Half Yearly Report

RNS Number : 7831P

Acorn Income Fund Ld

21 August 2014

Acorn Income

Fund Limited

Half-yearly Financial Report (unaudited) for the six months ended 30 June 2014

Investment Objectives and Policy

Investment Policy

The investment objective and policy of Acorn Income Fund Limited (the "Company") is to provide Shareholders with high income and also the opportunity for capital growth.

The Company's investments are held in two portfolios. The Company's assets comprise investments in equities and fixed interest securities in order to achieve its investment objective. Approximately 70% to 80% of the Company's assets are invested in smaller capitalised United Kingdom companies, admitted to the Official List of the Financial Conduct Authority (the "FCA") and traded on the London Stock Exchange (the "LSE") or traded on the Alternative Investment Market ("AIM") at the time of investment. The Company also aims to enhance income for Ordinary Shareholders by investing approximately 20% to 30% of the Company's assets in high yielding instruments which are predominantly fixed interest securities but may include up to 15% of the Company's overall portfolio (measured at the time of acquisition) in high yielding investment company shares.

The proportion of the overall portfolio held in the Smaller Companies Portfolio and the Income Portfolio varies from day to day as the market prices of investments move. The Directors retain discretion to transfer funds from one portfolio to the other and generally expect between 70% to 80% of the investments to be held in the Smaller Companies Portfolio.

While the Company's investment policy is to spread risk by maintaining diversified portfolios, there are no restrictions on the proportions of either of the portfolios which may be invested in any one geographical area, asset class or industry sector. However, not more than 7.5% of the Company's gross assets may be invested in securities issued by any one company as at the time of investment, save that (i) in respect of the Income Portfolio only, investments may be made in other investment funds subject only to the restriction set out in paragraph (c) of the section headed "Investment Restrictions" below; and (ii) in respect of the Smaller Companies Portfolio only, provided that not more than 10% of the Company's gross assets are invested in securities issued by any one company at any time, the 7.5% limit may be exceeded on a short term basis, with Board approval, where a company whose securities form part of the Smaller Companies Portfolio issues new securities (for example by way of a rights issue).

The Company's capital structure is such that the underlying value of assets attributable to the Ordinary Shares is geared relative to the rising capital entitlements of the ZDP Shares. The Company's gearing policy is not to employ any further gearing through long-term bank borrowing. Save with the prior sanction of ZDP

Shareholders, the Company will incur no indebtedness other than short term borrowings in the normal course of business such as to settle share trades or borrowings to finance the redemption of the ZDP Shares.

Investment Restrictions

For so long as required by the Listing Rules in relation to closed-ended investment companies, the Company has adopted the following investment and other restrictions:

(a) the Company will at all times invest and manage its assets in a way which is consistent with its object of spreading investment risk and in accordance with its published investment policy;

(b) the Company will not conduct any significant trading activity; and

(c) not more than 10% in aggregate of the value of the total assets of the Company at the time the investment is made will be invested in other listed closed-ended investment funds. The Listing Rules provide an exception to this restriction to the extent that those investment funds have stated investment policies to invest no more than 15% of their total assets in other listed closed-ended investment companies.

Derivatives

The Company may invest in derivatives, money market instruments and currency instruments including contracts for difference, futures, forwards and options. These investments may be used for hedging positions against movements in, for example; equity markets, currencies and interest rates. In addition, these instruments will only be used for efficient portfolio management purposes. The Company will not use such instruments to engage in trading transactions. The Company will not maintain derivative positions should the total underlying exposure of these positions exceed one times adjusted total capital reserves.

TABLE OF CONTENTS

Investment Objectives and Policy............................................... ifc

Performance Summary.................................................................. 3

Company Summary........................................................................ 4

Chairman's Statement & Interim Management Report .......... 6

Responsibility Statement........................................	8
Investment Advisers' Reports.................................	9
Schedule of Principal Investments.......................	11

Statement of Comprehensive Income (unaudited)............... 13

Statement of Financial Position (unaudited).......................... 14

Statement of Cash Flows (unaudited)..................................... 15

Statement of Changes in Equity (unaudited).......................... 16

Notes to the Financial Statements (unaudited) .................... 18

Directors and Advisers ............................................................... 42

2 ACORN INCOME FUND LIMITED Half-yearly Financial Report 2014

Performance Summary

for the six months ended 30 June 2014

	30/6/2014	31/12/2013	% change
Total Return Performance* Total Return on Gross Assets* ## Total Return on Net Assets (assets attributable to shareholders)* Numis Small Company (ex Investment Companies) Index FTSE All Share Index FTSE Small Cap (ex Investment Companies) Index	n/a n/a 15,724.56 5471.17 5520.75	n/a n/a 15,818.00 5,385.63 5,497.16	+1.89 +1.52 -0.59 +1.59 +0.43
Share Price and NAV Returns
Ordinary Shares
Ordinary Share Price	329.50p	365.00p	-9.72
Ordinary Share NAV**	359.20p	359.97p	-0.21
Ordinary Share IFRS NAV^#	356.13p	356.66p	-0.15
Capital return on Gross Assets			+0.67
Ordinary Share Total Return*			-8.12
Discount (-) Premium (+) to NAV on Ordinary Shares	-8.27%	+1.40%	-9.67
ZDP Shares
ZDP Share Price	128.25p	121.00p	+6.00
ZDP NAV**	119.52p	113.35p	+5.44
ZDP IFRS NAV^#	118.39p	114.72p	+3.20
Discount (-) Premium (+) to NAV on ZDP Shares	+7.3%	+6.75%	+8.15
Package discount (-) Premium (+) to
NAV Combined Ordinary and ZDP Shares	-3.46%	+3.00%	-6.46
	6 months to	6 months to	%
	30/6/2014	30/6/2013	change
Dividends and Earnings
Revenue return per ordinary share	7.59p	6.65p	+14.14
Dividends declared per ordinary share	6.25p	6.00p	+4.17

* assumes dividends reinvested

** NAV calculated in accordance with the Articles

# NAV calculated in accordance with International Financial Reporting Standards ## adjusted for the issue of new Ordinary and ZDP Shares

Half-yearly Financial Report 2014 ACORN INCOME FUND LIMITED 3

Company Summary

Capital Structure

Bank Loan As at 30 June 2014 the Company had no bank loans outstanding.

Zero Dividend Preference Shares (1p each) 21,937,916 (excluding treasury shares).

The ZDP Shares will have a final capital entitlement of 138 pence per ZDP Share on 31 January 2017 subject to there being sufficient capital in the Company. The ZDP Shares are not entitled to any dividends. ZDP shareholders rank ahead of the ordinary shareholders in regards to rights as to capital. The ZDP shareholders have the right to receive notice of all general meetings of the Company, but do not have the right to attend or vote unless the business of the meeting involves an alteration of the rights attached to the ZDP Shares, in which case the holders of ZDP Shares can attend and vote.

Ordinary Shares (1p each) 16,343,334 (excluding treasury shares).

The Ordinary Shares, excluding treasury shares, are entitled to participate in all dividends and distributions of the Company. On a winding-up holders of Ordinary Shares are entitled to participate in the distribution and the holders of Ordinary Shares are entitled to receive notice of and attend and vote at all general meetings of the Company.

Treasury Shares As at 30 June there were 1,535,000 Ordinary and 2,060,455 ZDP

Shares held in treasury.

Shareholder Funds £64.22 million as at 30 June 2014.

Market Capitalisation of the Ordinary Shares £58.91 million as at 30 June 2014.

The Board The Board consists of three independent non executive directors,

Helen Green (Chairman), Nigel Ward and David Warr (the "Directors").

Investment Manager Premier Asset Management (Guernsey) Limited ("PAMG Ltd"), is a

subsidiary of Premier Asset Management Limited ("PAM Ltd"). PAM Ltd had approximately £2.86 billion of funds under management as at 30 June 2014. PAMG Ltd is licensed under the provisions of the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended, by the Guernsey Financial Services Commission to carry on controlled investment business.

Investment Advisers Premier Fund Managers Limited ("PFM Ltd") - the Company's

Income Portfolio is managed by Paul Smith and Nigel Sidebottom.

Unicorn Asset Management Limited ("Unicorn Ltd") - the Company's Smaller Companies Portfolio is managed by Simon Moon and Fraser Mackersie.

Secretary JTC (Guernsey) Limited provide the Company's secretarial and

administrative services.

4 ACORN INCOME FUND LIMITED Half-yearly Financial Report 2014

Company Summary (continued)

Management Fee 0.7% per annum (Total Assets) charged 75% to capital and 25% to

revenue, plus performance fee. Minimum annual management fee £100,000.

Financial Calendar

Company's year end 31 December

Annual results announced April

Annual General Meeting 20 August 2014

Company's half year end 30 June

Half year results announced August

Dividend payments At the end of March, June, September and December

Half-yearly Financial Report 2014 ACORN INCOME FUND LIMITED 5

Chairman's Statement and Interim Management Report

30 June 2014

Dear Shareholder,

During the first half of 2014 the FTSE All Share Index (Total Return) rose 1.59%. The Smaller Companies Portfolio out performed the Numis Smaller Companies (ex Investment Companies) Index (NCSI (ex CI)) (Total Return), which fell 0.59%. The Company's net asset value per share (NAV) fell fractionally from 359.97p to 359.20p over the 6 months but with 6.25p of dividends per share distributed over the period total return was 1.52%. The rating of the shares deteriorated over the period with the ordinary shares starting the year on a premium of 1.4% and finishing the first half on a discount of 8.27%. As a consequence share price total return was -8.12%.

