Annual Financial Report Annou

RNS Number : 6284U

Midas Income & Growth Trust PLC

26 June 2009

 



MIDAS INCOME AND GROWTH TRUST PLC

AUDITED ANNUAL FINANCIAL REPORT

for the year ended 30 April 2009

1. CHAIRMAN'S STATEMENT

Highlights

• Progressive dividend policy continued with increase of 4.0%

• 5,313,000 shares purchased for cancellation 

• Net asset value total return of -30.5%

• Share price total return of -32.7%

Market background and performance

The year under review has been amongst the most difficult in living memory. Following perhaps what was the first synchronised boom in global history, it is perhaps not too surprising that the world is experiencing its first synchronised downturn since the Second World War. Stock markets around the world remain extremely volatile, although its severity has abated from the extraordinary levels seen in October and November 2008. However, the huge declines in equity markets experienced in 2008 continued apace in the early part of 2009, before rallying in March and April. 

Of particular note was the near total seizure of credit markets following the demise of Lehman Brothers and Bradford & Bingley amongst others in the Autumn of 2008. The general collapse in liquidity had severe ramifications across the financial markets, with only Government Bond markets being spared as banks and investors scrambled to withdraw capital. At times the stresses within the banking sector looked likely to threaten the whole financial system. Whilst this worst outcome appears to have been averted, this has only been achieved following huge levels of capital support and financial intervention by the World's Central Banks, unprecedented cuts in interest rates, and a massive transfer of debt from the private to the public sector.

Against this background the Company's fully diluted net asset value total return for the period (including dividends) was -30.5%, which is very disappointing and compares with the benchmark return of 8%. The share price fell by 36.7% over the period, which with dividends reinvested gave a total return of -32.7%. The contagion between the wide range of assets held within the portfolio provided little of the protection usually afforded by such a diversified investment approach. 

The Company's shares ended the year at a discount to net asset value of 11.9% having traded at a discount throughout the period, notwithstanding repurchases of 5,313,000 shares for cancellation over the course of the year. Your Board remains committed to reducing this discount and will be seeking a renewal of the share buyback facility at the Annual General Meeting in September. In the meantime the current buyback policy will continue to operate.

Gearing

A further £0.75 million was drawn down in November 2008 from the Company's existing multi currency revolving advance facility provided by the Royal Bank of Scotland. Total borrowings were £7 million at the end of the period, representing potential gearing of 18.2%. 

Exercise of Warrants

No warrants were exercised during the year with 1,934,411 remaining in issue. These warrants are exercisable in August each year and expire in August 2010.

Dividends

Three interim dividends of 1.63p were declared during the year, which together with the 4th interim dividend of 1.63p announced on 20 May 2009 (paid on 19 June 2009), give total dividends of 6.52p, an increase of 4% over last year. The income generated from the Company's investment portfolio has come under pressure this year but, together with the contribution from VAT repayments, provided sufficient revenue to both increase dividends and improve the revenue reserve held by your Company. The Board and Manager remain fully aware of the importance of the quarterly dividends to the Company's shareholders.

VAT Statement

Shareholders will be aware from my previous statements that HM Revenue & Customs ('HMRC') have agreed that VAT on management fees should not have been incurred by UK investment trusts. The Board is pleased to be able to report that our income this time includes a sum of £357,000 representing the VAT charged on our management and performance fees between 2004 and 2007 (exclusive of interest thereon), which has not been offset previously by the Company. This payment has been split between capital and revenue in accordance with the Company's accounting policy. We expect, in due course, to be able to recognise further sums, once there is more certainty as to the amounts recoverable by the Company's previous manager, Aberdeen Asset Managers, in respect of the VAT incurred on management fees in prior periods, and the interest payable by HMRC is determined.

Annual General Meeting

This year's AGM will be held at One Bow Churchyard, Cheapside, London at 12.30pm on 8 September 2009. I would be delighted if shareholders were to take this opportunity to meet with Board members and investment managers over a post AGM buffet lunch.

Outlook

The worst of outcomes for the World's financial markets appears to have been averted. Nevertheless, there remains a tremendous amount of uncertainty surrounding the ultimate success of economic policies which have been forced on Governments and Central Banks in order to 'prop up' the financial system and avoid an even more painful recession than that being felt at present. Meanwhile, unemployment continues to rise across the Western World and consumer spending looks likely to fall further, until such time that a more stable outlook for household income is foreseen. Central to the eventual recovery from the current recession will be the ability and willingness of banks to resume lending. However, there remains hope that the measures taken may lead to a better economic environment; in any event investment markets offer the prospect of further recovery as economic and systemic stresses unwind. 

Hubert Reid

Chairman

26 June 2009

2.     MANAGER'S REVIEW

Investment Performance

The Company's investment performance over the year was very disappointing as our multi asset approach singularly failed to provide the degree of capital protection we would have hoped for during a time when systemic risks and volatility were at such heightened levels. Unprecedented correlation of returns across asset classes during the period was experienced as equities, corporate bonds, hedge funds, structured products and property all endured significant difficulties. In particular closed-end vehicles used to gain exposure across a range of assets were hard hit as they came under immense selling pressure from financially distressed investors. A very large gap thus opened between the underlying value within these closed-end investments and their market pricing. 

The Company's net asset value total return for the year was -31.6%. This compares to the Company's investment objective to produce annualised returns of 8% over the medium term. While this is undoubtedly a poor outturn for the year, we firmly believe that many of the assets held within the portfolio offer considerable upside potential for when markets settle down, as we expect they will, over the coming year. Indeed, early signs are that some of this value is already being realised within the portfolio, many holdings having risen strongly in March and April. This more positive trend has continued into the new financial year. 

The performance and current positioning of portfolio holdings are further commented on later in this report.

Market Commentary 

Global stock-markets have been through exceptionally turbulent times during the year. In particular, the default of Lehman Brothers in September was something of a pivotal event, causing a virtually complete blocking up of inter-bank markets and massive levels of deleveraging across a broad range of financial sectors.

The default of Lehman has had significant repercussions on the functioning of financial markets. Market liquidity has been severely curtailed, whilst the re-assessment of counterparty risks has put pressure on the entire range of derivative markets. There have been redemptions by investors across both conventional money managers and hedge funds in particular, with the latter being amongst the worst affected by the withdrawal of borrowing facilities by the investment banks. Indeed, this has been a period when it was as important to understand who one's fellow investors were, as it was to appreciate the fundamental value of investments held.

While the shock to the global financial system has been exceptionally severe, with a sharp recession in most western economies and much slower growth in the emerging economies, policy makers around the world have responded with great speed. Governments have taken stakes in ailing financial institutions and have pursued unprecedented measures including substantial easing of interest rate policy. In addition, central banks have made massive efforts to improve liquidity within the financial system. 

There have been signs as 2009 has progressed that the measures taken by policy makers have begun to restore market conditions. In particular liquidity has improved and corporate bond markets are now open to borrowers with sound business prospects. However, the concerns over inflation, which were prevalent in early 2008, have turned to fears that deflation may be more of a worry. Falling commodity prices underpin this view and de-stocking by companies has created a rise in excess production capacity. More troublesome are the concerns that the recent policy response with the introduction of quantitative easing may have unforeseen and unwelcome long term repercussions as the economic recovery unfolds.

