Neptune-Calculus Income and Growth VCT plc

Report and Accounts

For the year ended 31 December 2016

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INVESTMENT STRATEGY

The Neptune-Calculus Income and Growth VCT is a Venture Capital Trust (“VCT”) listed on the London Stock Exchange which aims to achieve long term investment returns for private investors including tax free dividends.

INVESTMENT POLICY

The Company’s investment policy is to invest approximately 75 per cent of the Company’s funds in a diversified portfolio of holdings in qualifying investments whether unquoted or traded on the Alternative Investment Market (AIM). Investments are made selectively across a diverse range of sectors in companies which have the potential to generate growth and enhance their value. The Company does not invest in start-up and seed capital situations. The qualifying investments are managed by Calculus Capital Limited and the balance of the Company’s investments can be invested in a combination of Neptune income funds and a portfolio of similar income generating UK listed shares and money market instruments.

CONTENTS

Chairman’s Statement 2Investment Manager’s Review(Qualifying Investments) 4Investment Portfolio 8Unquoted Portfolio Companies 9Strategic Report 10Board of Directors 14

Directors’ Report 15

Directors’ Remuneration Report 18

Corporate Governance Statement 21

Directors’ Responsibilities Statement 25

Independent Auditor’s Report to the members of Neptune Calculus Income and Growth VCT plc 26

Income Statement 31

Statement of Changes in Equity 32

Statement of Financial Position 33

Statement of Cash Flows 34

Notes to the Financial Statements 35

Corporate Information 49

FINANCIAL HIGHLIGHTS

Ordinary Shares Year ended 31 December 2016

NAV as at 31 December 2016 32.5p

Cumulative dividends paid to 31 December 2016 37.5p

Accumulated shareholder value Ω 70.0p

Recommended Final Dividend 2.0p

Ω Accumulated shareholder value represents net asset value per share plus cumulative dividends paid per share since inception.

As at 28 February 2017*

Unaudited net asset value per share† 32.6p

* Being the latest practicable date prior to publication.† Including current year revenue.

EXAMPLES OF RECENT INVESTMENTS

C4X, based in Manchester, aims to become the world’s most productive drug discovery and development company by exploiting cutting edge technologies to create best in class drug candidates. The company has two proprietary and synergistic software platforms, Taxonomy3® and Conformetrix.

Air Leisure Group, based in Gloucestershire, operates trampoline parks in the UK and Continental Europe, trading under the brand name Jumptastic.

Origin Broadband, based in Doncaster, has its own infrastructure and now has the sixth largest broadband network in the UK. This gives it greater control over the underlying circuits and equipment, thereby allowing it to provide a more responsive service than a reseller.

Weeding Technologies, based in Cambridgeshire, produces equipment and consumables that treat weeds and moss using environmentally friendly hot foam, rather than herbicides such as glyphosate, which the WHO’s cancer agency describes in 2015 as probably carcinogenic to humans.

CORPORATE POLICY AND FINANCIAL HIGHLIGHTS

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CHAIRMAN’S STATEMENT

The Company’s results for the year ended 31 December 2016 were mainly affected by falls in the share prices of two AIM quoted qualifying stocks, Genedrive plc and Scancell Holdings plc (“Scancell“). This is disappointing as the falls in their share prices mask a year of considerable progress for these companies. Net asset value per share at the year end was 32.5 pence compared to 39.3 pence for the prior year. Of this decline, 3.5 pence reflected the dividends paid in the year. The remainder of the fall of 3.3 pence per share was largely attributable to a decline in the share prices of the Genedrive plc and Scancell. Net asset value per share (excluding dividends paid in the period) rose slightly in the second half of the year and, overall, I believe it to have been a year of progress for many of the companies in the portfolio.

Investment performance (Qualifying Investments)

The Company continues to meet its requirements to qualify as a VCT. Our qualifying investments are managed by Calculus Capital Limited and are in a combination of unquoted and AIM companies.

During the year, the Company made six new qualifying investments. In January 2016, £100,000 was invested in Arcis Biotechnology Holdings Limited (“Arcis”). Arcis is a Cheshire based, research and development (“R&D”), company which has used its technology platform to develop innovative products in the DNA extraction, agriculture and hygiene markets. In April 2016, the Company invested £150,000 in a developer of novel therapeutic vaccines for treating cancer, Scancell. In September 2016, the Company invested £100,000 in drug discovery and development company, C4X Discovery Holdings plc. In December 2016, the Company invested in three new companies. £100,000 was invested in Air Leisure Group Limited (trading as “Jumptastic”), an operator of trampoline parks across the UK and Europe. Another £100,000 was invested in Origin Broadband Limited (“Origin”), a Yorkshire-based provider of internet and telephone services. Finally, before the year end, £100,000 was invested in Weeding Technologies Limited, a cleantech company whose technology treats weeds and moss.

Dryden Human Capital Group Limited’s equity was written down to nil at the year end, impacting net asset value by approximately 0.4 pence per share, ahead of the sale of the company in January 2017 in which the Company recovered the value of its loan stock. RMS Europe Limited and Terrain Energy Limited were both written down by approximately 10 per cent in the period, reflecting tougher trading conditions.

The Company successfully exited its holding in Human Race Group Limited in September 2016, achieving a return of 32%.

A more detailed analysis of investment performance can be found in the Investment Manager’s Review that follows this statement.

Investment performance (Non-Qualifying Investments)

Our non-qualifying investments comprise holdings in the Neptune Income Fund, the Neptune Quarterly Income Fund and liquidity funds. Our investments in the Neptune Income Fund rose by 9 per cent but declined in the Neptune Quarterly Income Fund by 4 per cent over the year.

At the year end, the Company held £50,000 in the Aberdeen Global Liquidity Fund, £103,000 in the Fidelity Liquidity Fund, and £175,000 in the liquidity fund held with Goldman Sachs Asset Management.

Share buyback

During the year the Company purchased 100,000 shares for cancellation. In line with its policy of returning cash to shareholders, the Company may carry out limited share buybacks in the future if it considers it to be in the best of interests of all shareholders.

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Board changes

In view of the fact that I have served as Chairman of your Company since its launch in 2004, I have decided to retire from the Board at the forthcoming AGM to be held on 22nd June 2017. In the meantime a number of candidates are currently being considered for my replacement as Chairman and we expect to be able to make an announcement in the coming weeks.

Dividends

The Company paid the 2015 final dividend of 2 pence per share in June 2016 and an interim dividend for 2016 of 1.5 pence per share in October 2016. The total dividends paid to an ordinary shareholder to date are 37.5p.

The directors are pleased to propose a final dividend for 2016 of 2 pence per Ordinary Share which, subject to shareholder approval, will be payable on 30 June 2017 to shareholders on the register on 26 May 2017.

In addition your board is considering strategic options for the Company which may lead to proposals involving a significant return of capital to shareholders. We look forward to providing you with more information over the coming months.

Outlook

The UK economy remains strong though it is difficult to assess what impact the commencement of formal ‘Brexit’ negotiations may have. However, the outlook for young growing companies remains positive and should support future growth in the portfolio and provide opportunities for new investment.

Philip StephensChairman

21 March 2017

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INVESTMENT MANAGER’S REVIEW (QUALIFYING INVESTMENTS)

Calculus Capital Limited manages the Company’s qualifying portfolio. The Company invests in a diversified portfolio of UK growth companies, whether unquoted or traded on AIM.

Portfolio developments

At the year end, the portfolio of qualifying investments comprised 14 companies, made up of both unquoted and AIM stocks. The fall in the Net Asset Value was largely attributable to a decline in the share price of AIM quoted holding, Genedrive. This was due to an overhang of stock in the market, representing about 5% of Genedrive’s total equity, from several institutions which did not participate in the fundraising in July 2016. These shares were placed with other institutions in February 2017 but the placing served to push down the share price further. Two new quoted investments were made in the year, in C4X Discovery plc and Scancell Holdings plc, both quoted on AIM. Scancell’s price has decreased by 15 per cent compared to cost. This is disappointing as each of these companies showed underlying progress during the year under review which is detailed later in the report.

The unquoted portfolio declined in value by 7 per cent, largely because RMS Europe Limited and Terrain Energy Limited, the two largest holdings in the portfolio, were both written down by 10 per due to more adverse trading conditions in 2016. Four new qualifying investments were made during the year, Arcis, Jumptastic, Weeding Technologies and Origin. The section on unquoted portfolio companies in this report contains further information.

Quoted portfolio

Genedrive plc (“Genedrive“)

Genedrive®, a next-generation Point of Care molecular diagnostic system, provides a low cost, rapid, simple to use and robust platform for the diagnosis of infectious diseases. The company is making progress towards realising the potential of the Genedrive® platform in a range of applications through own programmes and partnerships. Progress continues to be made with the Hepatitis C (HCV) test and the company is targeting submission for CE Marking by the end of March based on highly encouraging performance results. End user sales in India for the TB assay have been slow mainly due to sample preparation issues for the test in field that are unique to the TB assay. In January, Genedrive announced that the US Department of Defense was starting field trials of a handheld, rapid biohazard identifier developed by Genedrive.

C4X Discovery Holdings plc (“C4X“)

In September, the Company invested £100,000 in C4X as part of a £3 million equity investment by funds managed by Calculus Capital Limited. C4X is an innovative company in the discovery, design and development of small molecule drugs. The company was spun out of the University of Manchester in July 2007. During 2016, the company enhanced its drug discovery engine through acquisitions and continued to broaden its portfolio of proprietary drug programmes. The acquisitions (Adorial Limited’s innovative target discovery platform technology, Taxonomy3, and Molplex Limited’s pioneering chemoinformatics and artificial intelligence software platform) combine with C4X’s drug discovery and rational molecule optimisation technology platform, Conformetrix, to create a state-of-the-art drug discovery engine. Approximately two-thirds of new drugs originate from smaller biotech companies. C4XD continues to build and progress its pipeline of programmes in a variety of therapeutic areas including addiction, diabetes, inflammatory diseases and cancer. The company has collaborations in place with the University of Oxford Structural Genomics Consortium and Evotec AG.

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Scancell Holdings plc (“Scancell”)

Scancell is developing two distinct immune-oncology platforms, ImmunoBody® and Moditope®, each with broad applications. Both platforms are targeting multi-billion dollar markets. SCIB1 (based on the ImmunoBody® platform) has achieved unprecedented survival rates in a phase I/II clinical trial covering twenty patients for malignant melanoma. The initial results show survival and progression free data well beyond established norms. A phase II combination trial of SCIB1 together with Keytruda, a checkpoint inhibitor, will commence out of Massachusetts General Hospital in Boston and include Harvard Medical School, MD Anderson, Memorial Sloan Kettering and the Division of Medical Oncology at University of Colorado. The two drugs work in different ways and Keytruda is relatively toxic whilst SCIB-1 is far less so on evidence to date. It is believed that a combination treatment of the two drugs will significantly increase the success rate in the treatment of advanced melanoma beyond current norms without significant additional toxicity. A phase I trial for Modi-1 (based on the Moditope® platform) targeting triple negative breast cancer, osteosarcoma and ovarian cancer is scheduled for 2018. The scientific principle behind Moditope® is autophagy which is the hitherto obscure area of medical research which was the subject of this year’s Nobel Prize for Medicine. Scancell is also developing SCIB2 (based on the ImmunoBody® platform) for the treatment of non-small cell lung cancer (NSCLC) in combination with a checkpoint inhibitor. In January 2017, Scancell announced a collaboration with The Addario Lung Cancer Medical Institute and the Bonnie J. Addario Lung Cancer Foundation to evaluate the use of SCIB2 to treat NSCLC.

Unquoted portfolio

Arcis Biotechnology Holdings Limited (“Arcis”)

Arcis has developed an innovative DNA extraction process which is on the cusp of commercialisation.

DNA extraction, essentially opening cells to allow access to their DNA without damaging them, is a necessary preliminary step before DNA analysis and sequencing can be performed. Over the last 20 years, there have been huge advances in DNA analysis and sequencing, but little change in DNA extraction protocols, which are slow and cumbersome. Arcis’ extraction process is much faster and simpler, and also offers a much higher level of DNA stabilisation. This enhanced stabilisation is important in dislodging long established laboratory procedures and, potentially very significantly, it extends to stabilisation of RNA which other processes cannot do (because RNA, which performs an information carrying role in a cell, is inherently less stable than DNA).