Investment commentary

We started the year with some caution as smaller quoted companies had had a very strong run the previous year. However, with interest rates remaining low and indications of economic recovery in the US and the UK our investment advisers for the Smaller Companies Portfolio sought out opportunities to increase exposure to the UK domestic economy and take profits from some of the successful investment in overseas earners that had been a focus of previous years. In the Income Portfolio our adviser remained cautious on the longer term outlook for interest rates but was able to actively manage the duration of the fixed interest portfolio to good effect and participate in some of the new loss absorbing instruments being issued in the financial sector.

John McClure

It was with great sadness that in early June the Directors received the news that John McClure, who had been involved with managing the Company's Smaller Companies Portfolio since 1999, had passed away. John was a highly respected fund manager and had many friends in the fund management industry. The Directors recognised in John not only his skill and depth of experience as a fund manager but also his complete commitment to the Company. Many of the Company's shareholders will have met John over the years. He will be greatly missed by his colleagues and all those who knew him.

Shareholders will, understandably be concerned as to what arrangements were in place to ensure continuity in the management of the Smaller Companies Portfolio. I can reassure investors that the management of the Smaller Companies Portfolio remains in very capable hands.

6 ACORN INCOME FUND LIMITED Half-yearly Financial Report 2014

Unicorn Ltd operated a team approach where investment decisions were made by consensus between members of the team. John had been supported by Simon Moon and Fraser Mackersie since 2008 and in December 2013 Simon and Fraser were appointed co-managers of the Smaller Companies Portfolio alongside John. The investment process remains unaltered with the same focus on high quality income generating investments. This approach, which has worked so successfully for the Company since its inception, remains core to Unicorn Ltd's investment philosophy.

The Income Portfolio remains under the capable management of Paul Smith and his fixed interest team at PFM Ltd and Nigel Sidebottom, PFM's deputy chief investment officer and head of closed end funds remains closely involved with all strategic decisions.

Placing Programme and discount management

The Company continued to issue shares under the placing programme and during the half year £6.175 million was raised through the issue/sale from treasury of 1.165 million ordinary shares and 1.564 million ZDP Shares issued. The new shares were issued at a premium to the 'package' net asset value and in a ratio to maintain the capital structure of the company.

There was some selling of the Company's shares in reaction to the announcement of John's passing, the timing of which coincided with a modest downturn in the small companies sector, and these two factors moved the Ordinary Shares to a discount. At this point the Board considered it appropriate to initiate use of its powers to buy back shares as part of a programme to reduce discount volatility. During June the Company bought back 200,000 Ordinary Shares and 268,464 ZDP Shares, which were all placed into treasury. All buy backs have been conducted at a discount to the 'package' net asset value and in a ratio to maintain the capital structure of the Company.

With a view to limiting the ongoing volatility of the Company's share price relative to net asset value, the Board currently intends to continue to operate the Company's placing and share buyback programmes. Since 30 June 2014 the Company has bought back a further 500,000 Ordinary Shares and 671,160 ZDP Shares of which 200,000 Ordinary Shares and 268,464 ZDP Shares have been held in treasury and 300,000 Ordinary Shares and 402,696 ZDP Shares have been cancelled*. Shareholders should note, however, that these programmes are subject

Chairman's Statement and Interim Management Report(continued)

30 June 2014

always to the discretion of the Directors, the conditions prevailing in the investment markets in which the Company invests, and the maintenance of the current ratio between Ordinary Shares and ZDP Shares.

*figure as at latest practicable date before publication 20 August 2014

Dividends and Earnings

Revenue earnings per share for the half year were 7.59p (6.65p: 2013). Two interim dividends were paid during the period. A first interim of 3p was paid on 28 March 2014 and the second interim was increased by 8.3% to 3.25p and paid on 27 June 2014.

Alternative Investment Fund Managers Directive (AIFMD)

The Company has notified the Guernsey Financial Services Commission that it is a self-managed Alternative Investment Fund (AIF) and has registered with the Financial Conduct Authority to market shares in the UK under the Private Placement Regime. The Board reviewed all risk management policies and processes and introduced additional measures to ensure that the monitoring of risks can be carried out in accordance with the AIFMD.

Outlook

The expectation of rising interest rates has been priced into fixed interest markets for some time however our investment adviser continues to keep duration below average for the sector as a precaution against a steeper or earlier rise in rates than the market anticipates. We expect default rates on bonds to remain low and opportunities to arise for our adviser to exploit mispriced credit risks.

Our investment adviser for UK equities has positioned the Smaller Companies Portfolio so as to benefit from a recovering domestic economy. Whilst there are sectors, such as high street retailers, that we expect will continue to struggle, we believe that our Smaller Companies Portfolio offers potential for above average growth in earnings and dividends without being overvalued.

Helen Green Chairman

20 August 2014

Half-yearly Financial Report 2014 ACORN INCOME FUND LIMITED 7

Responsibility Statement

for the period from 1 January 2014 to 30 June 2014

We confirm that to the best of our knowledge:

· the condensed set of financial statements has been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting;

· the interim management report includes a fair review of the information required by:

(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

Signed on behalf of the Board of directors on 20 August 2014.

Helen Green Chairman

Investment Advisers' Reports

The Smaller Companies Portfolio

During the six months to 30 June 2014 the Smaller Companies Portfolio rose by 1.6% (before expenses) compared to a fall of 0.59% by the NSCI (ex IC).

It was an active six month period for the Smaller Companies Portfolio, which initiated five new positions, including participation in four Initial Public Offerings ("IPOs"). Seven existing positions were also exited in full.

Following two calendar years of strong performance in small and mid caps the challenge of finding high quality income opportunities has undoubtedly increased. Despite facing slightly tougher market conditions we identified five new investment opportunities during the period which met our strict investment criteria. All five new holdings, which are outlined below, offer dividend income comfortably above market levels combined with the prospect of long term capital growth.

As noted earlier four of the new investments were added to the portfolio at the IPO stage. These new investments were Flowtech Fluidpower plc ("Flowtech"), a distributor of technical fluid power products; DX Group plc (DX Group), a parcel delivery and logistics business; Clipper Logistics plc (Clipper Logistics), a retail logistics specialist and River and Mercantile Group plc, an asset management and advisory business. Whilst the IPO market has become increasingly crowded during the last six months we remain highly selective and continue to assess new investments against our strict investment criteria. Pleasingly all four IPOs ended the period at a premium to their issue price, generating an average return of over 18%. Outside of the IPO market but staying with the theme Numis Corporation plc ("Numis") was also added to the Smaller Companies Portfolio during the period. Numis provides investment banking and stock broking services, primarily in the UK, and has brought more IPOs to the main market than any other firm since the start of 2013.

The strongest contribution to performance during the period came from Tyman plc, the international supplier of components to the door and window industry, which ended the period 20.9% higher. Safestyle UK, the double glazing business also performed strongly, rising by 19.8% during the period. Pleasingly the next three top performers were all new additions to the Smaller Companies Portfolio during the first half of the year, with Flowtech, DX Group and Clipper Logistics, all making meaningful contributions to performance.

The largest negative contribution to performance came from Secure Trust Bank plc, which ended the period 14.6% lower. The stock enjoyed an exceptionally strong year in 2013, rising by 85% and finishing the year near all time highs. Whilst the relatively short period of underperformance in the current year is disappointing the stock remains a core long term holding. Fenner plc also performed poorly during the period and this position was exited in full.

The Smaller Companies Portfolio has continued to selectively increase exposure to the domestic recovery whilst retaining a meaningful weighting towards high quality international earners.

Simon Moon and Fraser Mackersie Unicorn Asset Management Limited

Income Portfolio

Markets

Credit markets were characterised by a steady grind tighter in spreads, with the iTraxx Main (Investment Grade) and Xover (High Yield) repeatedly setting news tights as investors continued to reach for yield, accepting progressively lower returns in exchange for credit risk. Net new issuance turned positive during the period but was well absorbed, with the majority of new issues being subscribed many times over.

Markets maintained their focus on central bank action, which came from the European Central Bank (the "ECB") in the form of two successive cuts in the main refinancing rate, and a move to negative ECB deposit rates as Mario Draghi President of the ECB, continued to do 'whatever it takes'. The cost of borrowing for peripheral European Sovereigns fell sharply, to levels not seen since before the Eurozone crisis began.

In the UK, gilt investors' attention shifted from benign inflation data, and also unemployment data following a revision of the Monetary Policy Committee's forward guidance criteria, to indicators of slack in the labour market and any potential move by the central bank to arrest the rising housing market and prevent a potential bubble. Market expectations for the timing of a rise in interest rates were brought forward on comments from multiple committee members and improvements in economic data. 3-Month Sterling LIBOR gradually rose from 0.51% to 0.53%. Gilt yield volatility remained elevated relative to historical norms throughout the period, steadily

Half-yearly Financial Report 2014 ACORN INCOME FUND LIMITED 9

Investment Advisers' Reports (continued)

decreasing from a post-crisis peak at the beginning of the reporting period.

Portfolio Activity

The Income Portfolio significantly outperformed the broader bond market during the period while exhibiting noticeably lower volatility. Outperformance was once again attributable to strong selection of credit sectors and specific bond issues with our shorter duration reducing the degree of outperformance for most of 2014 so far.

