Half-yearly Report

THE INCOME & GROWTH VCT PLC Half-Yearly Results for the six months ended 31 March 2009 Financial Highlights - Ordinary shares of 1p each (`O' Shares) - Out-performance against comparable benchmarks - Decrease of 7.6% in net asset value (NAV) per `O' Share over the six month period - Decrease of 22.9% in total shareholder return (share price basis) over the six month period - Decrease of 2.3% in total shareholder return (net asset value basis) over the six month period - Liquidity maintained in face of market downturn Performance Summary Net assets Share price Net assets Net asset Total return Share Total return (£ million) value per to price to `O' Share shareholders (p) 1 shareholders (p) (NAV basis) (share price since launch basis) since per `O' Share launch per (p) `O' Share (p) As at 31 March 2009 27.1 77.2 97.7 53.5 74.0 As at 30 September 2008 29.6 83.6 100.0 79.5 96.0 As at 30 September 2007 36.8 100.5 2 115.0 87.5 100.0 As at 30 September 2006 44.2 112.9 121.6 84.5 93.2 As at 30 September 2005 49.2 122.5 128.0 87.5 93.0 (restated) 1 Source: London Stock Exchange 2 After deducting the dividend of 2p per share paid on 24 October 2007 Financial Highlights - S ordinary shares of 1p each (`S' Shares) - Out-performance against comparable benchmarks - Slight decrease of 0.4% in net asset value (NAV) per `S' Share over the six month period - Decrease of 5.5% in total shareholder return (share price basis)over the six month period - Slight decrease of 0.4% in total shareholder return (net asset value basis) over the six month period - Liquidity largely maintained in face of market downturn Performance Summary Net assets Share price Net assets Net Total return Share Total return (£ million) asset to price (p) to value shareholders 1 shareholders per (NAV basis) (share price `S' since launch basis) since Share `S' Share (p) launch per (p) `S' Share (p) As at 31 March 2009 11.1 94.2 94.2 94.5 94.5 As at 30 September 2008 11.2 94.6 94.6 100.0 100.0 At close of Offer 11.2 94.5 94.5 100.0 100.0 for Subscription 1 Source: London Stock Exchange The total return comprises the share price or NAV per share plus dividends paid, assuming the dividends paid were re-invested on the date on which the shares were quoted ex-dividend in respect of each dividend. Chairman's Statement I am pleased to present the Company's Half-Yearly Report for the six months ended 31 March 2009. The last six months has been dominated by the global economy. Nearly all UK investment portfolios have been and remain affected by the harsh economic conditions which now exist. These are predicted to continue for at least the remainder of this calendar year. I cover our views below on the outlook for the economy and for the Company's portfolio. Inevitably, nearly all sectors of the economy have been affected. Two important aspects of this are related to the Company's business: whilst divestments have proved to be difficult to achieve over the past six months, we do nevertheless expect acquisition prices to become more attractive. No exits have been achieved in the current period, but the Board and the Investment Manager remain cautiously confident about the trading performances of most of our investments. Performance `O' Share Fund At 31 March 2009 the Company's NAV per `O' Share was 77.2 pence (30 September 2008: 83.6 pence), a decrease of 7.6%. This compares with a decline of 27.6% in the capital return of the FTSE SmallCap Index and a fall of 33.6% in the capital return of the FTSE All-Share AiM Index during the same period. The total return per `O' Share (NAV basis) fell in the six month period by 2.3%. In the longer term, the Company has continued to perform well with total return per `O' Share (NAV basis) since launch rising by 3.4%. Cumulative dividends paid to date amount to 20.45 pence per `O' Share. `S' Share Fund At 31 March 2009 the NAV per `S' Share was 94.2 pence (30 September 2008: 94.6 pence), a decrease of 0.4%. Portfolio `O' Share Fund The performance of the `O' Share Fund portfolio during the period was mixed. UK sector price earnings multiples have, in the main, decreased significantly over this six month period, and this does impact on our portfolio valuations in both the quoted and unquoted sectors. In particular, it continues to be a difficult time for investments in the construction, food manufacturing and technology sectors. In general, the environment for new investment has, in the opinion of the Board and the Investment Manager, continued to prove unattractive. Therefore, the emphasis has been, and will continue to be, in the judicious support of existing investments. In October 2008, a new investment was made into ATG Media Holdings Limited of £595,842 to support the MBO of Metropress, publishers of the Antiques Trade Gazette. A further loan stock investment of £129,264 was made in November 2008 into PXP Holdings Limited and a further loan stock investment of £47,158 was made into Monsal Holdings Limited in January 2009. Unfortunately, FH Ingredients Limited was dissolved on 9 December 2008. Regrettably, there were no realisations in the period under review, although Tottel Publishing Limited repaid half its loan stock, resulting in a return of £257,400 to the `O' Share Fund. Further payments arising from the sale of Secure Mail Services Limited in 2006 were also received; these totalled £163,650, bringing total cash proceeds from this £1.3 million investment to over £5 million. Within the original MPEP portfolio, which now represents 83.3% of the overall `O' Share Fund portfolio, fourteen of the investments are now valued at cost or above with the balance being valued below cost. Notable trading performances during 2008 were produced by HWA Limited, Tottel Publishing Limited, PastaKing Holdings Limited, DiGiCo Europe Limited and Vectair Holdings Limited. By contrast, the former Foresight and Nova portfolios continue to underperform. These two legacy portfolios, comprising of largely technology and early-stage companies, will continue to need to be monitored closely. These legacy portfolios are currently jointly valued at some 34% of their original cost having seen a decrease in value of some £1.0 million over the last six months. The quoted investments, of which there are six, fell by £0.9 million over the six months to 31 March 2009. Oxonica was the worst affected with a fall of some £418,000. `S' Share Fund In October 2008, a new investment was also made into ATG Media Holdings Limited of £404,158 to support the MBO of Metropress, publishers of the Antiques Trade Gazette. There were no realisations in the period under review. The remainder of the portfolio, apart from its other investment in The Plastic Surgeon Holdings Limited, is currently held in cash and liquidity funds pending a more attractive investment climate. Cash available for investment Cash and liquidity fund balances as at 31 March 2009 in both share classes amounted to some £14.8 million. During this economic uncertainty, the Board has worked hard to ensure that our cash deposits have remained as secure as possible. We have for some time been spreading our significant cash deposits with a number of the leading global cash funds rather than depositing directly with individual banks, thereby reducing our exposure to any one particular bank. Revenue account `O' Share Fund At 31 March 2009, revenue return for the period available for distribution to `O' Fund Shareholders was £132,488 (31 March 2008: £124,647). However, in the light of present