Final Results
Close Brothers Dev VCT PLC
07 April 2008
Close Brothers Development VCT PLC
Annual Results announcement 7 April 2008
Preliminary announcement of the statutory financial results for the twelve
months to 31 December 2007. Copies of the full Report and Financial Statements
can be found on www.closeventures.co.uk
Close Brothers Development VCT PLC (the 'Company'), which invests in a balanced
portfolio of property based investments that provide a strong income stream,
combined with investment in a smaller number of higher risk companies with
greater growth prospects, across a variety of sectors, today announces the
annual results for the year ended 31 December 2007. This announcement was
approved for release by the Board of Directors on 7 April 2008.
FINANCIAL HIGHLIGHTS
Ordinary Shares C Shares
Year ended Year ended
31 December 2007 31 December 2007
Dividends paid per share 5.00 5.36
Net asset value per share 100.94 108.15
Shareholder value per share since Pence per share Pence per share(ii)
launch: (ii)
Dividends paid during the period ended 31 December 1999 (i) 1.00
Dividends paid during the year to 31 2.90
December 2000
Dividends paid during the year to 31 3.95
December 2001
Dividends paid during the year to 31 4.20
December 2002 -
Dividends paid during the year to 31 December 2003 (iii) 4.50 0.75
Dividends paid during the year to 31 4.00 2.00
December 2004
Dividends paid during the year to 31 5.20 5.90
December 2005
Dividends paid during the year to 31 3.00 4.50
December 2006
Dividends paid during the year to 31 December 2007 (iv) 5.00 5.36
33.75 18.51
Net asset value per share as at 31 100.94 108.15
December 2007
Total cumulative shareholder return at 31 December 2007 134.69 126.66
In addition to the dividends paid above, the Board has declared a first dividend
for the new financial year of 2.5 pence per share comprising 1.25 pence from
revenue profits and 1.25 pence from realised capital profits. The dividend will
be payable on 16 May 2008 to those shareholders on the register on 18 April
2008.
Notes
(i) assuming subscription for Ordinary Shares by the First Closing on 26
January 1999.
(ii) excluding tax benefits received upon subscription.
(iii) those subscribing for C Shares after 30 June 2003 were not entitled to
the interim dividend.
(iv) The C shares were converted into Ordinary shares on 31 March 2007, with a
conversion factor of 1.0715 Ordinary shares for each C share.The net asset
value per share and all dividends paid subsequent to the conversion of the C
shares to Ordinary shares are multiplied by the conversion factor of 1.0715 in
respect of the C shares return, in order to give an accurate picture of the
shareholder value since launch relating to the C shares.
CHAIRMAN'S STATEMENT
Introduction
I am pleased to report that the year to 31 December 2007 has been a successful
one for your Company. The strong investment return over the period was
generated by some excellent profits realised from the sale of mature
investments, which underpinned the policy of paying out an annual dividend of 5
pence per share from both revenue and realised capital profits. We would hope
that this will rise as further profitable disposals are made in future.
Investment progress and performance
The total return per Share was 10.8 pence for the year; part of this was due to
the continued growth in income from the investment portfolio, with the balance
from the successful realisation of investments. These comprised a profit of £3
million for Careforce, which was taken over by the Mears Group in April of this
year, (with the consideration being mainly in the form of cash, though we
received some in the form of shares in Mears) and £814,000 from the sale of Bold
Pub Company. In both cases, the VCT also received annual income from the
investments of around 10 per cent. on cost.
Meanwhile, £5.4 million was invested in 23 existing and new investee companies.
These included £1,000,000 into Kensington Health Clubs which owns and operates a
new health and fitness club on a 999 year lease at Olympia, West Kensington, and
£700,000 into Chichester Holdings, a specialist distributor of food and drink to
the travel industry.
PLEASE INSERT PIE CHART HERE
Source: Close Ventures Limited
The investments held are diversified to ensure a spread of risk across the
portfolio. The portfolio split (by cost) is approximately 60% loan stock and
40% equity. At 31 December 2007 the portfolio was 82% invested for HM Revenue &
Customs purposes, in 37 qualifying investments.