During 2016, Arcis’ initial products, targeting both human and infectious disease DNA extraction, have undergone external validation with a number of companies and key opinion leaders and achieved CE-mark certification. In early 2017, heads of terms were signed with the first customer to include Arcis’ products in their diagnostic devices, and some sales direct to end-users commenced.

From the same technology platform, Arcis has created two crop and turf yield improvement products. These are on the market and making a positive contribution, but do not have the same potential as DNA extraction and are considered non-strategic assets. The company is also working on the development of a novel biopesticide to treat nematodes. As its components are naturally occurring (rather than chemical) and trials to date have exceeded expectations, this product may have significant potential, although it is at a relatively early stage of development.

Dryden Human Capital Group Limited (“Dryden”)

Dryden is a specialist actuarial, insurance and compliance recruitment company which was sold in January 2017. The value of the equity was written off in 2016 impacting the Company’s net asset value by 0.4 pence per share, but the Company received a repayment of loan stock.

Air Leisure Limited (“Jumptastic”)

In the period under review, the Company made a new unquoted investment of £100,000 in Jumptastic as part of a £3m equity investment by funds managed by Calculus Capital Limited. Jumptastic operates trampoline parks in the UK and Continental Europe. Its first site opened in Gloucester in October 2015, trading under the brand name Jumptastic. This site incorporates 90 interlinked trampolines and has traded profitably since inception. The company’s second site opened in Copenhagen, Denmark in January 2017 and the team have a strong pipeline of potential sites identified across Scandinavia which they will look to open in 2017.

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MicroEnergy Generation Services Limited (“MicroEnergy”)

MicroEnergy owns and operates a fleet of 166 small onshore wind turbines (5kW) installed on land in East Anglia and Yorkshire. Revenues from the fleet of turbines come from two sources, both of which are inflation protected, being directly linked to RPI. First, there is the Government backed feed-in tariff (FIT) paid by the electricity suppliers for every kilowatt of electricity generated for twenty years. Secondly, there is an export tariff for any surplus electricity not used by the site owner that is exported to the grid. The valuation of MicroEnergy has been reduced as changes to legislation means that it is likely that business rates will now be payable on the installations. MicroEnergy has appointed an adviser to assist with its sale – expected to be in the first half of 2017.

Origin Broadband Limited (“Origin”)

The Company invested £100,000 in Origin in December, a provider of internet and phone services, based in Yorkshire. Since launch in 2011, when it acquired for no cost part of the Digital Europe network built with EU and government funding which Digital Europe was proposing to close, Origin has developed its own infrastructure and now has the sixth largest broadband network in the UK measured by points of presence. As an operator of its own physical network, Origin is able to deal directly with Openreach, the BT division that maintains the UK’s main telecoms network. This gives the company greater control over the underlying circuits and equipment; allowing it to provide a better service level than a pure reseller and making it easier to give commitments on speed. The company’s core network is composed of over 50 points of presence, together with diverse network links to locations including Manchester, London and datacentres including Telecity North and Telecity 8/9 Harbour Exchange.

Origin is seen as an agile alternative to the unwieldy corporate giants, with a focus on providing faster broadband speeds, a competitive pricing model and first-class customer service. More and more businesses are moving to cloud computing and the need for excellent 24/7 support is an important factor when choosing a provider. Likewise, consumers are using ever increasing amounts of data and require fast/superfast broadband services. Current clients include Amazon – where Origin is the preferred provider for all new warehouse and corporate sites, NHS Sheffield and various UK universities.

Funds managed by Calculus Capital Limited invested £3 million in Origin of which £100,000 came from the Company.

RMS Europe Limited (“RMS”)

RMS provides port services from six locations on the Humber Estuary, the UK’s busiest trading estuary. Trading conditions throughout 2016 were challenging and the implications of Brexit have created some uncertainty about future trade between the UK and continental Europe. Despite this, RMS achieved increased turnover and profitability in the year. This holding is showing a significant return on cost and will be sold when the right opportunity arises.

Solab Group Limited (“Solab”) (formerly Hampshire Cosmetics)

Solab is a long established manufacturer of fragrances, shampoos and skincare products for third party customers, including Penhaligon’s and Philip Kingsley. Its cosmetics business has been affected by a significant reduction in volumes from its largest customer, The Body Shop, as a result of L’Oreal’s decision to in-source manufacturing to French factories following its acquisition of The Body Shop. New business from third parties is beginning to replace lost turnover, although Solab has also had success in growing existing customer accounts. In January 2017, L’Oreal announced the intention to sell The Body Shop. It is too early to say whether this represents an opportunity for Solab to win back business.

Terrain Energy Limited (“Terrain”)

Terrain has interests in eleven petroleum licences: Keddington, Kirklington, Dukes Wood, Burton on the Wolds, Whisby and Louth in the East Midlands, Larne in Northern Ireland, Brockham and Lidsey in the Weald Basin and Egmating and Starnberger See in Germany. The Whisby-6 well was successfully drilled in 2016 and encountered a good oil-saturated basal sandstone with initial production of 168 barrels of oil per day (“bopd”) (of which Terrain receives 85%). The operator is currently working to optimise production from this well following a waxing issue. The company is producing from wells at Keddington and Whisby; Brockham and Lidsey are currently shut-in pending drilling or, in the case of Brockham, analysis of recent drilling results. A new well at Lidsey is due to be drilled in 2017, with Keddington and Louth to follow in 2018. Terrain sold half of its interest in the Brockham licence to Angus Energy (the operator) in December

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2016 (reducing Terrain’s interest to 10%) in return for a cash consideration and carrying Terrain’s remaining interest in the licence for the costs associated with the new side track. Angus has the option for a similar transaction in relation to Lidsey which would mean Terrain’s costs would also be carried for this well. From the evidence so far, the drilling at Brockham appears to indicate a similar structure to the oil bearing Kimmeridge sections in the nearby Horse Hill-1 well (this well produced over 1600bopd on test). Oil and gas shows have also been found in the underlying Corallian structure. A geothermal well at Holzkirchen, which is on the Egmating licence, drilled in 2016 encountered overpressured gas which had to be flared for 4 days before the well was brought back under control. This could be a significant discovery on Terrain’s licence - interpretation of the limited data available to date suggests the potential for as much as 75BCF of gas to be present at approximately 4000 metres (equivalent to approximately 10 million barrels of oil). A first well on the Larne licence targeting the Woodburn prospect was drilled in May/June 2016, but did not encounter any hydrocarbon accumulation. The data collected in the well is being evaluated to decide where to focus future exploration activity in the basin.

Weeding Technologies Limited (“Weedingtech”)

Weedingtech is a cleantech company focused on replacing toxic herbicides, particularly in the municipal market, but with potential in the agricultural and domestic markets. Weedingtech’s technology treats weed and moss using environmentally friendly hot foam (which keeps the heat on long enough to kill the weed or moss) rather than herbicides such as Glyphosate.

Increasingly, governments and regulators around the world are considering, or are already, banning the use of certain chemical herbicides (e.g. glyphosate, as used in Roundup, which studies have shown to be potentially carcinogenic) amid concerns about the risks they pose to human health and the environment. Globally, the herbicide market is estimated to grow at 6% a year to reach $31bn by 2020 (Allied Market Research, October 2014), with glyphosate accounting for around three quarters of the total. As such there is huge potential for herbicide-free alternatives to increase their share as concerns around glyphosate grow.

Funds managed by Calculus Capital Limited invested £3m into Weedingtech in December 2016 of which £100,000 came from the Company.

Developments since the year end

Other than disclosed, there have been no developments since the year end.

John GlencrossCalculus Capital Limited

21 March 2017

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INVESTMENT PORTFOLIO

The ten largest holdings by value are included below:

Cost Valuation Percentage£’000 £’000 %

AIM investments (quoted equity) Genedrive plc* 251 111 3.04%Scancell Holdings plc 150 128 3.51%Other AIM investments* 551 94 2.58%Unquoted equity investmentsArcis Biotechnology Holdings Limited 100 110 3.02%RMS Europe Limited 100 537 14.73%Solab Group Limited equity 35 46 1.26%Terrain Energy Limited 414 726 19.92%Other unquoted equity investments* 433 326 8.94%Unquoted loan notesSolab Group Limited loan notes 215 215 5.90%Other unquoted loan notes† 25 25 0.69%Non-qualifying equity investments* (9) (6) (0.16)%Total qualifying investments 2,265 2,312 63.43%Quoted fundsNeptune Income Fund Income A Class 444 521 14.29%Neptune Quarterly Income Fund Income Units 431 477 13.09%Goldman Sachs Liquidity Fund 175 175 4.80%Fidelity Sterling Liquidity fund 103 103 2.83%Other quoted funds 51 51 1.40%Non-qualifying equity investments* 9 6 0.16%Total non-qualifying investments 1,214 1,333 36.57%Total investments 3,478 3,645 100.00%

* The valuations of certain investments include small purchases made which are non-qualifying investments. These cost £9,000 and are valued at £5,750.

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UNQUOTED PORTFOLIO COMPANIES

The following unquoted investments are included in the investment portfolio at the balance sheet date. Further details of these companies are provided below:

Arcis Biotechnology Holdings Limited Agri-sciences

Latest audited results (group) : £’000 £’000 Investment information: £’000Year ended 31 July 2016 2015 Total cost 100Turnover 184 281 Income recognised in year –Pre-tax loss 1,768 1,098 Equity valuation 110Net Assets 1,352 498 Voting rights 0.7 per centValuation basis: Discounted cash flow

Other funds managed by Calculus Capital Limited have invested in this Company and have combined voting rights of 36.4 per cent.

RMS Europe Limited Operator of Port Facilities

Latest audited results: £’000 £’000 Investment information: £’000Period ended 31 December 2016 2015 Total cost 100Turnover 27,435 29,223 Income recognised in year –Profit after tax 642 775 Equity valuation 537Net Assets 9,081 8,880 Loan stock valuation –Valuation basis: Expected sale price Voting rights 1.0 per cent

Solab Group Limited Cosmetics Manufacturing

Latest audited results (group) : £’000 £’000 Investment information: £’000Period ended 31 Dec 2015 2014 Total cost 250Turnover 21,912 26,021 Income recognised in year 16Profit after tax (330) 181 Equity valuation 46Net Assets 2,474 2,691 Loan stock valuation 215Valuation basis: Discounted cash flow and multiples Voting rights 1.2 per cent

Other funds managed by Calculus Capital Limited have invested in this Company and have combined voting rights of 6.3 per cent.

Terrain Energy Limited Oil and Gas Production

Latest audited results: £’000 £’000 Investment information: £’000Year ended 31 December 2015 2014 Total cost 414Turnover 108 205 Income recognised in year –Pre-tax loss 595 635 Equity valuation 726Net Assets 6,038 6,617 Voting rights 5.7 per cent

Valuation basis: Reserves multiple & DCF

Other funds managed by Calculus Capital Limited have invested in this company and have combined voting rights of 4.9 per cent.

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STRATEGIC REPORT

This report has been prepared by the directors in accordance with the requirements of Section 414A of the Companies Act 2006.

Activities, status and investment objective

The Company is a VCT listed on the London Stock Exchange. The principal activity of the Company is investing in unquoted or AIM traded companies in the UK with the objective of generating long term capital growth and tax free dividends for investors. The Company is managed as a VCT in order that shareholders may benefit from the tax reliefs available.

Business model

The Board of directors is responsible for the overall stewardship of the Company including investment, dividend, borrowing and purchase of own shares policies, corporate strategy and governance and risk management. All the directors, whose details are set out on page 14 of the Report and Accounts, are non-executive. The Board has appointed Calculus Capital Limited to manage its qualifying portfolio and to provide certain administrative services. Details of the management agreement are set out under “Management” in the Directors’ Report. Calculus Capital Limited engages with companies invested in by the Company on corporate governance matters to encourage good practice. This includes engagement on significant social and environmental issues where these may impact shareholder value.

Alternative Investment Funds Directive (AIFMD)

The AIFMD regulates the management of alternative investment funds, including VCTs. The VCT is externally managed under the AIFMD by Calculus Capital Limited which is a small authorised Alternative Investment Fund Manager.