interest rate levels, dividends arising from current year's revenue are likely to be severely limited so any income dividend may be financed from revenue reserves built up from previous years. `S' Share Fund At 31 March 2009, revenue return for the period available for distribution to `S' Fund Shareholders was £44,287 (31 March 2008: loss of £2,942). As noted above, dividends arising from revenue are likely to be severely limited. Dividend investment scheme `O' Share Fund 206 'O' Fund Shareholders, who between them held a total of 2,420,614 'O' Shares, representing 6.9% of the `O' Share Fund, were issued 127,403 new 'O' Shares on 16 February 2009 in respect of the Dividend of 4 pence per `O' Share paid to 'O' Fund Shareholders on that date. Shareholders continue to have the opportunity to re-invest their dividends into new `O' Shares at the latest published NAV per share as at the dividend payment date. `S' Share Fund The above Scheme will be open to `S' Fund Shareholders as soon as the 'S' Share Fund starts to pay dividends. Shareholders will have the opportunity to re-invest their dividends into new `S' Shares at the latest published NAV per share as at the dividend payment date. New shares issued pursuant to the Scheme will, subject to an individual shareholder's particular circumstances, attract the VCT tax reliefs applicable for the tax year in which the shares are allotted (currently 30%). Copies of the Scheme Rules are available on Company's website, www.incomeandgrowthvct.co.uk, and personalised application forms can be obtained from the Company's Registrars, Capita Registrars, (tel: 0871 664 0300). Application forms should be returned to Capita Registrars at the address given on the form so as to arrive no later than fifteen days before the payment date for a particular dividend to ensure that you qualify to receive the dividend as shares. Valuation policy Quoted stocks are valued at bid prices, rather than mid-market prices in accordance with accounting standards. It is worth commenting that the Fund does hold a number of relatively early stage AiM listed stocks with limited marketability. In such cases, the price at which a sizeable block of shares could be traded, if at all, may vary significantly from the market price used. VAT Shareholders may be aware of recent HMRC announcements that could permit VCTs to recover VAT previously charged on fund management fees for at least the past three years. These accounts continue to recognise VAT recoverable of £334,232, based upon available information supplied by the Company's current and past Investment Managers. Appointment of corporate broker On 13 October 2008, the London Stock Exchange announced that Landsbanki Securities (UK) Limited (Landsbanki) would no longer be able to act as a market maker. Landsbanki was therefore unable to quote prices or make a market in the Company's shares. The Directors understand that this action by the London Stock Exchange related to the Administration of Landsbanki's parent company, Landsbanki Islands hf, and resultant regulatory actions arising therefrom. I apologise for the inconvenience this may have caused to any shareholders. The Board is pleased, therefore to have been able to announce the appointment of Matrix Corporate Capital LLP (MCC) as corporate broker to the Company on 3 December 2008. The team at MCC includes the core Investment Funds team who were formerly at Landsbanki. Share buy-backs During the six months ended 31 March 2009, the Company bought back 523,538 `O' Fund Shares (representing 1.48 per cent of the `O' Fund Shares in issue at the beginning of the period) at a total cost of £239,671 (net of expenses of £1,880). These shares were subsequently cancelled by the Company. Outlook It is highly probable that the current tougher economic conditions could endure for some time. Relatively small, early stage growth businesses will inevitably be tested in such an environment. However, many of our portfolio companies, which are in later stages of development, are continuing to trade positively and, in some cases, above the levels seen more than a year ago. The Board and Investment Manager are of the opinion that the worst of the recession is yet to be seen in the trading performances of most smaller companies. The Company overall has significant cash resources and this is crucially important at a time when many commercial banks are pursuing more cautious lending policies. Furthermore, it places the Company in an excellent position to take advantage of what are expected to be increasingly attractive purchase opportunities which are expected to become available later in the year. Therefore, while short term valuations are likely to be subject to continuing pressure your Board looks to the mid-term future with more optimism. The legacy Foresight portfolio will continue to need to be monitored closely. Most importantly though, the Board remains pleased with the progress that the core MPEP portfolio is making, especially given the current financial background. It is to be hoped that the recent G20 Summit in London will restore some confidence to the financial system globally and act as a catalyst for a resumption of higher levels of global trade. Once again, I would like to take this opportunity to thank Shareholders for their continued support. Colin Hook Chairman Cautionary Statement This report may contain forward looking statements with regards to the financial condition and results of the Company, which are made in the light of current economic and business circumstances. Nothing in this announcement should be construed as a profit forecast. Principal risks and uncertainties In accordance with D.T.R 4.2.7, the Board confirms that the principal risks and uncertainties facing the Company have not materially changed since the publication of the Annual Report and Accounts for the year ended 30 September 2008. The Board acknowledges that there is regulatory risk and continues to manage the Company's affairs in such a manner as to comply with section 274 Income Tax Act 2007. Other risks relate to credit risk, market price risk, interest rate risk and currency risk. A more detailed explanation of these can be found in Note 20 on pages 66 to 71 of the 2008 Annual Report and Accounts - copies are available on the VCT's website, www.incomeandgrowthvct.co.uk. Responsibility Statement The Directors confirm that to the best of their knowledge: (a) the condensed set of financial statements, which has been prepared in accordance with the statement, "Half-Yearly Reports", issued by the Accounting Standards Board, gives a true and fair view of the assets, liabilities, financial position and loss of the Company, as required by Disclosure and Transparency Rule (DTR) 4.2.4; and (b) the management report, comprising the Chairman's Statement, Investment Policy, Investment Portfolio Summary and the Investment Manager's Review includes a fair review of the information required by DTR 4.2.7 and in accordance with DTR 4.2.10 (c) there were no relevant Related Party Transactions to be reported as required by DTR 4.2.8 On behalf of the Board Colin Hook Chairman Investment Policy The Company's policy is to invest primarily in a diverse portfolio of UK unquoted companies. Investments are structured as part loan and part equity in order to receive regular income and to generate capital gains from trade sales and flotations of investee companies. Investments are made selectively across a number of sectors, primarily in management