Risks and uncertainties
The key risk facing the Company in the months ahead is the UK economy which,
while currently still growing, could be affected by the current unease in the
wholesale financial and housing markets. While this could give rise to
additional investment opportunities for a cash rich fund like ourselves, a
downturn could affect existing investee companies and make it harder for the
Manager to assess the prospects of new investment opportunities, as well as
potentially affecting asset values. The Company's policy of limiting external
borrowing and of having a first legal charge wherever possible, mitigates some
of these investment risks. Other risks and uncertainties are detailed in the
Directors' report within the Annual Report and financial Statements.
Proposed change to the Company's Articles of Association
I draw shareholders attention to the proposed resolution to change the Articles
of Association. The new provisions of the Companies Act 2006 include the
requirement for Directors to avoid actual or potential conflicts of interest
with effect from 1 October 2008. The Directors are proposing a resolution at
the forthcoming Annual General Meeting to allow Directors to approve actual or
potential conflict situations, should it be in the Company's best interests to
do so, and to allow conflicts of interest to be dealt with in a similar way to
the current position.
Directorate
At the year end Roderick Davidson, Chairman of the Board since the Company's
flotation, resigned as Chairman and Director as he has reached the age of 70.
On behalf of the Board and Shareholders, I would like to thank Roderick for his
considerable efforts and wise guidance throughout his tenure. I became Chairman
on 31 December 2007 following Roderick's retirement. We would also like to
welcome Andrew Phillipps who became a Director of the Company on 30 October
2007.
Results, dividends and prospects
Overall, despite the general economic risks referred to above, your Board
remains positive on the outlook of the Company and its investment portfolio. We
believe that the income generation potential of the portfolio remains strong and
we have some particularly interesting investments across a broad range of
sectors, which we believe could prove to be strong generators of shareholder
value in the future.
As at 31 December 2007, the net asset value per share was 100.9 pence (2006:
94.6 pence). The C Shares were converted into Ordinary Shares during the year
on the basis of 1.0715 new Ordinary Shares for each C Share; taking this
conversion factor into account, the adjusted net asset value for a former holder
of C Shares at the year end was 108.2 pence compared to 101.4 pence in 2006.
The revenue return after tax was £1.49 million compared with the combined
Ordinary Share and C Share revenue return for 2006 of £1.05 million.
The Board has declared a first dividend for the new financial year of 2.5 pence
per share comprising 1.25 pence from revenue profits and 1.25 pence from
realised capital profits. The dividend will be payable on 16 May 2008 to those
shareholders on the register on 18 April 2008.
Change of Auditors
During the year, the Board, advised by the Audit Committee, decided to put the
audit of the Company out to tender. Following a formal selection process which
considered expertise within the VCT market, depth of experience within the audit
firm and value for money, the Board have decided to propose a resolution for the
appointment of PKF (UK) LLP at the forthcoming Annual General Meeting.
In view of the proposed change in auditors, Deloitte & Touche LLP who are the
auditors for the financial year ended 31 December 2007, have informed the
Company of their intention not to seek reappointment at the forthcoming Annual
General Meeting.
David Pinckney
Director
7 April 2008
Statement of Directors' responsibilities
The Directors are responsible for preparing the Annual Report 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 (United Kingdom Accounting 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 income statement 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;
• state whether applicable UK Accounting Standards have been followed; and
• prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.
The Directors are responsible for keeping proper accounting records that
disclose with reasonable accuracy at any time the financial position of the
Company and enable them to ensure that the financial statements comply with the
Companies Act 1985. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate
and financial information included on the Company's website. Legislation in the
United Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
INCOME STATEMENT
Year Year ended
ended
31 December 2007 31/12/2006*
Revenue Capital Total Revenue Capital Total
Note £'000 £'000 £'000 £'000 £'000 £'000
Gains/(losses) on
investments 3 - 2,304 2,304 - (1,676) (1,676)
Investment income 4 2,206 - 2,206 1,893 - 1,893
Investment
management fee (214) (641) (855) (210) (628) (838)
Other expenses (209) - (209) (191) - (191)
Return on
ordinary activities
before tax 1,783 1,663 3,446 1,492 (2,304) (812)
Tax (charge)/credit on
ordinary activities 5 (292) 210 (82) (439) 187 (252)
Return
attributable to
equity shareholders 1,491 1,873 3,364 1,053 (2,117) (1,064)
Basic and diluted return
per share (excluding 7 4.8 6.0 10.8 3.2 (6.5) (3.3)
treasury shares)(pence)
* The comparative figures for the year ended 31 December 2006 comprise the
aggregate of the Ordinary shares and C shares amounts for that year. The C
shares were converted into Ordinary shares on 31 March 2007, at a conversion
ratio of 1.0715 Ordinary shares for each C share.