Investment and co-investment policies

The investment policy is to invest approximately 75 per cent of the Company’s funds in a diversified portfolio of holdings in qualifying investments, whether unquoted or traded on AIM. Investments are made selectively across a diverse range of sectors in companies which have the potential to generate growth and enhance their value. The balance of approximately 25 per cent of the Company’s funds can be invested in a combination of Neptune Income Funds, a portfolio of income generating UK quoted shares, and money market instruments.

The Company may co-invest with other funds managed and advised by Calculus Capital Limited. The allocation between different funds takes into account such factors as the funds available for investment and the time horizon of these funds, the size of a potential investment, and the existing sector exposure of the various funds.

Policy on qualifying investments

The qualifying investments in a particular company may be made in equity shares, loan stocks and/or preference shares where it is felt this would enhance shareholder return. It is intended that no one company shall represent more than 10 per cent of the portfolio and no sector shall represent more than 20 per cent of the total portfolio, in both cases at the date of investment. The Company’s policy is not to invest in start-up or seed capital situations. To meet the requirements of a VCT qualifying investment, at least 10 per cent by value of the total investments in any one qualifying company must be in ordinary shares which carry no preferential rights. In addition, the companies in which qualifying investments are made must be UK companies that have no more than £15 million of gross assets at the time of investment (or £7 million if the funds being invested were raised after 5 April 2006) . There are also restrictions on the age of the qualifying company and on the total amount of funds it can raise.

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VCT regulation

The Company’s investment policy is designed to ensure that it continues to meet the requirements for approved VCT status. Amongst other conditions, the Company may not invest more than 15 per cent, by value at the time of investment, in a single company and must have at least 70 per cent by value of its investments throughout the period in shares or securities in qualifying holdings, of which 30 per cent by value must be ordinary shares which carry no preferential rights.

Long term viability of the Company

In assessing the long term viability of the Company, the directors have had regard to the guidance issued by the Financial Reporting Council. The directors have assessed the prospects of the Company for a period of three years, which was selected because the Company’s strategic review covers a three-year period. The Board’s three-year strategic review considers the Company’s income and expenses, dividend policy, liquid investments and ability to make realisations of qualifying investments. These projections are subject to sensitivity analysis which involves flexing a number of the main assumptions underlying the forecast both individually and in unison. Where appropriate, this analysis is carried out to evaluate the potential impact of the Group’s principal risks actually occurring. Based on the results of this analysis, the directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the three-year period of their assessment. The principal assumptions used are as follows: i) Calculus Capital Limited pays any expenses in excess of 3.5 per cent of net asset value as set out on page 16 of the Report and Accounts; ii) the level of dividends paid are at the discretion of the Board; iii) the Company’s liquid investments which include cash, money market instruments and Neptune funds can be realised as permitted by the Company’s investment policy; iv) the illiquid nature of the qualifying portfolio. The Company has a continuation vote in 2018 and the directors have also looked at the projections were shareholders not to vote for the Company to continue. Based on the results of this analysis, the directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due.

In making this statement the Board carried out a robust assessment of the principal risks facing the Company including those that might threaten its business model, future performance, solvency or liquidity.

Borrowing powers

To give a degree of investment flexibility and to meet short term liquidity requirements, borrowing is permitted by the Company’s Articles of a sum which does not exceed 10 per cent of the Company’s share capital and reserves. The Company has not utilised these powers to date and does not plan to utilise this ability at the current time.

Principal risks and uncertainties and management of risk

The Company is exposed to a variety of risks and the principal risks identified by the Board are noted below.

- Regulatory

The Company is required at all times to observe the conditions within the Income Tax Act 2007 for the maintenance of approved VCT status. This involves compliance with a number of tests which, if not met, could result in the loss of a number of tax reliefs which are currently available to both the Company and its shareholders under its VCT status. The tests are under continual review by Calculus Capital Limited, the administrator and (qualifying) investment manager of the Company. The Board keeps these matters under continual review through the provision of monthly management information and quarterly board meetings. The Board has also retained the services of a VCT consultant to undertake an independent monitoring role.

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- Investment and liquidity risk

The majority of the Company’s investments are in small and medium size companies as these meet the VCT qualifying holdings rules. These companies may not be publicly traded or freely marketable and realisations of such investments can be difficult and can take a considerable amount of time. They also, by their nature, tend to carry higher risk than a larger or longer established business. This risk is in part mitigated by diversifying the investments and maintaining around 25 per cent of the Company’s portfolio in liquid assets to enable any short term cash requirements to be met. Calculus Capital Limited further mitigates this risk by considering exit strategy at the time of making investments.

- Market price risk

In addition, the Company is subject to other price risk constituting uncertainty about the future prices of financial instruments held by the Company. This risk is in part mitigated by diversifying the Company’s portfolio. The Company has invested in loan stocks and as a result is subject to credit risk. Credit risk is also included within market risk. The Company mitigates this risk through the regular monitoring of financial performance of investee companies by Calculus Capital Limited.

- Other risks

The majority of the loan stocks are fixed rate so the Board does not consider interest rate risk to be material. The Company has no exposure to foreign currency risk, nor does it have any interest bearing liabilities. Further comment is provided on the financial instruments risks of the Company in note 18 to the financial statements.

The Board regularly reviews the risks the business faces and their potential impact on the Company. The Board monitors the Company’s performance through the use of regular financial information and administrator and management reports.

Key performance indicators

The key performance indicators are those that communicate the financial performance and strength of the Company as a whole; these being principally the net asset value per Ordinary Share. Further key performance indicators are those which show the Company’s position in relation to the VCT tests which it is required to meet to maintain its VCT status.

The performance measures for the year are included in the Financial Highlights on page 1 and reported on in the Chairman’s statement on page 2 of the Report and Accounts.

Key strategic issues considered during the year

The key strategic issues considered during the year were:

The performance of the Company

The value and nature of investments made and realised during the year to ensure these were in accordance with the investment policy and/or whether any changes should be proposed to the investment policy.

The Investment Manager’s Review (Qualifying Investments) on pages 4 to 7 of the Report and Accounts provides commentary on the performance of the Company during the year.

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The level of dividends paid and proposed

The Board considered the level of dividends to be proposed, and the use of proceeds arising from the sale of one of the Company’s investments.

Employees, environmental, human rights and community issues

The Company has no employees and the Board comprises entirely non-executive directors. Day-to-day management of the Company’s business is delegated to the investment managers (details of the management agreement is set out in the Directors’ Report) and the Company itself has no environmental, human rights, or community policies. In carrying out its activities and in relationships with suppliers, the Company aims to conduct itself responsibly, ethically and fairly.

Gender diversity

The Board believes that diversity of experience and approach, including gender diversity, amongst board members is of great importance and the Board gives careful consideration to issues of board balance and diversity when considering the composition of the Board and making new appointments.

Statement regarding Annual Report and Accounts

The directors consider that taken as a whole, the Annual Report and Accounts is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy.

By order of the Board

Lesley WatkinsCompany Secretary

21 March 2017

14

BOARD OF DIRECTORS

Philip Stephens, Independent, Non-Executive Chairman

Philip was an investment banker in the City for 37 years, until 2002. He is currently non-executive Chairman of Egdon Resources plc and is Chairman of Foresight 4 VCT plc. Prior to retirement, he was at stockbrokers Williams de Broë for four years as joint head of Corporate Finance and before that, was head of UK Corporate Finance at UBS from 1995, having joined UBS in 1989.

John Glencross, Non-Executive Director

John is Chief Executive and joint founder of Calculus Capital Limited and is also a director of Terrain Energy Limited and Calculus VCT plc. He was instrumental in structuring and launching the UK’s first Approved Enterprise Investment Scheme (EIS) Fund in 2000 and has overseen the launch and management of fifteen further EIS funds. Prior to founding Calculus Capital Limited, John worked in Corporate Finance at UBS for nine years latterly as an Executive Director. Prior to this he was a founding member of Deloitte Haskins & Sells’ Corporate Finance Division specialising in small and medium size companies where his experience included secondment to Prudential Venture Managers to restructure its venture capital investment arm, Prutec. He qualified as a chartered accountant with Peat, Marwick, Mitchell & Co. where his experience included approximately one year as a member of the Corporate Recovery Department.

David Kempton, Independent, Non-Executive Director

David is a non-executive director of Impax Ireland plc, an investment company traded on the Irish Stock Exchange. He is also Chairman of EGS Energy Limited, a renewable energy company focused on engineered geothermal systems and non-executive Chairman of Hawksmoor Investment Management, an Exeter based fund manager. David has founded and successfully sold a number of companies including businesses in the engineering and medical instrumentation sectors.

15

DIRECTORS’ REPORT

The directors present their report for the Company for the year ended 31 December 2016.

Results

The total loss (after tax) for the year ended 31 December 2016 attributable to the Ordinary shareholders was £375,000 (2015 a loss of £431,000) .

The fair value of the Company’s investments at 31 December 2016 was £3.6 million (2015: £4.1 million) . Taking these investments at valuation, the net asset value per Ordinary Share as at 31 December 2016 was 32.5 pence (2015: 39.3 pence) .

Further commentary on the performance and activity of the Company is given in the Chairman’s Statement and the Investment Manager’s Review (Qualifying Investments) .

The financial performance of the Company is set out below:Year ended

31 December 2016

Year ended 31 December

2015Deficit per Ordinary Share (3.3)p (3.8)pNet asset value per Ordinary Share* 32.5p 39.3p

* The movement between the current and previous year’s net asset value per Ordinary Share does not agree to the Return per Ordinary Share for the year. This is because dividends of 3.5 pence per Ordinary Share were paid during the year.

Dividends

The final dividend for 2015 of 2.0 pence was paid in June 2016. In October 2016 an interim dividend of 1.5 pence per share was paid. As the proposed final dividend of 2.0 pence per Ordinary Share has to be approved at the Annual General Meeting, it will be paid, subject to approval, to shareholders on 30 June 2017. The record date of the dividend will be 26 May 2017.

Directors’ fees

A report on directors’ remuneration is set out on pages 18 to 20 of the Report and Accounts.

Directors’ and officers’ liability insurance

Directors’ and officers’ liability insurance cover is provided at the expense of the Company.

Corporate governance

A formal statement on corporate governance and the Company’s compliance with the various codes of practice is set out on pages 21 to 24 of the Report and Accounts, and forms part of this Directors’ Report.

Independence

The AIC Code referred to on page 21 of the Report and Accounts discusses the circumstances under which a director may be considered to be independent, including where the director has significant links with other companies or bodies providing services to the Company and where the directors have served for more than nine years.

John Glencross, a director of the Company, is not considered independent. John Glencross is the Chief Executive of Calculus Capital Limited, investment manager (qualifying portfolio) and administrator to the Company. Although both other board members, Philip Stephens and David Kempton have served for more than 9 years they are still considered to be independent as they have no links with the investment manager other than serving as board members of the Company and the Company does not consider that the length of a director’s tenure reduces his ability to act independently.

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Management

During the year Calculus Capital Limited acted as the investment manager in respect of qualifying investments and provided administrative services.

Calculus Capital Limited was appointed as investment manager pursuant to an agreement (the “Management Agreement”) with the Company, terminable by either party by twelve months’ written notice, under which it is entitled to receive investment management and administration fees of an amount equal to 1.8 per cent per annum of the net asset value of the Company attributable to the Ordinary Shares payable quarterly in arrears.

The Investment management fee component of the above-mentioned fee of 1.5 per cent is charged 75 per cent to capital and 25 per cent to revenue. Pursuant to the Management Agreement the total annual management and administration expenses of the Company are capped at 3.5 per cent of the net asset value at each financial year end, with any excess refunded to the Company by way of a reduction to the investment management fees payable for that financial year. For the year to 31 December 2016, Calculus Capital Limited waived £62,000 of their fees relating to investment management (2015: £68,000 of fees were waived) , and £12,000 relating to administration (2015:nil). A further expense contribution of £6,000 was made by Calculus Capital Limited payable to the Company (2015:nil)

The Management Agreement also contains the investment manager’s incentive fee arrangement. Under the incentive arrangement, if the net asset value per Ordinary Share at the end of a financial period, when added to the cumulative distributions per Ordinary Share paid to date, exceeds the higher of £1 as increased by 7 per cent per annum and the highest previous net asset value per Ordinary Share which resulted in an incentive fee being paid (subject to such adjustments as may be agreed with the auditors to reflect capital returned to shareholders) , since the Company’s commencement of trading, then the investment manager will be entitled to an incentive fee equal in value to 20 per cent of such excess. The fee will be payable annually. No performance fee will be paid out until investors have received cumulative distributions of at least 40 pence per share.

