------------------------- The Company has no employees
Directors Salaries Fees Total other than the three
GBP000 GBP000 GBP000 Directors, two of whom
----------- --------- ------- ------- receive remuneration
D Eades 7.5 7.5 15 as outlined above. The
P Ling 7.5 7.5 15 Directors' remuneration
M Dunn - - - payable by the Company
----------- --------- ------- ------- has been agreed at GBP15,000
per annum for both the
31 March 2015 Chairman and Senior Independent
--------------------------- Director. As a current
Directors Salaries Fees Total executive of Iona Capital,
GBP000 GBP000 GBP000 Mr MB Dunn has an interest
----------- --------- ------- ------- in the Management Contract
D Eades 3 12 15 between the Company and
P Ling 3 12 15 Iona Capital. Mr MB Dunn
M Dunn - - - has waived his right
----------- --------- ------- ------- to receive a salary from
the Company.
Views of Shareholders
The Directors were on Remuneration Policy
not remunerated for Any feedback from the
the year, other than Company's shareholders
as shown above. to the Board in relation
Directors' shareholdings to the remuneration policy
and interests (audited): will be taken into account
The Directors' shareholdings by the Committee when
and interests in the it undertakes its regular
Company are shown review of the Company's
in the table on the remuneration policy.
following page: 31 March 2016 On behalf of the Board
------------------------------- of Directors
Directors Ordinary A Shares B Shares
shares
0.01p 0.01p 0.01p
each each each
----------- --------- --------- ---------
D Eades - - 15,600
P Ling 105,000 105,000 15,600 David Eades
M Dunn - 427,640 15,600 Chairman
----------- --------- --------- --------- Registered Office:
86 Jermyn Street
31 March 2015 London, SW1Y 6JD
-------------------------------
Directors Ordinary A Shares B Shares 27 July 2016
shares
0.01p 0.01p 0.01p
each each each
----------- --------- --------- ---------
D Eades - - 15,600
P Ling 105,000 105,000 15,600
M Dunn - 427,640 15,600
----------- --------- --------- ---------
Report of the Independent Respective Responsibilities
Auditors to the Members of Directors and Auditor
of Iona Environmental As explained more fully
VCT PLC ("the Company") in the Statement of Directors'
Opinion on accounts Responsibilities on page
In our opinion the 17 of the accounts, the
accounts: Directors are responsible
* give a true and fair view of the state of the for the preparation of
Company's affairs as at 31 March 2016 and of its the accounts and for
results for the year then ended; being satisfied that
they give a true and
fair view. Our responsibility
* have been properly prepared in accordance with United is to audit and express
Kingdom Generally Accepting Accounting Practice; and an opinion on the accounts
in accordance with applicable
law and International
* have been prepared in accordance with the Companies Standards on Auditing
Act 2006. (UK and Ireland). Those
standards require us
to comply with the Auditing
This report is made Practices Board's (APB's)
solely to the Company's Ethical Standards for
members as a body, in Auditors.
accordance with Chapter Scope of the Audit of
3 of Part 16 of the the Accounts
Companies Act 2006. A description of the
Our audit work has been scope of an audit of
undertaken so that we accounts is provided
might state to the Company's on the Financial Reporting
members those matters Council's web-site at
we are required to state www.frc.org.uk/auditscopeukprivate.
to them in an auditor's Our application of materiality
report and for no other We apply the concept
purpose. To the fullest of materiality in planning
extent permitted by and performing our audit,
law, we do not accept and in evaluating the
or assume responsibility effect of misstatements
to anyone other than on our audit and on the
the Company and the accounts. For the purposes
Company's members as of determining whether
a body, for our audit the accounts are free
work, for this report, from material misstatement
or for the opinions we define materiality
we have formed. as the level of error
Emphasis of Matter - that would change or
Basis of Preparation influence the opinion
of a reasonably knowledgeable
In forming our opinion reader of the accounts.
on the accounts, which We determined materiality
is not modified, we for the accounts as a
have considered the whole to be GBP80,000
disclosures made in which was determined
the 'Basis of preparation' with reference to a benchmark
on page 27 of these of 2% of the total value
accounts. of investments. This
reflects the level of
Following the receipt precision within the
of an offer of GBP4.2m range of reasonably possible
for the four remaining valuations that could
assets, it is the Board's be applied within the
intention to call a total investment portfolio.
General Meeting to approve The value of investments
both the sale of the is considered to be a
assets and the orderly key indicator for users
wind up of the Company. of the accounts when
assessing its financial
It is envisaged that performance.
the disposal and wind We applied a lower level
up of the Company will of materiality to items
be completed in the that affect net revenue
current financial year and expenses, since misstatements
and accordingly the or omissions of a lesser
accounts have been prepared amount in relation to
on a break-up basis. those areas could reasonably
Under this basis, assets be expected to influence
are recorded at realisable the economic decisions
value, liabilities are of users of the accounts.
recorded at expected For this purpose we used
settlement value, long a materiality level of
term investments have GBP12,000.
been classified into We agreed with the Audit
current assets and all Committee that we would
future potential costs report to the Committee
have been accrued. all corrected and uncorrected
misstatements identified
What we have audited through our audit in
We have audited the excess of GBP1,000, as
accounts of the Company well as misstatements
for the year ended 31 below that threshold
March 2016, which comprise: that we believe warranted
* the Statement of Comprehensive Income; reporting on qualitative
grounds. We also report
to the Audit Committee
* the Statement of Financial Position; on any disclosure matters
identified when assessing
the overall presentation
* the Statement of Changes in Equity; of the accounts.
Our assessment of risks
of material misstatement
* the Statement of Cash Flows; and The assessed risk of
material misstatement
described below had the
* the related notes. greatest impact on our
audit strategy, the allocation
of resources in the audit
The financial reporting and directing the efforts
framework that has been of the engagement team.
applied in their preparation
is applicable law and
United Kingdom Accounting
Standards (United Kingdom
Generally Accepted Accounting
Practice)
Investment Valuation In particular, we are
The majority of the required to consider
Company's net assets whether we have identified
are held in investments any inconsistencies
where no quoted market between our knowledge
price is available. acquired during the
As described in the audit and the directors'
accounting policies, statement that they
these investments are consider the Annual
held at fair value. Report is fair, balanced
Subsequent to the year and understandable and
end, the Board received whether the Annual Report
an offer of GBP4.2m appropriately discloses
to dispose of the four those matters that we
remaining investments. communicated to the
The Investment Manager's Audit Committee which
valuation, determined we consider should have
by using the International been disclosed.