Additions to the Income Portfolio included First Group plc based on strong covenant protection and expectation of creditor-friendly action from management, and Contingent Convertibles from Societe Generale and KBC Groep NV at attractive yields. We reduced our underweight position in utilities during the first half, adding both Northumbrian Water plc and a Thames Water plc issue, which have outperformed peers to date. The additional allocation of money to the Income Portfolio led to purchases of high quality corporates including McDonalds, Pepsi and AT&T, while a recently issued convertible from the UK property group Helical Bar provided a little more punch to proceedings.

Among our investment companies, we sold holdings in Invesco Perpetual Enhanced Income and Merchants High Yield Trust as share prices rose to material premiums relative to respective NAVs, and took profits on part of the holding in Tritax Big Box REIT (Tritax) following strong performance since issue and news that Tritax is now considering the introduction of bank debt. We subsequently subscribed to a further placing of equity made by Tritax at a material discount. The increased allocation to the Income Portfolio in June resulted in a higher than average cash weighting whilst we sought opportunities across the credit spectrum.

Paul Smith

Premier Fund Managers Limited

Schedule of Principal Investments

as at 30 June 2014

TOP 10 HOLDINGS	NOMINAL VALUATION HOLDINGS HOLDINGS GBP	TOTAL ASSETS %
Smaller Companies Portfolio
VP plc	466,414 3,129,638	3.70
Cineworld Group plc	889,071 2,906,373	3.43
RPC Group plc	450,000 2,821,500	3.33
Electrocomponents plc	940,000 2,469,380	2.92
Berendsen plc	249,014 2,436,602	2.88
Tyman plc	882,242 2,390,876	2.82
Menzies (John) plc	330,000 2,199,450	2.60
UK Mail Group plc	368,349 2,160,367	2.55
Primary Health Properties	624,596 2,142,364	2.53
Brewin Dolphin Holdings plc	680,506 2,106,166	2.49
	24,762,717	29.25
Income Portfolio
UK Treasury 8% 2021	500,000 682,125	0.81
Societe Generale 8.25% CoCo Perp - 2018	1,000,000 643,049	0.76
Real Estate Credit 8% 2017	550,000 596,750	0.70
Ecofin Water & Power Opportunities 6% CULS 2016	545,000 577,700	0.68
GE Capital Funding 8% 2039	350,000 538,745	0.64
Credit Suisse 7.875% CoCo 2041-2016	700,000 441,950	0.54
University of Cambridge 3.75% 2052	400,000 400,152	0.47
Helical Bar 4% Convertible 2019	400,000 399,668	0.47
Rolls 3.375%	400,000 387,544	0.46
SVG Capital Plc 8.25% CULS 2016	350,000 384,762	0.45
	5,052,445	5.96
TOTAL	29,815,162	35.21

Schedule of Principal Investments

as at 31 December 2013

TOP 10 HOLDINGS	NOMINAL VALUATION HOLDINGS HOLDINGS GBP	TOTAL ASSETS %
Smaller Companies Portfolio
VP plc	466,414 3,106.317	3.92
RPC Group plc	450,000 2,655,000	3.35
Electrocomponents plc	940,000 2,618,840	3.31
Cineworld Group plc	673,539 2,547,661	3.22
Secure Trust Bank plc	83,009 2,407,261	3.04
Menzies (John) plc	330,000 2,336,400	2.95
Berendsen plc	249,014 2,309,605	2.92
Primary Health Properties	624,596 2,184,525	2.76
Hill & Smith plc	413,766 2,132,964	2.69
Brewin Dolphin Holdings plc	680,506 2,075,543	2.62
	24,374,116	30.78
Income Portfolio
Real Estate Credit 8% 2017	550,000 577,500	0.73
Nationwide 10.25% CCDS 2049	5,000 573,165	0.72
GE Capital Funding 8% 2039	350,000 521,997	0.66
Credit Suisse 7.875% CoCo 2041 - 2016	700,000 457,661	0.58
UK Treasury 1.25% Index Linked 2017	300,000 430,835	0.54
Lloyds 7.5884% CoCo 2020	400,000 423,096	0.53
Tritax Big Box Reit plc	400,000 409,000	0.52
SVG Capital plc 8.25% CULS 2016	350,000 387,464	0.49
University of Cambridge 3.75% 2052	400,000 382,744	0.48
Standard Life UK 3.5% CULS	300,000 378,000	0.48
	4,541,462	5.73
TOTAL	28,915,578	36.50

Statement of Comprehensive Income (unaudited)

for the period ended 30 June 2014

	Notes	Revenue GBP	Period ended 30 June 2014 Capital GBP	Total GBP	Period ended 30 June 2013 Total GBP
Net gains on financial assets designated as at fair value through profit or loss Gains on derivative financial instruments Investment income	10 4 3	- - 1,577,625	509,443 216,548 -	509,443 216,548 1,577,625	3,195,760 (11,757) 782,505
Total income and gains Expenses	5	1,577,625 (352,505)	725,991 (266,333)	2,303,616 (618,838)	3,966,508 (308,327)
Return on ordinary activities before finance costs and taxation Interest payable and similar charges	7	1,225,120 -	459,658 (736,042)	1,684,778 (736,042)	3,658,181 (455,821)
Return on ordinary activities before taxation Taxation on ordinary activities Other comprehensive income		1,225,120 - -	(276,384) - -	948,736 - -	3,202,360 - -
Total comprehensive income for the period attributable to Ordinary Shareholders		1,225,120	(276,384)	948,736	3,202,360
		Pence	Pence	Pence	Pence
Return per Ordinary Share	9	7.59	(1.71)	5.88	34.77
Dividend per Ordinary Share	8	6.25	0.00	6.25	6.00
Return per ZDP Share	9	-	3.40	3.40	3.63

The supplementary revenue return and capital return columns have been prepared in accordance with the Statement of Recommended Practice ("SORP") issued by the Association of Investment Companies ("AIC").

In arriving at the results for the financial period, all amounts above relate to continuing operations. No operations were acquired or discontinued in the period.

The notes on pages 18 to 41 form an integral part of these financial statements.

Statement of Financial Position (unaudited)

as at 30 June 2014

	Notes	30 Jun 2014 GBP	31 Dec 2013 GBP
NON-CURRENT ASSETS Financial assets designated as at fair value through profit or loss	10	81,817,118	75,976,377
CURRENT ASSETS
Receivables	11	876,715	723,023
Cash and cash equivalents		1,884,670	2,458,412
Derivative financial instruments	18	93,937	73,305
		2,855,323	3,254,740
TOTAL ASSETS		84,672,440	79,231,117
CURRENT LIABILITIES
Payables - due within one year	12	495,082	702,658
NON-CURRENT LIABILITIES
ZDP shares	13	25,973,297	23,681,183
TOTAL LIABILITIES		26,468,379	24,383,841
NET ASSETS		58,204,061	54,847,276
EQUITY
Share capital	14	178,783	153,781
Share premium		29,440,744	20,411,044
Treasury shares	15	(5,627,395)	-
Revenue reserve		653,420	447,558
Special reserve	18	10,000,000	10,000,000
Capital reserve	18	23,558,509	23,834,893
TOTAL EQUITY		58,204,061	54,847,276
		Pence	Pence
Net asset value per Ordinary Share (per Articles)		359.20	359.97
Net asset value per Ordinary Share (per IFRS)		356.13	356.66
Net asset value per ZDP Share (per IFRS)		118.39	114.72
Net asset value per ZDP Share (per Articles)		119.52	113.35

The financial statements on pages 18 to 41 were approved by the Board of Directors and authorised for issue on 20 August 2014 and signed on its behalf by:

David Warr Nigel Ward

The notes on pages 18 to 41 form an integral part of these financial statements

Statement of Cash Flows (unaudited)

for the period ended 30 June 2014

	Notes	Period ended 30 Jun 2014 GBP	Period ended 30 Jun 2013 GBP
Operating activities
Return on ordinary activities before taxation		948,736	3,202,360
Net gains on financial assets designated as at fair value through profit or loss	10	(509,443)	(3,195,760)
Investment income	3	(1,577,625)	(782,505)
Interest expense	7	736,042	455,821
Increase in derivative financial assets		(20,632)	(70,734)
Increase in derivative financial liabilities		-	19,255
(Decrease)/Increase in payables and appropriations	12	(207,576)	64,297
Increase in receivables excluding accrued investment income	11	(917)	(60,970)
Net cash used in operating activities before investment income		(631,415)	(368,236)
Investment income received		1,424,850	745,132
Net cash from operating activities before taxation		793,435	376,896
Tax paid		-	-
Net cash from operating activities after taxation		793,435	376,896
Investing activities
Purchase of financial assets	10	(34,160,093)	(23,925,140)
Sale of financial assets	10	28,828,795	16,901,032
Net cash flow from investing activities		(5,331,298)	(7,024,108)
Financing activities
Equity dividends paid	8	(1,019,258)	(552,042)
Sale of treasury shares	15	-	641,775
Proceeds from issue of Shares		3,656,322	6,580,414
Cost of issue of Ordinary Shares		(229,014)	(262,046)
Proceeds from issue of ZDP Shares		1,565,609	3,419,586
Cost of issue of ZDP Shares		(9,537)	(25,495)
Net cash flow from financing activities		3,964,121	9,802,192
(Decrease)/increase in cash and cash equivalents		(573,742)	3,154,980
Cash and cash equivalents at beginning of period		2,458,412	618,376
Cash and cash equivalents at end of period		1,884,670	3,773,356
The notes on pages 18 to 41 form an integral part of these financial statements