Auditors

A resolution to re-appoint Grant Thornton UK LLP as auditor of the Company was approved at the Annual General Meeting held in 2016. As Grant Thornton together with its predecessor firm RSM Robson Rhodes LLP have been the Company’s auditors for ten years, the Board has initiated a tender process in accordance with s.489 and s.489A of the Companies Act 2006. The auditor who is successful in the tender process will be put forward for election at the upcoming Annual General Meeting on 22 June 2017.

Substantial shareholdings

At 31 December 2016 and 21 March 2017, the latest practicable date before the printing of this report, so far as was known to the Company, there were no shareholders interested, directly or indirectly in 3 per cent or more of the issued Ordinary Share capital of the Company.

Capital structure and rights and obligations attaching to the Company’s shares

The capital structure of the Company is set out in note 13 to the financial statements. During the year, the Company purchased 100,000 Ordinary Shares of 10 pence for cancellation (2015: none) .

Financial risks and risk management

The Company’s principal risks are disclosed in the Strategic Report and Note 18 to the financial statements.

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Going concern

In assessing the going concern basis of accounting, the directors have had regard to the guidance issued by the Financial Reporting Council. They have considered the cash position of the Company and the value of the liquidity funds and Neptune Funds which are very liquid as well as the annual expenses which are capped at 3.5 per cent of net asset value on 31 December each year. The directors confirm that it is appropriate to adopt the going concern basis of accounting as the Company has adequate resources to continue in business for the next 12 months.

Greenhouse emissions

The Company has no greenhouse gas emissions to report for its operations, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations 2013.

Annual General Meeting

The notice convening an Annual General Meeting on 22 June 2017 is set out in a separate document which explains the business to be considered.

Developments since the year end

Other than disclosed above, there have been no developments since the year end.

Statement of disclosure to auditor

So far as the directors are aware:

(a) there is no relevant audit information of which the Company’s auditor is unaware, and

(b) they have taken all steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that the Company’s auditor is aware of that information.

By order of the Board

Lesley Watkins Company Secretary

21 March 2017

18

DIRECTORS’ REMUNERATION REPORT

For the year ended 31 December 2016

The Board has prepared this report in accordance with the requirements of Schedule 8 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008. The law requires the Company’s auditor to audit certain of the disclosures provided. Where disclosures have been audited, they are indicated as such. The auditor’s opinion is included in their report on pages 26 to 30 of the Report and Accounts.

Remuneration committee

The Company has three non-executive directors. The Board as a whole fulfils the function of a Remuneration Committee and has access to independent advice where the directors consider it appropriate. The Board reviewed the level of directors’ fees during 2015, and concluded that remuneration should be increased with effect from 1 July 2016 as set out in Directors’ remuneration policy below.

The annual fees for each director are shown below. Since the Company has no employees and all directors are non-executive, the provisions of the UK Corporate Governance Code on the role of a chief executive and on directors’ remuneration, except in so far as they apply to non-executive directors, are not relevant to the Company and are not reported on further. As the Company has no executive directors or employees there is no breakdown of remuneration which can be given other than for the non-executive directors.

Directors’ remuneration policy

The Board’s policy is that the remuneration of non-executive directors should reflect the experience of the Board as a whole, the responsibilities of the role, the time commitment required and be fair and comparable to that of other venture capital trusts that are similar in size, have a similar capital structure, and have a similar investment objective (UK income and growth) . It is intended that this policy will continue for up to 31 December 2019.

The fees for the non-executive directors are determined within the limits (not to exceed £100,000 per year in aggregate) set out in the Company’s Articles of Association, and they are not eligible for bonuses, pension benefits, share options, long-term incentive schemes or other benefits. The fees are fixed and are paid quarterly in arrears. Directors are able to claim expenses that are incurred in respect of duties undertaken in connection with the management of the Company. With effect from 1 July 2016, the fees for Philip Stephens and David Kempton increased by £2,000 per person, per annum.

It is the Board’s policy that none of the directors has a service contract. The terms of their appointment provide that a director shall retire and be subject to re-election at the first Annual General Meeting after his appointment, and at least every three years after that. However as the directors have now served for nine years the policy is that they should retire and offer themselves for re-election on an annual basis. The terms also provide that a director may be removed on not less than three months written notice and that compensation will not be due on leaving office.

Shareholder approval

Shareholders have not to date expressed any views on the directors’ remuneration. New rules for the reporting of directors’ remuneration came into effect on 1 October 2013. These require shareholders to approve the annual remuneration paid to directors every year and to formally approve the directors’ remuneration policy on a yearly or on a three yearly basis. The directors’ remuneration policy was last approved by 84.3% of votes cast at the Annual General Meeting held in 2014. Accordingly ordinary resolution 3 to approve the directors’ remuneration policy is being put to shareholders at the forthcoming Annual General Meeting to be held on 22 June 2017.

Any change to the directors’ remuneration policy will require shareholder approval. The vote on the Directors’ Remuneration Report is as previously an advisory note whilst the vote on the directors’ remuneration policy is a binding one. Ordinary resolution 2 to receive and adopt the Directors’ Remuneration Report will be put to shareholders at the forthcoming Annual General Meeting to be held on 22 June 2017.

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Statement of voting at the last annual general meeting

The following table sets out the votes received at the last annual general meeting of shareholders, held on 17 May 2016, in respect of the approval of the Directors’ Remuneration Report:

Votes cast for Votes cast against Total votes VotesNumber % Number % cast withheld832,921 98.6 12,061 1.4 844,982 16,644

Total shareholder return over the last 8 years

The graph below shows total shareholder return from a hypothetical £100 invested since 1 January 2008. This is then compared to the total shareholder return on a notional investment of £100 in the FTSE AIM All-Share Index which is the closest broad index against which to measure the Company’s performance.

Total shareholder return compared to the FTSE AIM All Share Index for the last 8 years

FTSE AIM All Share index

Neptune - Calculus Income and GrowthVCT plc – Ordinary Share Fund

-

Shar

ehol

der r

etur

n (p

ence

)

50.00

100.00

150.00

200.00

250.00

2008 2009 2010 2011 2012 2013 201620152014

Directors’ emoluments for the year

The emoluments in respect of qualifying services and compensation of each person who served as a director during the year were as shown below. All the emoluments are directors’ fees. John Glencross, Chief Executive of Calculus Capital Limited, does not receive director’s fees.

No other remuneration was paid or payable by the Company during the financial year nor were any expenses claimed or paid to the directors.

Directors’ emoluments for the year (audited)

31 December 31 December2016 2015

£ £Philip Stephens – Chairman 15,500 14,500John Glencross – –David Kempton 13,000 12,000Total 28,500 26,500

Taxable benefits (audited)

The directors who served during the year received no taxable benefits during the year.

Variable pay (audited)

The directors who served during the year received no variable pay relating to the performance of the Company during the year.

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Pensions benefits (audited)

The directors who served during the year received no pension benefits during the year.

Directors’ projected emoluments

Based on the current levels of fees, directors’ fees for the forthcoming financial year would be as follows:

31 December2017

£Philip Stephens – Chairman* 7,887New Chairman** 8,613John Glencross –David Kempton 14,000Total 30,500

*to/**from 22 June 2017

As disclosed under Management in the Directors’ Report, the total annual expenses of the Company are capped at 3.5 per cent of the net asset value at each financial year end, with any excess refunded to the Company by way of a reduction to the investment management fees payable for that financial year. Consequently, the spend on directors’ pay is not significant to the Company as any variation is likely to be directly offset by an equivalent variation in the fees waived by the investment manager.

There is no requirement for the directors to hold shares in the Company nor any restrictions on the purchase or sale of shares in the Company other than to comply with all applicable laws and regulations. The interests of the directors who held office during the year ended 31 December 2016 in the issued Ordinary Shares of the Company were as follows:

Number of Ordinary Shares (audited)31 December

201631 December

2015Philip Stephens – Chairman 19,723 19,723John Glencross 109,752 109,752David Kempton 98,940 98,940

John Glencross retires from the Board each year as he is not independent and offers himself for re-election.

The Board considers that John Glencross has considerable investment management and investment company experience. The Board unanimously supports the re-election of John Glencross.

David Kempton retires from the Board each year as he has served nine years and he offers himself for re-election. The Board unanimously supports the re-election of David Kempton.

As disclosed in the Chairman’s statement, Philip Stephen resigns from the board from the date of the AGM and therefore is not offering himself for re-election.

Biographical notes on the directors are given on page 14 of the Report and Accounts.

Approval

The Directors’ Remuneration Report on pages 18 to 20 of the Report and Accounts was approved by the Board of directors on 21 March 2017.

Signed on behalf of the Board of directors:

Philip Stephens Director

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CORPORATE GOVERNANCE STATEMENT

Introduction

The Board is accountable to shareholders for the governance of the Company’s affairs and is committed to maintaining high standards of corporate governance and to the principles of good governance as set out in the 2014 UK Corporate Governance Code and the Association of Investment Companies’ Code of Corporate Governance and Guide, revised in February 2015 (the ‘AIC Code’) .

Pursuant to the Listing Rules of the Financial Conduct Authority, the Company is required to provide shareholders with a statement on how the main principles set out in the Code have been applied and whether the Company has complied with the provisions of the Code.

The Board has established corporate governance arrangements that it believes are appropriate to the business of the Company as a venture capital trust.

The Company has complied, throughout the year ended 31 December 2016, with the AIC Code, except as noted below. The provisions relating to the role of Chief Executive, executive directors’ remuneration and the need for an internal audit function have not been complied with for the reasons set out in the preamble to the AIC Code. The Board considers that these provisions are not relevant to the position of the Company, being an externally managed investment company. The Board has therefore not reported further on these areas.

The Board has also not complied with the requirement to appoint an audit committee consisting wholly of independent non-executive directors. This requirement has not been met as none of the independent directors has recent and relevant financial experience as defined by the Code. John Glencross has therefore been appointed to the Audit Committee to meet the requirement to have a director with recent and relevant financial experience on the Audit Committee.

The following statement describes how the principles of good corporate governance have been applied and the Code and the AIC Code followed, and forms part of the Directors’ Report.

Investment manager

Calculus Capital Limited acts as investment manager with regard to qualifying investments. The Company has entered into the Management Agreement with Calculus Capital Limited under which the investment manager is responsible for managing the Company’s qualifying portfolio of assets on a discretionary basis, subject to the supervision of the directors. The Board lays down guidelines within which Calculus Capital Limited implements the investment policy. The Board is responsible for determining the Company’s investment policy and has overall responsibility for the Company’s activities.

The Board keeps under review the performance of the investment manager and considers that continuing the appointment of Calculus Capital Limited is in the best interests of shareholders as a whole.

Administrator

Throughout the year, Calculus Capital Limited acted as administrator to the Company.

Directors

The Board currently comprises three non-executive directors, two of whom are independent from Calculus Capital Limited. The directors’ biographies are set out on page 14 of the Report and Accounts. Due to the nature of their responsibilities and the size of the Board, the Company has not appointed a deputy chairman or a senior independent non-executive director. The directors have not set any measureable objectives in relation to the diversity of the Board.

Although the directors have no service contracts, letters of appointment are in place providing for termination on not less than three months’ written notice. Directors are not entitled to any compensation for loss of office.

22

The Articles of Association provide that all directors are re-elected by shareholders at the first annual general meeting and all directors are to be re-elected at least once every three years. However as the directors have now served for nine years the policy is that they should retire and offer themselves for re-election on an annual basis.

The Board undertakes an evaluation of its own performance and that of its Committees and of the individual directors. The performance of individual non-executive directors is evaluated by the Chairman. The evaluation process provides directors with the opportunity to draw on their experience to enable them to suggest how policies and procedures might be improved, to assess any strengths and weaknesses, and to address any perceived imbalance of skills, knowledge and experience.

The Board carried out a simple evaluation process in 2016, independently managed on behalf of the Board by Philip Stephens. As a result of the evaluation the Board considers that all the current directors contribute effectively and that all have skills and experience which are relevant to the leadership and direction of the Company.

