Interim Results

RNS Number : 4601Z

Close IHT AIM VCT PLC

18 July 2008

 



CLOSE IHT AIM VCT PLC

HALF-YEARLY RESULTS

18 July 2008

Close IHT AIM VCT PLC (the 'Company') ,managed by Close Investments Limited, which invests in companies listed on the Alternative Investment Market (AIM) and PLUS, today announces the Half-yearly results for the six months ended 31 May 2008.

This announcement was approved by the Board of Directors on 18 July 2008.

Please click on the following link to view the Half-yearly Financial Report and Accounts for the six months to 31 May 2008: 

http://www.rns-pdf.londonstockexchange.com/rns/4601Z_-2008-7-18.pdf

Alternatively you may view the Half-yearly Financial Report and Accounts at:  www.closeventures.co.uk by clicking on the 'Our Funds' section.

Financial highlights

	Unaudited Six months to 31 May 2008	Unaudited Six months to 31 May 2007	Audited  Year to  30 November 2007
Revenue return per A and B Ordinary share	0.57p	1.01p	1.91p
Capital return per A and B Ordinary share	(7.19)p	7.66p	(0.47)p
Dividends paid to shareholders	1.00p	1.00p	2.00p
Net asset value per A and B Ordinary share	86.52p	102.38p	94.15p
Movement in FTSE AIM Index (%)	(2.57)	20.15	3.40
Movement in FTSE Small Cap (excl Investment Trusts) (%)	(12.36)	14.97	(11.55)

Financial Calendar 

Record date for second dividend	August 2008
Payment date of second  dividend	August 2008
Financial year end	30 November 2008
Announcement of year end results	March 2009

Shareholder value per share since launch

	Ordinary shares
	pence per share
Total dividends paid during the period to 30 November 2006*	1.40
Total dividends paid during the year to 30 November 2007	2.00
Total dividends paid during the period to 31 May 2008	1.00
Total dividends paid to 31 May 2008	4.40
Net asset value as at 31 May 2008	86.52
Total cumulative Shareholder value as at 31 May 2008	90.92

In addition to the dividend above, the Directors have declared a dividend of 1.00 pence per A and B Ordinary share (0.5 pence out of revenue reserves and 0.5 pence out of realised gains). This dividend is subject to HM Revenue & Customs approval. The record date and payment date of this dividend will be announced on the London Stock Exchange RNS Service.

* Investors subscribing by 17 January 2006 were entitled to this dividend. Investors subscribing thereafter were not entitled to the first dividend. 

Note

• All dividends paid by the Company are free of income tax. It is an HM Revenue & Customs requirement that dividend vouchers indicate the tax element should dividends have been subject to income tax. Investors should ignore this figure on their dividend voucher and need not disclose any income they receive from a VCT on their tax return. 

• The net asset value of the Company is not its share price as quoted on the official list of the London Stock Exchange. The share price of the Company can be found in the Investment Companies section of the Financial Times on a daily basis. Investors are reminded that it is common for shares in VCTs to trade at a discount to their net asset value, primarily as a result of the initial tax relief which is non-transferable.

Interim Management Report

Overview

The six month period to 31 May 2008 has been a time of extreme volatility in financial markets as the combination of the fallout from the credit crisis and fears over inflation have resulted in a considerably reduced appetite for risk among investors. This has had an adverse effect on smaller company valuations and has led to a slowing in the new issue market. Despite this, your Investment Manager has continued to make investments with the result that at the end of May, the portfolio was 60 per cent. invested, compared with the 70 per cent. needed by the end of November. Although there has been a decline in the value of some of the investments in the portfolio, it is relatively early days for many of these, and provided the companies make progress, this should be reflected in their share prices in time.

Dividends

Your Board has declared a dividend of 1.00 pence per A and B share (0.5 pence out of the revenue reserves and 0.5 pence out of realised gains). This dividend is subject to HM Revenue & Customs approval and the record date and payment date of this dividend will be announced on the London Stock Exchange RNS Service. Your Board believes that shareholders appreciate tax free dividends and it will strive to produce a steady and sensible dividend policy. That may be more difficult to achieve in the short term as new investments are made and the cash balance is further reduced. However, your Company has realised some distributable profits which should help to maintain dividends when the income from investments diminishes.