Statement of Changes in Equity (unaudited)

as at 30 June 2014

	Share Capital 30 Jun 2014 GBP	Share Premium 30 Jun 2014 GBP	Treasury Reserve 30 Jun 2014 GBP	Revenue Reserve 30 Jun 2014 GBP	Special Reserve 30 Jun 2014 GBP	Capital Reserve 30 Jun 2014 GBP	Total 30 Jun 2014 GBP
Balance as at 1 January 2014	153,781	20,411,044		447,558	10,000,000	23,834,893	54,847,276
Total comprehensive income for the period attributable to shareholders	-	-	-	1,225,120	-	(276,384)	948,736
Dividends	-	-	-	(1,019,258)	-	-	(1,019,258)
Treasury shares acquired		-	(6,411,998)		-	-	(6,411,998)
Treasury shares sold	-	-	1,448,433		-	-	1,448,433
Buyback of Ordinary Shares	-	-	(663,830)		-	-	(663,830)
Transfer between reserves		-	-		-	-	-
Issue of Ordinary shares	25,002	9,258,714	-	-	-	-	9,283,717
Ordinary share issue costs		(229,014)	-	-	-	-	(229,014)
Balance as at 30 June 2014	178,783	29,440,744	(5,627,395)	653,420	10,000,000	23,558,509	58,204,061

Statement of Changes in Equity (unaudited) (continued)

as at 31 December 2013

	Share Capital 31 Dec 2013 GBP	Share Premium 31 Dec 2013 GBP	Treasury Reserve 31 Dec 2013 GBP	Revenue Reserve 31 Dec 2013 GBP	Special Reserve 31 Dec 2013 GBP	Capital Reserve 31 Dec 2013 GBP	Total 31 Dec 2013 GBP
Balance as at 1 January 2013	89,398	79,173	(303,211)	297,363	10,000,000	12,630,415	22,793,138
Total comprehensive income for the year attributable to shareholders	-	-	-	1,528,953	-	11,204,478	12,733,431
Dividends	-	-	-	(1,378,758)	-	-	(1,378,758)
Treasury shares acquired	-	-	(5,815,445)	-	-	-	(5,815,445)
Treasury shares sold	-	338,564	6,210,501	-	-	-	6,549,065
Transfer between reserves		91,845	(91,845)	-	-	-	-
Issue of Ordinary Shares	64,383	20,426,716	-	-	-	-	20,491,099
Ordinary Share issue costs		(525,254)	-	-	-	-	(525,254)
Balance as at 31 December 2013	153,781	20,411,044		447,558	10,000,000	23,834,893	54,847,276

Notes to the Financial Statements

for the period ended 30 June 2014

1 ACCOUNTING POLICIES

(a) Basis of preparation

The financial statements, which give a true and fair view, have been prepared in accordance with International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB"), the AIC's SORP (as revised in January 2009) where this is consistent with the requirements of IFRS and in compliance with The Companies (Guernsey) Law, 2008. All accounting policies adopted for the period are consistent with IFRS issued by the IASB. The financial statements have been prepared on an historical cost basis except for the measurement at fair value of financial assets designated as at fair value through profit or loss and derivative financial instruments.

The following Standards or Interpretations have been adopted in the current period. Their adoption has not had any impact on the amounts reported in these Financial Statements and it is not expected to have any impact on future financial periods:

IAS 32 Financial Instruments: Presentation - (amendments effective for annual periods beginning on or after 1 January 2014). The amendment to IAS 32 clarifies that an entity currently has a legally enforceable right to set-off if its right is not contingent on a future event and enforceable both in the normal course of business and in the event of default, insolvency or bankruptcy of the entity and all counterparties.

IAS 39 Financial Instruments: Recognition and Measurement (amendments to permit an entity to elect to continue to apply hedge accounting requirements) effective earlier than annual periods beginning on or after 1 January 2014). Under the amendments there would be no need to discontinue hedge accounting if hedging derivatives was novated, provided certain criteria are met.

The following Standards or Interpretations have been issued but not yet adopted in the current periods:

IFRS 8 - Operating Segments (effective for annual periods beginning on or after 1 July 2014). This amendment will require that an entity discloses the judgements made by management in applying the aggregation criteria to operating segments. It also clarifies that an entity shall only provide reconciliation of the total of the reportable segments' assets to the entity's assets if the segment assets are reported regularly.

IFRS 9 - Financial Instruments - Accounting for financial liabilities and derecognition. IFRS 9 (2009) deals with recognition, derecognition, classification and measurement of financial assets and financial liabilities. The standard contains two primary measurement categories for financial assets: at amortised cost and fair value. A financial asset would be measured at amortised cost if it is held with a business model whose objective is to hold assets in order to collect contractual cash flows, and the asset's contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding. All other financial assets would be measured at fair value.

Other requirements of IFRS 9 relating to classification and measurement of financial liabilities are unchanged from IAS 39. The requirement of IFRS 9 relating to derecognition are unchanged from IAS 39

IFRS 9 (2013) introduces new requirements for hedge accounting that align hedge accounting more closely with an entities risk management approach.

With the issue of IFRS 9 (2013) the mandatory effective date was removed and an effective date for IFRS 9 will be determined when the outstanding impairment guidance and a limited scope amendment to classification of financial assets are issued. Current application of IFRS 9 is however permitted.

IFRS 13 Fair value measurement - (amendment effective for annual periods beginning on or after 1 July 2014). Clarifies that the scope of the portfolio exception defined in paragraph 52 of IFRS 13 includes all contract accounted for within the scope of IAS 39 Financial instruments: Recognition and Measurement or IFRS 9 Financial Instruments, regardless of whether they meet the definition of financial assets or financial liabilities as defined in IAS 32 Financial Instruments.

Notes to the Financial Statements(continued)

for the period ended 30 June 2014

1 ACCOUNTING POLICIES (continued)

(a) Basis of preparation (continued)

IAS 24 Related Party Disclosure (amendments effective for annual periods beginning on or after 1 July 2014). Clarifies that an entity providing key management personnel services to the reporting entity or to the parent of the reporting entity is a related party of the reporting entity.

The Directors have considered the above and are of the opinion that these Standards and Interpretations are not expected to have an impact on the Company's financial statements except for the presentation of additional disclosure and changes to the presentation of components of the financial statements. These items will be applied in the first financial period for which they are required.

(b) Use of estimates and judgements

The preparation of the financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

Management use estimates and judgements in allocating expenses between Revenue and Capital and in ascertaining the risk disclosures contained in Note 18. Management use estimates and judgements in valuing the market value of the investments contained in Note 10.

Ordinary Shares are classified as equity. Incremental costs directly attributable to the issue of Ordinary Shares are recognised as a deduction from equity.

(d) Zero Dividend Preference shares

Under IAS 32, the ZDP Shares are classified as financial liabilities and are held at amortised cost. Appropriation for the period in respect of ZDP Shares is included in the Statement of Comprehensive Income as a finance cost and is calculated using the effective interest method ("EIR"). The costs of issue and premium of the ZDP Shares are being amortised over the period until the ZDP Shares will be redeemed.

(e) Taxation

The Company has been granted exemption under the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 from Guernsey Income Tax, and has elected to remain exempt following changes in the Guernsey tax regime. The Company pays an annual fee of £600.

(f) Treasury shares

Treasury shares are classified as a deduction from equity and recorded for the consideration paid.

(g) Capital reserve

The following are accounted for in this reserve:

- gains and losses on the realisation of investments;

- expenses charged to this account in accordance with the policy below;

- increases and decreases in the valuation of the investments held at the year end; and

- unrealised exchange differences of a capital nature.

Notes to the Financial Statements(continued)

for the period ended 30 June 2014

1 ACCOUNTING POLICIES (continued)

(h) Expenses

All expenses are accounted for on an accruals basis. Expenses are charged to the capital reserve where a connection with the maintenance or enhancement of the value of the investments can be demonstrated.

75% of the Company's management fee and financing costs are charged to the capital reserve in line with the Board's expected long-term split of returns between income and capital gains from the investment portfolio.

100% of any performance fee, commissions paid and the appropriation in respect of ZDP Shares is charged to the capital account. All other expenses are charged through the revenue account.

(i) Investment income

Interest income and distributions receivable are accounted for on an accruals basis. Interest income relates only to interest on bank balances. Bond income is accounted for on the EIR basis. Dividends are recognised on the ex-dividend date. All investment income is treated as a revenue item in the Statement of Comprehensive Income.

(j) Foreign currency translation

The currency of the primary economic environment in which the Company operates (the functional currency) is Great British Pounds (GBP) which is also the presentational currency.

Transactions denominated in foreign currencies are translated into GBP at the rate of exchange ruling at the date of the transaction.

Monetary assets and liabilities, other than investments, denominated in foreign currencies at the reporting date are translated into the functional currency at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the Statement of Comprehensive Income. Foreign exchange differences relating to investments are taken to the capital reserve. Realised and unrealised foreign exchange differences on non-capital assets or liabilities are taken to the Statement of Comprehensive Income in the period in which they arise.

(k) Cash and cash equivalents

Cash and cash equivalents are defined as cash in hand, demand deposits and short term, highly liquid investments readily convertible to known amounts of cash and subject to an insignificant risk of changes in value. For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash, deposits at bank and money market deposits, with a maturity of less than 3 months.