The Board believes that diversity of experience and approach, including gender diversity, amongst board members is of great importance and the Board gives careful consideration to issues of board balance and diversity when considering the composition of the Board and making new appointments.

The directors meet quarterly and on an ad hoc basis as required. Board Committees are empowered by the Board with delegated powers to consider matters between scheduled board meetings.

During the year there were four Board meetings and three Audit Committee meetings held.

DirectorBoard meetings

attendedAudit Committee

meetings attendedPhilip Stephens 4 3John Glencross 4 3David Kempton 4 3

Nominations committee

The Board does not consider it necessary to establish a nominations committee as it has no executive directors. As such the Board, as a whole, fulfils this function as and when required.

Audit Committee

The Audit Committee currently comprises Philip Stephens, John Glencross and David Kempton. The Audit Committee plays an important role in the appraisal and supervision of key aspects of the Company’s business including financial reporting and internal controls.

The responsibilities of the Audit Committee include reviews of the effectiveness of the internal control environment, the annual Report and Accounts and half yearly reports, accounting policies, the nature and scope of the external audit, their findings, the terms of appointment of the auditors and the provision of any non-audit services.

The Audit Committee reviews the risks faced by the business and assesses the probability of the occurrence, the impact were it to occur, the mitigating controls and the residual risk. Using this scoring basis the principal risks are identified which the Board considers in the context of its business model.

As part of the review of auditor independence and effectiveness, Grant Thornton UK LLP confirmed to the Audit Committee that it has complied with relevant ethical requirements regarding independence. In evaluating Grant Thornton UK LLP, the Audit Committee has taken into consideration the standing, skills and experience of the firm and the audit team. As Grant Thornton UK LLP together with its predecessor firm RSM Robson Rhodes LLP have been the Company’s auditors for ten years, a tender process has been initiated. The results of the tender will be communicated to shareholders thereafter.

The Audit Committee reviews the need for non-audit services and authorises such on a case-by-case basis, having consideration to the cost effectiveness of the services and the independence and objectivity of the auditors.

23

The Audit Committee meets at least three times a year with representatives of Calculus Capital Limited who report on the proper conduct of business in accordance with the regulatory environment in which both the Company and Calculus Capital Limited operate. The Company’s external auditors also attend the Audit Committee at its request, at least once a year, and report on their work procedures, the quality of the Company’s accounting procedures and their findings in relation to the Company’s statutory financial statements.

The Audit Committee is authorised to take such independent professional advice (including legal advice) and to secure the attendance of any external advisers with relevant expertise as it considers necessary. The Audit Committee’s terms of reference are available from the Company Secretary and are published on the website www.calculuscapital.com.

The Board considers John Glencross as the member of the Audit Committee having relevant and recent financial experience and, though not independent, he adds value to the Audit Committee.

Significant issues in preparing the financial statements considered by the audit committee during the year included the valuations of the unquoted portfolio investments, the underlying assumptions and income recognition from investments. The valuations were discussed with the investment manager who confirmed that the valuations had been performed in accordance with industry guidelines, on a consistent basis with prior year and took into account the latest available information on the investee companies. The directors discussed the entire portfolio with the investment manager at each meeting, the underlying assumptions about prospects and considered the appropriateness of the judgements made. As part of this process the directors considered the loan stocks held and the extent to which income had been recognised and discussed the assumptions with the investment manager and the external auditors.

Auditor

From 1 January 2016, the auditor does not undertake tax compliance work due to new regulations which prohibit the auditor providing these services.

Shareholder relations

The Board supports the principle that the Annual General Meeting be used to communicate with private shareholders and encourages them to participate. The Annual General Meeting will be attended by the Chairman who is also Chairman of the Audit Committee. The notice of general meeting will set out the business of the meeting and will be circulated separately. Shareholders may write to the Company with any concerns or enquiries via the Company Secretary.

Matters reserved for the Board

There is a formal schedule of matters reserved for the decision of the Board and there is an agreed procedure for directors, in the furtherance of their duties, to take independent professional advice if necessary at the Company’s expense.

The Board is responsible for efficient and effective leadership of the Company and has reviewed the schedule of matters reserved for its decision. The specific areas reserved for the Board include final approval of statutory Companies Act requirements including the payment of any dividend and allotment of shares; matters of a Stock Exchange or internal control nature such as approval of shareholder statutory documentation, performance reviews and director independence; and in particular matters of a strategic or management nature, such as the Company’s long term objectives and commercial strategy, the appointment or removal of the investment manager, the Investment Policy, corporate governance matters, changes to the Company structure, approving unquoted investment valuations and final approval of borrowing requirements and limits.

In order to enable them to discharge their responsibilities, prior to each meeting directors are provided, in a timely manner, with a comprehensive set of papers giving detailed information on the Company’s transactions, financial position and performance. Representatives of Calculus Capital Limited attend each board meeting, and written information about investments, performance and outlook are obtained from the investment manager at each quarterly meeting. In the light of this information, the Board gives direction to the investment manager with regard to investment objectives and guidelines. Within these established guidelines, the investment manager takes decisions as to the purchase and sale of individual investments within its mandate.

24

Accountability and audit

The Board’s responsibilities with regard to the financial statements are set out on page 25 and a statement of going concern is given on page 16 of the Report and Accounts. The report of the Auditor is on pages 26 to 30 of the Report and Accounts. Calculus Capital Limited, pursuant to the Management Agreement, carries out day-to-day activities pursuant to the terms of the agreement.

Risk management and internal controls

The directors are responsible for the effectiveness of the risk management and internal control systems for the Company, which are designed to ensure that proper accounting records are maintained, that the financial information on which the business decisions are made and which are issued for publication is reliable, and that the assets of the Company are safeguarded. Such a system of risk management and internal control is designed to manage rather than eliminate the risks of failure to achieve the Company’s business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss.

The directors have kept the effectiveness of the Company’s risk management and internal controls under review throughout the year covered by these financial statements and up to the date of approval of the Report and Accounts. The Board has identified risk management controls in the key areas of business objectives, accounting, compliance, operations and secretarial as areas for the extended review.

The Board recognises its ultimate responsibility for the Company’s system of risk management and internal controls and for monitoring its effectiveness. Calculus Capital Limited, as the investment manager, has established risk management and internal control frameworks to provide reasonable assurance on the effectiveness of the risk management and internal controls operated on behalf of its clients. The investment manager assesses on an on-going basis the effectiveness of its risk management and internal controls and provides the Board with regular reports on all aspects of risk management and internal control (including financial, operational and compliance control, risk management and relationships with external service providers) .The Board has produced a risk matrix against which the business risks and the effectiveness of the risk management and internal controls can be monitored, which is reviewed at each Audit Committee meeting and at other times as necessary.

In addition, the Board’s appointment of Calculus Capital Limited as administrator has delegated the financial administration of the Company to Calculus Capital Limited. Calculus Capital Limited has an established system of financial controls, including internal financial reporting controls, to ensure that proper accounting records are maintained and that financial information for use within the business and for reporting to shareholders is accurate and reliable and that the Company’s assets are safeguarded.

Approval

The Corporate Governance Report on pages 21 to 24 of the Report and Accounts was approved by the Board of directors on 21 March 2017.

Signed on behalf of the Board of directors:

Philip Stephens Director

25

DIRECTORS’ RESPONSIBILITIES STATEMENT

The directors are responsible for preparing the Annual Financial Report and the Company’s financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable laws) . Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the Company for that period. In preparing these financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting 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 financial statements;

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements and the remuneration report comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Under applicable law and regulations, the directors are also responsible for preparing a Strategic Report, Directors’ Report, Directors’ Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.

The directors are responsible for the integrity of the corporate and financial information included on the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The financial statements are published on the www.calculuscapital.com website, which is a website maintained by the Company’s investment manager, Calculus Capital Limited. The maintenance and integrity of the website maintained by Calculus Capital Limited is, so far as it relates to the Company, the responsibility of Calculus Capital Limited. The work carried out by the auditor does not involve consideration of the maintenance and integrity of this website and accordingly, the auditors accept no responsibility for any changes that have occurred to the financial statements since they were initially presented on the website. Visitors to the website need to be aware that legislation in the United Kingdom covering the preparation and dissemination of the financial statements may differ from legislation in their own jurisdiction.

We confirm that, to the best of our knowledge: (a) the financial statements, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and deficit of the Company; and (b) the Strategic Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

On behalf of the Board

Philip Stephens Chairman

21 March 2017

26

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF NEPTUNE-CALCULUS INCOME AND GROWTH VCT PLC

Our opinion on the financial statements is unmodified

In our opinion the financial statements:

• give a true and fair view of the state of the company’s affairs as at 31 December 2016 and of its loss for the year then ended;

• have been properly prepared in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’; and

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

Who we are reporting to

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

What we have audited

Neptune-Calculus Income and Growth VCT Plc’s financial statements for the year ended 31 December 2016 comprise the Income Statement, the Statement of Changes in Equity, the Statement of Financial Position, the Statement of Cash Flows and the related notes.

The financial reporting framework that has been applied in their preparation is United Kingdom Generally Accepted Accounting Practice, including FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’.

Overview of our audit approach

• Overall materiality: £36,000, which represents 1% of the company’s net assets; and

• The key audit risks were identified as the valuation of qualifying investments.

Our assessment of risk

In arriving at our opinions set out in this report, we highlight the following risks that, in our judgement, had the greatest effect on our audit:

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Audit risk How we responded to the risk

Valuation of qualifying investments

The Company’s business is investing in financial assets with a view to achieving long term investment returns including tax free dividends for investors. The Company’s investment policy is to invest approximately 75 per cent of their funds in a diversified portfolio of holdings in qualifying investments whether unquoted or traded on the Alternative Investment Market (AIM). Accordingly, the investment portfolio is a significant material item in the financial statements. The valuation of qualifying investments in the investment portfolio includes significant assumptions and judgements and is therefore a risk that requires particular audit attention.

Our audit work included, but was not restricted to:

• Considering whether the investments were valued in accordance with the International Private Equity and Venture Capital (IPEVC) guidelines and discussing the valuations of the investee companies with the investment manager, including a discussion of the investee companies’ management accounts and board packs, and determining whether the valuations were consistent with that data;

• Assessing whether the accounting policy for valuing investment is in accordance with the relevant reporting standard, being FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’;

• Obtaining the valuation workbook prepared by the investment manager for each invesment, and reviewing the methodology and calculation;

• Holding meetings with the investment manager to discuss the assumptions made, and performing sensitivity analysis on these assumptions;

• Using our internal valuation specialists to assist in determining whether valuation methodologies used by the investment manager were reasonable for the type of investment; and

• Comparing the publically available data obtained on comparator companies to the discount rates, forecasts, and other assumptions made by the investment manager in the valuations of the investee companies.

The company’s accounting policy on investments, including the valuation of investments, is shown in note 2 and related disclosures are included in note 9. The Audit Committee identified the valuations of the unquoted portfolio investments as a significant issue in its report on page 23, where the Committee also described the action that it has taken to address this issue.

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

Materiality

We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality in determining the nature, timing and extent of our work and in evaluating the results of that work.

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We determined materiality for the audit of the financial statements as a whole to be £36,000, which is 1% of the Company’s net assets. This benchmark is considered the most appropriate because it is considered a key driver of the Company’s performance.

Materiality for the current year is lower than the level that we determined for the year ended 31 December 2015 to reflect the decrease in the net asset value of the company.

We use a different level of materiality, performance materiality, to drive the extent of our testing and this was set at 75% of financial statement materiality. We also determine a lower level of specific materiality for certain areas, such as the revenue column of the Income Statement, Directors remuneration and related party transactions.

We determined the threshold at which we will communicate misstatements to the audit committee to be £1,800. In addition we will communicate misstatements below that threshold that, in our view, warrant reporting on qualitative grounds.

Overview of the scope of our audit

A description of the generic scope of an audit of financial statements is provided on the Financial Reporting Council’s website at www.frc.org.uk/auditscopeukprivate.

We conducted our audit in accordance with International Standards on Auditing (ISAs) (UK and Ireland). Our responsibilities under those standards are further described in the ‘Responsibilities for the financial statements and the audit’ section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

We are independent of the company in accordance with the Auditing Practices Board’s Ethical Standards for Auditors, and we have fulfilled our other ethical responsibilities in accordance with those Ethical Standards.

