Final Results

Close Technology & General VCT PLC 18 April 2008 The 'Final Results' announcement released today at 16:18 under RNS No 6844S is being re-released to include the PDF links relating to the share portfolio's in the Chairman's statement. All material details remain unchanged. The full text is shown below. CLOSE TECHNOLOGY & GENERAL VCT PLC ANNUAL RESULTS 18 April 2008 Preliminary announcement of the annual 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 Technology & General VCT PLC ('the Company') is a Venture Capital Trust which raised £14.3 million in December 2000 and 2002, and raised a further £35.0 million during 2006 through the launch of a C Share issue. The Company offers investors the opportunity to participate in a balanced portfolio of technology and non-technology businesses. The Company's investment portfolio is intended to be split approximately as follows: • 40% in unquoted UK technology-related companies; and • 60% in unquoted UK non-technology companies. This announcement was approved for release by the Board of Directors on 18 April 2008. Financial Highlights Year ended Period ended 31 December 2007 31 December 2006 Ordinary shares Revenue return (pence per share) 4.4 3.2 Capital return (pence per share) 3.2 (1.8) Dividends paid (pence per share) 8.0 8.0 Net asset value (pence per share) 114.1 114.4 Net assets £15,193,000 £15,485,000 C shares Revenue return (pence per share) 3.1 2.3 Capital return (pence per share) (2.9) (1.1) Dividends paid (pence per share) 2.5 0.5 Net asset value (pence per share) 92.7 94.9 Net assets £32,875,000 £33,679,000 In addition to the dividends summarised above, the Directors have declared a first dividend for the new financial year of 4.0 pence per Ordinary share (2.0 pence to be paid out of revenue profits and 2.0 pence out of capital profits) and 1.5 pence per C share (out of revenue profits) to be paid on 30 May 2008 to shareholders on the register at 2 May 2008. Shareholder value per share since launch Ordinary Shares Pence per share Total dividends paid during the period to 31 December 2006 29.0 Total dividends paid during the year to 31 December 2007 8.0 Total dividends 37.0 Net asset value at 31 December 2007 114.1 Total cumulative return at 31 December 2007 151.1 C Shares Pence per share Total dividends paid during the period to 31 December 2006 0.5 Total dividends paid during the year to 31 December 2007 2.5 Total dividends 3.0 Net asset value at 31 December 2007 92.7 Total cumulative return at 31 December 2007 95.7 Chairman's statement Introduction I am pleased to report that the year to 31 December 2007 continues the positive trend experienced by your Company over recent years. The strong investment return from the Ordinary Share portfolio over the period was generated by some excellent profits realised from the sale of mature investments. These further underpinned the continuing policy of paying out a dividend of 8.0 pence per Ordinary Share from both revenue and realised capital profits. The C Share portfolio, meanwhile, continues in its programme of building up a balanced portfolio of investments in technology and non-technology businesses. We are now in a position to pay out an annual dividend of 3.0 pence per C Share from revenue profits and it is hoped that this figure will grow further in the future. Investment progress and performance Ordinary share portfolio The total return per Ordinary Share was 7.6 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 £607,000 for Careforce, which was taken over by the Mears Group in April of this year, £292,000 in respect of Intelligent Environments and £132,000 from Bond International (two companies within our residual AIM portfolio), £217,000 from the portfolio of International Quoted Technology companies (which was wound down during the period) and £240,000 from the sale of Bold Pub Company. Meanwhile, £2.3 million was invested in 23 existing and new investee companies. Paste the following link into your web browser to download a PDF document of the Ordinary share portfolio: http://www.rns-pdf.londonstockexchange.com/rns/6935s_-2008-4-18.pdf Source: Close Ventures Limited The investments held are diversified to ensure a spread of risk across the portfolio. The portfolio is split broadly 67 per cent loan stock and 33 per cent equity investments. At 31 December 2007 the Ordinary share portfolio was 77 per cent invested for HM Revenue & Customs purposes, in 46 investee companies. C share portfolio The C Share portfolio, which is now over