The total column of this Income Statement represents the profit and loss account
of the Company. The supplementary revenue and capital return columns have been
prepared in accordance with the Association of Investment Trust Companies'
Statement of Recommended Practice.
All revenue and capital items in the above statement derive from continuing
operations.
There were no recognised gains or losses other than the results for the year as
disclosed above. Accordingly a statement of total recognised gains and losses
is not required.
BALANCE SHEET
31 December 31 December
2007 2006*
Notes £'000 £'000
Fixed asset investments
Qualifying investments 23,278 21,875
Non-qualifying investments 3,948 3,892
Total fixed asset investments 27,226 25,767
Current assets
Debtors 133 409
Cash at bank 3,991 4,236
4,124 4,645
Creditors: amounts falling due within one year (463) (118)
Net current assets 3,661 4,527
Total assets less current liabilities 30,887 30,294
Capital and reserves
Called up share capital 8 16,219 15,581
Share premium 3,208 3,208
Special reserve 9,223 9,889
Capital redemption reserve 1,183 1,173
Realised capital reserve 1,474 (1,144)
Unrealised capital reserve 129 1,652
Own treasury shares reserve (1,610) (388)
Revenue reserve 1,061 323
Total equity shareholders' funds 30,887 30,294
Net asset value per share (excluding treasury 100.9 94.6
shares)(pence)
* The comparative figures for the year ended 31 December 2006 comprise the
aggregate of the Ordinary shares and C shares amounts for that year. The C
shares were converted into Ordinary shares on 31 March 2007, at a conversion
ratio of 1.0715 Ordinary shares for each C share.
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
Own
Called Capital Realised Unrealised Treasury
up share Share Special redemption capital capital shares Revenue Total
capital premium reserve reserve reserve reserve reserve reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
As at 1 January 2006
15,829 3,208 10,341 925 (549) 3,328 - 339 33,422
Realised gains on investments in
the year - - - - 1 - - - 1
Capitalised investment
management and performance fees - - - - (627) - - - (627)
Tax relief on costs charged to
capital - - - - 187 - - - 187
Purchase of own shares for
Treasury - - - - - - (388) - (388)
Cancellation of own shares (248) - (452) 248 - - - - (452)
Movement in unrealised
appreciation - - - - - (1,676) - - (1,676)
Revenue return attributable to
shareholders - - - - - - - 1,053 1,053
Dividends paid - - - - (156) - - (1,069) (1,225)
As at 31 December 2006* 15,581 3,208 9,889 1,173 (1,144) 1,652 (388) 323 30,294
Conversion of C shares to
Ordinary shares 648 - (648) - - - - - -
Net realised gains on
investments in the year - - - - 3,827 - - - 3,827
Capitalised investment
management and performance fees - - - - (641) - - - (641)
Tax relief on costs charged to
capital - - - - 210 - - - 210
Cancellation of own shares (10) - (18) 10 - - - - (18)
Purchase of own shares for
Treasury - - - - - - (1,222) - (1,222)
Movement in unrealised
appreciation - - - - - (1,523) - - (1,523)
Revenue return attributable to
shareholders - - - - - - - 1,491 1,491
Dividends paid
- - - - (777) - - (754) (1,531)
As at 31 December 2007 16,219 3,208 9,223 1,183 1,474 129 (1,610) 1,061 30,887
* The comparative figures for the year ended 31 December 2006 comprise the
aggregate of the Ordinary shares and C shares amounts for that year. The C
shares were converted into Ordinary shares on 31 March 2007, at a conversion
ratio of 1.0715 Ordinary shares for each C share.