Private Equity and Venture Under the Companies
Capital Valuation Guidelines, Act 2006 we are required
has been reviewed an to report to you if,
independent third party in our opinion:
valuation expert who * adequate accounting records have not been kept and
has confirmed the offer returns adequate for our audit have not been received
to be in line with the from branches not visited by us; or
Investment Manager's
valuation.
* the accounts and the part of the Directors'
An overview of the Scope Remuneration Report to be audited are not in
of our Audit in relation agreement with the accounting records and return; or
to the risk identified
Investment Valuation
* certain disclosures of directors' remuneration
In light of the receipt specified by law are not made; or
of an offer of GBP4.2m
for the four remaining
assets, our audit work * we have not received all the information and
included, but was not explanations we require for our audit.
limited to, reviewing
the Investment Manager's
valuation and review Under the Listing Rules
of the report provided we are required to review:
by the independent third * the Directors' statement on page 13 in relation to
party valuation expert. going concern; and
The company's accounting
policy on the valuation * the part of the Corporate Governance Statement
of investments is included relating to the Company's compliance with the nine
on page 28. provisions of the Corporate Governance Code specified
for our review.
The Audit Committee's
consideration of the
above risk is set out We have nothing to report
on page 15. in respect of the above
responsibilities.
Opinion on other matters
prescribed by the Companies
Act 2006
In our opinion:
* the part of the Directors' Remuneration Report to be
audited has been properly prepared in accordance with
the Companies Act 2006; and
* the information given in the Strategic Report and
Directors' Report for the financial year for the year Kelly Sheppard
ended 31 March 2016 is consistent with the accounts (Senior Statutory Auditor)
for that financial year. For and on behalf of
Moore Stephens LLP,
Statutory Auditor
Matters on which we 150 Aldersgate Street
are required to report London
by exception EC1A 4AB
Under the International 28 July 2016
Standards in Auditing
(UK and Ireland), we
are required to report
to you if, in our opinion,
information in the Annual
Report is:
* materially inconsistent with the information in the
audited accounts; or
* apparently materially incorrect based on, or
materially inconsistent with, our knowledge of the
Company acquired in the course of performing our
audit; or
* is otherwise misleading.
Year ended 31 Year ended 31
March 2016 March 2015
--------------------------- ----------------------------
Revenue Capital Total Revenue Capital Total
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Income 1 230 - 230 272 - 272
(Loss) on
investments
- realised - - - - (45) (45)
(Loss)/Gains
on investments
- unrealised - (538) (538) - 877 877
-------- -------- ------- -------- -------- --------
230 (538) (308) 272 832 1,104
Administration
fees 2 (14) (42) (56) (21) (63) (84)
Other expenses 3 (188) - (188) (330) (1,216) (1,546)
-------- -------- ------- -------- -------- --------
(202) (42) (244) (351) (1,279) (1,630)
Profit/(Loss)
on ordinary
activities
before taxation 28 (580) (552) (79) (447) (526)
-------- -------- ------- -------- -------- --------
Tax on loss - - - - - -
on ordinary
activities
Profit/(Loss)
on ordinary
activities
after taxation 28 (580) (552) (79) (447) (526)
-------- -------- ------- -------- -------- --------
Other comprehensive - - - - - -
income
Total Comprehensive
income 28 (580) (552) (79) (447) (526)
-------- -------- ------- -------- -------- --------
Amounts attributable to the different classes
of shares are shown on page 23.
Basic and diluted return to shareholders per:
Ordinary 6 0.7p (0.2p) 0.5p (1.4p) (10.3p) (11.7p)
A share 6 0.1p (0.0)p 0.1p (0.1p) (0.2p) (0.3p)
B share 6 (1.2p) (5.8p) (7.0p) - 67.2p 67.2p
The total column of this statement represents the Company's
Income Statement prepared in accordance with FRS102. The revenue
and capital return columns are supplementary to this and are
prepared under guidance published by the Association of Investment
Companies. All revenue and capital items in the above statement
derive from continuing operations. No operations were acquired or
discontinued in the period.
The notes on page 27 to 41 form part of these accounts.
Attributable Year ended 31 Year ended 31
to Ordinary March 2016 March 2015
& A Shares
--------------------------- ----------------------------
Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Income 206 - 206 251 - 251
(Loss) on
investments
- realised - - - - (45) (45)
(Loss)/Gains
on investments
- unrealised - (64) (64) - 369 369
-------- -------- ------- -------- -------- --------
206 (64) 142 251 324 575
Administration
fees (11) (33) (44) (18) (53) (71)
Other expenses (157) - (157) (312) (1,216) (1,528)
-------- -------- ------- -------- -------- --------
(168) (33) (201) (330) (1,269) (1,599)
Profit/(Loss)
on ordinary
activities
before taxation 38 (97) (59) (79) (945) (1,024)
-------- -------- ------- -------- -------- --------
Tax on loss - - - - - -
on ordinary
activities
Profit/(Loss)
on ordinary
activities
after taxation 38 (97) (59) (79) (945) (1,024)
-------- -------- ------- -------- -------- --------
Attributable Year ended 31 Year ended 31
to B shares March 2016 March 2015
--------------------------- ---------------------------
Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Income 24 - 24 21 - 21
(Loss)/Gains
on investments
- unrealised - (474) (474) - 508 508
-------- -------- ------- -------- -------- -------
24 (474) (450) 21 508 529
Administration
fees (3) (9) (12) (3) (10) (13)
Other expenses (31) - (31) (18) - (18)
-------- -------- ------- -------- -------- -------
(34) (9) (43) (21) (10) (31)
(Loss)/Profit
on ordinary
activities
before taxation (10) (483) (493) - 498 498
-------- -------- ------- -------- -------- -------
Tax on loss - - - - - -
on ordinary
activities
(Loss)/Profit
on ordinary
activities
after taxation (10) (483) (493) - 498 498
-------- -------- ------- -------- -------- -------
The notes on pages 27 to 41 form part of these accounts.