buyout transactions (MBOs) i.e. to support incumbent management teams in acquiring the business they manage but do not yet own. Investments are primarily made in companies that are established and profitable. The Company has a small legacy portfolio of investments in companies from its period prior to 30 September 2008, when it was a multi-manager VCT. This includes investments in early stage and technology companies and in companies quoted on the Alternative Investment Market or PLUS. Uninvested funds are held in cash and lower risk money market funds. UK companies The companies in which investments are made must have no more than £15 million of gross assets at the time of investment to be classed as a VCT qualifying holding. VCT regulation The investment policy is designed to ensure that the Company continues to qualify and is approved as a VCT by HM Revenue & Customs ("HMRC"). Amongst other conditions, the Company may not invest more than 15 per cent of its investments in a single company and must have at least 70 per cent by value of its investments throughout the period in shares or securities comprised in VCT qualifying holdings, of which a minimum overall of 30 per cent by value must be ordinary shares which carry no preferential rights. In addition, although the Company can invest less than 30 per cent of an investment in a specific company in ordinary shares it must have at least 10 per cent by value of its total investments in each VCT qualifying company in ordinary shares which carry no preferential rights. Asset mix The Company initially holds its funds in a portfolio of readily realisable interest bearing investments and deposits. The investment portfolio of qualifying investments is built up over a three year period with the aim of investing and maintaining at least 70 per cent of net funds raised in qualifying investments. Risk diversification and maximum exposures Risk is spread by investing in a number of different businesses across different industry sectors. To reduce the risk of high exposure to equities, each qualifying investment is structured using a significant proportion of loan stock (up to 70 per cent of the total investment in each VCT qualifying company). Initial investments in VCT qualifying companies are generally made in amounts ranging from £200,000 to £1 million at cost. No holding in any one company will represent more than 10 per cent of the value of the Company's investments at the time of investment. Ongoing monitoring of each investment is carried out by the Investment Manager, generally through taking a seat on the board of each VCT qualifying company. Co-investment The Company aims to invest in larger, more mature unquoted companies through investing alongside the four other VCTs advised by the Investment Manager with a similar investment policy. This enables the Company to participate in combined investments advised on by the Investment Manager of up to £5 million. Investment Portfolio Summary - 'O' Share Fund as at 31 March 2009 Total cost at Valuation at Additional Valuation at 31 March 2009 30 September Investments in 31 March 2009 2008 the period (unaudited) (audited) (unaudited) £ £ £ £ HWA Limited (Holloway White 34,553 2,359,597 - 3,560,625 Allom) Specialist contractor in the high-value residential and heritage property refurbishment market Image Source Group Limited 305,000 2,241,678 - 2,183,012 Royalty free picture library Tottel Publishing Limited 325,182 1,294,585 - 1,494,338 Publisher of specialist legal and taxation titles Amaldis (2008) Limited (Original 80,313 1,248,967 - 1,350,652 Additions) Manufacturer and distributor of beauty products Youngman Group Limited 1,000,052 1,615,929 - 1,205,824 Manufacturer of ladders and access towers Apricot Trading Limited 1,000,000 1,000,000 - 1,000,000 Company seeking to acquire businesses in the marketing services and media sector Aust Construction Investors 1,000,000 1,000,000 - 1,000,000 Limited Company seeking to acquire businesses in the construction sector Calisamo Management Limited 1,000,000 1,000,000 - 1,000,000 Company seeking to acquire businesses in the healthcare sector Blaze Signs Holdings Limited 1,338,500 1,392,644 - 919,539 Manufacturer and installer of signs PastaKing Holdings Limited 292,405 856,250 - 812,317 Manufacturer and supplier of fresh pasta meals Camwood Limited 1,028,181 552,444 - 796,703 Provider of software repackaging services DiGiCo Europe Limited 656,900 763,337 - 779,896 Designer and manufacturer of audio mixing desks VSI Limited 245,596 675,439 - 756,831 Provider of software for CAD and CAM vendors IDOX plc 872,625 816,667 - 755,417 Provider of document storage systems Oxonica plc 2,524,527 1,113,991 - 696,244 Leading international nanomaterials group ATG Media Holdings Limited 595,842 - 595,842 595,842 Publisher and online auction platform operator Tikit Group plc 500,000 899,999 - 521,738 Provider of consultancy services and software solutions for law firms British International Holdings 500,000 375,112 - 489,073 Limited Helicopter service operator Focus Pharma Holdings Limited 516,900 516,900 - 423,256 Licensor and distributor of generic pharmaceuticals Monsal Holdings Limited 471,605 318,335 47,158 353,704 Supplier of engineering services to water and waste sectors BG Consulting Group 1,153,976 256,530 - 286,406 Limited/Duncary 4 Limited Technical training business Vectair Holdings Limited 215,914 341,830 - 286,113 Designer and distributor of washroom products DCG Group Limited 312,074 321,013 - 238,916 Design, supply and integration of data storage solutions Nexxtdrive Limited 812,014 203,004 - 203,004 Developer and exploiter of patented transmission technologies ANT plc 462,816 196,979 - 151,017 Provider of embedded browser/email software for consumer electronics and internet appliances Biomer Technology Limited 137,170 137,170 - 137,170 Developer of biomaterials for medical devices Brookerpaks Limited 55,000 417,540 - 136,374 Importer and distributor of garlic and vacuum-packed vegetables The Plastic Surgeon Holdings 307,071 153,536 - 76,768 Limited Supplier of snagging and finishing services to property sector Sarantel Group plc 1,881,252 68,078 - 68,078 Developer and manufacturer of antennae for mobile phones and other wireless devices Aigis Blast Protection Limited 272,120 68,030 - 68,030 Specialist blast containment materials company Corero plc 600,000 73,672 - 66,305 Provider of software repackaging services Sectorguard plc 150,000 64,286 - 53,571 Provision of manned guarding, mobile patrols, and alarm response Aquasium Technology Limited 700,000 311,306 - 42,899 Design, manufacture and marketing of bespoke electron beam welding and vacuum furnace equipment Campden Media Limited 334,880 65,842 - 36,334 Magazine publisher and conference organiser Alaric Systems Limited 595,802 30,647 - 30,647 Software development, implementation and support in the credit/debit card authorisation and payments market PXP Holdings Limited (Pinewood 920,176 324,860 129,264 - Structures) Designer, manufacturer and supplier of timber frames for buildings Racoon International Holdings 550,852 13,692 - - Limited Supplier of hair extensions, hair care products and training Letraset Limited 650,000 0 - - Manufacturer and distributor of graphic art products Other investments in the 730,435 0 - - portfolio * -------------- -------------- -------------- -------------- `O' Share Fund Total 25,129,733 23,089,889 772,264 22,576,643 * Other investments in the portfolio' comprises Stortext-FM