Investment Report 

Summary

There have been stresses within many parts of the portfolio over the course of the year, as investor risk aversion has spread across the various asset classes in which the Company's portfolio is invested. In addition, the heightened volatility in October and November were particularly detrimental to structured product holdings. In many cases the price falls experienced in the portfolio have been largely due to investor distress rather than any serious problems with the underlying investments, although the deterioration in the economic environment has clearly affected the shorter term prospects for many investments held. 

The Company's exposure to UK equities has been further reduced over the period, although some buying was carried out in early March when valuations looked to be discounting a financial Armageddon. International equity markets have been preferred over the course of the year, and these have benefited from the significant fall in sterling, although some protection was taken against a bounce in the pound in March and April. 

The property portfolio has borne the brunt of the opening of discounts in the closed-end vehicles held, with discounts of 60% to 85% being common. It is likely that these discounts will close as more normal market conditions are re-established and the Company is likely to benefit from corporate activity, which we are already beginning to see. Fixed interest holdings have been increased over the year, taking advantage of the stresses which built, particularly in corporate bonds markets, in the tail end of 2008. The additional borrowings drawn down in November were mainly used to increase corporate bond exposure.

Asset Allocation

The asset allocation across the portfolio at 30 April 2009 is shown in the table below.

	Portfolio Weight	Core Allocation	Range
Asset Class	%	%	%
UK Equities	25.9	35	20 - 55
Overseas Equities	21.8	15	10 - 25
Total equities	47.7	50	30 - 80
Fixed Interest	18.3	25	15 - 45
Alternative Assets (inc Structured Products)	20.4	15	10 - 25
Property	10.2	10	5 - 20
Cash	3.4	0	0 - 25

All figures are expressed as a percentage of gross assets.

UK Equities (25.9%)

Exposure to the UK equity market was reduced by some 4.2% to 25.9% over the course of the year. This was largely carried out in the early part of the period as a more defensive stance was taken towards equities. Bank holdings were significantly reduced which, although a little late, still saved the portfolio from significant further falls. Not everything in the financial sectors was damaging to returns and the portfolio benefitted from the take-over of Highway Insurance and positive returns from Jardine Lloyd Thompson. However, the Legal & General holding fell in value as investors became increasingly concerned over capital adequacy in the face of equity and corporate bond market declines.

BT Group disappointed following further revelations of missed targets in their global services division and amid concerns over the size of the company's pension fund deficit. The portfolio had minimal exposure to consumer related sectors, although Tesco was bought and has, in relative terms, performed well. 

The portfolio remains well represented in the oil sector, with holdings in BP and Royal Dutch Shell delivering strong dividend growth, something which has become increasingly important as dividend cuts have been rife across many of the more cyclical and consumer related sectors. 

Utility positions performed well relative to the market over the period and have, like Oil and Pharmaceutical holdings, provided a solid support to the company's dividend receipts. Holdings in the sector were further increased late in the period with the purchase of Scottish & Southern Energy. 

The precipitous falls in equity markets early in 2009 was used as an opportunity to introduce a holding in Ashmore Group, the highly regarded emerging market asset manager. This proved well timed as the shares have subsequently rallied strongly. 

Overall the portfolio remains defensively positioned and as such has not fully participated in the equity market rally seen since early March. However, we believe that the higher quality, cash generative companies held offer a secure base for future returns in what is likely to remain a difficult economic environment, particularly for companies exposed to UK consumer spending.

Overseas Equities (21.8%)

Exposure to overseas equity markets increased over the period through a combination of good relative performance, some incremental additional investments and the benefit of weak sterling on international positions. Whilst the managers and products used to provide exposure to international equity markets have not escaped the full effect of the ravages of the past year, they have, in general, performed well relative to local indices. The slightly disappointing performance by Aberdeen Asian Income Fund referred to in last year's investment commentary, was more than compensated for by excellent relative performance in the current year. European equity managers have outperformed local indices, whilst the Company's US equity exposure has been obtained through a product which combines a high level of income with capital protection through the use of a PUT option, helping the Fund outperform strongly through the most difficult periods of market falls. 

Fixed Interest (18.3%)

To say the period had been difficult for bond investors would be something of an understatement. The deleveraging seen in the markets has been particularly detrimental to corporate bond markets, as banks, hedge funds and other short-term investors sought to reduce bond holdings into a very uncertain market. Indeed the withdrawal of capital by investment banks, usually the conduits for much of the business conducted in bonds, led to a complete seizure in liquidity. 

The problems in bond markets were particularly severe in the six month period following the demise of Lehman Brothers. Whilst this period was detrimental to returns, positions were increased as corporate bond markets appeared to be discounting massive levels of default and historically very low levels of recovery. Although we were perhaps a little early in committing additional investment, there have been very positive signs of improvement in the portfolio's holdings. The recovery in credit markets should lead to a strong rally in capital values. In addition the yields offered by these investments have bolstered the income generated on the portfolio, further supporting the revenue position of the Company. 

The Company has no exposure to Gilts, which we consider to offer little value due to the huge levels of issuance anticipated over the next 5 years by the UK Government. 

Alternative Assets (14.4%)

Alternative asset positions have, in the main, performed well. Although the underlying performance of the Company's agricultural commodity and timberland investments have been encouraging, the closed end nature of this exposure has meant that these vehicles moved to significant discounts against the value of their underlying assets. We would expect both companies to introduce measures to close this discount and indeed, Ceres - the agricultural commodity Fund - has already announced a tender offer which has helped narrow the discount.

A J Bell Holdings, the Company's only unquoted investment, continues to trade well, with recent results showing a further significant uplift in profitability. However, we took the view in March that the carried value should be reduced to 225p per share from 275p, to reflect falls in quoted equity markets over the previous 12 months. This was in no way a reflection of any concerns regarding the progress of the company and indeed the business is gaining market share and continues to expand its revenues through strong management action.

Hedge Fund performance was more mixed with the Signet Global Hedge Fund performing well, whilst the holding in Acencia Debt Strategies suffered from both poor asset performance and a widening of the discount to net asset value. We believe this Fund offers significant potential as credit markets settle down and more 'normal' trading conditions resume.

A holding in traded life policies was introduced to the portfolio early in the period and this holding has produced satisfactory returns despite some dislocations in the market due to the deleveraging seen across most financial markets.

Structured Products (6.0%)

The Company's structured product holdings were badly affected as volatility spiked to record levels in October and November amid collapsing equity markets. Several products breached their capital protection levels at this time. These investments were either sold or transferred to equity holdings to reflect the changed nature of the instruments. However, other products were created which have taken advantage of the heightened levels of volatility. These have performed well as markets have recovered and volatility declined. The Company has suffered no losses from counterparty defaults such as those caused by the demise of Lehman Brothers and the Icelandic banks. 