Called Revaluation Capital Revenue Total
up share reserve* Reserve* reserve
capital
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1
April 2014 14 468 (135) 5,501 5,848
Comprehensive
income
Profit and loss - 877 (1,324) (79) (526)
Other comprehensive
income
Transfer of previously
unrealised losses
now realised - 253 (253) - -
Total Other Comprehensive
income - 253 (253) - -
Total Comprehensive
income - 1,130 (1,577) (79) (526)
Transactions
with owners
Dividends relating
to 2015 - - - (256) (256)
---------- ------------ ---------- --------- -------
Total Transactions
with owners - - - (256) (256)
---------- ------------ ---------- --------- -------
Balance at 31
March 2015 14 1,598 (1,712) 5,166 5,066
Comprehensive
income
Profit and loss - (538) (42) 28 (552)
Other comprehensive - - - - -
income
---------- ------------ ---------- --------- -------
Total Comprehensive
income - (538) (42) 28 (552)
Transactions
with owners
Dividends relating
to 2016 - - - (95) (95)
Purchase of own
shares (41) (41)
---------- ------------ ---------- --------- -------
Total Transactions
with owners - - - (136) (136)
---------- ------------ ---------- --------- -------
Balance at 31
March 2016 14 1,060 (1,754) 5,058 4,378
---------- ------------ ---------- --------- -------
* Non-distributable
On 29 January 2016 the company purchased 85,000 Ordinary and
44,600 A shares for a consideration of GBP40,954 and GBP512.90
respectively. The purchase of own shares by the Company has
resulted in a Capital Redemption Reserve of GBP133.
The notes on pages 27 to 41 form an integral part of the
accounts.
As at 31 March As at 31 March
2016 2015
------------------------------ ------------------------------
Ordinary B Shares Total Ordinary B Shares Total
& A & A
Shares Shares
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Fixed assets
Investments
held at fair
value 7 - - - 3,272 1,168 4,440
Current assets
Investments
held at fair
value 7 3,500 700 4,200 - - -
Debtors 9 31 2 33 6 - 6
Cash at bank 171 53 224 1,156 91 1,247
--------- --------- -------- --------- --------- --------
3,702 755 4,457 1,162 91 1,253
Current liabilities
Creditors:
amounts falling
due within
one year 10 (69) (10) (79) (619) (8) (627)
Net Current
assets 3,633 745 4,378 543 83 626
Total assets
less current
liabilities 3,633 745 4,378 3,815 1,251 5,066
Net assets 3,633 745 4,378 3,815 1,251 5,066
--------- --------- -------- --------- --------- --------
Capital and
reserves
Called up
share capital 11 13 1 14 13 1 14
Capital reserves (1,723) (31) (1,754) (1,690) (22) (1,712)
Revaluation
reserve 963 97 1,060 1,027 571 1,598
Revenue reserve 4,380 678 5,058 4,465 701 5,166
Total Shareholders'
funds 3,633 745 4,378 3,815 1,251 5,066
Net asset
value per
Ordinary Share 12 67.0 69.2
Net asset
value per
A Share 12 1.4 1.4
Net asset
value per
B Share 12 88.9 149.8
The notes on pages 27 to 41 form an integral part of the
accounts.
The accounts on pages 22 to 41 were approved by the Board of
Directors on 27 July 2016 and were signed on its behalf by:
David Eades
Director
Date: 27 July 2016
Registered Number: 07049290
Year ended 31 Year ended 31
March 2016 March 2015
------------------------------ -----------------------------
Ordinary B Shares Total Ordinary B Shares Total
& A & A
Shares Shares
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Net cash outflow
from operating
activities 14 (73) (25) (98) (73) (23) (96)
Investing
activities
Purchase of
investments (792) - (792) - - -
Disposal of
investments - - - 795 - 795
Net cash (outflow)/inflow
from investing
activities (792) - (792) 795 - 795
Net cash (outflow)/inflows
before financing (865) (25) (890) 722 (23) 699
Financing
Dividends
paid (79) (13) (92) (234) (11) (245)
Purchase of
own shares (41) - (41) - - -
--------- --------- -------- --------- --------- -------
Net cash outflow
from financing (120) (13) (133) (234) (11) (245)
(Decrease)/Increase
in cash for
the year 13 (985) (38) (1,023) 488 (34) 454
The notes on pages 27 to 41 form an integral part of the
accounts.
Statement of compliance
Iona Environmental Infrastructure VCT plc ("the company") is a
Venture Capital Trust incorporated in England and Wales. The
Registered Office is 86 Jermyn Street, London, SW1Y 6JD.
The company's accounts have been prepared in compliance with
Financial Reporting Standard 102 ("FRS102"), the Financial
Reporting Standard applicable to the UK and Republic of Ireland
issued by the FRC as it applies to the accounts of the company for
the year ended 31 March 2016. These accounts are those of the
Company only and are presented in Pounds Sterling (GBP) to the
nearest pound. GBP is the functional currency, as that is the
currency in which the Company's transactions are denominated.
The Company transitioned from previously extant UK GAAP to FRS
102 as at 1 April 2014. An explanation of how transition to FRS102
has affected the reported financial position and financial
performance is given in note 20.
Basis of accounting
The accounts are prepared on the historical cost basis of
accounting, modified to include the revaluation of current asset
investments, in accordance with the Companies Act 2006 and FRS102
and the Statement of Recommended Practice 'Financial Statements of
Investment Trust Companies and Venture Capital Trusts' issued by
the Association of Investment Companies in November 2014 ('the
SORP').
In order to reflect the activities of an investment company,
supplementary information which analyses the accounts between items
of a revenue and capital nature has been presented. In analysing
total income between capital and revenue returns, the Directors
have followed the guidance contained in the SORP.
The management and administrative fees are allocated between
revenue and capital in accordance with the Board's expected long
term split of returns. Other expenses are charged to capital only
to the extent that a clear connection with the maintenance or
enhancement of the value of investments can be demonstrated.
Basis of preparation
Following the receipt of an offer of GBP4.2m for the four
remaining assets, it is the Board's intention to seek approval for
both the sale of the assets and the orderly wind up of the VCT at a
General Meeting to be held in October 2016.