(l) Investments

All investments have been designated as financial assets at "fair value through profit or loss". Investments are initially recognised on the date of purchase at fair value, with transaction costs recognised in the Statement of Comprehensive Income. Unrealised gains and losses on movement in fair value of investments are recognised in the Statement of Comprehensive Income. Investments are derecognised on the date of sale. Gains and losses on the sale of investments will be taken to the Statement of Comprehensive Income in the period in which they arise. For investments actively traded in organised financial markets, fair value is determined by reference to Stock Exchange quoted market bid prices as at the close of business on the reporting date.

(m) Derivatives

Derivatives consist of forward exchange contracts which are stated at market value, with the resulting net realised and unrealised gains and losses being reflected in the Statement of Comprehensive Income.

Notes to the Financial Statements(continued)

for the period ended 30 June 2014

1 ACCOUNTING POLICIES (continued)

(n) Trade date accounting

All "regular way" purchases and sales of financial assets are recognised on the "trade date", i.e. the date that the entity commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of the asset within the timeframe generally established by regulation or convention in the market place.

(o) Segmental reporting

The Company retains two Investment Advisers, Unicorn Asset Management Limited and Premier Fund Managers Limited for the Smaller Companies Portfolio and Income Portfolio respectively. As the Board reviews the performance of each portfolio separately and decides on the allocation of resources based on this performance, the Board has determined that the Company has two reportable segments (30 June 2013: two).

The Board is charged with setting the Company's investment strategy in accordance with the Prospectus. They have delegated the day to day implementation of this strategy to its Investment Advisers but retain responsibility to ensure that adequate resources of the Company are directed in accordance with their decisions. The investment decisions of the Investment Advisers are reviewed on a regular basis to ensure compliance with the policies and legal responsibilities of the Board. The Investment Advisers have been given full authority to act on behalf of the Company, including the authority to purchase and sell securities and other investments on behalf of the Company and to carry out other actions as appropriate to give effect thereto. Whilst the Investment Advisers may make the investment decisions on a day to day basis regarding the allocation of funds to different investments, any changes to the investment strategy or major allocation decisions have to be approved by the Board, even though they may be proposed by the Investment Advisers. The Board therefore retains full responsibility as to the major allocation decisions made on an ongoing basis. The Investment Advisers will always act under the terms of the Prospectus which cannot be radically changed without approval of the Board and the shareholders.

The key measure of performance used by the Board to assess the company's performance and to allocate resources is the total return on the Company's net asset value ("NAV"), as calculated under IFRS, and therefore no reconciliation is required between the measure of profit or loss used by the Board and that contained in the financial statements.

The schedule of principal investments held as of the period end are presented in the Investment Advisers' Report.

(p) Going Concern

The Company has adequate financial resources and as a consequence, the Directors believe the Company is well placed to manage its business risks successfully. In reaching this conclusion, the Directors have considered the liquidity of the Company's portfolio of investments as well as its cash position, income and expense flows. In addition, during 2011 the Company passed its continuation vote and is not subject to a further continuation vote until 2016.

2 OPERATING SEGMENTS

The Company has two reportable segments, being the Income Portfolio and the Smaller Companies Portfolio. Each of these portfolios is managed separately as they entail different investment objectives and strategies and contain investments in different products.

Notes to the Financial Statements(continued)

for the period ended 30 June 2014

2 OPERATING SEGMENTS (continued)

For each of the portfolios, the Board reviews internal management reports on a quarterly basis. The objectives and principal investment products of the respective reportable segments are as follows:

Segment Investment objectives and principal investments products

Income Portfolio To maximise income through investments in sterling denominated fixed interest

securities including corporate bonds, preference and permanent interest bearing shares, convertibles, reverse convertibles, debentures and other similar securities.

Smaller Companies Portfolio To maximise income and capital growth through investments in smaller‑

capitalised UK companies.

Information regarding the results of each reportable segment follows. Performance is measured based on the increase in value of each portfolio, as included in the internal management reports that are reviewed by the Board.

Segmental information is measured on the same basis as that used in the preparation of the Company's financial statements.

	Income Portfolio GBP	Smaller Companies Portfolio GBP	Unallocated GBP	Total GBP
30 June 2014 External revenues: Net gains on financial assets designated as at fair value
through profit or loss	412,525	96,918	-	509,443
Losses on derivative financial instruments	-	-	216,548	216,548
Investment income:
Bank interest	-	-	79	79
Dividend income	51,956	1,075,570	-	1,127,526
Bond income	450,020	-	-	450,020
Total income and gains	914,501	1,172,488	216,627	2,303,616
Expenses	-	-	(618,838)	(618,838)
Interest payable and similar charges	-	-	(736,042)	(736,042)
Total comprehensive income for the period attributable to shareholders	914,501	1,172,488	(1,138,253)	948,736

Notes to the Financial Statements(continued)

for the period ended 30 June 2014

2 OPERATING SEGMENTS (continued)

	Income Portfolio GBP	Smaller Companies Portfolio GBP	Unallocated GBP	Total GBP
30 June 2014 Financial assets designated as at fair value through
profit or loss	20,634,699	61,182,418	-	81,817,118
Receivables	454,754	402,170	19,791	876,715
Derivative financial instruments	-	-	93,937	93,937
Cash and cash equivalents	866,358	830,120	188,193	1,884,670
Total assets	21,955,811	62,414,708	301,921	84,672,440
Derivative financial liabilities	-	-	-	-
Payables	-	-	495,082	495,082
Total liabilities		-	495,082	495,082

	Income Portfolio GBP	Smaller Companies Portfolio GBP	Unallocated GBP	Total GBP
31 December 2013 External revenues: Net gains on financial assets designated as at fair value
through profit or loss	618,539	12,525,410	-	13,143,949
Gains on derivative financial instruments	-	-	93,555	93,555
Investment income:
Bank interest	-	-	170	170
Dividend income	114,996	1,299,400	-	1,414,398
Bond income	525,201	-	-	525,201
Total income and gains	1,258,736	13,824,810	93,725	15,177,273
Expenses	-	-	(1,348,088)	(1,348,088)
Interest payable and similar charges	-	-	(1,095,754)	(1,095,754)
Total comprehensive income for the year attributable to shareholders	1,258,736	13,824,810	(2,350,117)	12,733,431

Notes to the Financial Statements(continued)

for the period ended 30 June 2014

2 OPERATING SEGMENTS (continued)

	Income Portfolio GBP	Smaller Companies Portfolio GBP	Unallocated GBP	Total GBP
31 December 2013 Financial assets designated as at fair value through
profit or loss	15,243,477	60,732,900	-	75,976,377
Receivables	463,269	256,172	3,582	723,023
Derivative financial instruments	-	-	73,305	73,305
Cash and cash equivalents	511,577	302,978	1,643,858	2,458,412
Total assets	16,218,323	61,292,049	1,720,745	79,231,117
Derivative financial liabilities	-	-	-	-
Payables	-	-	702,658	702,658
Total liabilities		-	702,658	702,658

Geographical information

In presenting information on the basis of geographical segments, segment revenue and segment assets are based on the domicile countries of the investees and counterparties to derivative transactions.

Other Rest of

UK Guernsey Jersey Europe the World Total

GBP GBP GBP GBP GBP GBP

30 June 2014 External revenues

Total Revenue 1,286,035 102,169 75,568 95,900 17,874 1,577,546

Other Rest of

UK Guernsey Jersey Europe the World Total

GBP GBP GBP GBP GBP GBP

31 December 2013 External revenues

Total Revenue 1,688,513 127,924 35,171 63,874 24,116 1,939,598

The Company did not hold any non-current assets during the period other than financial instruments (December 2013: 0).

Major customers

The Company regards its shareholders as customers. There were no shareholders with a holding greater than 10% at the period end.

Notes to the Financial Statements(continued)

for the period ended 30 June 2014 3 INVESTMENT INCOME	Period ended 30 Jun 2014 GBP	Period ended 30 Jun 2013 GBP
Bank interest	79	82
Dividend income	1,127,526	589,257
Bond income	450,020	193,166
	1,577,625	782,505
4 GAINS/(LOSSES) ON DERIVATIVE FINANCIAL INSTRUMENTS
	Period ended	Period ended
	30 Jun 2014	30 Jun 2013
	GBP	GBP
Unrealised gain/(loss) on forward foreign currency contracts	93,937	(99,815)
Realised gain on forward foreign currency contracts	122,611	16,617
Depreciation on fair value of derivative financial assets		71,441
	216,548	(11,757)

Notes to the Financial Statements(continued)

for the period ended 30 June 2014 5 EXPENSES	Revenue GBP	Period ended 30 Jun 2014 Capital GBP	Total GBP
Manager's fee*	73,843	221,528	295,371
Performance fee*	-	-	-
Administrator's fee	58,158	-	58,158
Registrar's fee	9,578	-	9,578
Directors' fees	38,609	-	38,609
Custody fees	22,607	-	22,607
Audit fee	20,929	-	20,929
Directors' and Officers' insurance	3,771	-	3,771
Annual fees	6,781	-	6,781
Bank charges	1,288	-	1,288
Commission paid	-	44,805	44,805
Legal and professional fees	10,767	-	10,767
Broker fees	18,515	-	18,515
Sundry costs	16,930	-	16,930
Loss on foreign exchange	70,729		70,729
	352,505	266,333	618,838

*The Company has entered into a Management Agreement with Premier Asset Management (Guernsey) Limited, a wholly-owned, Guernsey incorporated subsidiary of Premier Asset Management Limited. The Manager receives a management fee of 0.7% per annum of total assets (subject to a minimum fee of £100,000) calculated monthly and payable quarterly in arrears, out of which it pays fees to the Investment Advisers. The Manager is also paid a shareholder communication and support fee, currently £3,100 for the twelve months from 1 April 2014 to 31 March 2015. The Manager is also potentially entitled to a performance fee of 15% of any excess of the NAV per Ordinary Share (together with any dividends paid by reference to the relevant period) over the higher of the First Benchmark or the Second Benchmark. The First Benchmark is calculated as the NAV per Ordinary Share immediately following completion of the tender offer, in January 2007, compounded at a rate of 10.0% per annum up to the relevant calculation day. The Second Benchmark being the higher NAV on the last day in the prior period is used if a performance fee was paid in that prior period. The Management Agreement may be terminated by either party on 12 months' written notice.