Performance

The Net Asset Value of the 'A' and 'B' Ordinary shares fell in the period by 8.1 per cent. to 86.52 pence, a total return of minus 6.8 per cent. after dividends. This compares with a 2.6 per cent. fall in the FTSE AIM Index. This was once again a period when the FTSE AIM Index outperformed smaller companies generally because of its high weighting in oil and gas and mining companies that between them account for about a third of AIM. These companies are not eligible investments for VCTs. Thus, a better comparison might be the FTSE Smaller Companies Index (excl Investment Trusts). This fell by 12.4 per cent. in the period.

The main reason for the fall in the NAV in the six months was a steady de-rating of smaller company shares as investors became increasingly risk averse. Liquidity has greatly reduced in smaller companies, leaving many of them priced to reflect the probability of profits being downgraded over the next few months as the effects of a slowing economy begin to be felt. This contrasts with good progress being reported by many of the companies in the portfolio which in many cases is not reflected in their share prices.

There have been some setbacks in individual holdings, with Optimisa and Twenty both highlighting signs of weakness in marketing spend which has, in the former case, coincided with its own challenges to integrate acquisitions. Hatpin, which was suspended pending clarification of its financial position in February, announced the appointment of administrators in May 2008. It has been written off in the accounts. Vertu Motors has also suffered from a very weak share price against a background of fear about the sustainability of consumer spending combined with a stream of profit warnings from Pendragon, one of the largest operators of motor retail outlets. Vertu's business was still making progress when it reported on its results in April and it is concentrating its efforts on improving the profitability of what is still a fairly small and manageable estate. It would, however, be unrealistic to expect its shares to recover in the short term. Claimar also saw its shares fall after it warned on profits as a result of cost pressures.

Many of the holdings in the portfolio have announced good progress despite all the gloom apparent in share prices. Mount Engineering and Pressure Technologies have both benefited as suppliers to the booming oil sector. Research Now is building critical mass and credibility with its online consumer panels. The challenge for all small companies in the current environment is financing growth, but this will hopefully open up opportunities to make further investments at keen prices.

Portfolio Activity

In our statement with the last accounts, we remarked that the Board believed the Investment Manager to be on track to reach its minimum 70 per cent. qualifying investment level within the three years set by HM Revenue & Customs. In the first half of the year, six new qualifying investments were made at a book cost of £3.0m and £0.4m was invested in a new non-qualifying investment. There was only one disposal of a qualifying holding when BBI was bid for by a non-qualifying US company. To the date of writing, one further investment has been made in Darwen Group, a Midlands based bus manufacturer, bringing the HM Revenue & Customs cover up to 63 per cent. This means that the Investment Manager needs to make three more medium sized investments to reach the 70 per cent. level by the end of November this year.

Your Investment Manager has started to dispose of the holding in the Close Special Situations Fund in the six month period. This is expected to continue over the coming months as originally set out in the prospectus. The fund has performed relatively well to date, although current market conditions are affecting values of all equities. Details of related party transactions can be found in note 11.

Shareholder information

We propose to write to shareholders in the Autumn outlining the timetable for the distribution in specie of the 'B' Ordinary shares and the conversion of the 'B' Ordinary shares to 'A' Ordinary shares. In the meantime any shareholders seeking to remind themselves of the terms of these corporate actions can refer to the prospectus, a copy of which can be found with other useful information at www.closeventures.co.uk by clicking the 'Our Funds' section. 

Risks and Uncertainties

As required under the Listing Rules under which your Company operates, we are required to comment on the potential risks and uncertainties which could have a material impact over the VCT's performance. The key risk derives from the need to meet HM Revenue & Customs regulations requiring 70 per cent. of your Company to be invested in qualifying holdings within three years and to maintain that level of cover thereafter. In addition, a downturn could affect existing companies' trading prospects and share prices.