It is envisaged that the disposal and wind up of the VCT will be
completed in the current financial year and accordingly the
accounts have been prepared on a break-up basis. Under this basis,
assets are recorded at realisable value, liabilities are recorded
at expected settlement value, long term investments have been
classified into current assets and all future potential costs have
been accrued.
The Directors do not believe there is any required adjustments
to the recorded value of both assets and liabilities and in
addition believe that the costs of winding up the business will not
be significant and therefore no provision for costs of closure have
been included in the accounts.
Accounting convention
The accounts are prepared under the historical cost convention,
modified to include the revaluation of current asset investments at
fair value. The more significant accounting policies are listed
below.
Judgments and key sources of estimation uncertainty
The preparation of the accounts requires management to make
judgments, estimates and assumptions that affect the amounts
reported for assets and liabilities as at the balance sheet and the
amounts reported for revenues and expenses during the year.
However, the nature of estimation means that actual outcomes could
differ from these estimates. The following judgment (apart from
those involving estimates) have had the most significant effect on
amounts recognised in the accounts.
i) Taxation
The Company establishes provisions based on reasonable
estimates, for possible consequences of audits by the tax
authority. Management estimation is required to determine the
amount of deferred assets that can be recognised, based upon likely
timing and level of future taxable profits together with an
assessment of the effect of future tax planning. Further details
are contained in note 5.
Valuation of investments
The Company includes its investments in unquoted investments at
fair value. A description of the valuation techniques applied,
estimations and judgments are included below.
Financial asset and liabilities
General
Financial instruments are recognised on the Company's statement
of financial position when the Company becomes a party to the
contractual provisions of the instrument. Financial Instruments are
initially measured at transaction price unless the arrangement
constitutes a financing transaction which includes transaction
costs for financial instruments not subsequently measured at fair
value. Subsequent to initial recognition, they are measured as set
out below.
Investments
Purchases and sales of investments are recognised when the
contract for acquisition or sale becomes unconditional.
Investments in ordinary shares and debt instruments classified
as basic instruments are measured at fair value at the end of the
reporting period, with the resulting changes recognised in profit
or loss.
The fair value is calculated in accordance with International
Private Equity and Venture Capital Valuation Guidelines issued in
December 2012 following the methodology outlined below.
Principles of Valuation of Investments
Fair value represents the amount for which an asset could be
exchanged between knowledgeable, willing parties in an arm's length
transaction. Where an investment is in the early stage of
development it will normally continue to be held at cost as the
best estimate of fair value, reviewed for impairment. Only when the
investment is established after an appropriate period, the
investment may be valued.
In estimating fair value, the Directors use a methodology which
is appropriate in light of the nature, facts and circumstances of
the investment and its materiality in the context of the total
investment portfolio. Methodologies are applied consistently from
one period to another except where a change results in a better
estimate of fair value. Due to the inherent uncertainties in
estimating the value of private equity investments, the Directors
exercise due caution in applying the various methodologies.
Unquoted Investments
The principal methodologies applied in valuing unquoted
investments include the following:
-- Revenues multiple, Earnings multiple
-- Price of recent investment
-- Net assets
-- Discounted cash flow
In the majority of cases the Enterprise Value of the underlying
business is derived by the use of a discounted cash flow model.
This involves calculating the net present value of the expected
future cash flows of the investee companies.
The methodology applied takes account of the nature, facts and
circumstances of the individual investment and uses reasonable
data, market inputs, assumptions and estimates in order to
ascertain fair value. Methodologies are applied consistently from
year to year except where a change results in a better estimate of
fair value. Where a recent investment has been made, either by the
Company or by a third party in one of the Company's investments,
this price will be used as the estimate of fair value from the date
on which the investment was made. One of the principal
methodologies, as above, may be used at any time if this is deemed
to provide a better assessment of the fair value of the investment.
Unquoted investments may be subject to an impairment adjustment to
valuation where necessary.
The amount of the discount is a question of judgment and will
reflect several factors including the ability of the Company to
influence the timing and nature of any realisation. Where the
Company has the ability to influence an exit, or is part of a
syndicate of like-minded investors who initiate the exit, a smaller
discount will be applied. This may vary according to market and
investee company circumstances. Where the likelihood of an exit is
high, the discount is likely to be lower. Where there is no ability
to initiate an exit and exit is not under discussion, the discount
is likely to be higher. In cases where no exit is contemplated by
controlling shareholders, the investment may be valued by
discounting the cash flow from the investment itself.
Financial asset and liabilities (continued)
Unquoted Investments
It is not the company's policy to exercise significant influence
over investee companies. Therefore, the results of these companies
are not incorporated in the Income Statement. This is in accordance
with the SORP and FRS102 Sections 14 and 15 that does not require
portfolio investments, where the interest held is greater than
20%.
Trade debtors
Trade debtors, due within one year, are included at amortised
cost using the effective interest rate.
Cash and cash equivalents
Cash and cash equivalents consist of cash on hand and balances
with banks, and investments in money market instruments which are
readily convertible, being those with original maturities of three
months or less.
Cash and cash equivalents are measured at fair value.
Revenue recognition
Dividends receivable from equity investments are brought into
account on the ex-dividend date or, where no ex-dividend date is
quoted, are brought into account when the Company's right to
receive payment is established. Fixed returns on non-equity
investments and on debt securities including redemption premium are
recognised on an effective interest rate basis. Where there is
reasonable doubt that a return, which falls within the accounting
period, will actually be received by the Company, the recognition
of the return is deferred until the reasonable doubt has been
removed.
Interest income
Revenue is recognised when interest accrues using the effective
interest method.
Expenses
All expenses are accounted for on an accruals basis. Expenses
are charged through the revenue account except for expenses in
connection with the disposal of current asset investments, which
are deducted from the disposal proceeds of the investment and
investment management and incentive fees which are dealt with
below.
Investment Management and Incentive Fees
The investment management fees for the Investment Manager's
services are charged 25% to the revenue account and 75% to the
capital account. This is in line with the Board's long-term
expected split of returns from the investment portfolio of the
Company.