Notes to the Financial Statements(continued)

for the period ended 30 June 2014 5 EXPENSES (continued)	Revenue GBP	Period ended 30 Jun 2013 Capital GBP	Total GBP
Manager's fee	35,652	106,957	142,609
Administrator's fee	30,617	-	30,617
Registrar's fee	3,589	-	3,589
Directors' fees	35,699	-	35,699
Custody fees	8,866	-	8,866
Audit fee	11,716	-	11,716
Directors' and Officers' insurance	2,837	-	2,837
Annual fees	8,372	-	8,372
Bank charges	1,003	-	1,003
Commission paid	-	31,551	31,551
Broker fees	9,808	-	9,808
Sundry costs	18,797	-	18,797
Loss on foreign exchange	2,863		2,863
	169,819	138,508	308,327
6 DIRECTORS' REMUNERATION

Under the terms of their appointment, each Director is paid a fee of £20,000 per annum by the Company In addition the Chairman receives £7,500 per annum (in total remuneration £27,500) and both the Chairman of the Audit Committee and the Remuneration and Management Engagement Committee each receive an additional £5,000 , (total remuneration for each post being £25,000).

7 INTEREST PAYABLE AND SIMILAR CHARGES

Period ended 30 Jun 2014 Period ended 30 Jun 2013

GBP GBP GBP GBP GBP GBP

Appropriation in respect of

ZDP shares - 689,186 689,186 - 418,306 418,306

Amortisation of ZDP issue costs 46,856 46,856 37,515 37,515

- 736,042 736,042 - 455,821 455,821

Notes to the Financial Statements(continued)

for the period ended 30 June 2014

8 DIVIDENDS IN RESPECT OF ORDINARY SHARES

Period ended

30 Jun 2014

Pence

GBP per share

First interim payment	481,600	3.00
Second interim payment	537,658	3.25
	1,019,258	6.25

	Year ended 31 Dec 2013 GBP	Pence per share
First interim payment	261,744	3.00
Second interim payment	178,796	2.00
Third interim payment	111,502	1.00
Fourth interim payment	373,518	3.00
Fifth interim payment	453,198	3.00
	1,378,758	12.00
9 EARNINGS PER SHARE

Ordinary Shares

The total return per Ordinary Share (per IFRS) is based on the total return on ordinary activities for the period attributable to Ordinary shareholders of £948,736 (Jun 2013: £3,202,360) and on 16,143,911 (Jun 2013: 9,207,380) shares, being the weighted average number of shares in issue during the period. There are no dilutive instruments and therefore basic and diluted gain per share is identical.

The revenue return per Ordinary Share (per IFRS) is based on the revenue return on activities for the period attributable to Ordinary shareholders of £1,225,120 (Jun 2013: £612,686) and on 16,143,911 (Jun 2013: 9,207,380) shares, being the weighted average number of shares in issue during the period. There are no dilutive instruments and therefore basic and diluted gain per share is identical.

The capital return per Ordinary Share (per IFRS) is based on the capital loss on ordinary activities for the period attributable to Ordinary shareholders of £276,384 (Jun 2013: gain of £2,589,674) and on 16,143,911 (Jun 2013: 9,207,380) shares, being the weighted average number of shares in issue during the period. There are no dilutive instruments and therefore basic and diluted gain per share is identical.

ZDP shares

The return per ZDP Share (per IFRS) is based on the appropriation in respect of ZDP Shares and the amortisation of ZDP Share issue costs totalling£736,042 (Jun 2013: £455,821) and on 21,670,227 (Jun 2013: 12,540,964) shares, being the weighted average number of ZDP Shares in issue during the period.

Notes to the Financial Statements(continued)

for the period ended 30 June 2014 10 FINANCIAL ASSETS DESIGNATED AS AT FAIR VALUE THROUGH PROFIT OR LOSS	30 Jun 2014 GBP	31 Dec 2013 GBP
INVESTMENTS
Opening portfolio cost	52,881,014	23,711,877
Unrealised appreciation on valuation brought forward	23,095,363	10,647,059
Opening valuation	75,976,377	34,358,936
Movements in the period/year
Purchases at cost	34,160,093	59,932,096
Sales
- proceeds	(28,828,795)	(31,458,604)
- realised gains on sales	2,521,143	695,645
Unrealised (depreciation)/appreciation on valuation for the period/year	(2,011,700)	12,448,304
Fair value of investments at 30 June 2014	81,817,118	75,976,377
Closing book cost	60,733,455	52,881,014
Closing unrealised appreciation	21,083,663	23,095,363
	81,817,118	75,976,377
Realised gains on sales	2,521,143	695,645
(Decrease)/increase in unrealised appreciation	(2,011,700)	12,448,304
Net gains on financial assets designated as at fair value through profit or loss	509,443	13,143,949

As at 30 June 2014, the closing fair value of investments comprises £63,518,773 (Dec 2013: £63,507,047) of equity shares and £18,298,344 (Dec 2013: £12,414,432) of fixed income securities.

IFRS 13 requires the fair value of investments to be disclosed by the source of inputs using a three-level hierarchy as detailed below:

Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);

Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (Level 2);

Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).

Notes to the Financial Statements(continued)

for the period ended 30 June 2014

10 FINANCIAL ASSETS DESIGNATED AS AT FAIR VALUE THROUGH PROFIT OR LOSS (continued)

The Investments held by the Company have been classified as Level 1. This is in accordance with the fair value hierarchy.

Details of the value of each classification are listed in the table below. Values are based on the market value of the investments as at the reporting date:

Financial assets designated as at fair value through profit or loss

30 Jun 2014 30 Jun 2014 31 Dec 2013 31 Dec 2013

Market Value Market Value Market Value Market Value

% GBP % GBP

Level 1	100	81,817,118	100	75,976,377
Total	100	81,817,118	100	75,976,377

Derivative financial assets and liabilities designated as at fair value through profit or loss

30 Jun 2014 30 Jun 2014 31 Dec 2013 31 Dec 2013

Market Value Market Value Market Value Market Value

% GBP % GBP

Level 2 derivative financial assets 100 93,937 100 73,305

Level 2 derivative financial liabilities 100 - 100

There have been no transfers between levels of the fair value hierarchy during the period under review. It is the Company's policy to recognise all the transfers into the levels and transfers out of the levels at the end of the reporting period. Transfers into each level shall be disclosed and discussed separately from transfer out of each level.

The derivative financial instruments held by the Company have been classified as Level 2. This is in accordance with the fair value hierarchy. The Company uses widely recognised valuation models for determining fair value of derivative financial instruments that use only observable market data and require little management judgement and estimation.

11 RECEIVABLES
	30 Jun 2014	31 Dec 2013
	GBP	GBP
Prepayments	19,971	3,582
Accrued income	641,171	488,396
Sundry receivables	215,753	231,045
	876,715	723,023

Notes to the Financial Statements(continued)

for the period ended 30 June 2014 12 PAYABLES (amounts falling due within one year)	30 Jun 2014 GBP	31 Dec 2013 GBP
Accrued expenses	308,869	679,776
Broker creditors	159,558	-
Trade creditors	26,655	22,882
	495,082	702,658
13 ZDP SHARES
	30 Jun 2014	31 Dec 2013
	GBP	GBP
ZDP Share entitlement	25,973,297	23,681,183
The above entitlement comprises the following:
20,642,306 ZDP Shares issued 31 December 2013	22,147,580	12,000,000
3,356,065 ZDP Shares issued during the period	3,899,340	-
523,504 ZDP Shares sold out of treasury during the period	643,617
2,583,959 Buyback of ZDP Shares during the period	(2,977,348)	-
8,642,305 ZDP Shares issued during the year to December	-	9,977,006
2,357,107 Buyback of ZDP Shares during the year to December	-	(2,625,985)
2,357,107 ZDP Shares sold out of treasury during the year to December	-	2,796,559
Appropriation in respect of ZDP Shares	2,508,076	1,818,890
ZDP value (calculated in accordance with the Articles)	26,221,265	23,966,470
ZDP issue costs	(376,888)	(367,351)
Issue costs amortised	128,920	82,064
ZDP value (calculated in accordance with IFRS)	25,973,297	23,681,183

The fair value of the ZDP Shares is considered to be the same as the value calculated in accordance with IFRS.