Our audit approach was based on a thorough understanding of the company’s business and is risk based. The day-to-day management of the Company’s investment portfolio, the custody of its investments and the maintenance of the Company’s accounting records is outsourced to third-party service providers. Accordingly, our audit work is focused on:

• Obtaining an understanding of, and evaluating, internal controls at the Company and relevant third-party service providers;

• Reviewing reports on the description, design and operating effectiveness of internal controls at relevant third-party service providers; and

• Undertaking substantive testing on significant transactions, balances and disclosures, the extent of which was based on various factors such as our overall assessment of the control environment, the effectiveness of controls over individual systems and the management of specific risks.

Other reporting required by regulations

Our opinions on other matters prescribed by the Companies Act 2006 is unmodified

In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006.

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the Strategic Report and Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• The Strategic Report and Directors’ Report have been prepared in accordance with applicable legal requirements.

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Matter on which we are required to report under the Companies Act 2006

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Directors’ Report.

Matters on which we are required to report by exception

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

• the financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

Under the Listing Rules, we are required to review:

• the directors’ statements in relation to going concern and longer-term viability, set out on pages 11 and 16 respectively; and

• the part of the Corporate Governance Statement relating to the company’s compliance with the provisions of the UK Corporate Governance Code specified for our review.

Under the ISAs (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 financial statements; or

• apparently materially incorrect based on, or materially inconsistent with, our knowledge of the company acquired in the course of performing our audit; or

• otherwise misleading.

In particular, we are required to report to you if:

• we have identified any inconsistencies between our knowledge acquired during the audit and the directors’ statement that they consider the annual report is fair, balanced and understandable; or

• the annual report does not appropriately disclose those matters that were communicated to the audit committee which we consider should have been disclosed.

We have nothing to report in respect of the above.

We also confirm that we do not have anything material to add, or to draw attention, to in relation to:

− the directors’ confirmation in the annual report that they have carried out a robust assessment of the principal risks facing the or company including those that would threaten its business model, future performance, solvency or liquidity;

− the disclosures in the annual report that describe those risks and explain how they are being managed or mitigated;

− the directors’ statement in the financial statements about whether they have considered it appropriate to adopt the going concern basis of accounting in preparing them, and their identification of any material uncertainties to the company’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements; and

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− the directors’ explanation in the annual report as to how they have assessed the prospects of the company, over what period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.

Responsibilities for the financial statements and the audit

What the directors are responsible for:

As explained more fully in the Directors’ Responsibilities Statement set out on page 25, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.

What we are responsible for:

Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and ISAs (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Christopher Smith Senior Statutory Auditor for and on behalf of Grant Thornton UK LLP Statutory Auditor, Chartered Accountants London

21 March 2017

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INCOME STATEMENT

For the year ended 31 December 2016Year ended

31 December 2016Year ended

31 December 2015Revenue Capital Total Revenue Capital Total

Note £’000 £’000 £’000 £’000 £’000 £’000(Losses)/gains on investments at fair value 9 – (325) (325) – (389) (389) Investment income 3 77 – 77 114 – 114Investment management fee 4 – – – (4) (11) (15) Other expenses 5 (127) – (127) (141) – (141) Deficit before taxation (50) (325) (375) (31) (400) (431) Taxation 6 – – – – – –Deficit attributable to Ordinary shareholders (50) (325) (375) (31) (400) (431) Deficit per Ordinary Share 8 (0.45) p (2.89) p (3.34) p (0.27) p (3.54) p (3.81)p

The total column is the profit and loss account of the Company. The revenue and capital columns are provided as supplementary information in accordance with the AIC SORP.

All items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year.

There is no other comprehensive income as there were no other gains and losses.

The notes to the financial statements on pages 35 to 48 of the financial statements form an integral part of this statement.

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STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2016

Sharecapital

Specialreserve

Capitalredemption

reserveCapital

reservesRevenuereserve Total

Note £’000 £’000 £’000 £’000 £’000 £’000For the year ended 31 December 20161 January 2016 1,131 7,395 510 (4,505) (85) 4,446Net deficit after taxation for the year (325) (50) (375) Shares bought back for cancellation 13 (10) (40) 10 (40) Dividends paid 7 (392) (392) 31 December 2016 1,121 6,963 520 (4,830) (135) (3,639) For the year ended 31 December 20151 January 2015 1,131 8,356 510 (4,105) (54) 5,838Net deficit after taxation for the year – – – (400) (31) (431) Dividends paid 7 – (961) – – – (961) 31 December 2015 1,131 7,395 510 (4,505) (85) 4,446

The notes to the financial statements on pages 35 to 48 of the financial statements form an integral part of this statement.

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STATEMENT OF FINANCIAL POSITION

As at 31 December 2016

Year ended 31 December

2016

Year ended 31 December

2015Note £’000 £’000

Fixed AssetsInvestments at fair value through profit or loss 9 3,645 4,085Current AssetsDebtors 11 25 34Cash at bank 37 392

62 426Creditors: Amounts falling due within one yearCreditors 12 (68) (65) Net Current Assets (6) 361Net Assets 3,639 4,446Represented by:CALLED UP SHARE CAPITAL AND RESERVESShare capital 13 1,121 1,131Special reserve 14 6,963 7,395Capital redemption reserve 14 520 510Capital reserve 14 (4,830) (4,505) Revenue reserve 14 (135) (85) Total Ordinary shareholders’ funds 3,639 4,446Net asset value per Ordinary Share 15 32.46p 39.31p

The notes to the financial statements on pages 35 to 48 of the financial statements form an integral part of this statement.

The financial statements on pages 31 to 48 were approved by the Board of directors on and were signed on its behalf by:

Philip StephensDirector

21 March 2017

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STATEMENT OF CASH FLOWS

For the year ended 31 December 2016

Year ended 31 December

2016

Year ended 31 December

2015Note £’000 £’000

Cash flows from operating activitiesInvestment income received 82 108Investment management fees refunded/(paid) 7 (67) Administration fees paid (12) (26) Other cash payments (115) (116) Net cash used in operating activities 16 (38) (101) Cash flows from investing activitiesPurchase of investments (651) (975) Sale of investments 766 450Net cash inflow/(outflow) from investing activities 115 (525) Cash flows from financing activitiesEquity dividends paid 7 (392) (961) Purchase of own shares (40) –Net cash used in financing activities (432) (961) Decrease in cash and cash equivalents (355) (1,587) Cash and cash equivalents at the beginning of the year 392 1,979Cash and cash equivalents at the end of the year 37 392

The notes to the financial statements on pages 35 to 48 of the financial statements form an integral part of this statement.

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NOTES TO THE FINANCIAL STATEMENTS

1 Company information

The Company is incorporated in England and Wales and operates under the Companies Act 2006 (the Act) and the regulations made under the Act as a public company limited by shares, with registered number 05300876. The registered office of the Company is 104 Park Street London W1K 6NF.

2 Basis of preparation

Basis of accounting

The financial statements have been prepared on a basis compliant with applicable United Kingdom accounting standards, including Financial Reporting Standard 102 - The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland (‘FRS102’) and with the Act. The directors have prepared the financial statements on a basis compliant with the recommendations of the Statement of Recommended Practice November 2014 (“the SORP”) updated in January 2017 for Investment Trust Companies and Venture Capital Trusts produced by the Association of Investment Companies (“AIC”) .

The financial statements are presented in Sterling (£) .

Going concern

After reviewing the Company’s forecasts and projections, the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for at least 12 months from the date of signing this report. The Company therefore continues to prepare its financial statements on the going concern basis and on the basis that its VCT status will continue to be met.

Significant judgements and estimates

Preparations of the financial statements requires management to make significant judgements and estimates. The items in the financial statements where these judgements and estimates have been made are in the valuation of unquoted investments. The valuation methodologies used when valuing unquoted investments provide a range of possible values. Judgements are used to estimate where in the range the fair value lies. The sensitivity analysis in note 18 demonstrates the impact on the portfolio of applying alternative values in the upside and downside.

As at 31 December 2016 the value of unquoted investments included within the Company’s investment portfolio was £1,984,720 (2015: £2,193,518) . These investments are valued in accordance with the accounting policy disclosed under note 9 investments.

Principal accounting policies

Investments

The Company has adopted FRS 102 sections 11 and 12 for the recognition of financial instruments. The Company’s business is investing in financial assets with a view to profiting from their total return in the form of increases in fair value. Fair value is the amount for which an asset can be exchanged between knowledgeable, willing parties in an arm’s length transaction. The Company manages and evaluates the performance of these investments on a fair value basis in accordance with its investment strategy, and information about the investments is provided on this basis to the Board of directors.

Investments held at fair value through profit or loss are initially recognised at fair value, being the consideration given and excluding transaction or other dealing costs associated with the investment, which are expensed and included in the capital column of the Income Statement.

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After initial recognition, investments, which are classified as at fair value through profit or loss, are measured at fair value. Gains or losses on investments classified as at fair value through profit or loss are recognised in the capital column of the Income Statement, and allocated to the capital reserve – other, and capital reserve – investment holding loss as appropriate.

Aggregate transaction and dealing costs included in disposals and additions are disclosed in note 9 to the financial statements. All purchases and sales of quoted investments are accounted for on the trade date basis. All purchases and sales of unquoted investments are accounted for on the date that the sale and purchase agreement becomes unconditional.

For quoted investments and money market instruments fair value is established by reference to bid, or last, market prices depending on the convention of the exchange on which the investment is quoted at the close of business on the balance sheet date.

Unquoted investments are valued using an appropriate valuation technique so as to establish what the transaction price would have been at the balance sheet date. Such investments are valued in accordance with the International Private Equity and Venture Capital (“IPEVC”) guidelines. Primary indicators of fair value are derived from earnings or sales multiples, using discounted cash flows, recent arm’s length market transactions by independent third parties, from net assets, or where appropriate, at price of recent investments.

Premiums on loan stock investments and preference shares are accrued at fair value when the Company has the right to receive the premium and expects to do so. Redemption premiums are allocated to the revenue column of the Income Statement.

Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents does not include liquidity fund investments as the Company does not consider the risk associated with changes in value to be insignificant.

Debtors

Short term debtors are measured at transaction price, less any impairment.

Creditors

Short term trade creditors are measured at the transaction price.

Income

Dividends receivable on equity shares and on unquoted funds are recognised as income on the date on which the shares or units are marked as ex-dividend. Where no ex-dividend date is available, the income is recognised when the Company’s right to receive it has been established.

Interest income on loan stock and dividends on preference shares are accrued on a daily basis. Provision is made against this income where recovery is doubtful.

Interest receivable from fixed income securities is recognised using the effective interest rate method.

Interest receivable on bank deposits is included in the financial statements on an accruals basis.

Other income is credited to the revenue column of the Income Statement when the Company’s right to receive the income is established.

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Expenses

All expenses are accounted for on an accruals basis. Expenses are charged through revenue in the Income Statement except as follows:

– costs which are incidental to the acquisition or disposal of an investment are taken to the capital column of the Income Statement;

– expenses are charged to the capital column in the Income Statement where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. In this respect investment management fees have been allocated 75 per cent to the capital column and 25 per cent to the revenue column in the Income Statement, being in line with the Board’s expected long-term split of returns, in the form of capital gains and revenue respectively, from the investment portfolio of the Company;

– expenses associated with the issue of shares are deducted from the share premium account.

Reserves

Special reserve

The special reserve was created by a reduction in the share premium account by order of the High Court. It can be used for the repurchase of the Company’s ordinary shares and for the payment of dividends.

In accordance with the AIC SORP, the consideration paid for shares bought for cancellation is shown as a reduction of the special reserve.

Capital redemption reserve

The capital redemption reserve accounts for amounts by which the issued capital is diminished through the repurchase of the Company’s own shares.

Capital reserve – other

The following are accounted for in this reserve:

– gains and losses on disposal of investments;

– transaction costs which are incidental to the acquisition of investments;

– 75% of investment management fee expenses, together with any related tax effect, is charged to the capital column of the Income Statement in accordance with the above policies; and

– 100% of performance incentive fees.