Revenue and Capital Reserves
The revenue return in the Income Statement is taken to the
revenue reserve.
Gains and losses on the realisation of investments are taken to
the realised capital reserve. Gains and losses arising from changes
in fair value are considered to be realised only to the extent that
they are readily convertible to cash in full at the balance sheet
date. Otherwise gains and losses are treated as unrealised.
Taxation and deferred taxation
The tax effects of different items in the Income Statement are
allocated between capital and revenue on the same basis as the
particular item to which they relate using the Company's effective
rate of tax for the accounting period.
Due to the Company's status as a venture capital trust and the
continued intention to meet the conditions required to comply with
Section 274 of the Income Tax Act 2007, no provision for taxation
is required in respect of any realised or unrealised appreciation
of the Company's investments.
Deferred tax is recognised in respect of all timing differences
which are differences between taxable profits and total
comprehensive income that arise from the inclusion of income and
expenses in tax assessments in period different from those which
they are recognised in the financial statement, except that:
-- Unrelieved tax losses and other deferred tax assets are
recognised only to the extent that the directors consider that it
probable that they will be recovered against the reversal of
deferred tax liabilities or other future taxable profits.
Deferred tax is measured on an undiscounted basis at the tax
rates that are expected to apply in which timing differences
reverse, based on tax rates and laws enacted or substantially
enacted at the balance sheet date.
Dividends Payable
Dividend distributions to shareholders are recognised as a
liability in the period in which they are paid in respect of
interim dividends or when approved by members in respect of final
dividends.
Share Issue Expenses and Share Premium Account
Costs of share issues are written off against the premium
arising on the issues of share capital.
1 Income Year ended Year ended
31 March 31 March
2016 2015
GBP000 GBP000
----------- -----------
Interest income and accrued
redemption premium 230 264
Management services income - 7
Other income - 1
----------- -----------
230 272
----------- -----------
2 Administrative fees Year ended Year ended
31 March 31 March
2016 2015
Investment Manager's fee GBP000 GBP000
----------- -----------
Iona Capital Ltd - Revenue 14 21
Iona Capital Ltd - Capital 42 63
----------- -----------
56 84
----------- -----------
Management fees and arrangements
Management fees are payable quarterly in advance to the
Investment Manager, Iona Capital Ltd, as a percentage of net
assets. Management fees are paid at 2.5% per annum in respect of
the Original Fund, that is, the Ordinary and A Shares, and 2% per
annum in respect of the B Share Fund. To date no management fees
have been paid to the Investment Manager as result of total costs
of the company (excluding management fees) exceeding the Annual
Running Cost cap of 3.6%.
Annual Running Costs (annual costs and expenses incurred by the
Company, including irrecoverable VAT but excluding exceptional and
extraordinary costs) of the Company are capped at 3.6% of the net
asset value. Any excess will be reduced against the management fee
payable to the Investment Manager.
An administrative fee of GBP60,000 plus VAT per annum is also
payable under the terms of the agreement and is subject to an
annual RPI adjustment and the Annual Running Costs provisions.
Incentive scheme
Ordinary Shares and A Shares
To give effect to a Performance Incentive, each investor
received one Ordinary Share and on A Share at the Subscription
prices of the 99.9p for each Ordinary Share and 0.1p for each A
Share. At the close of the Offer, management owned 20% of the
issued A Shares in the share capital of the Company, with a further
13% allotted on the 25 November 2010, therefore holding a third of
all A Shares in issue, which vested on allocation. Subject to the
achievement of the Hurdle, being a Performance Value of at least
120p per share and the payment of Shareholder Proceeds (being
amounts paid by way of dividends or other distributions, shares
buybacks, proceeds on sale of liquidation of the Company and any
other proceeds or value received , by Shareholders in the Company,
excluding any income tax relied on subscription) of at least 20p
per share, the Management A Shareholders will receive 1% of the
first 20p of Shareholder Proceeds and 20% of Shareholder Proceeds
thereafter.
The holder of A Shares will be entitled to distributions
equivalent to three times the Performance Incentive. Two thirds of
the distributions in respect of the A Shares will be allocated to
Shareholders and one third to Management, which will result in
Management receiving the level of Performance described above.
B Shares
The amount of the performance incentive fee is based on the net
asset value of the B Shares in the Company and on the payment of
the Shareholder Proceeds in relation to B Shares.
If by the end of a financial year, Shareholder Proceeds per B
Share have reached 20p in aggregate and if the Performance Value at
that date exceeds 120p per B Share, a performance incentive fee
equal to 20% of the excess of such performance Value over 100p per
B Share will be payable to the Investment Manager.
If, on a subsequent financial year end, the Performance Value of
the Company falls short of the Performance Value on the previous
financial year end, no incentive fee will arise. If, on a
subsequent financial year end, the performance exceeds the previous
best Performance Value of the Company, the Investment Manager will
be entitled to 20% of such excess in aggregate.
To date no performance incentive fees have been paid relating to
either share class, since Shareholder Proceeds have not reached the
relevant thresholds.
3 Other expenses Year ended Year ended
31 March 31 March
2016 2015
GBP000 GBP000
----------- -----------
Auditors remuneration:
Audit 26 19
Tax compliance 4 -
Other:
Professional fees 20 25
Administration expense 66 67
Trail commission 7 10
Impairments - 1,216
Bad debt write off 65 209
----------- -----------
188 1,546
----------- -----------
4 Directors remuneration
Details of Directors' remuneration are shown
in the 'Directors' Remuneration for the year
(audited) section of the Directors Remuneration
Report on page 18.
The Company has three employees, all of whom
are Directors in the Company, during the year
ended 31 March 2016 (2015: three)
5 Taxation on ordinary activities Year ended Year ended
31 March 31 March
2016 2015
GBP000 GBP000
----------- -----------
Analysis of change in the
period
Current tax: - -
UK corporation tax at 20% - -
(2015: 20%)
----------- -----------
Total current tax - -
----------- -----------
Factors affecting tax charge
for the year
(Loss) on ordinary activities
before tax (552) (526)
----------- -----------
(Loss) on ordinary activities
before tax multiplied by tax
rate of 20% (2015: 20%) (110) (105)
Effects of:
Expenses no deductible 99 94
Unutilised tax losses arising
the year 11 11
Total current tax - -
----------- -----------
Capital returns are not included in above
reconciliation as VCTs are exempt from tax
on realised capital gains provided that they
comply and continue to comply with the VCT
regulations.