Property (10.2%)

The Company's property holdings have been at the centre of the discount widening in closed end vehicles. This was largely caused by forced selling from distressed investors and deleveraging by hedge funds. Whilst the underlying net asset performance of property holdings has in some cases shown strong growth, this has been largely irrelevant when set against deteriorating sentiment towards international property markets and the constant selling pressure by investors. With discounts reaching to over 90% in the early part of 2009, it is not perhaps surprising that we have begun to see corporate activity in the sector. The Company's holding in Summit Germany was taken private in April at a significant premium to the prevailing share price. Several other holdings are also attracting attention from predators and it is likely that this increased interest will yield significant returns for the portfolio from current levels. 

The Company's holding in infrastructure company Babcock & Brown Public Partnership has performed well over the period, whilst the UK commercial property position is likely to be increased over the course of the year as rental yields now appear to be stabilising at very attractive levels.

Outlook

Western economies remain gripped in a severe recession which is likely to see further substantial increases in unemployment. Meanwhile uncertainties prevail over the long term effects of the various support measures introduced to save the banking system and promote growth. However, the sheer scale of policy response can be expected to begin to reveal some 'green-shoots' of recovery as the year progresses. Forecasters are expecting the US economy to return to growth in the second half and recently growth forecasts have been upgraded for most developed economies in 2010.

Although the worst of the economic crisis may now be behind us, it seems highly unlikely that recovery will be anything other than anaemic. The burden of debt which has been assumed by western governments is likely to require a severe curtailment in public spending and higher taxes for a period of years. Against this background financial markets can certainly continue to recover, but a return to bull market conditions is very doubtful.

We are intensely aware that the Company's investment returns have been disappointing. However, we believe that the investment portfolio is appropriately positioned for a gradual recovery in growth. The more recent positive trends in performance can be expected to continue as market sentiment improves. We are taking a proactive approach to closing the discounts on closed end fund holdings and this process offers further prospect for a return of value to shareholders. 

The progressive dividend policy established over recent years has been maintained, with distributions increasing by 4% this year. We remain confident that the current levels of dividends can be maintained. However, further increases are unlikely, in the short term at least, as we concentrate efforts on improving the capital returns to shareholders. We firmly believe the current yield of 7% looks very attractive, particularly when this is combined with the significant recovery potential within the portfolio.

Midas Capital Partners Limited

26 June 2009

3.    STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and Accounts and the 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 elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (UK Accountings Standards and applicable law). 

The financial statements are required by law to give a true and fair view of the state of affairs of the Company and of the 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 judgments and estimates that are reasonable and prudent; and 

•    state whether applicable UK Accounting Standards have been followed, subject to any material 
     departures disclosed and explained in the financial statements. 

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities. 

Under applicable law and regulations, the Directors are also responsible for preparing a Directors' Report, Directors' Remuneration Report and Statement of Corporate Governance that comply with that law and those regulations. 

The financial statements are published on www.midascapital.co.uk which is a website maintained by the Company's Manager. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. 

The Directors confirm that to the best of our knowledge: 

•    the financial statements, prepared in accordance with the applicable UK Accounting Standards, give a 
     true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and 

•    the Directors' 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 the 
    Company faces. 

For Midas Income & Growth Trust PLC

Hubert Reid

Chairman

26 June 2009

4.    BUSINESS REVIEW

A review of the Company's activities is given in the Annual Report, the Chairman's Statement and the Manager's Review. This includes a review of the business of the Company and its principal activities, recommended dividends, likely future developments of the business and details of the Company's policy on share capital management. The principal risks and uncertainties associated with the Company are detailed below and in Note 18 to the financial statements. The Company has exposure to financial instruments, details of which are disclosed in Note 18 to the financial statements. 

Principal Risks and Uncertainties 

Investment and Market Risks: Managing a portfolio of shares and debt security investments necessarily involves certain risks, the more important of which are set out in Note 18 below. A significant proportion of the assets of the Company may be invested in debt security investments and overseas equities. Whilst this broader spread of investments is intended to reduce the volatility and risk profile of the Company's portfolio this cannot be assured.

Shares: The market value of the Ordinary shares, as well as being affected by the net asset value, also takes into account their supply and demand. The market value of an Ordinary share can fluctuate and may not always reflect its underlying net asset value. Investment in the Company should be regarded as long term in nature. There can be no guarantee that appreciation in the value of the Company's investments will occur and investors may not get back the full value of their original investment. 

Investment Objective: There is no guarantee that the investment policy adopted by the Company will provide the returns sought by the Company. 

Borrowings: The Company currently utilises gearing in the form of bank borrowings (see 'note 11 on below). Gearing has the effect of exacerbating market falls and market gains. 

Currency: A proportion of the Company's portfolio may be invested in assets denominated in currencies other than sterling. This will increase the currency risk that the Company is exposed to as a result in fluctuations in the exchange rate between the denomination of the investments and the sterling denomination of the Company's base currency. 

Dividends: The ability of the Company to pay dividends in respect of the Ordinary shares and any future dividend growth will depend on the level of income received from its investments. Accordingly, the amount of dividends paid to Shareholders may fluctuate. 

Discount: While the Board intends to implement an active discount management policy, the ability to implement such a policy is dependent on a number of factors including; the ability to buy back shares in the market, the ability to fund share buybacks, the authority to buy back shares being renewed annually and the Board's discretion over the making and timing of any buybacks. 

Key Individuals: The Company is substantially dependent on the services of key individuals working for its Manager, namely Simon Edwards and Alan Borrows. The loss of either or both of these individuals could have an adverse effect on the Company's performance. 

Taxation and Exchange Controls: Any change in the Company's tax status or in taxation legislation (including the tax treatment of dividends or other investment income received by the Company) or failure to satisfy the conditions of section 842 of the Income and Corporation Taxes Act 1988 (including the requirement for a listing) could affect the value of the investments held by the Company, affect the Company's ability to provide returns to Shareholders or alter the post tax returns to Shareholders. 

 5.    INCOME STATEMENT 

		Year ended 30 April 2009			Year ended 30 April 2008
	Notes	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Losses on investments	9	-	(23,538)	(23,538)	-	(10,266)	(10,266)
Income	2	3,329	-	3,329	4,423	-	4,423
Investment management fee	3	(240)	(240)	(480)	(402)	(403)	(805)
Performance fee	3	-	-	-	-	-	-
VAT recoverable on investment management fees	20	140	217	357	-	-	-
Administrative expenses	4	(391)	-	(391)	(348)	-	(348)
Exchange gains		-	9	9	-	2	2
		_______	_______	_______	_______	_______	_______
Net return on ordinary activities before finance costs and taxation		2,838	(23,552)	(20,714)	3,673	(10,667)	(6,994)
Finance costs	5	(153)	(153)	(306)	(192)	(198)	(390)
		_______	_______	_______	_______	_______	_______
Net return on ordinary activities before taxation		2,685	(23,705)	(21,020)	3,481	(10,865)	(7,384)
Taxation	6	-	-	-	-	-	-
		_______	_______	_______	_______	_______	_______
Return on ordinary activities after taxation		2,685	(23,705)	(21,020)	3,481	(10,865)	(7,384)
		_______	_______	_______	_______	_______	_______
Return per share (pence):	8
Basic		6.52	(57.53)	(51.01)	7.64	(23.84)	(16.20)
		_______	_______	_______	_______	_______	_______
Diluted		6.50	(57.37)	(50.87)	7.52	(23.47)	(15.95)
		_______	_______	_______	_______	_______	_______
The total column of this statement represents the profit and loss account of the Company.
All revenue and capital items in the above statement derive from continuing operations.
No operations were acquired or discontinued in the year.
A Statement of Total Recognised Gains and Losses has not been prepared as all gains and losses are recognised in the Income Statement.
The accompanying notes are an integral part of the financial statements.