Capital reserve – investment holding loss

The following are accounted for in this reserve:

– movements in the fair value of investments held at the year end.

Revenue reserve

The revenue reserve represents the balance of revenue retained within the Company after the payment of any dividends.

Taxation

Under FRS 102, deferred tax must be recognised in respect of all timing differences that have originated but not reversed at the reporting date where transactions or events that result in an obligation to pay more tax in the future have occurred at the reporting date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversals of the underlying timing differences can be deducted. Timing differences are differences between the Company’s taxable profits and its results as stated in the financial statements.

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Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantially enacted by the balance sheet date. Deferred tax is measured on a non-discounted basis.

No taxation liability arises on gains from sales of fixed asset investments by the Company by virtue of its venture capital trust status. However, the net revenue (excluding UK dividend income) accruing to the Company is liable to corporation tax at the prevailing rates.

Any tax relief obtained in respect of management fees allocated to capital is reflected in the capital reserve – other and a corresponding amount is charged against revenue. The relief is the amount by which corporation tax payable is reduced as a result of capital expenses.

Dividends

Dividends to shareholders are accounted for in the year in which they are paid or approved in general meetings. Dividends payable to equity shareholders are recognised in the Statement of Changes in Equity when they are paid, or have been approved by shareholders in the case of a final dividend and become a liability of the Company.

Share buybacks

Where shares are purchased for cancellation, the consideration paid, including any directly attributable incremental costs, is deducted from distributable reserves. As required by the Companies Act 2006, the equivalent of the nominal value of shares cancelled is transferred to capital redemption reserve.

3 Income

Year ended 31 December 2016

Year ended 31 December 2015

£’000 £’000Income from quoted investmentsUK dividend income 31 52Unfranked investment income – –

31 52Income from unquoted investmentsUnfranked investment income 46 62

46 62

Total income 77 114Total income comprisesDividends 31 52Interest 46 62Total income 77 114

All income arose in the United Kingdom.

The Board considered operating segments and considered there to be one, that of investing in financial assets.

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4 Investment management fee

Year ended 31 December 2016

Year ended 31 December 2015

Revenue Capital Total Revenue Capital Total£’000 £’000 £’000 £’000 £’000 £’000

Investment management fee 15 47 62 21 62 83 Claw back of excess expenses (15) (47) (62) (17) (51) (68)

- - - 4 11 15 Administration fee 12 - 12 17 - 17 Claw back of excess expenses (12) - (12) - - -

- - - 17 - 17 Expense contribution from the manager (6) - (6) - - - Total (due from)/due to the Manager (6) - (6) 21 11 32

For the year ended 31 December 2016, Calculus Capital Limited waived £61,828 (2015: £68,455) of its fees relating to investment management, and £12,366 (2015: nil) of its fees relating to administration. A further expense contribution of £6,144 (2015: nil) was made by Calculus Capital Limited to the Company. At 31 December 2016, there was £6,144 due to the Company from Calculus Capital Limited (31 December 2015: due to Calculus Capital Limited £5,259). Details of the terms and conditions of the investment management agreement are set out under “Management” in the Directors’ Report.

5 Deficit before taxation

The deficit before taxation is stated after:Year ended

31 December 2016Year ended

31 December 2015£’000 £’000

Fees payable to the Company’s auditor for the audit of the Company’s individual accounts 23 22Fees payable to the Company’s auditor for other services: Tax compliance services – 7Directors’ remuneration and social security contributions 29 26Expenses contribution from the manager (6) –Other expenses 81 86

127 141

Further details of directors’ remuneration can be found in the Directors’ Remuneration Report.

6 Taxation

Year ended 31 December 2016

Year ended 31 December 2015

Revenue Capital Total Revenue Capital Total£’000 £’000 £’000 £’000 £’000 £’000

UK Corporation Tax – – – – – –The tax assessed for the year is lower than the standard rate of corporation tax In the United Kingdom at 20% (2015: 20.25%) The differences are explained as follows

Deficit before taxation: (50) (325) (375) (31) (400) (431) Deficit multiplied by Corporation Tax at 20% (2015: 20.25%) (10) (65) (75) (6) (81) (87) Effect of:UK dividends not chargeable to tax (6) – (6) (11) – (11) Non-taxable losses – 65 65 – 79 79Excess expenses for the year 16 – 16 17 2 19Total tax charge – – – – – –

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The corporation tax rate remained at 20% throughout 2016.

At 31 December 2016, the Company had £1,516,639 (31 December 2015: £1,437,541) of excess management expenses to carry forward against future taxable profits. The deferred tax asset of £257,829 (31 December 2015: £259,974) has not been recognised due to the fact that it is unlikely the excess management fees will be set off in the foreseeable future.

7 Dividends

Year ended31 December 2016

Year ended31 December 2015

£’000 £’000Paid during the year:2015 Special dividend: nil (2014: 5.0p) per Ordinary Share – 5652015 Final dividend: 2.0p (2014: 2.0p) per Ordinary Share 224 2262016 Interim dividend: 1.5p (2015: 1.5p) per Ordinary Share 168 170

392 961Declared post year end:2016 Final dividend: 2.0p (2015: 2.0p) per Ordinary Share 224 226

The Company paid a final dividend in June 2016 of 2.0p per Ordinary Share (2015: 2.0p) and an interim dividend in October 2016 of 1.5p per Ordinary Share (2015:1.5p) . The directors are proposing a final dividend of 2.0p per Ordinary Share in respect of the year ended 31 December 2016 (2015: 2.0p) . Subject to shareholder approval, this dividend will be paid on 30 June 2017 to shareholders on the register on 26 May 2017.

8 Basic and diluted earnings per share

Year ended 31 December 2016

Year ended 31 December 2015

Revenue Capital Total Revenue Capital Totalpence pence pence pence pence pence

Ordinary Share (0.45) (2.89)p (3.34)p (0.27)p (3.54)p (3.81)p

Basic and diluted earnings per Ordinary Share is based on the net revenue deficit attributable to the Ordinary Shares of £50,442 (2015: deficit of £29,939) and on 11,232,367 (31 December 2015: 11,311,329) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the year.

Basic and diluted capital deficit per Ordinary Share is based on the net capital deficit for the year of £325,015 (2015: return of £400,614) and on 11,232,367 (31 December 2015: 11,311,329) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the year.

Basic and diluted total deficit per Ordinary Share is based on the total deficit attributable to the Ordinary Shares of £375,457 (2015: return of £430,553) and on 11,232,367 (31 December 2015: 11,311,329) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the year.

As the Company has not issued any convertible securities or share options, there is no dilutive effect on return per share.

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9 Investments at fair value through profit or loss

Year Ended31 December 2016

Year Ended31 December 2015

£’000 £’000AIM investments 333 236Quoted Neptune income funds 998 978Unquoted investments 1,985 2,193Money market instruments 329 678

3,645 4,085

£’000 £’000Opening book cost 5,422 5,414Opening investment holding losses (1,337) (1,465) Opening valuation 4,085 3,949

Movements in the year:Purchases at cost 651 975Sales – proceeds (766) (450) – realised losses on sales (1,828) (517) Movement in investment holding losses 1,503 128Closing valuation 3,645 4,085Closing book cost 3,479 5,422Closing unrealised gains/(losses) 166 (1,337) Closing valuation 3,645 4,085

£’000 £’000Loss on disposal of investments (1,828) (517) Movement in investment holding gains 1,503 128Total losses on investments (325) (389)

In the year to 31 December 2016, Dryden Human Capital Group Limited was written down by £50,000 as it was sold for no return to equity shareholders in January 2017. Terrain Energy Limited and RMS Europe Limited were written down by £49,521 and £62,171 respectively due to adverse trading conditions. The holding in Human Race Group Limited which cost £400,000 was sold for £429,744.

There have not been any transaction costs in the year to 31 December 2016, nor in the year to 31 December 2015.

Note 18 to the financial statements provides a detailed analysis of investments held at fair value through profit or loss.

10 Significant interests

The Company had the following interests of 3 per cent or more in the share capital of its portfolio companies:

Class of shares Number held Proportion of class heldTerrain Energy Limited Ordinary £1 412,677 5.7%RMS Europe Limited Ordinary £1 85,166 4.5%

11 Debtors

Year Ended 31 December 2016

Year Ended 31 December 2015

£’000 £’000Accrued income 15 10Other debtors and prepayments 10 24

25 34

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12 Creditors – amounts falling due within one year

Year Ended31 December 2016

Year Ended31 December 2015

£’000 £’000Accruals and other creditors 68 65

13 Called up share capital Ordinary Shares

Issued and fully paid:Year Ended

31 December 2016Year Ended

31 December 2015Ordinary Shares of 10p each Number £’000 Number £’000As at 1 January 11,311,329 1,131 11,311,329 1,131Buy back of shares for cancellation (100,000) (10) - -As at 31 December 11,211,329 1,121 11,311,329 1,131

During the year the Company purchased for cancellation 100,000 Ordinary Shares of 10p (2015:nil) at a price of 39 pence per share. The consideration was £39,000 (2015:nil) including stamp duty.

14 Reserves

Special reserve

Capital redemption

reserve

Capital reserve – other

Capital reserve –

investment holding

lossRevenue reserve

£’000 £’000 £’000 £’000 £’000At 1 January 2016 7,395 510 (3,168) (1,337) (85) Loss on sales - - (1,828) - -Movement in investment holding losses - - - 1,503 -Investment management fee charged to capital - - - - -Shares bought back for cancellation (40) 10 - - -Dividends paid (392) - - - -Retained net loss for the year - - - - (50) At 31 December 2016 6,963 520 (4,996) 166 (135)

The Special reserve was created to (i) create a distributable reserve which can be used by the Company to fund purchases of its own shares; (ii) to enable the Company to offset the effects of any future unrealised losses on future dividends payable in respect of shares; and (iii) since the Company revoked its status as an investment company, for any other purpose. The Company is therefore able to make distributions out of the aggregate of its Revenue reserve, Special reserve and Capital reserves, excluding any gains arising on the valuation of unquoted investments.

15 Net asset value per share

Year Ended31 December 2016

Year Ended31 December 2015

pence penceOrdinary Shares of 10p each 32.46 39.31

The basic and diluted net asset value per Ordinary Share is based on net assets (including current year revenue) of £3,639,000 (31 December 2015: £4,446,002) and on 11,211,329 (31 December 2015: 11,311,329) Ordinary Shares, being the number of Ordinary Shares in issue at the end of the year.

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16 Reconciliation of net (deficit) /return before finance charges and taxation to net cash outflow from operating activities

Year ended 31 December 2016

Year ended 31 December 2015

£’000 £’000Net deficit before finance charges and taxation (375) (431) Net capital deficit/(return) 325 400(Increase) /decrease in debtors 9 (13) (Decrease) / increase in creditors 3 (46) Investment management fee charged to capital - (11) Net cash outflow from operating activities (38) (101)

17 Financial commitments

At 31 December 2016 and 2015 the Company did not have any financial commitments which had not been accrued.

18 Financial Risk Management

The objective of the Company is to generate long term capital growth and tax free dividends for investors. The investment policy is to invest approximately 75 per cent of the Company’s funds in a diversified portfolio of holdings in qualifying investments, whether unquoted or traded on AIM. Investments are made selectively across a diverse range of sectors in companies which have the potential to generate growth and enhance their value. The investments in a particular company may be made in loan stocks or preference shares as well as equity shares where it is felt this would enhance shareholder return. In accordance with the Company’s risk averse approach, the investment manager will only invest when it believes it has identified the right investment opportunity. The balance of approximately 25 per cent of the Company’s funds can be invested in a combination of Neptune income funds, a portfolio of similar income generating UK listed shares and money market instruments.

The ten largest holdings by value and the amounts invested in quoted equity, unquoted equity, unquoted bonds, unquoted preference shares, quoted funds and unquoted funds are set out in the Investment Portfolio, on page 8 of the Report and Accounts.

The Company’s financial instruments comprise securities, cash balances and debtors and creditors that arise from its operations.

The Company has no direct exposure to foreign currency risk.

The principal risks the Company faces in its portfolio management activities are:

– Market price risk

– Interest rate risk

– Liquidity risk

The investment manager’s policies for managing these risks are summarised below and have been applied throughout the year. The Board keeps the risks under continual review through the provision of monthly management information and quarterly board meetings.