Limited/Stortext (DO) Limited and Inca Interiors Limited (in administration) Investment Portfolio Summary - 'S' Share Fund as at 31 March 2009 Total cost at Valuation at Additional Valuation at 31 March 2009 30 September 2008 Investments in 31 March 2009 (unaudited) (audited) in the period (unaudited) £ £ £ £ ATG Media Holdings Limited 404,158 - 404,158 404,158 Publisher and online auction platform operator The Plastic Surgeon Holdings Limited 99,011 49,506 - 24,753 Supplier of snagging and finishing services to property sector -------------- -------------- -------------- -------------- `S' Share Fund Total 503,169 49,506 404,158 428,911 -------------- -------------- -------------- -------------- Company Total 25,632,902 23,139,395 1,176,422 23,005,554 -------------- -------------- -------------- -------------- Investment Manager's Review Over the last six months, the environment for new investment has in our opinion continued to be generally unattractive; this view has been informed both by a lack of sufficiently attractive investment opportunities and the increasing evidence of recession affecting many smaller companies. We have held the view for some time that in the current market the price expectations of vendors would prove unsustainable; furthermore we have, over the past two years, avoided transactions which necessitated companies taking on high levels of bank borrowing, believing that economic conditions were deteriorating and that highly-leveraged investments would become vulnerable in the tougher economic conditions which now prevail. Against a worsening backdrop of reducing demand and increasing pressure on margins, your Manager remains cautious in its assessment of the forecasts produced by aspiring management teams and we therefore chose to complete just one new investment over the period. In October, the `O' and `S' Share Funds invested £595,842 and £404,158 respectively in ATG Media; this company acquired the publisher of the leading weekly newspaper serving the UK antiques trade, the Antiques Trade Gazette, via a MBO. This London-based business also offers an on-line auction capability. The `O' and `S' Share Funds invested in loan stock and ordinary shares, holding 5.3% and 3.6% of the equity respectively. Two small additional investments were made by the `O' Share Fund during the period. In November, £129,264 was invested as part of a £1 million funding round to provide capital to support PXP in what is expected to remain a difficult housebuilding and construction market during 2009. In January, Monsal received further shareholder funding of £500,000, including £47,158 from the `O' Share Fund, to provide additional working capital. We are of the view that the depth of the recession, insofar as it affects the performance of smaller companies, remains some way off and a priority will therefore be to continue to invest to support portfolio companies judiciously during this period. We believe that the overall quality of the portfolio remains very high and that it contains a number of UK market-leading companies which will rebound strongly as the economy recovers. Proportionate additional investment alongside highly-motivated management teams who are prepared to take hard decisions to ensure the long term financial health of their businesses will, in our view, be a proper response to the economic environment. We are also mindful that small acquisitions of distressed competitors may represent opportunities for some portfolio companies and continue to review these. Inevitably, the valuations of a number of portfolio companies have suffered materially over the past year, due to deterioration in their own trading and also to falls in the PE ratios of quoted companies by reference to which the funds' investments are valued. Appropriate provisions have been made against investments to reflect this. Certain sectors have been particularly affected, notably construction, food manufacturers and software and computer services. Within the `O' Share Fund a number of MPEP portfolio companies posted record profits during 2008, including HWA, Tottel Publishing, PastaKing, DiGiCo Europe and Vectair. Tottel generated sufficient cash to prepay half its loan stock, resulting in a return of £189,618 to the `O' Share Fund, in addition to a premium of £67,782. Further payments of deferred consideration arising from the sale of Secure Mail Services in 2006 were also received; these totalled £163,650, bringing total cash proceeds from this £1.3 million investment to over £5 million. Small final payments are expected to follow. The MPEP investments reflect both the maturity of the portfolio and the position in the economic cycle. Of the twenty-five current investments, ten are valued above cost, four at cost and eleven below cost. Including the investment in ATG Media, these investments were valued at £18.5 million at 31 March 2009, representing 138% of investment cost of £13.7 million. The legacy Foresight and Nova portfolios comprise largely technology and early-stage companies and show a rather worse position, with a total of fourteen investments of which one is valued above cost, one at cost and twelve below cost. The value of the AiM market investments in these portfolios suffered particularly; the value of the six investments fell from £3.2 million at 30 September 2008 to £2.3 million at 31 March 2009, a fall of 28% in six months. Oxonica was the worst affected, showing a fall of 38%. The value of the legacy portfolio investments at 31 March 2009 was £3.8 million, a fall of £1.0 million from the valuation of £4.8 million at 30 September 2008. The current valuation represents 34% of original cost. The `S' Share Fund now has two investments, namely Plastic Surgeon and ATG Media. The former is exposed to the construction industry and we have therefore felt it appropriate to raise a 75% impairment provision; the latter has traded broadly in line with its investment plan since investment last October. The measured pace of investment within the fund reflects the views expressed above in relation to the current environment for new investment. Unaudited Non-Statutory Analysis between the 'O' Share and 'S' Share Funds Profit and loss accounts for the six months ended 31 March 2009 `O' Share Fund `S' Share Fund Notes Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ Unrealised losses on - (1,028,110) (1,028,110) - (24,753) (24,753) investments held at fair value Realised - 20,000 20,000 - - - gains on investments held at fair value Income 424,362 67,950 492,312 161,589 - 161,589 Investment 2 (72,754) (218,262) (291,016) (27,015) (81,043) (108,058) management fees Other (186,777) - (186,777) (72,495) - (72,495) expenses ------------ -------------- ------------- ----------- ------------ ------------ Profit/(loss) on ordinary 164,831 (1,158,422) (993,591) 62,079 (105,796) (43,717) activities before taxation Tax on profit/(loss) 3 (32,343) 33,318 975 (17,792) 16,817 (975) on ordinary activities ------------ -------------- ------------- ----------- ------------ ------------ Profit/(loss) attributable 132,488 (1,125,104) (992,616) 44,287 (88,979) (44,692) to equity shareholders ------------ -------------- ------------- ----------- ------------ ------------ Basic and diluted 6 0.38 p (3.19)p (2.81)p 0.38 p (0.76)p (0.38)p earnings per 1p share Total of both Funds (per Statutory Profit and Loss Account) Notes Revenue Capital Total £ £ £ Unrealised losses on investments held at - (1,052,863) (1,052,863) fair value Realised gains on - 