  6.    BALANCE SHEET

	Notes	As at 30 April 2009 £'000	As at 30 April 2008 £'000
Non-current assets
Investments at fair value through profit or loss	9	43,841	72,569
		___________	___________
Current assets
Debtors and prepayments	10	923	791
Cash and short term deposits		705	756
		___________	___________
		1,628	1,547
		___________	___________
Creditors: amounts falling due within one year	11
Bank loan		(7,000)	(6,250)
Other creditors		(95)	(252)
		___________	___________
		(7,095)	(6,502)
		___________	___________
Net current liabilities		(5,467)	(4,955)
		___________	___________
Net assets		38,374	67,614
		___________	___________
Capital and reserves
Called-up share capital	12	9,582	10,910
Share premium account		-	40,993
Special reserve		42,149	6,641
Warrant reserve		616	616
Capital redemption reserve		2,007	679
Capital reserve	13	(17,542)	6,163
Revenue reserve		1,562	1,612
		___________	___________
Equity Shareholders' funds		38,374	67,614
		___________	___________
Net asset value per share (pence):	17
Basic		100.12	154.94
		___________	___________
Diluted		100.12	152.60
		___________	___________
The financial statements were approved by the Board of Directors and authorised for issue on 26 June 2009 and were signed on its behalf by:
H V Reid
Chairman
The accompanying notes are an integral part of the financial statements.

  7.    RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

For the year ended 30 April 2009
	Share capital £'000	Share premium account £'000	Special reserve £'000	Warrant reserve £'000	Capital redemption reserve £'000	Capital reserve £'000	Revenue reserve £'000	Total £'000
Balance at 30 April 2008	10,910	40,993	6,641	616	679	6,163	1,612	67,614
Purchase of Ordinary shares for cancellation	(1,328)	-	(5,485)	-	1,328	-	-	(5,485)
Cancellation of share premium account (see note below)	-	(40,993)	40,993	-	-	-	-	-
Return on ordinary activities after taxation	-	-	-	-	-	(23,705)	2,685	(21,020)
Dividends paid (see note 7)	-	-	-	-	-	-	(2,735)	(2,735)
	_______	_______	______	______	_______	______	_______	_______
Balance at 30 April 2009	9,582	-	42,149	616	2,007	(17,542)	1,562	38,374
	_______	_______	______	______	_______	______	_______	_______
For the year ended 30 April 2008
	Share capital £'000	Share premium account £'000	Special reserve £'000	Warrant reserve £'000	Capital redemption reserve £'000	Capital reserve £'000	Revenue reserve £'000	Total £'000
Balance at 30 April 2007	11,564	40,918	10,538	648	-	16,996	792	81,456
Purchase of Ordinary shares for cancellation	(679)	-	(3,897)	-	679	-	-	(3,897)
Exercise of Warrants	25	75	-	(32)	-	32	-	100
Return on ordinary activities after taxation	-	-	-	-	-	(10,865)	3,481	(7,384)
Dividends paid (see note 7)	-	-	-	-	-	-	(2,661)	(2,661)
	_______	_______	______	______	_______	______	_______	_______
Balance at 30 April 2008	10,910	40,993	6,641	616	679	6,163	1,612	67,614
	_______	_______	______	______	_______	______	_______	_______
The cancellation of the share premium account (as approved at the Extraordinary General Meeting held on 27 October 2008 and by the Court dated 26 November 2008) has resulted in the Company having an increased special reserve, the purpose of which is to fund market purchases of the Company's own shares.
The revenue reserve represents the amount of the Company's reserves distributable by way of dividend.
The accompanying notes are an integral part of the financial statements.

  8.    CASHFLOW STATEMENT

		Year ended  30 April 2009		Year ended  30 April 2008
	Notes	£'000	£'000	£'000	£'000
Net cash inflow from operating activities	14		2,861		2,253
Servicing of finance
Bank and loan interest paid			(397)		(320)
Financial investment
Purchases of investments		(14,476)		(22,661)
Sales of investments		19,422		24,333
		_______		_______
Net cash inflow from financial investment			4,946		1,672
Equity dividends paid			(2,735)		(2,661)
			_______		_______
Net cash inflow before financing			4,675		944
Financing
Share capital issue expenses		-		(7)
Buyback of shares		(5,485)		(3,897)
Exercise of Warrants		-		100
Loans drawn down		750		-
		_______		_______
Net cash outflow from financing			(4,735)		(3,804)
			_______		_______
Decrease in cash			(60)		(2,860)
			_______		_______
Reconciliation of net cash flow to movements in net debt
Decrease in cash as above			(60)		(2,860)
Drawdown of loan			(750)		-
Exchange movements			9		2
			_______		_______
Movement in net debt in the year			(801)		(2,858)
Net debt at 1 May			(5,494)		(2,636)
			_______		_______
Net debt at 30 April	15		(6,295)		(5,494)
			_______		_______
The accompanying notes are an integral part of the financial statements.

  9.    NOTES TO THE FINANCIAL STATEMENTS:

1	Accounting policies
	(a)	Basis of preparation and going concern
		The financial statements have been prepared in accordance with the applicable UK Accounting Standards and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (issued in January 2009 and adopted early). They have also been prepared on the assumption that approval as an investment trust will continue to be granted. The financial statements have been prepared on a going concern basis. The Directors believe this is appropriate for the reasons outlined in the Directors' Report section of the Annual Report.
	(b)	Valuation of investments
		Investments have been designated upon initial recognition as fair value through profit or loss. Investments are recognised and de-recognised at trade date where a purchase or sale is under a contract whose terms require delivery within the time frame established by the market concerned, and are initially measured as fair value. Subsequent to initial recognition, investments are valued at fair value. For listed investments, this is deemed to be bid market prices or closing prices for SETS (London Stock Exchange's electronic trading service) stocks sourced from the London Stock Exchange. The unquoted investments held (see note 9) are valued by the Directors using primary valuation techniques, such as earnings multiples, recent transactions and net assets, which equate to their fair values. Gains and losses arising from changes in fair value are included in net profit or loss for the period as a capital item in the Income Statement.
	(c)	Income
		Income from investments (other than special dividends), including taxes deducted at source, is included in revenue by reference to the date on which the investment is quoted ex dividend. Special dividends are credited to capital or revenue, according to the circumstances. The fixed returns on debt securities are recognised on a time apportionment basis so as to reflect the effective yield on the debt securities and shares. Interest receivable on short term deposits is treated on an accruals basis.
	(d)	Expenses
		All expenses are accounted for on an accrual basis. Expenses are charged to revenue within the Income Statement except as follows: •    transaction costs on the acquisition or disposal of investments are charged to capital; •    expenses are charged to the capital reserve where a connection with the maintenance or enhancement of the value of investments can be demonstrated. In this respect the investment management fee and loan interest on the £7.0m bank loan have been allocated 50% to capital and 50% to revenue within the Income Statement; •    loan break costs and performance fees are charged 100% to the capital reserve within the Income Statement.
	(e)	Capital reserves
		Gains or losses on realisation of investments and changes in fair values of investments which are readily convertible to cash, without accepting adverse terms, are transferred to the capital reserve. Also, expenses and finance costs, together with the related taxation effect, are charged to this reserve in accordance with (d) above, as well as movements in exchange differences.
	(f)	Deferred taxation
		The charge for taxation is based on the profit for the year and takes into account taxation deferred because of timing differences between the treatment of certain items for taxation and accounting purposes. Deferred taxation is provided using the liability method on all timing differences, calculated at the rate at which it is anticipated the timing differences will reverse. Deferred tax assets are recognised only when, on the basis of available evidence, it is more likely than not that there will be taxable profits in future against which the deferred tax asset can be offset. Due to the Company's status as an investment trust company, and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.
	(g)	Foreign currency
		Assets and liabilities in foreign currencies are translated at the rates of exchange ruling on the Balance Sheet date. Transactions involving foreign currencies are converted to sterling, being the Company's functional currency, at the rate ruling at the date of the transaction.