There is no unprovided deferred tax liability
at 31 March 2016 (2015: none)
There has been no recognition of a deferred
tax asset arising from tax losses of GBP66,000
(2015: GBP56,000) as the Directors do not
believe there is sufficient certainty these
tax losses will be used or recovered against
future applicable taxable profits.
No asset or liability has been recognised
for deferred tax in relation to capital gains
or losses on revaluing investments. The Company
is exempt from such tax as a result of qualifying
as a Venture Capital Trust.
6 Return per
Share
Year ended 31 Year ended 31
March 2016 March 2015
--------------------------------- ---------------------------------
Ordinary A Shares B Shares Ordinary A Shares B shares
Shares Shares
Weighted average
number of shares 5,330,868 8,010,569 853,360 5,345,499 8,018,246 835,360
---------- ---------- --------- ---------- ---------- ---------
Revenue return
per share based
on:
Net profit/(loss)
after taxation
(GBP000) 37 1 (10) (77) (2) -
Pence per share 0.69p 0.01p (1.20p) (1.43) (0.03) -
Capital return
per share based
on:
Net capital
(loss) for
the year (GBP000) (94) (3) (483) (917) (28) 498
Pence per share 0.18p (0.0p) (5.78p) (17.15p) (0.35p) 59.62p
There are no dilutive potential shares and
so the basic and dilutive return per share
are the same.
In accordance with the Company's articles,
dividends per Ordinary and A Shares will be
allocated 97% to Ordinary Shares and 3% to
A Shares and for the A Shares accumulated
until such time as the accumulated total reaches
0.25p per A Share, at which point they will
become payable.
7 Investment
held at fair
value
Unquoted investments Shares Loan Total
notes
GBP000 GBP000 GBP000
---------- ---------- -----------
Attributable to
Ordinary & A Shares
Opening balance
at 1 April 2015 2,039 1,233 3,272
Additions at
cost - 232 232
Capitalised
unpaid interest - 39 39
Redemption premiums at
effective interest rate - 21 21
Unrealised gains/(losses)
in the income statement 2 (66) (64)
---------- ---------- -----------
As at 31 March
2016 2,041 1,459 3,500
---------- ---------- -----------
Attributable
to B Shares
Opening balance
at 1 April 2015 910 258 1,168
Additions at - - -
cost
Capitalised
unpaid interest - 6 6
Unrealised (losses)/gains
in the income statement (494) 20 (474)
As at 31 March
2016 416 284 700
Details of the fair value movements by investment
can be found on page 6.
7 Investments held at fair
value (continued)
Shares Loan notes Date of
GBP000 GBP000 loan note
maturity
--------- ----------- -------------
Attributable to Ordinary
& A Shares
28 March
JFS Howla Hay Biogas Ltd 513 605 2022
30 June
JFS Wray House Biogas Ltd 535 335 2022
Stanley Renewable Energy 07 December
Ltd 993 519 2022
Gradone Products Limited - - -
(in administration)
--------- ----------- -------------
2,041 1,459
--------- ----------- -------------
Attributable to B Shares
30 September
JFS Home Farm Biogas Ltd 416 284 2023
--------- ----------- -------------
416 284
--------- ----------- -------------
All of the above investments are designated
as fair value through profit and loss on initial
recognition.
The enterprise value of the investments that
are operational and recognised at fair value
have previously been derived using a discounted
cash flow ("DCF") model. The assets are expected
to have an operational life of at least twenty
years requiring the manager to exercise judgment
over the inputs and performance assumptions
in the DCF models to make an informed and qualified
decision over fair value based as far as possible
on the actual experience of operating these
and similar kinds of assets. At the reporting
date, the fair value of the above investments
is based on an actual market offer.
During the year, Gradone Products Limited entered
administration. The asset was fully impaired
during the year ended 31 March 2015 and it
not anticipated that any amounts invested will
be recovered.
The Company has categorised its financial instruments
that are measured subsequent to initial recognition
at fair value, using the fair value hierarchy
as follows:
Level a Reflects financial instruments quoted
in an active market.
Level b Reflects financial instruments that
have been valued based on prices of recent
transactions for identical assets.
Level c (i) Reflects financial instruments
that have been valued using valuation techniques
with observable inputs.
Level c (ii) Reflects financial instruments
that have been valued using valuation techniques
with unobservable inputs.
31 March 31 March
2016 2015
GBP000 GBP000
----------- -------------
Level a - -
Level b - -
Level c (ii) 4,200 4,440
----------- -------------
4,200 4,440
----------- -------------
8 Significant interests
The Company has interest of 10% or greater
of the nominal value of the allotted shares
in the following companies incorporated in
the United Kingdom as at 31 March 2016.