Outlook

Although the rate of new issues has evidently slowed down over the last year, the Investment Manager has managed to continue investing in qualifying investments at sensible valuations for the portfolio. Despite the probability of a lull during the Summer, with only three more normal sized investments needed to reach 70 per cent, your Board is comfortable that your Investment Manager can continue to be selective.

The short term prospects for small company share prices looks uncertain with fears over inflation and slowing growth leaving them firmly out of favour. However, a major factor in successful VCT investment results from backing good management at realistic valuations. Your Investment Manager believes that current market conditions should generate good opportunities for investing the remaining capital.

Responsibility Statement

The Directors have chosen to prepare this Half-yearly Financial Report for the Company in accordance with United Kingdom Generally Accepted Accounting Practice ('UK GAAP').

In preparing these summarised financial statements for the period to 31 May 2008, we the Directors, confirm that to the best of our knowledge:

• the summarised set of financial statements have been prepared in accordance with the pronouncement on interim reporting issued by the Accounting Standards Board;

• the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year);

• the summarised set of financial statements give a true and fair view in accordance with UK GAAP of the state of affairs of the Company and of the profit and loss of the Company for that period and comply with UK GAAP and Companies Act 1985 as required by DTR 4.2.4R; and 

• the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

This Half-yearly Financial Report has not been audited or reviewed by the auditors, pursuant to the Auditing Practices Board guidance on review of the Interim Financial Information.

Portfolio of Investments  

at 31 May 2008

Company	Fair value £'000	Book cost £'000	Shareholding nominal units	Voting equity owned by Fund CIHT* %	Voting equity owned by CIL** managed funds %
Qualifying AIM investments
Adept Telecom Ord GBP0.10	209	750	535,715	2.5	4.6
Animalcare Group Ord GBP0.20	600	600	1,090,909	5.5	12.7
BGlobal Ord GBP0.01	108	200	400,000	0.7	1.6
Brulines (Holdings) Ord GBP0.10	278	253	205,882	0.9	2.9
Claimar Care Group Ord GBP0.10	190	500	476,190	1.0	4.3
Clerkenwell Ventures Ord GBP0.05	433	650	1,733,333	2.1	8.0
Craneware Ord GBP0.01	263	174	136,328	0.5	1.6
Essentially Group Ord GBP0.001	644	659	5,856,964	3.0	5.6
Fishworks Ord GBP0.01	241	275	4,583,333	4.1	7.3
Hatpin Ord GBP0.025	-	-	427,351	-	-
Hexagon Human Capital Ord GBP0.01	479	632	382,801	2.1	5.2
IDOX Ord GBP0.01	378	236	3,150,000	0.9	3.1
Individual Restaurant Company Ord GBP0.35	163	217	206,295	0.5	1.9
IS Pharma Ord GBP0.70	1,182	1,000	1,298,701	4.2	8.7
Jelf Group Ord GBP0.01	431	180	169,800	0.3	0.6
Lombard Medical Technologies Ord GBP0.02	321	375	2,678,571	2.0	3.6
Melorio Ord GBP0.10	753	612	612,000	1.9	6.4
Mount Engineering Ord GBP0.01	569	539	769,142	3.2	8.2
Neuropharm Group Ord GBP0.10	535	400	314,959	1.0	4.3
Optimisa Ord GBP0.25	283	511	235,800	2.6	8.8
Plastics Capital Ord GBP0.01	492	535	535,000	2.0	5.2
Pressure Technologies Ord GBP0.05	551	352	234,333	2.1	5.6
Research Now Ord GBP0.02	375	375	125,000	1.4	4.8
Telephonetics Ord GBP0.01	160	456	2,280,000	2.1	7.5
Twenty Ord GBP0.10	300	750	3,750,000	7.8	18.1
Vertu Motors Ord GBP0.10	538	750	1,250,001	1.4	4.5
Work Group Ord GBP0.02	404	707	878,450	3.1	7.2
Total qualifying equity investments at 31 May 2008	10,880	12,688