2	Income	2009 £'000	2008 £'000
	Income from investments
	UK franked income	1,467	1,980
	UK unfranked dividend income	119	51
	UK unfranked interest income	559	950
	Overseas dividends	1,123	1,328
	Stock dividends	16	-
		_______	_______
		3,284	4,309
		_______	_______
	Other income
	Deposit interest	40	90
	Other commission	5	24
		_______	_______
		45	114
		_______	_______
	Total income	3,329	4,423
		_______	_______
		2009	2008
	Income from investments	£'000	£'000
	Listed UK	2,359	3,123
	Listed overseas	361	352
	Unlisted	548	834
	Stock dividends	16	-
		_______	_______
		3,284	4,309
		_______	_______

3	Investment management and performance fees	2009			2008
		Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
	Investment management fee	240	240	480	373	374	747
	Irrecoverable VAT	-	-	-	29	29	58
		_______	_______	_______	_______	_______	_______
		240	240	480	402	403	805
		_______	_______	_______	_______	_______	_______
	Midas Capital Partners Limited ('Midas') was appointed the Investment Manager on 19 August 2005 (formerly Aberdeen Asset Managers Limited) and the management fee payable to Midas during the year was 1% of net assets. The fee is chargeable 50% to capital and 50% to revenue within the Income Statement. The agreement is terminable by either party on twelve months' notice. The balance due to Midas at the year end was £32,000 (2008 - £56,000).
		2009			2008
		Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
	Performance fee	-	-	-	-	-	-
		_______	_______	_______	_______	_______	_______
	A performance fee is calculated based on a comparison of the net asset value at the start of the calculation period and the net asset value at the period end. Where there has been an increase of greater than the benchmark of 8% per annum then a performance fee of 10% of the excess is applicable. The performance fee is subject to a high-watermark based on the higher of the total return of 8% per annum and the previous highest NAV on which a performance fee was unpaid. The balance due to Midas at the year end in respect of the performance fee was £nil (2008 - £nil).

4	Administrative expenses	2009			2008
		Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
	Administration fees	129	-	129	129	-	129
	Directors' fees	57	-	57	54	-	54
	Printing and stationery	20	-	20	11	-	11
	Auditors' remuneration:
	- audit	25	-	25	23	-	23
	- for review of Interim Report	6	-	6	6	-	6
	Other	154	-	154	125	-	125
		_______	_______	_______	_______	_______	_______
		391	-	391	348	-	348
		_______	_______	_______	_______	_______	_______
	The Company has an agreement with Aberdeen Asset Managers Limited ('AAM') which is delegated to Aberdeen Asset Management PLC for the provision of administration services with fees based on the following basis:
	- £90,000 per annum plus VAT where the Company's net asset value is less than £50 million;
	- £110,000 per annum plus VAT where the Company's net asset value exceeds £50 million.
	The net asset position is assessed at 1 August for each year the agreement is in place. At this date the fee will also be increased, but not decreased, by the movement in RPI over the twelve month period.
	The agreement is terminable by either party on three months' notice. No sum was due to AAM at the year end (2008 - £nil).

5	Finance costs	2009			2008
		Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
	On bank loans and overdrafts	153	153	306	192	198	390
		______	______	______	______	______	______

Finance costs relate to interest charge on the revolving loan facility, details of which are disclosed in note 11.

6	Taxation	2009				2008
		Revenue £'000		Capital £'000	Total £'000	Revenue £'000		Capital £'000			Total £'000
(a)	Analysis of charge for the year
	Overseas withholding tax	-	-		-	-		-		-
		______	______		____	______		______		_____
(b)	Factors affecting the tax charge for the year
	The tax assessed for the year is lower than the standard rate of corporation tax in the UK.
							2009 £'000		2008 £'000
	Return on ordinary activities before taxation						(21,020)		(7,384)
							_______		_______
	Return on ordinary activities at the UK standard tax rate of corporation tax (28%) (2008 - 29.75%)						(5,886)		(2,197)
	Effects of:
	Non-taxable UK dividend income						(411)		(591)
	Expenses disallowed for tax purposes						11		-
	Losses on investments not relievable						6,591		3,054
	Exchange gains not taxable						(3)		(1)
	Movement in overseas dividends taxable on receipt						(8)		16
	Utilisation of brough forward excess expenses						(294)		(281)
							_______		_______
	Current revenue tax charge for the year						-		-
							_______		_______
(c)	Factors that may affect future tax changes
	There was no provision for deferred taxation made for either this year or the previous year. The Company has not recognised a deferred tax asset of £1,157,000 (2008 - £4,133,000) arising as a result of non-trading deficits and eligible unrelieved foreign tax. These deficits will only be utilised if the Company has profits chargeable to corporation tax in future accounting periods. It is considered too uncertain that the Company will generate such profits and therefore no deferred tax asset has been recognised.