Share % share % total
type type held voting rights
------------ ----------- ---------------
JFS Howla Hay Biogas
Ltd Ordinary 31.00% 31.00%
Stanley Renewable
Energy Ltd A Ordinary 36.06% 36.06%
JFS Home Farm Biogas
Ltd Ordinary 48.00% 48.00%
JFS Wray House Biogas
Ltd Ordinary 50.00% 50.00%
Gradone Products Limited
(in administration) A Ordinary 100% 50.00%
9 Debtors 2016 2015
GBP000 GBP000
------- -------
Amounts receivable within one
year:
Trade debtors 20 -
Accrued income 4 3
Prepayments 2 2
Other debtors 7 1
------- -------
33 6
------- -------
10 Creditors: amounts falling
due within one year
2016 2015
GBP000 GBP000
------- -------
Trade creditors 4 4
Trail commission payable 15 13
Accrued expenses 45 39
Accumulated dividends 15 11
Amounts unpaid on investments - 560
------- -------
79 627
------- -------
11 Called-up share capital
At 31 March At 31 March
2016 2015
-------------------- --------------------
Number GBP000 Number GBP000
----------- ------- ----------- -------
Ordinary Shares of
0.1p each issued 5,260,499 5 5,345,499 5
A Shares of 0.1p each
issued 7,973,646 8 8,018,246 8
B Shares of 0.1 each
issued 835,360 1 835,360 1
----------- ------- ----------- -------
14,069,505 14 14,199,105 14
----------- ------- ----------- -------
12 Net asset value per
share
Ordinary A B
Shares* Shares* Shares Total
---------- ---------- --------- ----------
Net assets at 1 April
2014 4,931 153 764 5,848
Total revenue for
the period (78) (1) - (79)
Total capital for
the period (917) (28) 498 (447)
Dividends paid during
the year* (234) (11) (11) (256)
---------- ---------- --------- ----------
Net assets at 31 March
2015 3,702 113 1,251 5,066
---------- ---------- --------- ----------
Number of shares in
issue 5,345,499 8,018,246 835,360
Net asset value per
share (p) 69.2 1.4 149.8
Net assets a1 1 April
2015 3,702 113 1,251 5,066
Total revenue for
the period 37 1 (10) 28
Total capital for
the period (94) (3) (483) (580)
Dividends paid during
the year* (78) (4) (13) (95)
Purchase of own shares (41) - - (41)
---------- ---------- --------- ----------
Net assets at 31 March
2016 3,526 107 745 4,378
---------- ---------- --------- ----------
Number of shares in
issue 5,260,499 7,973,646 835,360
Net asset value per
share (p) 67.0 1.4 88.9
*Unless and until the Hurdle is met (ie.
there is a performance value of at least
120p per share and the Shareholders have
received Shareholder Proceeds of at least
20p per share), distributions are made as
to 97% to Ordinary Shares and 3% to A Shares.
13 Analysis of changes in net funds
Year ended 31 Year ended 31
March 2016 March 2015
------------------------------------- -------------------------------
Ordinary B Shares Total Ordinary B Shares Total
& A & A
shares Shares
------------ ----------- ---------- ---------- --------- --------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At beginning
of the year 1,156 91 1,247 668 125 793
Net cash (outflow)/inflow (985) (38) (1,023) 488 (34) 454
------------ ----------- ---------- ---------- --------- --------
At the end of
the year 171 53 224 1,156 91 1,247
------------ ----------- ---------- ---------- --------- --------
14 Reconciliation of net revenue on ordinary
activities before taxation to net cash outflow
from operating activities
Year ended 31 Year ended 31
March 2016 March 2015
------------------------------ -----------------------------
Ordinary B Shares Total Ordinary B Shares Total
& A & A
Shares Shares
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------- --------- ------- --------- --------- -------
(Loss)/profit
on ordinary
activities (59) (493) (552) (1,024) 498 (526)
Redemption
premium (39) (6) (45) (43) - (43)
Unpaid interest
rolled up into
investment (21) - (21) (48) (22) (70)
Impairment
of investments - - - 1,216 - 1,216
Unrealised
revaluation
loss/(gain) 64 474 538 (369) (508) (877)
Realised loss
on disposals - - - 45 - 45
(Increase)/decrease
in debtors (25) (2) (27) 148 7 155
Increase in
creditors and
accruals 7 2 9 2 2 4
---------- --------- ------- --------- --------- -------
Net cash outflow
from operating
activities (73) (25) (98) (73) (23) (96)
---------- --------- ------- --------- --------- -------
15 Financial instruments
The Company's financial instruments comprise
investments held at fair value through the
profit and loss, being equity and loan stock
investments in unquoted companies; loans
and receivables (being cash deposits and
short term debtors); and financial liabilities
(being creditors arising from its operations).
The main purpose of these financial instruments
is to generate cash flow, revenue and capital
appreciation for the Company's operations.
The Company has no gearing or other financial
liabilities apart from short-term creditors
and does not use any derivatives.
The fair value of investments is determined
using the detailed accounting policy as
shown in the statement of accounting policies.
The composition of the investments is set
out in note 7 and below.
The fair value of cash deposits and short
term debtors and creditors equates to their
carrying value in the Balance Sheet.
Principal risks and management objectives
The Company's investment activities expose
the Company to a number of risks associated
with financial instruments and the sectors
in which the Company invests. The principal
financial risks arising from the Company's
operations are:
-- Market risks;
-- Price risks;
-- Credit risk; and
-- Liquidity risk.
The Board regularly reviews these risks
and the policies in place for managing them.
There have been no significant changes to
the nature of the risks that the Company
is exposed to over the year and there have
also been no significant changes to the
policies for managing those risks during
the year.
15 Financial instruments (continued)
Interest rate risk: The Company invests in loan
notes on fixed rates and none of the Company's
other assets are interest bearing at variable
rates and therefore do not have exposure to interest
rate risk.
The interest rate profile of the Company's financial
assets as at 31 March 2016 was:
Financial Fixed Variable Total Weighted
assets rate rate average
on which financial financial interest
no interest assets assets rates
is earned
GBP000 GBP000 GBP000 GBP000 %
-------------------- -------------- ----------- -------- ----------
Cash 224 - - 224
Debtors 20 - - 20
Loan notes - 1,743 - 1,743 10%
-------------------- -------------- ----------- -------- ----------
244 1,743 - 1,987
-------------------- -------------- ----------- -------- ----------
The interest rate profile of the Company's
financial assets as at 31 March 2015 was:
Financial Fixed Variable Total Weighted
assets rate rate average
on which financial financial interest
no interest assets assets rates
is earned
GBP000 GBP000 GBP000 GBP000 %
------------- ----------- ----------- --------- ----------
Cash 1,247 - - 1,247
Debtors 6 - - 6
Loan notes - 1,491 - 1,491 10%
------------- ----------- ----------- --------- ----------
1,253 1,491 - 2,744
------------- ----------- ----------- --------- ----------
The only financial liabilities are creditors
shown in note 10, none of which is interest
bearing. The Directors manage interest rate
risk by investing in loan notes which earn interest
at a fixed rate. As none of the Company's current
loan assets is linked to a base rate they are
not exposed to movements and thus no sensitivity
analysis has been undertaken.
Price risk: Price risk arises from uncertainty
in future process and valuations of financial
instruments held in accordance with Company's
Investment Policy. It represents the potential
loss to the Company as a result of changes to
the fair value of investments that it holds.