* CIHT: Close IHT AIM VCT, the Company

** CIL: Close Investments Limited, the Investment Manager.

Company	Fair value £'000	Book cost £'000	Shareholding nominal units
AIM Quoted Investments
BGlobal Ord GBP0.01	-	1	1,000
Brulines (Holdings) Ord GBP0.10	2	2	1,000
Claimar Care Group Ord GBP0.10	-	1	1,000
Hatpin Ord GBP0.025	-	-	1,000
Hexagon Human Capital Ord GBP0.01	1	2	1,000
Individual Restaurant Company Ord GBP0.35	1	1	1,000
Jelf Group Ord GBP0.01	3	2	1,000
Neuropharm Group Ord GB0.10	2	2	1,000
Research Now Ord GBP0.02	375	375	125,000
Vertu Motors Ord GBP0.10	-	1	1,000
Work Group Ord GBP0.02	-	1	1,000
Listed Investments
Citigroup Inc Floating Rate Note 01/11/10	2,936	3,002	3,000,000
Authorised Unit Trust
Close Special Situations Fund (ACC)	3,299	2,925	3,071,189
Total non-qualifying investments at 31 May 2008	6,619	6,315

Please note, the voting equity for the AIM Quoted Investments listed above have been included in the percentage calculations for each relevant company in the preceding table.

Summary Income Statement

		Unaudited Six months to 31 May 2008			Unaudited Six month to 31 May 2007			Audited Year to 30 November 2007
	Note	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
		£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000
(Losses)/gains on investments	4	-	(1,626)	(1,626)	-	2,092	2,092	-	230	230
Investment income	3	304	-	304	466	-	466	858	-	858
Investment management fees		(64)	(194)	(258)	(73)	(220)	(293)	(144)	(432)	(576)
Other expenses		(71)	-	(71)	(93)	-	(93)	(138)	-	(138)
Return/(loss) on ordinary activities before finance costs and taxation		169	(1,820)	(1,651)	300	1,872	2,172	576	(202)	374
Finance costs		(1)	-	(1)	-	-	-	-	-	-
Return/(loss) on ordinary activities before taxation		168	(1,820)	(1,652)	300	1,872	2,172	576	(202)	374
Tax (charge)/credit on ordinary activities	5	(26)	23	(3)	(47)	42	(5)	(97)	85	(12)
Return/(loss) attributable to shareholders		142	(1,797)	(1,655)	253	1,914	2,167	479	(117)	362
Return per share (pence) - basic and diluted	7	0.57	(7.19)	(6.62)	1.01	7.66	8.67	1.91	(0.47)	1.44

Comparative figures have been extracted from the unaudited interim accounts for the period ended 31 May 2007 and the audited statutory accounts for the year ended 30 November 2007.

The accompanying notes are an integral part of this announcement.

All of the Company's activities derive from continuing operations.

No operations were acquired or discontinued during the period.

The Company has no recognised gains or losses other than the results from the period as disclosed above.  Accordingly, a statement of total recognised gains and losses is not required.

The total column of the Income Statement represents the profit and loss of the Company. The supplementary revenue and capital columns have been prepared in accordance with the AITC's Statement of Recommended Practice.

Summary Balance Sheet

	Note	Unaudited 31 May  2008	Unaudited 31 May  2007	Audited 30 November  2007
		£'000	£'000	£'000
Fixed asset investments -  at fair value through profit or loss
Qualifying investments		10,880	7,768	9,820
Non-qualifying investments		6,619	16,322	12,711
Total fixed asset investments		17,499	24,090	22,531
Current assets
Debtors		53	156	123
Cash at bank	10	4,144	2,048	1,754
		4,197	2,204	1,877
Creditors: amounts falling due within one year		(83)	(720)	(890)
Net current assets		4,114	1,484	987
Net assets		21,613	25,574	23,518
Capital and reserves
Called up share capital	8	3	3	3
Special reserve		23,604	23,604	23,604
Realised capital reserve		(631)	(237)	(418)
Unrealised capital reserve		(1,504)	1,930	80
Revenue reserve		141	274	249
Total shareholders' funds		21,613	25,574	23,518
Net asset value (pence per share)		86.52	102.38	94.15

Comparative figures have been extracted from the unaudited interim accounts for the period ended 31 May 2007 and the audited statutory accounts for the year ended 30 November 2007

The accompanying notes are an integral part of this announcement.