20,000 20,000 investments held at fair value Income 585,951 67,950 653,901 Investment 2 (99,769) (299,305) (399,074) management fees Other expenses (259,272) - (259,272) ----------- ------------ ------------- Profit/(loss) on ordinary activities 226,910 (1,264,218) (1,037,308) before taxation Tax on profit/(loss) on ordinary 3 (50,135) 50,135 - activities ----------- ------------ ------------- Profit/(loss) attributable to 176,775 (1,214,083) (1,037,308) equity shareholders ----------- ------------ ------------- Balance Sheets as at 31 March 2009 `O' Share Fund `S' Share Fund Adjustments Total of both Funds Notes (see note (per Statutory below) Balance Sheet) £ £ £ £ Assets held at fair 22,576,643 428,911 23,005,554 value through profit and loss - investments Current assets Debtors and prepayments 562,449 26,440 (84,129) 504,760 Current investments 4,001,243 10,746,291 14,747,534 Cash at bank 32,705 8,597 41,302 --------------- --------------- --------------- --------------- 4,596,397 10,781,328 (84,129) 15,293,596 Creditors: amounts (104,220) (87,439) 84,129 (107,530) falling due within one year --------------- --------------- --------------- --------------- Net current assets 4,492,177 10,693,889 15,186,066 --------------- --------------- --------------- --------------- Net assets 27,068,820 11,122,800 38,191,620 --------------- --------------- --------------- --------------- Share capital and reserves Called up share capital 350,553 118,065 468,618 Share premium account 308,614 11,053,220 11,361,834 Capital redemption 70,708 - 70,708 reserve Capital reserve - (1,999,148) (74,258) (2,073,406) unrealised Special reserve 17,743,304 - 17,743,304 Profit and Loss account 10,594,789 25,773 10,620,562 --------------- --------------- --------------- --------------- Equity shareholders' 27,068,820 11,122,800 38,191,620 funds --------------- --------------- --------------- --------------- Number of shares in 35,055,303 11,806,467 issue: Net and diluted asset 10 77.22p 94.21p value per 1p share: Note: The adjustment above nets off the inter-fund debtor and creditor balances, so that the "Total of both funds" balance sheet agrees to the statutory balance sheet below. Unaudited Profit and Loss Account for the six months ended 31 March 2009 Six months ended 31 March 2009 Six months ended 31 March 2008 (unaudited) (unaudited) Notes Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ Unrealised losses on investments 7 - (1,052,863) (1,052,863) - (2,353,042) (2,353,042) Net gains on realisation of investments 7 - 20,000 20,000 - 1,641,036 1,641,036 Income 585,951 67,950 653,901 486,926 - 486,926 Recoverable VAT - - - - - - Investment management expense 2 (99,769) (299,305) (399,074) (103,025) (664,074) (767,099) Other expenses (259,272) - (259,272) (239,487) - (239,487) --------- --------- --------- --------- ---------- ---------- Profit/(loss) before taxation 226,910 (1,264,218) (1,037,308) 144,414 (1,376,080) (1,231,666) Tax on profit/(loss) on ordinary activities 3 (50,135) 50,135 - (22,709) 22,709 - --------- --------- --------- --------- ---------- ---------- Profit/(loss) for the financial period 176,775 (1,214,083) (1,037,308) 121,705 (1,353,371) (1,231,666) --------- --------- --------- --------- ---------- ---------- Basic and diluted earnings per 'O' Share: 6 (2.81)p (3.37)p Basic and diluted earnings per 'S' Share: 6 (0.38)p (1.54)p Year ended 30 September (audited) 2008 Notes Revenue Capital Total £ £ £ Unrealised (losses)/gains on investments - (7,553,875) (7,553,875) Net gains on realisation of investments - 2,053,510 2,053,510 Income 1,454,724 - 1,454,724 Recoverable VAT 83,278 249,833 333,111 Investment management expense 2 (197,028) (1,013,810) (1,210,838) Other expenses (517,005) - (517,005) ----------- -------------- ----------- Profit/(loss) before taxation 823,969 (6,264,342) (5,440,373) Tax on profit/(loss) on ordinary activities 3 (106,773) 106,773 - ----------- -------------- ----------- Profit/(loss) for the financial period 717,196 (6,157,569) (5,440,373) ----------- -------------- ----------- Basic and diluted earnings per 'O' Share: 6 (15.06)p Basic and diluted earnings per 'S' Share: 6 (0.04)p The total column of this statement is the Profit and Loss Account of the Company. All the items in the above statement derive from continuing operations. There were no other recognised gains or losses in the period. Other than revaluation movements arising on investments held at fair value through Profit and Loss Account, there were no differences between the profit/(loss) as stated above and at historical cost. The Notes to the Unaudited Financial Statements below form part of these half-yearly financial statements. Unaudited Balance Sheet as at 31 March 2009 31 March 2009 31 March 2008 30 September 2008 (unaudited) (unaudited) (audited) Notes £ £ £ Non-current assets Investments 7 23,005,554 27,423,194 23,139,395 Current assets Debtors and prepayments 504,760 3,763,735 1,843,777 Investments at fair value 8 14,747,534 7,189,315 16,336,014 Cash at bank 41,302 95,347 65,690 -------------- -------------- ------------- 15,293,596 11,048,397 18,245,481 Creditors: amounts falling (107,530) (593,187) (593,164) due within one year -------------- -------------- ------------- Net current assets 15,186,066 10,455,210 17,652,317 -------------- -------------- ------------- Net assets 38,191,620 37,878,404 40,791,712 -------------- -------------- ------------- Capital and reserves 9 Called up share capital 468,618 397,970 472,580 Share premium account 11,361,834 3,725,068 11,266,282 Capital redemption reserve 70,708 59,516 65,472 Revaluation reserve (2,073,406) 6,259,311 (1,252,761) Special reserve 17,743,304 18,813,238 18,169,799 Profit and loss account 10,620,562 8,623,301 12,070,340 -------------- -------------- ------------- Equity shareholders' funds 38,191,620 37,878,404 40,791,712 -------------- -------------- ------------- Net asset value per 'O' 77.22p 95.25p 83.56p Share - basic Net asset value per 'O' 77.22p 95.25p 82.39p Share - diluted Net asset value per 'S' 94.21p 94.47p 94.59p Share - basic and diluted Unaudited Reconciliation of Movements in Shareholders' Funds for the six months ended 31 March 2009 Six months ended Six months ended Year ended 31 March 2009 31 March 2008 30 September 2008 (unaudited) (unaudited) (audited) Notes £ £ £ Opening shareholders' 40,791,712 36,778,493 36,778,493 funds Net share capital (bought back)/ subscribed for in 9 (144,725) 3,062,765 10,184,779 the period Loss for the period (107,308) (1,231,666) (5,440,373) Dividends paid in period 5 (1,418,059) (731,188) (731,187) -------------- -------------- ------------- Closing shareholders' 38,191,620 37,878,404 40,791,712 funds Unaudited Cash Flow Statement for the six months ended 31 March 2009 Six months ended Six months ended Year ended 31 March 2009 31 March 2008 30 September 2008 (unaudited) (restated) (audited) £ £ £ Operating activities Investment income received 730,106 927,176 1,435,092 Investment management fees (825,088) (338,136) (782,286) paid Recoverable VAT 130,470 - - Other income 12,377 - - Other cash payments (338,927) (270,770) (564,901) -------------- -------------- ------------- (291,062) 318,270 87,905 Investing activities Acquisitions of (176,422) (1,329,112) (5,735,193) investments Disposals of investments 417,400 4,165,270 7,247,239 -------------- -------------- ------------- Net cash inflow from investing 240,978 2,836,158 1,512,046 activities Dividends Equity dividends paid (1,418,059) (1,462,948) (1,385,722) -------------- -------------- ------------- Cash (outflow)/inflow before (1,468,143) 1,691,480 214,229 financing and liquid resource management Management of liquid resources Increase/(decrease) in 1,588,480 (607,818) (9,754,517) current investments Financing Issue of ordinary shares 96,826 77,226 11,171,285 Purchase of own shares (241,551) (1,112,403) (1,612,169) -------------- -------------- ------------- (144,725) (1,035,177) 9,559,116 -------------- -------------- ------------- (Decrease)/increase in cash for the (24,388) 48,485 18,828 period -------------- -------------- ------------- Reconciliation of loss on ordinary activities before taxation to net cash outflow from operating activities for the six months ended 31 March 2009 Six months ended Six months ended Year ended 31 March 2009 31 March 2008 30 September 2008 £ £ £ Loss on ordinary activities before (1,037,308) (1,231,666) (5,440,373) taxation Net unrealised losses on 1,052,863 2,353,042 7,553,875 investments Net gains on realisations of (20,000) (1,641,036) (2,053,510) investments Decrease/(increase) in 165,615 998,669 (406,071) debtors (Decrease)/increase in (452,232) (160,739) 433,984 creditors -------------- -------------- ------------- Net cash (outflow)/inflow from operating activities (291,062) 318,270 87,905 -------------- -------------- ------------- Notes to the Unaudited Financial Statements 1. Principal accounting policies The following accounting policies have been applied consistently throughout the period. Full details of principal accounting policies will be disclosed in the Annual Report. a) Basis of preparation The unaudited results cover the six months to 31 March 2009 and have been prepared under UK Generally Accepted Accounting Practice (UK GAAP), consistent with the accounting policies set out in the statutory accounts for the year ended 30 September 2008 and, to the extent that it does not conflict with the Companies Act 1985, the 2009 Statement of Recommended Practice, `Financial Statements of Investment Trust Companies'. The Half-yearly Report has not been audited, nor has it been reviewed by the auditors pursuant to the Auditing Practices Board (APB)'s guidance on Review of Interim Financial Information. b) Presentation of the Profit and Loss Account In order to better reflect the activities of a VCT and in accordance with the SORP, supplementary information which analyses the Profit and Loss Account between items of a revenue and capital nature has been presented alongside the Profit and Loss Account. The revenue column of profit attributable to equity shareholders is the measure the Directors believe appropriate in assessing the Company's compliance with certain requirements set out in Section 274 Income Tax Act 2007. c) Investments Investments are recognised on a trade date basis. All investments held by the Company are classified as "fair value through profit and loss" as the Company's business is to invest in financial assets with a view to profiting from their total return in the form of capital growth and income. Purchases and sales of quoted investments are recognised on the trade date where a contract of sale exists whose terms require delivery within a time frame determined by the relevant market. Purchases and sales of unlisted investments are recognised when the contract for acquisition or sale becomes unconditional. Investments are stated at "fair value through profit and loss", in accordance with the International Private Equity and Venture Capital Valuation ("IPEVCV") guidelines. The fair value of quoted investments is the bid price value of those investments at the close of business on 31 March 2009. Unquoted investments are stated at fair value by the Directors in accordance with the following rules, which are consistent with the IPEVCV guidelines: (i) Investments which have been made in the last 12 months are at fair value which, unless another methodology gives a better indication of fair value, will be at cost; (ii) Investments in companies at an early stage of their development are also valued at fair value which, unless another methodology gives a better indication of fair value, will be at cost; (iii) Where investments have been held for more than 12 months or have gone beyond the stage in their development in (i) or (ii) above, the shares may be valued by applying a suitable price-earnings ratio to that company's historic, current or forecast post-tax earnings before interest and amortisation (the ratio used being based on a comparable sector but the resulting value being discounted to reflect points of difference identified by the Investment Manager compared to the sector, as well as to reflect lack of marketability). Where overriding factors apply, alternative methods of valuation will be used. These will include the application of a material arms-length transaction by an independent third party, cost less provision for impairment, discounted cash flow, or a net asset basis. (iv) Where a value is indicated by a material arms-length transaction by a third party in the shares of a company, this value will be used. (v) Unquoted investments will not normally be re-valued upwards for a period of at least twelve months from the date of acquisition. Where a company's underperformance against plan indicates a diminution in the value of the investment, provision against cost is made, as appropriate. Where the value of an investment has become permanently impaired below cost, the loss is treated as a permanent impairment and as a realised loss, even though the investment is still held. The Board assesses the portfolio for such investments, and after agreement with the Investment Managers, will agree the values that represent the extent to which an investment has become permanently impaired. This is based upon an assessment of objective evidence of that investment's future prospects, to determine whether there is potential for the investment to recover in value. (vi) Premium on loan stock investments are accrued at fair value when the Company receives the right to the premium and when considered recoverable. Although the Company holds more than 20% of the equity of certain companies, it is considered that the investments are held as part of an investment portfolio. Accordingly, and as permitted by FRS 9 `Associates and Joint Ventures', their value to the Company lies in their marketable value as part of that portfolio. It is not considered that any of our holdings represents investments in associated companies. 2. Investment Management Expense Six months ended Six months ended Year ended 31 March 2009 31 March 2008 30 September 2008 `O' Share `S' Share `O' Share `S' Share `O' Share `S' Share Fund Fund Fund Fund Fund Fund £ £ £ £ £ £ Fees payable under Investment Adviser's 291,016 108,058 406,840 5,259 667,942 120,163 Agreement Amounts payable 422,733 under Incentive - - 355,000 - - Agreement ----------- ------------ ------------ ----------- ------------ ---------- Total investment management expense 291,016 108,058 761,840 5,259 1,090,675 120,163 The Directors have charged 75% of the fees payable under the investment adviser's agreement, and 100% of the amounts payable under the Incentive Agreement, to the capital reserve. The Directors believe it is appropriate to charge the incentive fee wholly against the capital return, as any fee payable depends on capital performance, as explained below. Under the terms of the Incentive Agreement, each Manager is entitled to a performance fee equal to 20% of the excess of the value of any realisation of an investment made after 30 June 2007, over the value of that investment in a Manager's portfolio at that date, which value is itself uplifted at the rate of 6% per annum. No fee is payable I n any year if the value of that Manager's portfolio at that year-end plus the cumulative value of any realisations made up to that year-end is less than the value of that Manager's portfolio at 30 June 2007. No fee is payable for the period ended 31 March 2009. 