CASH FLOW STATEMENT
Year ended Year ended
31 December 2007 31 December 2006*
Notes £'000 £'000
Operating activities
Investment income received 1,266 1,083
Deposit income received 377 528
Other income received 72 35
Investment management fees paid (610) (1,066)
Other cash receipts/(payments) 153 (555)
Net cash inflow from operating activities 9 1,258 25
Taxation - (412)
Capital expenditure and financial investment
Purchase of qualifying investments (3,833) (4,818)
Purchase of non-qualifying investments - (377)
Disposals of qualifying investments 4,975 1
Disposals of non-qualifying investments 136 4,000
Net cash inflow/(outflow) from investing
activities 1,278 (1,194)
Equity dividends paid
Dividends paid (1,540) (1,225)
Net cash inflow/(outflow) before financing 996 (2,806)
Financing
Cancellation of shares (18) (452)
Own treasury shares (1,223) (388)
Net cash outflow from financing (1,241) (840)
Decrease in cash in the year (245) (3,646)
* The comparative figures for the year ended 31 December 2006 comprise the
aggregate of the Ordinary shares and C shares amounts for that year. The C
shares were converted into Ordinary shares on 31 March 2007, at a conversion
ratio of 1.0715 Ordinary shares for each C share.
Notes to the financial statements
1. Accounting convention
The financial statements have been prepared in accordance with applicable
United Kingdom law and 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.
The financial statements are prepared under the historical cost convention,
modified by the revaluation of certain investments.
Throughout the financial statements (except where noted), the comparative
figures for the year ended 31 December 2006 comprise the aggregate of the
Ordinary shares and C shares amounts for that year. The C shares were converted
into Ordinary shares on 31 March 2007, at a conversion ratio of 1.0715 Ordinary
shares for each C share.
True and fair override
The Company is no longer an investment company within the meaning of s266
of the Companies Act 1985. However, it conducts its affairs as a venture
capital trust for taxation purposes under Part 6 Income Taxes Act 2007.
The absence of s266 status does not preclude the Company from presenting its
accounts in accordance with the AITC's SORP and furthermore the Directors
consider it appropriate to continue to present the accounts in accordance with
the SORP. Under the SORP, the financial performance of the Company is
presented in an income statement in which the total column is the profit and
loss account of the Company.
In the opinion of the Directors the presentation adopted enables the Company to
report in a manner consistent with the sector within which it operates. The
Directors therefore consider that these departures from the specific provisions
of Schedule 4 of the Companies Act 1985 relating to the form and content of
accounts for companies other than investment companies and these departures from
accounting standards are necessary to give a true and fair view. The departures
have no effect on the total return or balance sheet.
2. Accounting policies
Investments
Quoted and unquoted equity investments
In accordance with FRS 26 'Financial Instruments Measurement', quoted and
unquoted equity investments are designated as fair value through profit or loss
('FVTPL'). Investments listed on recognised exchanges are valued at the closing
bid prices at the end of the accounting period. Unquoted investments' fair
value is determined by the Directors in accordance with the International
Private Equity and Venture Capital Valuation Guidelines.
Fair value movements on equity investments and gains and losses arising on the
disposal of investments are reflected in the capital column of the Income
Statement in accordance with the AITC SORP and realised gains or losses on the
sale of investments will be reflected in the realised capital reserve, and
unrealised gains or losses arising from the revaluation of investments will be
reflected in the unrealised capital reserve..
Unquoted loan stock
Unquoted loan stock is classified as loans and receivables in accordance with
FRS 26 and carried at amortised cost using the Effective Interest Rate method ('
EIR') less impairment. Movements in the amortised cost relating to interest
income are reflected in the revenue column of the Income Statement, and hence
are reflected in the Revenue reserve, and movements in respect of capital
provisions are reflected in the capital column of the Income Statement and are
reflected in the realised capital reserve following sale, or in the unrealised
Capital reserve on revaluation. For unquoted loan stock, the amount of the
impairment is the difference between the asset's carrying value and the present
value of estimated future cash flows, discounted at the effective interest rate.
Floating rate notes
In accordance with FRS 26 'Financial Instruments Measurement', floating rate
notes are designated as fair value through profit or loss ('FVTPL'). Floating
rate notes are valued at market bid price at the balance sheet date.
Warrants, convertibles and unquoted equity derived instruments
Warrants, convertible and unquoted equity derived instruments are only valued if
their exercise, conversion terms or contractual terms would allow them to be
exercised or converted as at the balance sheet date, and if there is additional
value to the Company in exercising or converting as at the balance sheet date.
Otherwise these instruments are held at nil value. The valuation techniques used
are those used for the underlying equity investment.
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.
Dividend income is not recognised as part of the fair value movement of an
investment, but is recognised separately as investment income through the
revenue reserve when a share becomes ex-dividend.
Loan stock accrued interest is recognised in the Balance Sheet as part of the
carrying value of the loans and receivables at the end of each reporting period.