7	Dividends	2009 £'000	2008 £'000
	Amounts recognised as distributions to equity holders in the period:
	Fourth interim dividend for 2008 - 1.68p (2007 - 1.45p)	733	488
	Special C share dividend for 2008 - nil (2007 - 0.40p)	-	87
	First interim dividend for 2009 - 1.63p (2008 - 1.53p)	677	708
	Second interim dividend for 2009 - 1.63p (2008 - 1.53p)	677	699
	Third interim dividend for 2009 - 1.63p (2007 - 1.53p)	648	679
		_______	_______
		2,735	2,661
		_______	_______
	A fourth interim dividend for the year of £621,000 (2008 - £733,000) was paid to Shareholders on 19 June 2009. Since the year end the Company bought back 215,000 shares, therefore the fourth interim dividend for 2009 is based on 38,111,950 shares in issue. There is no final dividend proposed for the year (2008 - nil).
	We set out below the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of Section 842 of the Income and Corporation Taxes Act 1988 are considered. The revenue available for distribution by way of dividend for the year is £2,685,000 (2008 - £3,481,000).
		2009 £'000	2008 £'000
	First interim dividend for 2009 - 1.63p (2008 - 1.53p)	677	708
	Second interim dividend for 2009 - 1.63p (2008 - 1.53p)	677	699
	Third interim dividend for 2009 - 1.63p (2008 - 1.53p)	648	679
	Fourth interim dividend for 2009 - 1.63p (2008 - 1.68p)	621	733
		_______	_______
		2,623	2,819
		_______	_______

8	Return per Ordinary share
	The return per Ordinary share is based on the following figures:
		2009			2008
		Revenue P	Capital P	Total P	Revenue P	Capital P	Total P
	Basic	6.52	(57.53)	(51.01)	7.64	(23.84)	(16.20)
		_______	_______	_______	_______	_______	_______
	Diluted	6.50	(57.37)	(50.87)	7.52	(23.47)	(15.95)
		_______	_______	_______	_______	_______	_______
	The basic revenue return per Ordinary share is calculated on net revenue on ordinary activities after taxation for the year of £2,685,000 (2008 - £3,481,000) and on 41,204,120 (2008 - 45,578,361) Ordinary shares, being the weighted average number of Ordinary shares in issue during the year.
	The basic capital return per Ordinary share is calculated on net capital returns for the year of (£23,705,000) (2008 - (£10,865,000)) and on 41,204,120 (2008 - 45,578,361) Ordinary shares, being the weighted average number of Ordinary shares in issue during the year.
	The basic total return per Ordinary share is calculated on the total return for the year of (£21,020,000) (2008 - returns of (£7,384,000)) and on 41,204,120 (2008 - 45,578,361) Ordinary shares, being the weighted average number of Ordinary shares in issue during the year. Diluted returns have been calculated on the basis set out in Financial Reporting Standard 22 'Earnings per share' ('FRS 22'). The diluted revenue return per Ordinary share is calculated on net revenue on ordinary activities for the year of £2,685,000 (2008 - £3,481,000) plus £119,000 (2008 - £95,000) in respect of amounts due to dilution adjustments, and on 43,138,531 (2008 - 47,557,237) Ordinary shares, being the weighted average number of Ordinary shares and warrants in issue during the year. The diluted capital return per Ordinary share is calculated on net capital on ordinary activities for the year of (£23,705,000) (2008 - (£10,865,000)) less £1,044,000 (2008 - £297,000) in respect of amounts due to dilution adjustments, and on 43,138,531 (2008 - 47,557,237) Ordinary shares, being the weighted average number of Ordinary shares and warrants in issue during the year. The diluted total return per Ordinary share is calculated on the total return for the year of (£21,020,000) (2008 - (£7,384,000)) less £925,000 (2008 - £202,000) in respect of amounts due to dilution adjustments, and on 43,138,531 (2008 - 47,557,237) Ordinary shares in issue during the year.

9	Investments at fair value through profit and loss	Listed in UK £'000	Unquoted (incl. Unit Trusts & OEICS) £'000	Total £'000
	Opening book cost	61,930	15,513	77,443
	Opening fair value (losses)/gains on investments held	(5,552)	678	(4,874)
		__________	_______	_______
	Opening valuation	56,378	16,191	72,569
	Movements in year:
	Purchases at cost	11,638	2,782	14,420
	Sales - proceeds	(17,635)	(1,975)	(19,610)
	- losses on sales	(8,293)	(938)	(9,231)
	Current year fair value losses on investments held	(10,076)	(4,231)	(14,307)
		_______	_______	_______
	Closing valuation	32,012	11,829	43,841
		_______	_______	_______
	Closing book cost	47,640	15,382	63,022
	Closing fair value losses on investments held	(15,628)	(3,553)	(19,181)
		_______	_______	_______
		32,012	11,829	43,841
		_______	_______	_______
			2009	2008
			£'000	£'000
	(Losses)/gains on investments sold		(9,231)	1,136
	Increase in fair value losses on investments held		(14,307)	(11,402)
			_______	_______
			(23,538)	(10,266)
			_______	_______
	Transaction costs
	During the year expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within losses on investments in the Income Statement. The total costs were as follows:
			2009 £'000	2008 £'000
	Purchases		42	50
	Sales		22	22
			_______	_______
			64	72
			_______	_______

10	Debtors: amounts falling due within one year	2009 £'000	2008 £'000
	Dividends and interest receivable	352	769
	Prepayments and other debtors	383	22
	Amounts due from brokers	188	-
		_______	_______
		923	791
		_______	_______

11	Creditors: amounts falling due within one year	2009 £'000	2008 £'000
	Bank loan	7,000	6,250
	Amounts due to brokers	-	56
	Interest payable	3	94
	Other creditors	92	102
		_______	_______
		7,095	6,502
		_______	_______
	The Company has an £8,000,000 revolving loan facility in place with Royal Bank of Scotland plc, of which at 30 April 2009 £7,000,000 had been drawn down at an all-in-rate of 1.504%. Subsequent to the year end the loan was rolled over until 3 July 2009 at an all-in-rate of 1.2536%. The remaining £1,000,000 has not been drawn down and remains available for draw down in the future for purposes of funding investments consistent with the Company's investment policy.
	The termination date of the facility is 2 August 2009. The Company anticipates refinancing the facility through a similar arrangement.

12	Called up share capital	2009 £'000	2008 £'000
	Authorised
	390,000,000 (2008 - 390,000,000) Ordinary shares of 25p	97,500	97,500
		_______	_______
	Called-up, allotted and fully paid
	38,326,950 (2008 - 43,639,950) Ordinary shares of 25p	9,582	10,910
		_______	_______
	At 30 April 2009 there were in issue 1,934,411 (2008 - 1,934,411) Warrants to subscribe for one Ordinary share at 100p on 31 August in each of the years 2009 and 2010 inclusive or, if later, the date in any such year 30 days after the date on which copies of the audited financial statements of the Company for its then immediately preceding financial year are dispatched to Shareholders. During the year to 30 April 2009 the Company purchased 5,313,000 Ordinary shares in the market for immediate cancellation at a cost of £5,485,000.

13	Capital reserve	2009 £'000	2008 £'000
	At 30 April 2008	6,163	16,996
	Movement in fair value losses	(23,538)	(10,266)
	Foreign exchange movement	9	2
	Exercise of warrants	-	32
	VAT recoverable on capitalised investment management fees	217	-
	Capitalised expenses	(393)	(601)
		_______	_______
	At 30 April	(17,542)	6,163
		_______	_______
	The capital reserve includes investment holding losses amounting to £19,181,000 (2008 - £4,874,000), as disclosed in note 9.