3. Taxation There is no tax charge for the period, as the Company has incurred taxable losses in the period. 4. Recoverable VAT On the basis of information supplied by the Company's current and past Investment Managers, and discussions with the Company's professional advisors as a result of the European Court of Justice ruling and subsequent HMRC briefing that management fees be exempt for VAT purposes, the Directors consider it reasonably certain that the Company will in the foreseeable future obtain a repayment of VAT of not less than £334,232. This was part of the amount that was recognised as a separate item in the profit and loss account for the year ended 30 September 2008, allocated 25% to revenue and 75% to capital return and is the same proportion as that in which the irrecoverable VAT was originally charged. It is possible that additional amounts of VAT will be recoverable in due course but the Directors are unable at this stage to quantify the sums involved. £334,232 remains recoverable as at 31 March 2009, which is included in Debtors and prepayments, within Current Assets in the Balance Sheet. 5. Dividends on equity shares paid and payable Six months ended Six months ended Year ended 31 March 2009 31 March 2008 30 September 2008 £ £ £ `O' Share Fund Ordinary Shares - interim paid of nil (31 March 2008: nil; 30 September 2008 : nil) - - - pence per share Ordinary Shares - final paid of 4p (31 March 2008 : 2p; 30 September 2008 : 2p) pence 1,418,059 726,069 731,790 per share Under/(over) provision re 5,119 (603) prior year `S' Share Fund - - - ---------------- ---------------- ---------------- 1,418,059 731,188 731,187 6. Earnings and return per share Six months ended 31 March 2009 Six months ended 31 March 2008 `O' Share `S' Share Total `O' Share `S' Share Total Fund Fund Fund Fund £ £ £ £ £ £ i) Total earnings after taxation: (992,616) (44,692) (1,037,308) (1,224,780) (6,886) (1,231,666) Basic earnings per share (2.81)p (0.38)p (3.37)p (1.54)p ii) Net revenue from ordinary activities after taxation 132,488 44,287 124,647 (2,942) Revenue return per share 0.38 p 0.38 p 0.34 p (0.66)p Net unrealised capital losses - (1,028,110) (24,753) (2,353,042) Net realised capital gains - - 20,000 1,641,036 Income from capital dividends 67,950 - - - Recoverable VAT - - - - Capital expenses (net of taxation) (184,944) (64,226) (637,421) (3,944) ----------- -------- ----------- ------- iii) Total capital return (1,125,104) (88,979) (1,349,427) (3,944) Capital return per share (3.19)p (0.76)p (3.71)p (0.88)p iv) Weighted average number of shares in issue in the period 35,317,847 11,806,467 36,391,058 446,276 Year ended 30 September 2008 `O' Share `S' Share Total Fund Fund £ £ £ Total earnings after i) taxation: (5,436,580) (3,793) (5,440,373) Basic earnings per share (15.06)p (0.04)p Net revenue from ordinary ii) activities after taxation 599,837 117,359 Revenue return per share 1.66 p 1.26 p Net unrealised capital losses (7,504,370) (49,505) Net realised capital gains 2,053,510 - Income from capital dividends - - Recoverable VAT 249,833 - Capital expenses (net of taxation) (835,390) (71,647) --------- -------- Total capital iii) return (6,036,417) (121,152) Capital return per share (16.72)p (1.30)p Weighted average number of shares in issue in the iv) period 36,109,718 9,341,544 7. Summary of movements on investments during the period Company Traded on AiM Unlisted or Preference Qualifying loans Total traded on PLUS shares MARKETS £ £ £ £ £ Valuation at 30 September 3,233,672 10,426,630 70,473 9,408,620 23,139,395 2008 Purchases at - 355,556 1,111 819,755 1,176,422 cost Sales - proceeds - (20,000) - (257,400) (277,400) - realised gains - 20,000 - - 20,000 Unrealised (921,302) 673,294 (17,140) (787,715) (1,052,863) (losses)/gains ----------------- --------------- ----------------- ----------------- --------------- Valuation at 31 March 2009 2,312,370 11,455,480 54,444 9,183,260 23,005,554 ----------------- --------------- ----------------- ----------------- --------------- Book cost at 31 March 2009 6,991,220 6,748,624 174,418 11,718,640 25,632,902 Unrealised (losses)/gains (4,678,850) 4,790,667 (118,084) (2,067,139) (2,073,406) at 31 March 2009 Permanent impairment of valuation of - (83,811) (1,890) (468,241) (553,942) investments ----------------- --------------- ----------------- ----------------- --------------- 2,312,370 11,455,480 54,444 9,183,260 23,005,554 ----------------- --------------- ----------------- ----------------- --------------- Gains/(losses) on investments Realised losses based on - (499,858) (1,890) (1,049,820) (1,551,568) historical cost Less amounts recognised as unrealised losses in - (519,858) (1,890) (1,049,820) (1,571,568) previous years ----------------- --------------- ----------------- ----------------- --------------- Realised gains based on carrying value - 20,000 - - 20,000 at 30 September 2008 Net movement in unrealised depreciation in (921,302) 673,294 (17,140) (787,715) (1,052,863) the period ----------------- --------------- ----------------- ----------------- --------------- (Losses)/gains on investments for the period ended (921,302) 693,294 (17,140) (787,715) (1,032,863) 31 March 2009 ----------------- --------------- ----------------- ----------------- --------------- `O' Share Fund Traded on AiM Unlisted or Preference shares Qualifying loans Total traded on PLUS MARKETS £ £ £ £ £ Valuation at 30 September 3,233,672 10,421,678 70,449 9,364,090 23,089,889 2008 Purchases at - 211,855 662 559,747 772,264 cost Sales - proceeds - (20,000) - (257,400) (277,400) - realised gains - 20,000 - - 20,000 Unrealised (losses)/gains (921,302) 678,246 (17,116) (767,938) (1,028,110) ----------------- --------------- ----------------- ----------------- --------------- Valuation at 31 March 2009 2,312,370 11,311,779 53,995 8,898,499 22,576,643 ----------------- --------------- ----------------- ----------------- --------------- Book cost at 31 March 2009 6,991,220 6,595,020 173,921 11,369,572 25,129,733 Unrealised (losses)/gains at (4,678,850) 4,800,570 (118,036) (2,002,832) (1,999,148) 31 March 2009 Permanent impairment of valuation of investments - (83,811) (1,890) (468,241) (553,942) ----------------- --------------- ----------------- ----------------- --------------- 2,312,370 11,311,779 53,995 8,898,499 22,576,643 ----------------- --------------- ----------------- ----------------- --------------- Gains/(losses) on investments Realised losses based on - (499,858) (1,890) (1,049,820) (1,551,568) historical cost Less amounts recognised as unrealised losses in - (519,858) (1,890) (1,049,820) (1,571,568) previous years ----------------- --------------- ----------------- ----------------- --------------- Realised gains based on carrying value - 20,000 - - 20,000 at 30 September 2008 Net movement in unrealised depreciation in (921,302) 678,246 (17,116) (767,938) (1,028,110) the period ----------------- --------------- ----------------- ----------------- --------------- (Losses)/gains on