ZDP Shares carry no entitlement to income distributions to be made by the Company. The ZDP Shares will not pay dividends but have a final capital entitlement at the end of their life on 31 January 2017 of 138 pence. It should be noted that the predetermined capital entitlement of a ZDP Share is not guaranteed and is dependent upon the Company's gross assets being sufficient on 31 January 2017 to meet the final capital entitlement of ZDP Shares. If the Company had been wound up on 30 June 2014, the ZDP Shares would have had an entitlement of 117.24 pence each. The ZDP Shares have the right to receive notice of and attend, but shall not have the right to vote at, any general meeting.

Under the Articles of Incorporation, the Company is obliged to redeem all of the ZDP Shares on 31 January 2017 (if such redemption has not already been effected).

The number of authorised ZDP Shares is 50,000,000. The number of issued ZDP Shares is 21,937,916 (2013: 20,642,306). The non-amortisation of the ZDP Shares in line with the Articles has the effect of increasing the NAV per Ordinary Share by 3.07 pence.

Notes to the Financial Statements(continued)

for the period ended 30 June 2014

14 SHARE CAPITAL

Authorised GBP

Ordinary Shares of 1p each unlimited

Issued Number of

The issue of Ordinary Shares took place as follows:

Ordinary Shares 11 February 1999 29,600,002

Tender offer 17 January 2007 (20,660,212)

Purchase of treasury shares - Year ended 31 December 2011 (215,000)

Placing - Year ended 31 December 2013 6,438,339

Purchase of treasury shares - Year ended 31 December 2013 (1,756,000)

Shares sold out of Treasury - Year ended 31 December 2013 1,971,000

Number of shares in issue at 31 December 2013 15,378,129

Issue from treasury shares during the period 2,500,205

Buyback of Ordinary Shares during the period (1,925,000)

Shares sold out of Treasury during the period 390,000

Number of shares in issue at 30 June 2014 16,343,334

GBP

Issued and fully paid capital as at 30 June 2014 178,783

The Ordinary Shares (excluding treasury shares) are entitled to participate in all dividends and distributions of the Company. On a winding-up holders of Ordinary Shares are entitled to participate in the distribution and the holders of Ordinary Shares are entitled to receive notice of and attend and vote at all general meetings of the Company.

Notes to the Financial Statements(continued)

for the period ended 30 June 2014
15 TREASURY RESERVES
	30 Jun 2014	31 Dec 2013
	GBP	GBP
Balance as at 1 January 2014	-	(303,211)
Buyback of shares during the period	(7,075,828)	(5,815,445)
Treasury shares sold during the period	1,448,433	6,210,501
Transfer between reserves	-	(91,845)
Balance as at 30 June 2014	(5,627,395)	-

30 Jun 2014 31 Dec 2013

No. Shares No. Shares

Balance as at 1 January 2014 - 215,000

Buyback of shares during the period 1,925,000 1,756,000

Treasury shares sold during the period (390,000) (1,971,000)

Balance as at 30 June 2014 1,535,000 -

The Treasury Shares were purchased in the market at various prices ranging from £3.30 to £3.72 and held by the Company in treasury.

16 RELATED PARTIES

Premier Asset Management (Guernsey) Limited is the Company's Investment Manager and operates under the terms of the management agreement in force which gives it complete control over the Company's investment portfolio.

£295,371 (Jun 2013: £142,609) of costs were incurred by the Company with this related party in the period, of which £150,214 (Dec 2013: £636,168) was due to this related party as at 30 June 2014.

The directors' remuneration is disclosed in Note 6.

17 FINANCIAL INSTRUMENTS

The Company's main financial instruments comprise:

(a) Cash and cash equivalents that arise directly from the Company's operations;

(b) Investments in listed entities and derivative financial assets;

(d) Derivative financial assets.

Notes to the Financial Statements(continued)

for the period ended 30 June 2014

18 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The following table details the categories of financial assets and liabilities held by the Company at the reporting date:

	30 Jun 2014 GBP	31 Dec 2013 GBP
Financial assets Financial assets at fair value through profit or loss	81,817,118	75,976,377
Derivative financial instruments	93,937	73,305
Total financial assets at fair value through profit or loss	81,911,055	76,049,682
Loans and receivables	2,761,386	3,181,435
Total assets	84,672,440	79,231,117
Financial liabilities Financial liabilities at fair value through profit or loss: Accrued expenses Derivative financial liabilities	495,082 -	702,658 -
Total financial liabilities at fair value through profit or loss	495,082	702,658
Financial liabilities measured at amortised cost	25,973,297	23,681,183
Total liabilities excluding net assets attributable to holders of Ordinary Shares	26,468,379	24,383,841

Loans and receivables presented above represents cash and cash equivalents, balances due from brokers and other receivables as detailed in the Statement of Financial Position.

Financial liabilities measured at amortised cost presented above represents accrued expenses and ZDP Shares as detailed in the Statement of Financial Position.

Derivative financial assets presented above represent forward foreign exchange contracts. Long gilts exist and are valued initially at date of purchase at fair value. Unrealised gains and losses on movement in fair value are recognised in the Statement of Comprehensive Income.

The main risks arising from the Company's financial instruments are market price risk, credit risk, liquidity risk, interest rate risk and foreign exchange risk. The Board regularly review and agrees policies for managing each of these risks and these are summarised in notes 18(a) to 18(f).

Notes to the Financial Statements(continued)

for the period ended 30 June 2014

18 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

(a) Market Price Risk

Market price risk arises mainly from uncertainty about future prices of financial instruments held. It represents the potential loss the Company might suffer through holding market positions in the face of price movements. The Investment Advisers actively monitor market prices and report to the Board as to the appropriateness of the prices used for valuation purposes. The Investment Advisers also attempt to minimise market price risk by undertaking a detailed analysis of the risk/reward relationship of each investee company prior to any investment being made.

Details of the Company's Investment Objective and Policy are given inside the front cover of this Report. Price sensitivity

The following details the Company's sensitivity to a 15% increase and decrease in the market prices, with 15% being the sensitivity rate used when reporting price risk internally to key management personnel and representing management's assessment of the possible change in market prices.

At 30 June 2014, if market prices had been 15% higher with all the other variables held constant, the return attributable to shareholders for the period would have been £12,272,568 (Dec 2013: £11,396,457) greater, due to the increase in the fair value of financial assets at fair value through profit or loss. This would represent an increase in Net Assets of 21.09% (Dec 2013: 20.78%).

If market prices had been 15% lower with all the other variables held constant, the return attributable to shareholders for the period would have been £12,272,568 (Dec 2013: £11,396,457) lower, due to the decrease in the fair value of financial assets at fair value through profit or loss. This would represent a decrease in Net Assets of 21.09% (Dec 2013: 20.78%).

(b) Credit Risk

Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet a commitment that it has entered into with the Company. The Directors receive financial information on a regular basis which is used to identify and monitor risk. It is Company policy not to invest more than 20% of the gross assets of the Company in the securities of any one company or group at the time the investment is made.

The Company has no significant concentration of credit risk, with exposure spread over a large number of counterparties. At 30 June 2014 the Company's largest exposure to a single investment was £3,129,638 (Dec 2013: £3,106,317), 3.7% (Dec 2013: 3.92%) of total assets.

Investors should be aware that the prospective returns to Shareholders mirror the returns under the Quoted Securities held or entered into by the Company and that any default by an issuer of any such Quoted Security held by the Company would have a consequential adverse effect on the ability of the Company to pay some or all of the entitlement to Shareholders. Such a default might, for example, arise on the insolvency of an issuer of a Quoted Security.

Notes to the Financial Statements(continued)

for the period ended 30 June 2014

18 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) (b) Credit Risk (continued)
The Company's financial assets exposed to credit risk are as follows:
	30 Jun 2014	31 Dec 2013
	GBP	GBP
Financial assets designated as at fair value through profit or loss (fixed income securities only)	18,320,292	12,414,432
Cash and cash equivalents	1,884,670	2,458,412
Interest, dividends and other receivables	876,715	723,023
	21,081,678	15,595,867

The credit ratings of the bonds in the Income Portfolio, as rated by Moody's Investor Services Inc ("Moody's") were:

Rating	30 Jun 2014	31 Dec 2013
Aaa	3.62%	2.51%
Aa	13.63%	9.89%
A	27.87%	8.62%
Baa	13.96%	14.04%
Ba	0.00%	9.11%
B	2.91%	3.98%
WR	0.00%	0.00%
No rating available	38.01%	51.85%

The cash and cash equivalents were held with BNP Paribas, which at the time of signing this report held a credit rating, as rated by Moody's, of A2.

Liquidity risk is the risk that the Company will encounter difficulty in realising assets or otherwise raising funds to meet financial commitments. The Company's main financial commitment is its ongoing operating expenses and the settlement of the obligation upon maturity of the ZDP Shares on 31 January 2017. The ZDP liability will be settled through realisation of the Company's investment portfolio.

The Investment Advisers ensure that the Company has sufficient liquid resources available to fulfil its operational plans and to meet its financial obligations as they fall due. This is monitored by carrying out a solvency calculation on a quarterly basis by reference to management accounts and revenue projections. The Board will approve, if appropriate, a Solvency Certificate resolution prior to declaring any interim distributions.

The ZDP Shares will not pay dividends but will have a final capital entitlement at the end of their life on 31 January 2017 of 138 pence. It should be noted that the predetermined capital entitlement of a ZDP Share is not guaranteed and is dependent upon the Company's gross assets being sufficient on 31 January 2017 to meet the final capital entitlement of the ZDP Shares.