  Summary Reconciliation of Movements in Shareholders' Funds (unaudited)

		Called up share capital	Special reserve	Realised capital reserve	Unrealised capital reserve	Revenue reserve	Total
		£'000	£'000	£'000	£'000	£'000	£'000
As at 30 November 2007		3	23,604	(418)	80	249	23,518
Net (loss)/return after taxation for the period		-	-	(213)	(1,584)	142	(1,655)
Dividends paid to shareholders		-	-	-	-	(250)	(250)
As at 31 May 2008		3	23,604	(631)	(1,504)	141	21,613

As at 30 November 2006		3	23,623	(209)	(12)	270	23,675
Net (loss)/return after taxation for the period		-	-	(28)	1,942	253	2,167
Shares purchased for cancellation		-	(19)	-	-	-	(19)
Dividends paid to shareholders		-	-	-	-	(249)	(249)
As at 31 May 2007		3	23,604	(237)	1,930	274	25,574
As at 30 November 2006		3	23,623	(209)	(12)	270	23,675
Net (loss)/return after taxation for the year		-	-	(209)	92	479	362
Shares purchased for cancellation		-	(19)	-	-	-	(19)
Dividends paid to shareholders		-	-	-	-	(500)	(500)
As at 30 November 2007		3	23,604	(418)	80	249	23,518

Summary Cash Flow Statement

	Note	Unaudited Six months to 31 May  2008 £'000	Unaudited Six months to 31 May  2007 £'000	Audited Year to 30 November  2007 £'000
Operating activities
Investment income received		283	420	808
Deposit interest received		76	32	79
Investment management fees paid		(214)	(326)	(631)
Other expenses paid		(86)	(74)	(138)
Net cash inflow from operating activities	9	59	52	118
Servicing of finance
Interest paid		(1)	-	(1)
Taxation payment		(15)	-	(29)
Capital expenditure and financial investments
Purchase of qualifying investments		(3,821)	(2,698)	(5,770)
Purchase of non-qualifying investments		(375)	(17)	(16)
Disposal of qualifying investments		431	419	419
Disposal of non-qualifying investments		6,362	3,009	6,001
Net cash inflow from investing activities		2,597	713	634
Dividends
Dividends paid on Ordinary shares		(250)	(249)	(500)
Financing
Cancellation of shares		-	(19)	(19)
Net cash outflow from financing		-	(19)	(19)
Increase in cash	10	2,390	497	203
.

Notes to the Summarised set of Financial Statements

For the six months to 31 May 2008

1.       Accounting convention

The financial statements have been prepared in accordance with the historical cost convention, modified by the revaluation of certain investments, and in accordance with applicable law and United Kingdom Accounting Standards, and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies' ('SORP') issued by the Association of Investment Trust Companies ('AITC') in January 2003 and revised in December 2005. Accounting policies have been applied consistently in current and prior periods.

2.       Accounting policies

a) Investments

In accordance with FRS 26 'Financial Instruments: Measurement', equity investments units in an authorised UK smaller company unit trust and debt securities are designated as fair value through profit or loss ('FVTPL'). 

Investments listed on recognised exchanges are valued at the closing bid prices or last traded price at the end of the accounting period. The total column of the Income Statement represents the Company's profit and loss account. Fair value movements on equity investments and gains or losses arising on the disposal of investments are reflected in the capital column of the Income Statement in accordance with the AITC's SORP.

Investments are recognised as financial assets on legal completion of the investment contract and are de-recognised on legal completion of the sale of an investment.