investments for the period ended (921,302) 698,246 (17,116) (767,938) (1,008,110) 31 March 2009 ----------------- --------------- ----------------- ----------------- --------------- `S' Share Fund Traded on AiM Unlisted or Preference shares Qualifying loans Total traded on PLUS MARKETS £ £ £ £ £ Valuation at 30 September - 4,952 24 44,530 49,506 2008 Purchases at - 143,701 449 260,008 404,158 cost Unrealised - (4,952) (24) (19,777) (24,753) losses ----------------- --------------- ----------------- ----------------- --------------- Valuation at 31 March 2009 - 143,701 449 284,761 428,911 ----------------- --------------- ----------------- ----------------- --------------- Book cost at 31 March 2009 - 153,604 497 349,068 503,169 Unrealised (losses)/gains at - (9,903) (48) (64,307) (74,258) 31 March 2009 ----------------- --------------- ----------------- ----------------- --------------- - 143,701 449 284,761 428,911 ----------------- --------------- ----------------- ----------------- --------------- Gains/(losses) on investments Realised gains/(losses) based on - - - - - historical cost Less amounts recognised as unrealised gains/(losses) in previous - - - - - years ----------------- --------------- ----------------- ----------------- --------------- Realised gains/(losses) based on carrying value - - - - - at 30 September 2008 Net movement in unrealised depreciation in the period - (4,952) (24) (19,777) (24,753) ----------------- --------------- ----------------- ----------------- --------------- (Losses)/gains on investments for the period ended - (4,952) (24) (19,777) (24,753) 31 March 2009 --------------- ----------------- ----------------- --------------- --------------- 8. Current asset investments Monies held pending investment 31 March 31 March 30 September 2009 2008 2008 £ £ £ `O' Share Fund Royal Bank of Scotland Sterling 776,690 3,183,400 1,683,879 Liquidity Fund Royal Bank of Scotland Sterling 92,983 278,250 287,051 Liquidity Fund plus Blackrock Investment Management (UK) Institutional Sterling Fund 3,131,570 3,727,665 3,672,485 `S' Share Fund Royal Bank of Scotland Sterling 2,308,060 - 2,330,657 Liquidity Fund Fidelity Institutional Cash Fund 4,151,931 - 4,091,501 Scottish Widows Investment Partnership Sterling Liquidity Fund 4,286,300 - 4,270,441 --------------- ----------------- ----------------- Monies held pending investment 14,747,534 7,189,315 16,336,014 --------------- ----------------- ----------------- These comprise investments in five Dublin based OEIC money market funds as shown in the table above. £14,654,551 (31 March 2008: £6,911,065; 30 September 2008: £16,048,963) of this sum is subject to same day access, while £92,983 (31 March 2008: £278,250; 30 September 2008: £287,051) is subject to two day access. 9. Capital and reserves for the six months ended 31 March 2009 Company Called up Share premium Capital Revaluation Special Profit and Total share account redemption reserve reserve loss account capital reserve £ £ £ £ £ £ £ At 1 October 472,580 11,266,282 65,472 (1,252,761) 18,169,799 12,070,340 40,791,712 2008 Shares bought back (5,236) - 5,236 - (241,551) - (241,551) Dividends re-invested into new 1,274 95,552 - - - - 96,826 shares Dividends paid - - - - - (1,418,059) (1,418,059) Loss transferred between reserves - - - - (184,944) 184,944 - Other expenses net of taxation - - - - - (249,170) (249,170) Net unrealised losses on - - - (1,052,863) - - (1,052,863) investments Gains on disposal of investments (net of transaction costs) - - - - - 20,000 20,000 Realisation of previously unrealised - - - 232,218 - (232,218) - appreciation Capital dividends received - - - - - 67,950 67,950 Profit for the period - - - - - 176,775 176,775 --------- ------------- ------------- -------------- ------------- ------------ ------------- At 31 March 2009 468,618 11,361,834 70,708 (2,073,406) 17,743,304 10,620,562 38,191,620 --------- ----------- ------------- -------------- ------------- ------------ ------------- 9a. `O' Share Fund Called up Share Capital Revaluation Special Profit and Total share premium redemption reserve reserve loss capital account reserve account £ £ £ £ £ £ At 1 October 354,515 213,062 65,472 (1,203,256) 18,169,799 12,024,628 29,624,220 2008 Shares (5,236) - 5,236 - (241,551) - (241,551) bought back Dividends 1,274 95,552 - - - - 96,826 re-invested into new shares Dividends - - - - - (1,418,059) (1,418,059) paid Loss - - - - (184,944) 184,944 - transferred between reserves Other - - - - - (184,944) (184,944) expenses net of taxation Net - - - (1,028,110) - - (1,028,110) unrealised losses on investments Gains on - - - - - 20,000 20,000 disposal of investments (net of transaction costs) Realisation - - - 232,218 - (232,218) - of previous unrealised appreciation Capital - - - - - 67,950 67,950 dividends received Profit for - - - - - 132,488 132,488 the period ------- ------- ------ --------- ---------- ---------- ---------- At 31 March 350,553 308,614 70,708 (1,999,148) 17,743,304 10,594,789 27,068,820 2009 9b. `S' Share Fund Called up Share Capital Revaluation Special Profit and Total share premium redemption reserve reserve loss capital account reserve account £ £ £ £ £ £ At 1 October 2008 118,065 11,053,220 - (49,505) - 45,712 11,167,492 Other expenses net of taxation - - - - - (64,226) (64,226) Net unrealised losses on investments - - - (24,753) - - (24,753) Profit for the period - - - - - 44,287 44,287 ------- ---------- ---- -------- ---- ------ --------- At 31 March 2009 118,065 11,053,220 - (74,258) - 25,773 11,122,800 10. Net asset value per share 31 March 2009 31 March 2008 30 September 2008 `O' Share `S' Share `O' Share `S' Share `O' Share `S' Share Fund Fund Fund Fund Fund Fund £ £ £ £ £ £ Net assets 27,068,820 11,122,800 34,335,785 3,542,618 29,624,220 11,167,492 Number of shares in 35,055,303 11,806,467 36,047,146 3,749,820 35,451,438 11,806,467 issue Net asset value per 77.22p 94.21p 95.25p 94.47p 83.56p 94.59p share Diluted net asset 77.22p 94.21p 95.25p 94.47p 82.39p 94.59p value per share Diluted NAV per share assumes that the Investment Manager's incentive fee is satisfied by the issue of additional shares. No incentive fee is expected to be triggered for the "O" Share Fund nor the "S" Share Fund for the foreseeable future. 11. Related party transactions Up until 28 September 2007, Christopher Moore was chairman of, but remains a shareholder in, Oxonica plc ("Oxonica"), in which the Company has invested a total of £1,113,991. He owns 0.21% of the equity of Oxonica. Additionally, it has been agreed that Christopher Moore will cede 128,972 options into ordinary shares of Oxonica out of his options pool. These options are subject to performance conditions and lock in restrictions. The exercise price of the options is 45p. The bid market price of Oxonica ordinary shares as at 31 March 2009 was 10p. 12. The financial information for the six months ended 31 March 2009 and the six months ended 31 March 2008 has not been audited. The information for the year ended 30 September 2008 does not comprise full financial statements within the meaning of Section 240 of the Companies Act 1985. The financial statements for the year ended 30 September 2008 have been filed with the Registrar. 13. Copies of the Half-Yearly Report for the six months ended 31 March 2009 will be sent to all shareholders shortly. Further copies are available free of charge from the Company's registered office, One Vine Street, London, W1J OAH.

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