The Board intend to monitor the financial position of the Company to ensure that it has sufficient liquid resources available to fulfil its obligation upon maturity of the ZDP Shares.

Notes to the Financial Statements(continued)

for the period ended 30 June 2014

18 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) (c) Liquidity Risk (continued) The table below details the residual contractual maturities of financial liabilities: As at 30 June 2014:	1-3 months GBP	Over 1 year GBP
Financial assets
Financial assets designated as at fair value through profit or loss	81,817,118	-
Receivables	876,715	-
Cash and cash equivalents	1,884,670
	84,578,504
Financial liabilities including derivatives
Payables - due within one year	495,082	-
ZDP Share entitlement	-	30,274,324
	495,082	30,274,324
As at 31 December 2013:
	1-3 months	Over 1 year
	GBP	GBP
Financial assets
Financial assets designated as at fair value through profit or loss	75,976,377	-
Receivables	723,023	-
Cash and cash equivalents	2,458,412
	79,157,712	-
Financial liabilities including derivatives
Payables - due within one year	702,658	-
ZDP Share entitlement	-	28,486,382
	702,658	28,486,382

Notes to the Financial Statements(continued)

for the period ended 30 June 2014

18 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

(d) Interest Rate Risk

The Company could hedge interest rate risk using various different methods.

The following table details the Company's exposure to interest rate risks. It includes the Company's assets and liabilities at fair values, categorised by the earlier of contractual re-pricing or maturity date measured by the carrying value of the assets and liabilities:

	Less than 1 month GBP	Fixed interest GBP	Non-interest Bearing GBP	Total GBP
Financial Assets Financial assets at fair value through profit or loss on initial recognition Cash and cash equivalents Interest, dividends and other receivables Derivative financial instruments	- 1,884,670 - -	18,320,292 - - -	63,496,825 - 876,715 93,937	81,817,118 1,884,670 876,715 93,937
Total Financial Assets	1,884,670	18,320,292	64,467,477	84,672,440
Financial Liabilities Payables ZDP Share entitlement	- -	- 25,973,297	495,082 -	495,082 25,973,297
Total Financial Liabilities	-	25,973,297	495,082	26,468,379
Total interest sensitivity gap	1,884,670	(7,653,005)
As at 31 December 2013:	Less than 1 month GBP	Fixed interest GBP	Non-interest Bearing GBP	Total GBP
Financial Assets Financial assets at fair value through profit or loss on initial recognition Cash and cash equivalents Interest, dividends and other receivables Derivative financial instruments	- 2,458,412 - -	12,414,432 - - -	63,561,945 - 723,023 73,305	75,976,377 2,458,412 723,023 73,305
Total Financial Assets	2,458,412	12,414,432	64,358,273	79,231,117
Financial Liabilities Payables ZDP Share entitlement	- -	- 23,681,183	702,658 -	702,658 23,681,183
Total Financial Liabilities	-	23,681,183	702,658	24,383,841
Total interest sensitivity gap	2,458,412	(11,266,751)

Notes to the Financial Statements(continued)

for the period ended 30 June 2014

18 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

(d) Interest Rate Risk (continued)

Interest rate sensitivity takes account of the effect of interest rate movements on cash balances, loan amounts and fixed interest securities. Interest rate risk does not affect the cash flows of the fixed interest securities but does affect the fair value and as such this sensitivity has been reflected in the market price risk disclosures at Note 18a.

Interest rate sensitivity

If interest rates had been 25 basis points higher and all other variables were held constant, the Company's return attributable to Shareholders for the period ended 30 June 2014 would have increased by approximately £2,356 (Dec 2013: £6,146) or 0% (Dec 2013: 0.01%) of Total Assets due to an increase in the amount of interest receivable on the bank balances.

If interest rates had been 25 basis points lower and all other variables were held constant, the Company's return attributable to Ordinary Shareholders for the period ended 30 June 2014 would have decreased by approximately £2,356 (Dec 2013: £6,146) or 0% (Dec 2013: 0.01 %) of Total Assets due to a decrease in the amount of interest receivable on the bank balances.

(e) Foreign exchange risk

Forward currency transactions are used to hedge the foreign currency exposure in bonds, other investments and cash balances held within the portfolio. The purpose of the hedge is to protect the Company's assets from a decline in value that might arise from the depreciation of a foreign currency against Sterling.

At 30 June 2014, the Company's holdings in derivatives translated into GBP were as specified below:

Type of contract	Expiration	Underlying	Notional amount of contracts outstanding	Fair value assets GBP
Forward	August 2014	Sold USD	400,000	1,786
Forward	August 2014	Sold USD	250,000	1,901
Forward	August 2014	Sold USD	4,475,000	36,551
Forward	August 2014	Sold EUR	2,425,000	53,699
				93,937
At 31 December 2013:

Notional

amount of Fair value

contracts assets

Type of contract Expiration Underlying outstanding GBP

Forward	February 2014	Sold USD	300,000.00	2,298
Forward	February 2014	Sold USD	35,000.00	278
Forward	February 2014	Sold EUR	1,425,000.00	15,052
Forward	February 2014	Sold USD	3,235,000.00	55,677
				73,305

Notes to the Financial Statements(continued)

for the period ended 30 June 2014

18 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

(e) Foreign Exchange Risk (continued)

Exchange rate exposures are managed by minimising the amount of foreign currency held at any one time and entering into forward exchange contracts.

The following table sets out the Company's total exposure to foreign currency risk and the net exposure to foreign currencies of the monetary assets and liabilities:

30 June 2014	Monetary Assets GBP	Monetary Liabilities GBP	Forward FX Contracts GBP	Net Exposure GBP
Euro	2,439,783	(159,558)	(1,994,786)	285,439
US Dollar	3,276,721	(24,741)	(3,036,263)	215,717
Australian Dollar	13	-	-	13
31 December 2013
	Monetary	Monetary	Forward
	Assets	Liabilities	FX Contracts	Net Exposure
	GBP	GBP	GBP	GBP
Euro	1,406,764	-	(1,198,509)	208,255
US Dollar	2,310,212	-	(2,214,441)	95,772
Australian Dollar	12,418	-	-	12,418

Amounts in the above table are based on the carrying value of monetary assets and liabilities and the underlying principle amount of forward currency contracts.

(f) Capital Management

The principal investment objectives of the Company are to provide shareholders with a high income and also the opportunity for income and capital growth by investing primarily in smaller capitalised United Kingdom companies admitted to the Official List of the Financial Conduct Authority and traded on the London Stock Exchange or traded on AIM.

The Company's portfolio is invested in equities and high income and fixed interest and other income-bearing securities in order to achieve its investment objectives. It is the aim of the Company to provide both income and capital growth predominantly through investment of approximately 70% -80% of the portfolio in smaller capitalised United Kingdom companies. The Company also aims to further enhance income for shareholders by investing approximately 20% -30% of its assets in high yielding securities which will be predominantly fixed income securities (including corporate bonds, preference and permanent interest bearing shares, convertible and reverse convertible bonds and debentures) but may include up to 15% of the portfolio (measured at time of acquisition) in high yielding investment company shares.

As the Company's Ordinary Shares are traded on the London Stock Exchange, the Ordinary Shares may trade at a discount or premium to their Net Asset Value ("NAV") per share on occasion. However, the Directors and the Investment Manager monitor the discount on a regular basis and can use share buybacks to manage the discount.

Notes to the Financial Statements(continued)

for the period ended 30 June 2014

18 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

(f) Capital Management (continued)

The Company monitors capital on the basis of the carrying amount of equity as presented on the face of the Statement of Financial Position. Capital for the reporting periods under review is summarised as follows:

GBP

Distributable reserves 10,653,420

Share capital and share premium 29,619,527

Non distributable reserves 23,558,509

Treasury shares (5,627,395)

Total 58,204,061

The distributable reserves comprise the revenue reserve and the special reserve. The non distributable reserves comprise the capital reserve. The special reserve was created on the cancellation of part of the Company's share premium account. The Directors have resolved that the capital reserve is a non distributable reserve.

19 SUBSEQUENT EVENTS

Further to the authority granted to the Company at the EGM on the 6 January 2014, the company has undertaken a buyback programme and as at 20 August 2014 (the latest practicable date before publication) bought back 500,000 Ordinary Shares and 671,160 ZDP Shares since 30 June 2014, of which 200,000 Ordinary Shares and 268,464 ZDP Shares were held in treasury and 300,000 Ordinary Shares and 402,696 ZDP Shares have been cancelled.

Directors and Advisers

Board of Directors

Helen Foster Green (Chairman)

John Nigel Ward

David John Warr

Investment Manager

Premier Asset Management (Guernsey) Limited

PO Box 156

Frances House

Sir William Place

St Peter Port

Guernsey GY1 4EU

Investment Adviser -

Smaller Companies Portfolio

Unicorn Asset Management Limited

Preacher's Court

The Charterhouse

Charterhouse Square

London EC1M 6AU

Investment Adviser - Income Portfolio

Premier Fund Managers Limited Eastgate Court

High Street

Guildford GU1 3DE

Administrator and Secretary

JTC (Guernsey) Limited

(formerly JTC Fund Managers (Guernsey) Limited)

PO Box 156

Frances House

Sir William Place

St Peter Port

Guernsey GY1 4EU

This information is provided by RNS

The company news service from the London Stock Exchange

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