14	Reconciliation of net revenue before finance costs and taxation to  net cash inflow from operating activities	2009 £'000	2008 £'000
	Net return before finance costs and taxation	(20,714)	(6,994)
	Adjustments for:
	Losses on investments	23,538	10,266
	Exchange gains	(9)	(2)
	Decrease/(increase) in accrued income	417	(203)
	(Increase)/decrease in other debtors	(361)	11
	Decrease in other creditors	(10)	(825)
		_______	_______
	Net cash inflow from operating activities	2,861	2,253
		_______	_______

15	Analysis of changes in net debt	1 May 2008 £'000	Cash flow £'000	Exchange movements £'000	30 April 2009 £'000
	Cash and short term deposits	756	(60)	9	705
	Debt due in less than one year	(6,250)	(750)	-	(7,000)
		_______	_______	_______	_______
		(5,494)	(810)	9	(6,295)
		_______	_______	_______	_______

16	Commitments and contingencies
	As at 30 April 2009 there were no contingent liabilities (2008 - nil.)
	As at 30 April 2009 there was a commitment to pay a fee for any sums not drawn down on the bank loan. The fee of £3,000 (2008 - £6,000) is based on 0.325% of the undrawn sum (2008 - 0.325%).

17	Net asset value per equity share	2009	2008
	Basic
	Net assets attributable	£38,374,000	£67,614,000
	Number of Ordinary shares in issue	38,326,950	43,639,950
	Net asset value per Ordinary share	100.12p	154.94p
	Diluted
	Net assets attributable	£40,308,000	£69,548,000
	Number of Ordinary shares if Warrants converted	40,261,361	45,574,361
	Net asset value per Ordinary share	100.12p	152.60p
		___________	___________
	The diluted net asset values per Ordinary share as at 30 April 2009 and 30 April 2008 have been calculated by reference to the total number of Ordinary shares in issue at each year end and on the assumption that those Warrants which are not exercised at the period end, amounting to 1,934,411 Warrants as at 30 April 2009 (30 April 2008 - 1,934,411), were fully exercised on the first day of the financial year at 100p per share, giving a total of 40,261,361 Ordinary shares (30 April 2008 - 45,574,361).

18	Risk management, financial assets and liabilities
	The Company's financial instruments comprise:
	•    Equities and debt security investments that are held in accordance with the Company's investment objectives, which are set out on in the Annual Report;
	•    Term loans and bank overdrafts, the main purpose of which are to raise finance for the Company's operations; and
	•    Cash and liquid resources that arise directly from the Company's operations.
	The main risks arising from the Company's financial instruments are market price risk, (comprising interest rate risk, currency risk and other price risk). There may also be exposure to liquidity risk and credit risk from time to time. The Board regularly reviews and agrees policies for managing each of these risks and they are summarised below. These policies have remained unchanged since the inception of the Company.
	(i) 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.
	To mitigate the risk the Board's investment strategy is to select investments for their fundamental value. Stock selection is therefore based on disciplined accounting, market and sector analysis, with the emphasis on long term investments. The Investment Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to consider investment strategy.
	A list of the investments held by the Company at 30 April 2009 is shown in the 'Investment Portfolio' table in the annual Report. All investments are stated at fair value.
	Interest rate risk
	Financial assets
	Bonds, Open Ended Investment Companies, floating rate notes and preference share yields, and as a consequence their prices, are determined by market perception as to the appropriate level of yields given the economic background. Key determinants include economic growth prospects, inflation, the Government's fiscal position, short-term interest rates and international market comparisons. The Investment Manager takes all these factors into account when making any investment decisions as well as considering the financial standing of the potential investee company.
	Returns from bonds, floating rate notes and preference shares are fixed at the time of purchase, as the fixed coupon payments are known, as are the final redemption proceeds. This means that if a bond is held until its redemption date, the total return achieved is unaltered from its purchase date. However, over the life of a bond the market price at any given time will depend on the market environment at that time. Therefore, a bond sold before its redemption date is likely to have a different price to its purchase level and a profit or loss may be incurred.
	Financial liabilities
	The Company finances its operations through the use of a loan facility. The Board sets borrowing limits to ensure gearing levels are appropriate to market conditions and reviews these on a regular basis.
	The interest rate profile of the Company (excluding short term debtors and creditors) at 30 April 2009 and 30 April 2008 was as follows:

	Total (as per Balance Sheet) £'000		Floating rate £'000		Fixed rate  £'000		Financial assets on which no interest is paid  £'000		Weighted average interest rateA %		Weighted average period for which rate is fixedB years
Type	2009	2008	2009	2008	2009	2008	2009	2008	2009	2008	2009	2008
Assets
Equities	23,817	38,900	-	-	-	-	23,817	38,900	-	-	-	-
Property	1,073	1,483	-	-	-	-	1,073	1,483	-	-	-	-
OEIC's	7,236	10,615	-	-	-	-	7,236	10,615	-	-	-	-
Corporate Bond	4,036	5,118	-	-	4,036	5,118	-	-	3.04	8.44	2.05	2.55
Floating Rate Notes	1,897	8,699	1,897	8,699	-	-	-	-	16.95	6.80	3.23	4.79
Preference shares	3,268	4,171	-	-	3,268	4,171	-	-	9.26	8.51	4.94	5.94
Convertible Bond	264	833	-	-	264	833	-	-	24.19	6.76	2.08	3.08
Unquoted	2,250	2,750	-	-	-	-	2,250	2,750	-	-	-	-
Cash at bank - Sterling	705	755	705	755	-	-	-	-	3.26	5.40	-	-
Cash at bank - Euro	-	1	-	1	-	-	-	-	-	-	-	-
	_____	_____	_____	_____	_____	_____	_____	_____	_____	_____	_____	_____
	44,546	73,325	2,602	9,455	7,568	10,122	34,376	53,748	n/a	n/a	n/a	n/a
	_____	_____	_____	_____	_____	_____	_____	_____	_____	_____	_____	_____
Liabilities
Bank loan - Sterling	(7,000)	(6,250)	-	-	(7,000)	(6,250)	-	-	1.50	6.25	-	-
	_____	_____	_____	_____	_____	_____	_____	_____	_____	_____	_____	_____
Total	37,546	67,075	2,602	9,455	568	3,872	34,376	53,748	n/a	n/a	n/a	n/a
	_____	_____	_____	_____	_____	_____	_____	_____	_____	_____	_____	_____
A The 'weighted average interest rate' is based on the current yield of each asset, weighted by their market value. This excludes all equities and stocks where payments have been suspended.
B The 'weighted average period for which rate is fixed' excludes stocks with no maturity date.