The Directors are conscious of the fact that because shares are traded on AIM, this does not guarantee their liquidity. The nature of AIM investments and units in an authorised UK smaller company unit trust are such that the prices can be volatile and realisation may not achieve current book value, especially when such a sale represents a significant proportion of that company's market capital. Nevertheless, on the grounds that the investments are not intended for immediate realisation, the Directors regard bid prices as the most objective and appropriate method of valuation.

b) Investment income

Dividends receivable on quoted equity shares and units in an authorised UK smaller company unit trust are taken to revenue on an ex-dividend basis. Returns on listed debt securities are recognised on a time apportionment basis from the date of purchase so as to reflect the effective yield on the securities.

c) Investment management fees and other expenses

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

•    expenses which are incidental to the acquisition of an investment are included within the cost of the investment; 

•    expenses which are incidental to the disposal of an investment are deducted from the disposal proceeds of the investment; and

•    expenses are allocated between capital and revenue where a connection with maintenance or enhancement of the value of the investments held can be demonstrated. In respect of the Investment Manager's fee, 75% has been allocated to the realised capital reserve and 25% to revenue in the Income Statement.

d) Performance incentive

In the event that a performance fee crystallises, the fee will be allocated between revenue and realised capital reserves (net of corporation tax) based upon the proportion to which the calculation of the fee is attributable to revenue and capital returns.

e) Taxation

Taxation is applied on a current basis in accordance with FRS 16 'current tax' and is based on the profit before taxation for the period. Taxation associated with capitalised expenses is applied in accordance with the SORP. In accordance with FRS 19 'Deferred Tax', deferred taxation is provided in full on timing differences that result in an obligation at the balance sheet date to pay more tax or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the financial statements. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered.  The specific nature of taxation of Venture Capital Trusts means that it is unlikely that any deferred tax will arise. The Directors have considered the requirements of FRS 19 and do not believe that any provision should be made.

f) Reserves

The realised capital reserve contains gains and losses on the realisation of investments, capital dividends paid to shareholders and investment management fees allocated to the capital reserve and taxation thereon. The unrealised capital reserve contains increases and decreases in the valuation of investments held at the end of the accounting period. The special reserve is distributable and is primarily used for the cancellation of the Company's share capital. 

g) Dividends

In accordance with FRS 21 'Events after the balance sheet date' interim dividends are not accounted for until paid and final dividends are accounted for when approved by shareholders at an annual general meeting.

3.       Investment income

	Unaudited	Unaudited	Audited
	Six months to	Six months to	Year to
	31 May 2008	31 May 2007	30 November 2007
	£'000	£'000	£'000
Dividend income	28	17	25
Floating Rate Note interest income	187	375	685
Bank deposit interest income	62	39	92
Management fee rebates	27	35	56
	304	466	858

All of the Company's income is derived from operations based in the United Kingdom.

4.       (Losses)/gains on investments

	Unaudited	Unaudited	Audited
	Six months to	Six months to	Year to
	31 May 2008	31 May 2007	30 November 2007
	£'000	£'000	£'000
Realised (losses)/gains on investments	(42)	150	138
Unrealised (losses)/gains on investments	(1,584)	1,942	92
	(1,626)	2,092	230

5.       Tax (charge)/credit on ordinary activities

The tax charge for the half-year is £3,000 which relates to an adjustment to the prior year charge (31 May 2007: £5,000; 30 November 2007: £12,000). The effective tax rate is expected to be nil as investment gains are exempt from tax owing to the Company's status as a Venture Capital Trust and there is expected to be an excess of management expenses over taxable income.

6.       Dividends

During the period, the Company paid a dividend of 1.00p per Ordinary share making a total dividend payment of £250,000 (31 May 2007: £249,000; 30 November 2007: £500,000). The Board has declared a dividend of 1.00p per Ordinary share (0.5 pence out of revenue reserves and 0.5 pence out of realised gains). This dividend is subject to HM Revenue & Customs approval. The record date and payment date of this dividend will be announced on the London Stock Exchange RNS service.

7.       Basic and diluted return per share

Return per share has been calculated on 24,980,111 (31 May 2007: 24,989,639; 30 November 2007: 25,053,501) shares being the weighted average number of A and B Ordinary shares in issue for the period.