The Company's sensitivity to fluctuations in
the fair value of investments is summarised
below. A 10% upward or downward movement in
the fair of investments held by the Company
would have the following effect:
Ordinary A Shares B Shares
Shares
----------- --------- ----------
Effect on
net assets +/-
(GBP000) +/- 377 +/-10.1 98.6
Effect on
NAV per share
(pence per +/-
share) +/- 6.22 +/- 0.13 11.8
The directors manage price risk as outlined
in the Investment Strategy. Risk diversification
procedures include investing funds in different
companies to mitigate poor performance by any
individual investment and to invest in fixed
income funds, securities and cash deposits to
reduce the effect of fair value movements.
15 Financial instruments (continued)
Credit risk: Credit risk is the risk that a counterparty
to a financial instrument is unable to discharge
an obligation or commitment entered into with
the Company. The Investment Manager has a procedure
in respect of counterparty risk which is monitored
regularly. The carrying amounts of financial assets
best represent the maximum credit risk exposure
at the balance sheet date.
At the reporting date, the Company's financial
assets exposed to credit risk amounted to the
following:
As at As at
31 March 31 March
2016 2015
----------- ----------
Shares 2,457 2,949
Loan notes 1,743 1,491
Loan notes - commitment
not yet drawn - 232
Cash 224 1,247
Trade debtors 20 -
Accrued income 4 3
Other debtors 1 1
Investments in loan notes comprise of loans
made to investee companies. All loans are made
at a fixed rate between 10% and 12%. Interest
and principal is repaid over fixed payment terms.
Here schedule interest payments cannot be met
by an investee Company, the unpaid interest
is added to the loan notes in accordance with
the conditions of each loan. The Directors manage
credit risk on these loans at initial investment
as outlined in the Investment Strategy and through
continuing close monitoring of the investee
company which includes significant influence
over the management of the business through
Board of Director appointments.
The cash balance is held in an HSBC Bank plc
bank account. HSBC Bank PLC is an A rated financial
institution and the cash held in escrow is held
in lieu of investment and is redeemable on demand
by the Company. Consequently, the Directors
believe the credit risk associated with the
cash deposits to be low.
Liquidity risk: Liquidity risk is the risk the
Company my encounter difficulty in meeting its
obligations arising from holding financial instruments.
The Company's liquidity risk is continuously
managed by the Investment Manager as presented
in the Strategic Report. The Company maintains
sufficient investments in cash and liquid resources
to pay all accounts payable and accrued expenses
as they fall due.
Management of capital
The Company's objective when managing capital
is to safeguard the Company's ability to continue
as a going concern in order to continue to provide
returns to shareholders. In compliance with
HMRC's VCT tax legislation, 70% must be invested
in qualifying investments within 3 years of
the capital being subscribed. Capital for this
purpose is considered to be shareholders' funds.
The Company does not have any externally imposed
capital requirements.
16 Geographical analysis
The Company's operations are
located wholly in the United
Kingdom.
17 Related party transactions
Iona Capital Ltd acts as Investment Manager
for the Company and therefore provides key
management personnel services to the Company.
Details of fees payable by the Company to Iona
Capital Limited are outlined in Note 2. The
following table shows fees paid to Iona Capital
Ltd in the year ended 31 March 2016.
Year ended Year ended
31 March 31 March
2016 2015
GBP000 GBP000
------------ ------------
Administrative fee 56 84
The Investment Manager waived its right to
investment management fees (2015: GBPnil).
As at 31 March 2016 there were no outstanding
balances payable to Iona Capital Limited (2015:
GBPnil)
Remuneration of the Company's directors for
their services to the Company are outlined
in the Remuneration Report on page 18. The
following table shows fees paid to the directors
and balances owing to them at 31 March 2016
Year ended Year ended
31 March 31 March
2016 2015
GBP000 GBP000
------------ ------------
Directors fees expense 18 24
Directors salaries 15 4
Outstanding amounts owed to
the directors at 3 5
The companies in which Iona Environmental VCT
Plc holds voting rights of more than 20% are
considered to be related parties. The companies
are listed in Note 8, including the shareholdings
in each. At the balance sheet date there was
GBP1,477,000 (2015: GBP1,183,000) owing to
the Company from these entities which includes
loan note principal and accrued interest calculated
at the effective interest rate, after adjusting
for impairments. In the period to 31 March
2016 interest income of GBP230,027 (2015: GBP260,800)
from these companies was recorded in the Income
Statement.
Iona Environmental Infrastructure LP, a fund
managed by Iona Capital Ltd, has submitted
an offer to the Company to purchase the remaining
four investments for a consideration of GBP4.2m,
18 Contingent liabilities
There are no contingent liabilities outstanding
as at 31 March 2016 (2015: none)
19 Subsequent events
Subsequent to the year end the VCT received
an offer of GBP4.2m for the four remaining
assets. The Board will be proposing the approval
of the sale of the assets at a General Meeting
to be held in October 2016.
20 Transition to FRS
102
The company transitioned to FRS 102 from
the previously extant UK GAAP as at 1 April
2014
The impact from the transition
to FRS 102 is as follows:
GBP'000s
Reconciliation of equity at 1 April
2014
Equity shareholders' funds at 1
April 2014 under previous UK GAAP 5,406
Impact of fair value of loan stock 442
----------
Equity shareholders' funds at 1
April 2014 under FRS102 5,848
----------
Reconciliation of equity at 31
March 2015
Equity shareholders' funds at 31
March 2015 under previous UK GAAP 5,000
Impact of fair value of loan stock 66
----------
Equity shareholders' funds at 31
March 2015 under FRS102 5,066
----------
The following change in accounting
policy arose from the transition
to FRS 102:
Fair value of loans
Under previous UK GAAP, the VCT accounted
for loan stock that it had issued to investee
companies at cost. Under section 11 of FRS102,
the VCT has determined that the issued loan
stock should be classified as a basic instrument
and has been designated as fair value through
profit and loss.
Reconciliation of profit and loss
for the year ended 31 March 2015
GBP'000s
Loss for the year ended 31 March
2015 under previous UK GAAP (150)
Impact of fair value loan stock
through profit and loss (376)
----------
Loss for the year ended 31 March
2015 under FRS102 (526)
----------
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END
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