	Maturity profile
	The maturity profile of the Company's financial assets at 30 April 2009 and 30 April 2008 was as follows:
	At 30 April 2009		Within 1 year  £'000		More than 5 years £'000			Total  £'000
	Fixed rate
	Corporate Bond		2,078		1,958			4,036
	Convertible Bond		264		-			264
	Preference shares		-		828			828
			_______		_______			_______
			2,342		2,786			5,128
			_______		_______			_______
	Floating rate
	Cash		705		-			705
			_______		_______			_______
	Details of the Company's loans are shown in note 11. All the other financial assets (including Preference shares of £2,440,000 (2008 - £4,792,000)) and liabilities do not have a maturity date.
	At 30 April 2008		Within 1 year £'000		More than 5 years £'000				Total £'000
	Fixed rate
	Corporate Bond		2,564		2,554				5,118
	Convertible Bond		833		-				833
	Preference shares		-		840				840
			_______		_______				_______
			3,397		3,394				6,791
			_______		_______				_______
	Floating rate
	Cash		756		-				756
			_______		_______				_______
	Interest rate sensitivity
	The sensitivity analyses below have been determined based on the exposure to interest rates for floating and fixed interest investments at the Balance Sheet date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of investments that have floating rates. If interest rates had been 100 basis points higher or lower and all other variables were held constant, the Company's:     -     profit before tax for the year ended 30 April 2009 would increase/ decrease by            £7,000 (2008 - £8,000). This is mainly attributable to the Company's exposure          to interest rates on its floating rate cash balances. These figures have been          calculated based on cash positions at each year end.    -    profit before tax for the year ended 30 April 2009 would increase/ decrease by         £523,000 (2008 - £149,000). This is also mainly attributable to the Company's          exposure to interest rates on its fixed interest securities. This is based on a          Value at Risk calculated at a 99% confidence level. In the opinion of the Directors, the above sensitivity analyses are not representative of the year as a whole, since the level of exposure changes frequently as part of the interest rate risk management process used to meet the Company's objectives. The risk parameters used will fluctuate depending on the current market perception.
	Foreign currency risk
	The income and capital value of the Company's investments are mainly denominated in Sterling; therefore, the Company is not subject to any material risk of currency movements. At the year end the Company held the following investments:
		2009				2008
		Currency '000		Sterling equivalent £'000		Currency '000	Sterling equivalent £'000
	Euro	540		482		2,945	2,315
	Japanese Yen	197,382		1,354		270,286	1,306
	US Dollar	1,957		1,320		4,219	2,130
		_______		_______		_______	_______
	At the year end the Company held euro cash balances with the sterling equivalent of £nil (2008 - £1,000).
	Other price risk Other price risks (ie changes in market prices other than those arising from interest rate or currency risk) may affect the value of the quoted investments. It is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular country or sector. The allocation of assets to international markets and the stock selection process, as detailed in the Annual Report, both act to reduce market risk. The Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. The investments held by the Company are listed on various stock exchanges worldwide. Other price risk sensitivity If market prices at the Balance Sheet date had been 10% higher or lower while all other variables remained constant, the return attributable to ordinary shareholders for the year ended 30 April 2009 would have increased/decreased by £3,438,000 (2008 : increase/decrease of £5,375,000 ) and equity reserves would have increased/ decreased by the same amount. (ii) Liquidity risk Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. Liquidity risk is not considered to be significant as the Company's assets are comprised of mainly readily realisable securities, which can be sold to meet funding commitments if necessary. (iii) Credit risk     This is failure of the counter party to a transaction to discharge its obligations under that transaction that could result in the Company suffering a loss. The risk is not significant, and is managed as follows: •    where the Investment Manager makes an investment in a bond, corporate or otherwise, the credit rating of the issuer is taken into account so as to minimise the risk to the Company of default; •    investments in quoted bonds are made across a variety of industry sectors and geographic markets so as to avoid concentrations of credit risk; •    transactions involving derivatives are entered into only with investment banks, the credit rating of which is taken into account so as to minimise the risk to the Company of default; •    investment transactions are carried out with a large number of brokers, the credit rating of which is taken into account so as to minimise the risk to the Company of default; •    investment transactions are carried out with a large number of brokers, whose credit-standing is reviewed periodically by the investment manager, and limits are set on the amount that may be due from any one broker; •    the risk of counterparty exposure due to failed trades causing a loss to the Company is mitigated by the review of failed trade reports on a monthly basis. In addition, the Custodian carries out a stock reconciliation on a monthly basis to ensure discrepancies are picked up on a timely basis. The Manager's compliance department carries out periodic reviews of the Custodian's operations and reports its findings to the Manager's risk management committee; and, •    cash is held only with reputable banks with high quality external credit enhancements. None of the Company's financial assets are secured by collateral or other credit enhancements.

19	Capital management policies and procedures
	The Company's capital management objectives are: •    to ensure that the Company will be able to continue as a going concern; and •    to maximise the income and capital return to its equity shareholders through an appropriate balance of equity capital and debt. Gearing is limited to a maximum of 25% of net assets. The Board monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes the nature and planned level of gearing, which takes account of the Manager's views on the market and the extent to which revenue in excess of that which is required to be distributed should be retained.
	The Company's capital at 30 April comprised:

		2009	2008
		£’000	£’000
	Debt
	Bank loan	7,000	6,250
		_______	_______
	Equity
	Equity share capital	9,582	10,910
	Retained earnings and other reserves	28,792	56,704
		_______	_______
		38,374	67,614
		_______	_______
	Debt as a % of net assets	18.24	9.24
		_______	_______

20	Contingent assets
	On 5 November 2007, the European Court of Justice ruled that management fees should be exempt from VAT. HMRC has announced its intention not to appeal against this case to the UK VAT Tribunal and therefore protective claims which have been made in relation to the Company will be processed in due course. The Manager and former Manager have agreed to refund £357,000 to the Company for VAT charged on investment management fees for the period 1 January 2004 to 30 September 2007 and this has been included in these financial statements. This repayment has been allocated to capital and revenue in line with the accounting policy of the Company for the periods in which the VAT was charged. The reclaim for interest and for previous periods and the timescale for receipt are at present uncertain and the Company has taken no account in these financial statements of any such repayment.

21.

Related party disclosure

On 7 March 2008 Midas Capital Partners Limited and iimia MitonOptimal plc merged to form Midas Capital PLC. The Company has appointed Intelli Corporate Finance Limited ('Intelli'), a subsidiary company of Midas Capital PLC, to act as its Stockbroker and Financial Advisor. The aggregate remuneration paid by the Company to Intelli was £29,000 (2008 - £30,000) in respect of their services as brokers. Group subsidiaries of Midas Capital PLC, on occasions, earn broking commissions on share transactions on behalf of the Company. During the period Intelli received commission fees totalling £11,000 (2008 - £1,000).

Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise and may be affected by exchange rate movements. Investors may not get back the amount they originally invested.

The Annual Financial Report Announcement is not the Company's statutory accounts. The above results for the year ended 30 April 2009 have been agreed with the auditors and are an abridged version of the Company's full accounts, which have been approved and audited with an unqualified report. The 2008 and 2009 statutory accounts received unqualified reports from the Company's auditors and did not include any reference to matters to which the auditors drew attention by way of emphasis without qualifying the reports, and did not contain a statement under s.498(2) or 498(3) of the Companies Act 2006. The financial information for 2008 is derived from the statutory accounts for 2008 which have been delivered to the Registrar of Companies. The 2009 accounts will be filed with the Registrar of Companies in due course.

The Annual General Meeting of the Company will be held at 12.30 p.m. on 8 September 2009 at One Bow Churchyard, Cheapside, London EC4M 9HH.

The audited Annual Report and Accounts will be posted to shareholders shortly. Copies may be obtained during normal business hours from the Company's Registered Office, One Bow Churchyard, Cheapside, London EC4M 9HH or from the Manager's website, www.midascapital.co.uk

By order of the Board

Aberdeen Asset Management PLC - Secretary

26 June 2009

 

END

 

 

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