It is not the Company's policy to exercise control or significant influence over
investee companies. Therefore in accordance with the exemptions under FRS 9 '
Associates and joint ventures', those undertakings in which the Company holds
more than 20% of the equity are not regarded as associated undertakings.
Investment income
Quoted and Unquoted equity income
Dividend income is included in revenue when received.
Unquoted Loan stock income
The fixed returns on non-equity shares and debt securities are recognised on a
time apportionment basis using an effective interest rate over the life of the
financial instrument.
Bank interest income
Interest income is recognised on an accrual basis using the rate of interest
agreed with the bank.
Floating Rate Note Income
Floating rate note income is recognised on an accrual basis using the interest
rate applicable to the floating rate note at that time.
Management fees and expenses
All expenses have been accounted for on an accruals basis. Expenses are
charged through the revenue account except the following which are charged
through the realised capital reserve:
• 75 per cent. of management fees (the balance of the management fee is
charged to the Revenue account) which represents the proportion of the
investment management fee attributable to the enhancement of the value of the
investments of the Company; and
• expenses which are incidental to the purchase or disposal of an investment.
Performance incentive fee
In the event that a performance incentive fee crystallises, the fee will be
allocated between revenue and realised capital reserves, based upon the
proportion to which the calculation of the fee is attributable to revenue and
capital returns.
Taxation
Taxation is applied on a current basis in accordance with Financial Reporting
Standard ('FRS') 16. Taxation associated with capitalised management fees is
applied in accordance with the SORP. In accordance with FRS 19, 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 the taxation of VCTs 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.
Dividends
In accordance with FRS 21 'Events after the balance sheet date', dividends
declared by the Company are accounted for in the period in which the dividend
has been paid or approved by shareholders in an Annual General Meeting.
Reserves
Realised capital reserve
The following are accounted for in this reserve:
(i) gains and losses compared to cost on the realisation of investments;
(ii) capitalised management and performance fees together with the related
taxation effect, charged in accordance with the above policies; and
(iii) dividends paid to equity holders.
Unrealised capital reserve
Increases and decreases in the valuation of investments against cost held at the
year end are accounted for in this reserve.
Special reserve
This reserve is distributable and is primarily used for the cancellation of the
Company's share capital.
Capital redemption reserve
This reserve accounts for amounts by which the issued share capital is
diminished through the repurchase of the Company's own shares.
Own Treasury shares reserve
This reserve accounts for amounts by which the distributable reserves of the
Company are diminished through the purchase of the Company's own shares for
Treasury.
C Share conversion
In accordance with the terms of the circular to shareholders issued in September
2002 and the Articles of Association, on 31 March 2007, the C shares were
converted to Ordinary shares on the basis of the net assets attributable to the
Ordinary shares and the C shares, as disclosed in the audited accounts for the
year to 31 December 2006 and in accordance with the calculation as described and
approved by shareholders' resolution number 2(4) at the Extraordinary General
Meeting on 21 October 2002. C shareholders received 1.0715 Ordinary shares for
each C share. The new share certificates were dispatched on 20 April 2007.
3. Gains/(losses) on investments Year ended Year ended
31 December 2007 31 December 2006
£'000 £'000
Unrealised losses on investments held
at fair value through profit and loss
account (1,292) (1,596)
Unrealised impairments on investments
held at amortised cost (231) (81)
Unrealised losses sub total (1,523) (1,677)
Realised gains on investments held at
fair value through profit and loss
account 3,827 1
Impairments on investments held at
amortised cost - -
Realised gains sub total 3,827 1
Total 2,304 (1,676)
4. Investment income Year ended Year ended
31 December 2007 31 December 2006
£'000 £'000
Income recognised on investments held
at fair value through profit and loss
Bank deposit interest 199 288
Floating rate note interest 177 194
UK dividend income 76 34
Management fees received from equity 20 16
investments
472 532
Income recognised on investments held
at amortised cost
Return on loan stock investments 1,734 1,361
2,206 1,893
Interest income earned on impaired investments at 31 December 2007 amounted to
£46,000 (2006: £25,000). These investments are all held at amortised cost.