(i) Market price risk

Market price risk arises from uncertainty about the future prices of financial instruments held in accordance with the Company’s investment objectives. It represents the potential loss that the Company might suffer through holding market positions in the face of market movements. This risk is monitored by the investment manager on a regular basis and by the Board at meetings with the investment manager.

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The Board reviews each investment purchase in the qualifying portfolio to ensure that any acquisition allows the Company to maintain an appropriate spread of other price risk and that it falls within the VCT qualifying criteria at the time of purchase. It considers the associated business risks of each investment. These include, but are not restricted to, the industry sector, management expertise and financial stability of each company.

The Company does not use derivative instruments to hedge against market price risk. The maximum potential exposure to market price risk is the value of the investment portfolio as at 31 December 2016 of £3,645,000 (31 December 2015: £4,085,000) .

The Board believes that the Company’s assets are mainly exposed to market price risk, as the Company holds most of its assets in the form of investments in VCT qualifying small UK companies whose equity shares are either quoted or valued by reference to the share prices of quoted comparable companies and are thus subject to market movements. The Board considers that investments in loan stock and/or preference shares may also be sensitive to changes in quoted share prices as the value of these financial instruments can be determined with reference to the enterprise value of the investee company which may be based on the value of quoted comparable companies.

The table below shows the impact upon return and net asset value per share if there were to be a 10 per cent (31 December 2015: 10 per cent) movement in overall share prices, and assumes:

– that each of the shares and the Neptune funds held by the Company produces an overall movement of 10 per cent, and

– the values of the loan stocks and liquidity funds are not affected by a market movement of this size, and

– that the actual portfolio of investments held by the Company is perfectly correlated to this overall movement in share prices. Shareholders should however note that this level of correlation is highly unlikely in reality.

If overall share prices fell/rose by 10 per cent (2015: 10 per cent) , with all other variables other than investment management fees held constant:

Year Ended31 December 2016

Return and net assets

Year Ended31 December 2015

Return and net assets

£’000 £’000(Decrease) /increase in return (297)/297 (271) /271(Decrease) /increase in net asset value per Ordinary Share (2.74)p/2.74p (2.40) p/2.40p

A decrease of £296,821 (31 December 2015: £271,354) in the net assets of the Company would have increased the manager’s contribution to expenses by £10,766 (31 December 2015: £9,497) . An increase of £296,821 (31 December 2015: £271,354) would have increased the investment management and admin fees payable by £4,622 (31 December 2015: £9,497) and reduced the expenses contribution to nil (31 December 2015:nil).

The impact of a change of 10 per cent has been selected, as in current market conditions, an increase/(decrease) in the aggregate values of investments in shares and Neptune funds by 10 per cent is reasonably possible based on historical changes that have been observed.

The Board considers credit risk to be part of market risk. The failure of a counterparty to a transaction to discharge its obligations under that transaction could result in the Company suffering a loss. The Company manages this risk by ensuring that where an investment is made in an unquoted loan, it is made as part of the overall equity and debt package. The recoverability of the debt is assessed as part of the overall investment process and is then monitored on an ongoing basis by the investment manager who reports to the Board on any recoverability issues. It also ensures that cash at bank is held only with reputable banks with high quality external credit ratings. None of the Company’s financial assets are secured by collateral or other credit enhancements. The maximum exposure to credit risk as at 31 December 2016 was £3,707,000 (31 December 2015: £4,511,000).

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All quoted shares of the Company which are traded on a recognised exchange are held by Reyker Securities plc, the Company’s custodian. The Board regularly monitors the Company’s risk by reviewing assessments of the custodian submitted by the investment manager.

(ii) Interest rate risk

Interest is earned on cash balances and money market funds and is linked to the banks’ variable deposit rates. The Board does not consider interest rate risk to be material. Interest rate risk arising on loan stock instruments is not considered significant, as the main risks on these investments are credit risk and market price risk. The interest rate earned on the loan stock instruments has been disclosed below:

Effective Interest rate on 31 December 2016

%Solab Group Limited 12.0Dryden Human Capital Group Limited 15.0

On 31 December 2016, there was £8,507 (2015:£4,747) in loan stock interest overdue from Dryden Human Capital Group Limited.

The Company does not have any interest bearing liabilities.

An analysis of financial assets and liabilities, which identifies the risk of the Company’s holding of such items is provided. The Company’s financial assets comprise equity and preference shares, loan stock, cash and debtors. The interest rate profile of the Company’s financial assets is given in the table below:

Year Ended31 December 2016

Year Ended31 December 2015

Fair value interest rate

risk

Cash flow interest rate

risk

Fair value interest rate

risk

Cash flow interest rate

risk£’000 £’000 £’000 £’000

Loan stock 240 - 599 –Money market funds - 329 – 678Cash - 37 – 392

240 366 599 1,070

The variable rate is based on the banks’ deposit rate, and applies to cash balances held and the money market funds. The benchmark rate which determines the interest payments received on interest bearing cash balances is the Bank of England base rate which was 0.25 per cent as at 31 December 2016 (31 December 2015: 0.5 per cent) .

(iii) Liquidity risk

The investments the Company holds include AIM quoted securities where the liquidity is generally below that of securities listed/quoted on the main market and it also holds unquoted investments where there is no ready market for the securities. The ability of the Company to realise positions may therefore be restricted when there are no willing purchasers.

The Board, which monitors the Company’s overall liquidity risk, seeks to ensure that an appropriate proportion of the Company’s investment portfolio is invested in cash and readily realisable securities, which are sufficient to meet any funding commitments that may arise.

At 31 December 2016, the Company held £1,364,000 (31 December 2015: £2,048,000) in cash and readily realisable securities (including the investments in the Neptune Income Fund and Neptune Quarterly Income Fund) to pay accounts payable and accrued expenses.

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Fair value hierarchy

Investments held at fair value through profit and loss are valued in accordance with IPEVC guidelines as follows:

Valuation MethodologyYear ended

31 December 2016Year ended

31 December 2015£’000 £’000

Quoted market bid price 1,660 1,892Expected recoverable amount 240 59Discounted cash flow 719 27Earnings multiple - 599Recent investment price 300 –Sales multiple - 475Precedent transaction multiple - 257Reserves multiple 726 776

3,645 4,085

The valuation method used will be the most appropriate valuation methodology for an investment within its market, with regard to the financial health of the investment and the IPEVCA guidelines.

In order to provide further information on the valuation techniques used to measure assets carried at fair value, the measurement bases are categorised into a “fair value hierarchy” as follows:

– Quoted market prices in active markets – “Level 1”

Inputs to Level 1 fair values are quoted prices for identical asset in an active market. Quoted in an active market in this context means quoted prices are readily and regularly available and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted price is usually the current bid price. The Company’s investments in AIM quoted equities, money market funds and the quoted Neptune funds are classified within this category.

– Valued using models with significant observable market inputs – “Level 2”

Inputs to Level 2 fair values are inputs other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly. The Company has no investments classified within this category.

– Valued using models with significant unobservable market inputs – “Level 3”

Inputs to Level 3 fair values are unobservable inputs for the asset. Unobservable inputs may have been used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset at the measurement date (or market information for the inputs to any valuation models) . As such, unobservable inputs reflect the assumptions the Company considers that market participants would use in pricing the asset. The Company’s unquoted equities, preference shares and loan stock are classified within this category. As explained in note 1, unquoted investments are valued in accordance with the IPEVCA guidelines.

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Financial assets at fair value through profit or loss for year ended 31 December

2016Level 1 Level 2 Level 3 Total

£’000 £’000 £’000 £’000Equity investments 333 – 1,745 2,078Fixed interest investments – – 240 240Preference share investments – – – –Money market funds 329 – – 329Quoted Neptune income funds 998 – – 998

1,660 – 1,985 3,645

Financial assets at fair value through profit or loss for year ended 31 December

2015Level 1 Level 2 Level 3 Total

£’000 £’000 £’000 £’000Equity investments 236 – 1,595 1,831Fixed interest investments – – 598 598Preference share investments – – – –Money market funds 678 – – 678Quoted Neptune income funds 978 – – 978

1,892 – 2,193 4,085

In order to maintain disclosures in line with prior year, the Company has early adopted the changes to FRS 102 published by the FRC in March 2016.

In valuing the unquoted portfolio, the inputs include the discount rate used when performing the discounted cash flow analysis and the multiple applied in universal transaction and comparable company analysis. The portfolio has been reviewed and both downside and upside reasonable possible alternative assumptions have been identified and applied to the valuation of each of the unquoted investments. Applying the downside alternatives the value of the unquoted investment portfolio would be £86,293 (31 December 2015: £565,003) or 7.9 per cent (31 December 2015: 25.8 per cent) lower. Using the upside alternatives the value of the unquoted investment portfolio would be increased by £96,225 (31 December 2015: £715,134) or 8.9 per cent (31 December 2015: 32.6 per cent) higher.

Financial liabilities

The Company finances its operations through its issued share capital and existing reserves. The only financial liabilities of the Company are creditors all of which are sterling denominated and are due within one year. The creditors are disclosed in note 12. No interest is paid on these liabilities.

Capital management policies and procedures

The Company’s capital management objectives are to ensure that it will be able to continue as a going concern and to maximise the income and capital return to its Ordinary shareholders.

The Board, with the assistance of the investment manager monitors and reviews the broad structure of the Company’s capital on an ongoing basis. This review includes the planned level of gearing, which takes account of the Manager’s views on the market; the need for new issues of equity shares; and the extent to which revenue in excess of that which is required to be distributed should be retained. The capital of the Company is made up of called up share capital and reserves as detailed on the statement of financial position on page 33 of the Report and Accounts.

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19 Related Party Transactions

Calculus Capital Limited receives an investment manager’s fee from the Company. As disclosed in Note 4, for the year ended 31 December 2016, Calculus Capital Limited waived £61,826 (2015: £68,455) of its fees, and contributed a further £6,144 (2015: nil) towards the expenses of the Company. At 31 December 2016, there was £6,144 due back from Calculus Capital Limited (31 December 2015: due to Calculus Capital Limited £5,259) .

20 Other Transactions with the Investment Manager

The Company’s qualifying investments are managed by Calculus Capital Limited. John Glencross, a director of the Company, has an interest in Calculus Capital Limited and is a director of Terrain Energy Limited.

Calculus Capital Limited receives annual fees for monitoring and for the provision of a director from Terrain Energy Limited, Human Race Group Limited and Solab Group Limited. Calculus Capital Limited receives a monitoring fee from Arcis Biotechnology Holdings Limited and MicroEnergy Generation Services Limited. Calculus Capital Limited also received a fee from Terrain Energy Limited for office support services. In the year to 31 December 2016, Calculus Capital Limited received an arrangement fee relating to the investment of funds managed by it in Arcis Biotechnology Holdings Limited.

In the year ended 31 December 2016, the amount payable to Calculus Capital Limited which was attributable to the investment in the Company was £nil (2015: £700) for Dryden Human Capital Group Limited, £1,205 (2015: £nil) from Arcis Biotechnology Holdings Limited, £1,170 (2015: £829) for Solab Group Limited, £2,409 (2015: £3,178) from Human Race Group Limited, £2,503 (2015: £2,681) from Terrain Energy Limited and £311 (2015: £954) from MicroEnergy Generation Services Limited (all excluding VAT) .

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CORPORATE INFORMATION

Directors Philip Stephens (Chairman) John Glencross David Kempton all of 104 Park Street London W1K 6NF

Secretary Lesley Watkins 104 Park Street London W1K 6NF

Auditors and tax advisers Grant Thornton UK LLP 30 Finsbury Square London EC2P 2YU

Registered office 104 Park Street London W1K 6NF

Registered Number 05300876

Manager for qualifying investments Calculus Capital Limited 104 Park Street London W1K 6NF

Stockbroker N+1 Singer Capital Markets Limited One Bartholomew Lane London EC2N 2AX

Registrar and receiving agent Capita Asset Services The Registry 34 Beckenham Road Beckenham Kent BR3 4TU

Custodian Reyker Securities plc 17 Moorgate London EC2R 6AR

Solicitors to the Company R W Blears LLP 125 Old Broad Street London EC2N 1AR

Bankers HSBC plc 79 Piccadilly London W1J 8EU

Adam & Company 22 King Street London SW1Y 6QY