There are no convertible instruments, derivatives or contingent share agreements in issue for Close IHT AIM PLC hence there are no dilution effects to the return per share. The basic return per share is therefore the same as the diluted return per share.

8.       Share Capital

	Unaudited	Unaudited	Audited
	Six months to	Six months to	Year to
	31 May 2008	31 May 2007	30 November 2007
	£'000	£'000	£'000
Authorised
275,000,000 A Ordinary shares of 0.01p each	27	27	27
275,000,000 B Ordinary shares of 0.01p each	27	27	27
Allotted called up and fully paid
7,299,461 A Ordinary shares of 0.01p each	1	1	1
17,680,650 B Ordinary shares of 0.01p each	2	2	2
	3	3	3

All classes of shares rank pari passu as to rights to attend and vote at any general meeting of the Company, and to receive dividends. The capital and assets of the Company shall on a winding up be divided amongst the holders of each class of share pro rata according to their shareholding.

9.       Reconciliation of (loss)/return before finance costs and taxation to net cash inflow from operating activities

	Unaudited	Unaudited	Audited
	Six months to	Six months to	Year to
	31 May 2008	31 May 2007	30 November 2007
	£'000	£'000	£'000
(Loss)/return on ordinary activities before finance costs and taxation	(1,651)	2,172	374
Net capital loss/(return) before finance costs and taxation	1,820	(1,872)	202
Investment management fees charged to capital	(194)	(220)	(432)
Decrease/(increase) in operating debtors	69	(17)	16
Increase/(decrease) in operating creditors	15	(11)	(42)
Net cash inflow from operating activities	59	52	118

10.       Analysis of change in cash during the period

	Unaudited	Unaudited	Audited
	Six months to	Six months to	Year to
	31 May 2008	31 May 2007	30 November 2007
	£'000	£'000	£'000
Opening net funds	1,754	1,551	1,551
Net cash inflow	2,390	497	203
Closing net funds	4,144	2,048	1,754

11.       Related party transactions

The Investment Manager, Close Investments Limited, is considered to be a related party by virtue of the fact that it is party to a management agreement from the Company. During the period, services of a total value of £258,000 (31 May 2007: £293,000; 30 November 2007: £576,000) were purchased by the Company from Close Investments Limited. At the financial period end, the amount due to Close Investments Limited was £37,000 (31 May 2007: £14,000; 30 November 2007: nil) and debtors were nil (31 May 2007: nil; 30 November 2007: £8,000).

As at 31 May 2008, the Company held 3,071,189 units, in Close Special Situations Fund, an authorised unit trust which is managed by Close Investments (UK) Limited, a subsidiary of Close Brothers Group, the ultimate parent company of the Investment Manager. This investment was valued at £3,299,000 as at 31 May 2008 (cost £2,925,000). The Company received a rebate of £27,000 (31 May 2007: £35,000; 30 November 2007: £56,000) on the Management fees charged by Close Special Situations Fund in the period under review.

The Close Special Situations Fund held an investment in Tenon Group PLC, a company of which Andrew Raynor is Chief Executive Officer.

12.       Other information

The information set out in the Half-yearly Report does not constitute the Company's statutory accounts within the terms of section 240 of the Companies Act 1985 for the period ended 31 May 2008 and 31 May 2007, and is unaudited. The information for the year ended 30 November 2007 does not constitute statutory accounts within the terms of section 240 of the Companies Act 1985 and is derived from the statutory accounts for the financial year, which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified and did not contain a statement under s237 (2) or (3) of the Companies Act 1985.

13.       Publication

The Half-yearly report is being sent to shareholders and copies will be made available to the public at the registered office of the Company and at Companies House, the FSA viewing facility and also electronically on www.closeventures.co.uk.

For further information, please contact:

Andrew Buchanan / Kate Tidbury	Karen Wagg
Close Investments Limited	Polhill Communications
Tel: [phone]	Tel: [phone]

 

END

 

 

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