5. Tax charge/(credit) on ordinary activities
Year ended Year ended
31 December 2007 31 December 2006
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
UK Corporation tax charge 292 (210) 82 439 (187) 252
The tax charge for the year is based on the UK standard rate of corporation tax
at 30%. The actual tax charge for the current and previous year is below the
standard rate for the reasons set out in the following reconciliation:
Year ended Year ended
31 December 2007 31 December 2006
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Return before taxation 1,783 1,663 3,445 1,492 (2,304) (812)
Tax on profit at the standard
rate 535 499 1,034 448 (691) (243)
Factors affecting the charge
Non-taxable (gains)/losses (25) (697) (722) (9) 504 495
Consortium relief (218) - (218) - - -
Marginal relief - (12) (12) - - -
292 (210) 82 439 (187) 252
Notes
(i) Venture Capital Trusts are not subject to corporation tax on capital gains
(ii) Tax relief on expenses charged to capital has been determined by allocating
tax relief to all expenses proportionately by reference to the applicable
corporation tax rate of 30% and allocating relief in accordance with the SORP.
(iii) No deferred tax asset or liability has arisen in the year.
6. Amounts recognised as distributions to equity shareholders in the period
Year ended Year ended
31 December 2007 31 December 2006
£'000 £'000
First Interim 2006 revenue dividend paid of 1.00p per Ordinary
share and 1.50p per C share - 411
Second Interim 2006 revenue dividend paid of 2.0p per Ordinary
share and 2.15p per C share - 658
Second Interim 2006 capital dividend paid of 0.85p per C share - 156
First Interim 2007 revenue dividend paid of 1.50 p per Ordinary share 478 -
Second Interim 2007 revenue dividend paid of 1.0p per Ordinary share 276 -
Second Interim 2007 capital dividend paid of 2.5p per Ordinary share 777 -
Total dividends 1,531 1,225
7. Basic and diluted return per share
Year ended Year ended
31 December 2007 31 December 2006
Revenue Capital Total Revenue Capital Total
pence pence pence pence pence pence
Ordinary Shares 4.8 6.0 10.8 3.2 (6.5) (3.3)
Revenue return per share is based on the net revenue return attributable to
equity holders for the financial year of £1,491,000 in respect of the weighted
average number of shares in issue during the year, being 31,229,055 shares
(excluding Treasury shares).
Capital return per share is based on net capital profit attributable to equity
holders for the financial year of £1,873,000 and based on the same weighted
average number of shares as for revenue return shown above.
Also disclosed under note 8, the C shares were converted into Ordinary shares on
31 March 2007. In accordance with the FRS 22 'Earnings per share' the return per
share calculation for the year ended 31 December 2006 has been calculated as if
the conversion had taken place during the year.
The revenue return per share for the year ended 31 December 2006 is calculated
by aggregating the Ordinary share revenue return of £396,000 and the C share
revenue return of £657,000 giving a total revenue return of £1,053,000.
The capital return per share for the year ended 31 December 2006 is calculated
by aggregating the Ordinary share capital loss of £ 1,088,000 and the C share
capital loss of £ 1,029,000, giving a total capital loss of £2,117,000.
The weighted average number of Ordinary shares for the year ended 31 December
2006 is calculated by converting the weighted average number of C shares for the
year ended 31 December 2006 being (18,136,143) at the conversion ratio (1.0715),
into Ordinary shares (19,432,877). This total is added to the weighted average
number of Ordinary shares for the year ended 31 December 2006 (13,075,011) to
give a total converted weighted average number of Ordinary shares of 32,507,888.
All calculations exclude Treasury shares.
There are no convertible instruments, derivatives or contingent share agreements
relating to the Company's share capital in issue for Close Brothers Development
VCT PLC and hence no dilution affecting the return per share. The basic return
per share is therefore the same as the diluted return per share.
Return per share calculations treat Treasury shares as if they had been
cancelled.
8. Share Capital 31 December 31 December
2007 2006
£'000 £'000
Authorised:
50,000,000 Ordinary Shares of 50p each (2006: 25,000,000) 25,000 12,500
(2006: 25,000,000 C Ordinary Shares of 12,500
50p each) -
25,000 25,000
Allotted, called-up and fully-paid (including treasury
shares):
32,438,309 Ordinary Shares of 50p each 16219
-
(2006: 13,042,663 Ordinary Shares of 50p 6,521
each -
and 18,120,057 C Ordinary Shares of 50p 9,060
each) -
16,219 15,581
Conversion of C shares and Ordinary shares
In accordance with the terms of the circular to shareholders issued in September
2002 and the Articles of Association, on 31 March 2007, the C shares were
converted to Ordinary shares on the basis of the net assets attributable to the
Ordinary shares and the C shares as disclosed in the audited accounts for the
year to 31 December 2006 and in accordance with the calculation as described and
approved by shareholders' resolution number 2(4) at the Extraordinary General
Meeting on 21 October 2002. C shareholders received 1.0715 Ordinary shares for
each C share. This conversion was achieved in two stages; firstly 1,295,584 '
bonus' C shares were issued in order to provide the correct number of shares
determined by the conversion ratio, and then all C shares were converted into
Ordinary shares on a 1:1 basis. The new Ordinary share certificates in respect
of the C share conversion were dispatched on 20 April 2007.
In order to deal with the fractional shares arising from the rounding of the
conversion, 331 shares were issued to Close Ventures Limited. These shares are
to be sold at a later date for the benefit of the Company.
The cost of issuing bonus shares was funded through the special reserve.
During the year to 31 December 2007 the Company purchased 20,000 (2006: 313,118)
of its own shares for cancellation at a cost of £17,654 (2006: £281,000)
representing 0.6 per cent. of the share capital as at 31 December 2007. The
Company also purchased 1,395,286 shares to be held in Treasury at a cost of
£1,223,070 (2006: £ 388,000) representing 4.4 per cent. of the share capital as
at 31 December 2007. The shares purchased for cancellation were funded from the
special reserve and the shares purchased for Treasury were funded from the Own
Treasury shares reserve.
Total treasury shares held as at 31 December 2007 are 1,838,323 shares
representing 5.7 per cent. of the shares in issue.
9. Reconciliation of net return on ordinary activities before taxation to
net cash inflow from operating activities
Year ended Year ended
31 December 2007 31 December 2006
Shares Shares
£'000 £'000
Return on ordinary activities before taxation 1,783 1,492
Investment management fee charged to capital (604) (628)
Performance incentive fee charged to capital (37)
-
Movement in loan stock carrying value (505) (278)
Decrease/(increase) in debtors 276 (308)
Increase/(decrease) in creditors 345 (253)
Net cash inflow from operating activities 1,258 25
10. Post balance sheet events
Since 31 December 2007 the Company has completed the following investments
• Investment of £140,000 in Opta Limited
• Investment of £33,289 in Consolidated Communications Limited
11. Related party transactions
The Manager, Close Ventures Limited, is considered to be a related party, by
virtue of the fact that it is party to a management contract from the Company.
During the year, services of a total value of £855,000 (2006: £838,000) were
purchased by the Company from Close Ventures Limited. At the financial year
end, the amount due to Close Ventures Limited disclosed as accruals and deferred
income was £278,000 (2006£16,000).
Buy-backs of 1,335,286 Treasury shares during the year were purchased at an
average price of 88.8 pence per share through Winterflood Securities Limited, a
subsidiary of Close Brothers Group plc.
Close Ventures Limited hold 331 fractional entitlement shares of the Company as
a result of the conversion of C shares to Ordinary shares in March 2007. These
shares will be sold for the benefit of the Company at a future date.
Close Ventures Limited also holds 14,000 Ordinary shares as a result of the
failure of an original subscriber to pay cleared funds on initial subscription.
12. Financial Information
The financial information set out in this announcement does not constitute the
Company's statutory accounts for the years ended 31 December 2007 and 31
December 2006, but is derived from those statutory accounts. Statutory accounts
for the year ended 31 December 2006 have been delivered to the Registrar of
Companies and those for the year ended 31 December 2007 will be delivered
following the Company's Annual General Meeting. The auditors reported on those
accounts; their reports were unqualified and did not contain a statement under
Section 237(2) or (3) of the Companies Act 1985.
Whilst the financial information included in this preliminary announcement has
been computed in accordance with United Kingdom Generally Accepted Accounting
Practice (UK GAAP), this announcement does not itself contain sufficient
information to comply with UK GAAP. The Company expect to publish full financial
statements that comply with UK GAAP.
13. Publication
The full Annual Report and Financial Statements is being sent to shareholders
and copies will be made available electronically at www.closeventures.co.uk. The
full Annual Report and Financial Statements will also be made available to the
public at the registered office of the Company, Companies House and via the FSA
viewing facility.
For further information please contact:
Patrick Reeve
Close Ventures Limited - tel: 020 7422 7830
This information is provided by RNS
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