two-thirds of the way through its initial investment programme, recorded a total return of 0.2 pence per share. Of this, 3.1 pence was accounted for by the growing revenue return with a negative capital return of 2.9 pence, relating to a partial write down of two of its investments, Premier Leisure Suffolk and Helveta. During the year some £13.0 million was invested or reserved for investment in 20 investee companies. Paste the following link into your web browser to download a PDF document of the C chare portfolio: http://www.rns-pdf.londonstockexchange.com/rns/6935s_2-2008-4-18.pdf Source: Close Ventures Limited The investments held are diversified to ensure a spread of risk across the portfolio. The portfolio is split approximately 52 per cent loan stock and 48 per cent equity invested; this does not include cash and cash equivalents. There is a large proportion of cash and cash equivalents because the C share portfolio has until 31 December 2008 to meet the minimum 70 per cent. HM Revenue & Customs qualifying level. At 31 December 2007 the C share portfolio was 43 per cent invested for HM revenue & Customs purposes, taking the total number of investments to 23. Risks and uncertainties The key risk 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 having a first legal charge wherever possible, mitigates some of the investment risks. Other risks and uncertainties are detailed in the Directors Report and Business Review of the Annual Report and Financial Statements. Dividend reinvestment scheme I draw to shareholders attention a Dividend Reinvestment Scheme whereby shareholders may elect to reinvest the whole of the dividend due for payment on 30 May 2008 by subscribing for New Ordinary Shares and New C Shares. The Circular dated 18 April 2008 which is enclosed with the Annual Report and Financial Statements 'Introduction of a Dividend Reinvestment Scheme; details the mechanics of this Scheme. Proposed change to the Company's Articles of Association I draw shareholders attention to the proposed resolution to change the Articles of Association, which is described in detail in the Directors' Report and Business Review of the Annual Report and Financial Statements. 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 to align with current legislation 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. 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, while we have some particularly interesting technology investments which we believe could prove to be strong generators to shareholder value in the future. As at 31 December 2007, the net asset value of the Company's Ordinary Shares was 114.1 pence (2006: 114.4 pence) and the net asset value for the C Shares 92.7 pence (2006: 94.9 pence). The revenue return before tax for the Ordinary Shares was £738,000 (2006: £658,000) and for the C Shares the revenue return before tax was £1,538,000 (2006: £947,000). The first dividend for the new financial year will be 4.0 pence per Ordinary Share (comprising 2.0 pence from revenue profits and 2.0 pence from realised capital profits) and 1.5 pence per C Share (from revenue profits). Dividends will be payable on 30 May 2008 to those shareholders on the register on 2 May 2008. Dr Neil Cross Chairman 18 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 the year. 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 Ordinary shares Year ended 31 December 2007 Year ended 31 December 2006 Revenue Capital Total Revenue Capital Total Note £'000 £'000 £'000 £'000 £'000 £'000 Gains/(losses) on investments 3 - 664 664 - (3) (3) Investment income 4 932 - 932 832 - 832 Investment management fees (113) (340) (453) (117) (351) (468) Other expenses (81) - (81) (57) - (57) Return/(loss) on ordinary activities before tax 738 324 1,062 658 (354) 304 Tax (charge)/credit on ordinary activities 5 (152) 99 (53) (219) 114 (105) Return/(loss) attributable to equity shareholders 586 423 1,009 439 (240) 199 Basic and diluted return/(loss) per Ordinary share (pence) 7 4.4p 3.2p 7.6p 3.2p (1.8)p 1.4p C shares Year ended 31 December 2007 Year ended 31 December 2006 Revenue Capital Total Revenue Capital Total Note £'000 £'000 £'000 £'000 £'000 £'000 (Losses)/gains on investments 3 - (517) (517) - 202 202 Investment income 4 1,964 - 1,964 1,322 - 1,322 Investment management fees (242) (725) (967) (246) (738) (984) Other expenses (184) - (184) (129) - (129) Return/(loss) on ordinary activities before tax 1,538 (1,242) 296 947 (536) 411 Tax (charge)/credit on ordinary activities 5 (425) 211 (214) (284) 221 (63) Return/(loss) attributable to equity shareholders 1,113 (1,031) 82 663 (315) 348 Basic and diluted return/(loss) per Ordinary share (pence) 7 3.1p (2.9)p 0.2p 2.3p (1.1)p 1.2p Combined Year ended 31 December 2007 Year ended 31 December 2006 Revenue Capital Total Revenue Capital Total Note £'000 £'000 £'000 £'000 £'000 £'000 Gains on investments 3 - 147 147 - 199 199 Investment income 4 2,896 - 2,896 2,154 - 2,154 Investment management fees (355) (1,065) (1,420) (363) (1,089) (1,452) Other expenses (265) - (265) (186) - (186) Return/(loss) on ordinary activities before tax 2,276 (918) 1,358 1,605 (890) 715 Tax (charge)/credit on ordinary activities 5 (577) 310 (267) (503) 335 (168) Return/(loss) attributable to equity shareholders 1,699 (608) 1,091 1,102 (555) 547 The total column of this Income Statement represents the profit and loss account of the Company. The supplementary revenue and capital 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 are no recognised gains or losses other than the results for the year disclosed above. Accordingly a statement of total recognised gains and losses is not required. Balance sheet Ordinary shares As at As at Note 31 December 31 December 2007 2006 £'000 £'000 Fixed Assets Qualifying 10,688 10,965 Non-qualifying 444 2,332 Total fixed asset investments 11,132 13,297 Current assets Debtors 223 23 Cash at bank 4,056 2,486 4,279 2,509 Creditors: amounts falling due (218) (321) within one year 4,061 2,188 Net current assets 15,193 15,485 Net assets Capital and reserves: Called up share capital 6,795 6,795 Share premium 165 165 Special reserve 5,554 5,554 Capital redemption reserve 400 400 Own treasury shares reserve (282) (56) Realised capital reserve 4,067 3,432 Unrealised capital reserve (2,092) (1,276) Revenue reserve 586 471 Equity shareholders' funds 15,193 15,485 Net asset value per Ordinary share (pence) 8 114.1 114.4 C shares As at As at Note 31 December 31 December 2007 2006 £'000 £'000 Fixed Assets Qualifying 14,193 3,116 Non-qualifying 14,967 28,430 Total fixed asset investments 29,160 31,546 Current assets Debtors 136 332 Cash at bank 4,229 2,145 4,365 2,477 Creditors: amounts falling due (650) (344) within one year 3,715 2,133 Net current assets 32,875 33,679 Net assets Capital and reserves: Called up share capital 17,740 17,740 Special reserve 15,768 15,768 Realised capital reserve (745) (505) Unrealised capital reserve (600) 190 Revenue reserve 712 486 Equity shareholders' funds 32,875 33,679 Net asset value per C share (pence) 8 92.7 94.9 Combined As at As at Note 31 December 31 December 2006 2007 £'000 £'000 Fixed Assets Qualifying 24,881 14,081 Non-qualifying 15,411 30,762 Total fixed asset investments 40,292 44,843 Current assets Debtors 359 355 Cash at bank 8,285 4,631 8,644 4,986 Creditors: amounts falling due (868) (665) within one year 7,776 4,321 Net current assets 48,068 49,164 Net assets Capital and reserves: Called up share capital 24,535 24,535 Share premium 165 165 Special reserve 21,322 21,322 Capital redemption reserve 400 400 Own treasury shares reserve (282) (56) Realised capital reserve 3,322 2,927 Unrealised capital reserve (2,692) (1,086) Revenue reserve 1,298 957 Equity shareholders' funds 48,068 49,164 Reconciliation of movements in shareholders' funds Ordinary shares Called up Capital Own Realised Unrealised share Share Special redemption Treasury capital capital Revenue capital premium reserve reserve shares reserve reserve reserve Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 As at 1 January 2006 6,908 165 5,785 287 - 4,311 (1,027) 235 16,664 Net realised gains on - - - - - 246 - - 246 investments in the year Capitalised investment - - - - - (351) - - (351) management fees Tax relief on costs charged - - - - - 114 - - 114 to capital Share redemptions (113) - (231) 113 - - - - (231) Purchase of own treasury - - - - (56) - - - (56) shares Movement in unrealised - - - - - - (249) - (249) appreciation Revenue return attributable - - - - - - - 439 439 to shareholders Dividends - - - - - (888) - (203) (1,091) As at 31 December 2006 6,795 165 5,554 400 (56) 3,432 (1,276) 471 15,485 Net realised gains on - - - - - 1,480 - - 1,480 investments in the year Capitalised investment - - - - - (340) - - (340) management fees Tax relief on costs charged - - - - - 99 - - 99 to capital Purchase of own treasury - - - - (226) - - - (226) shares Movement in unrealised - - - - - - (816) - (816) appreciation Revenue return attributable - - - - - - - 586 586 to shareholders Dividends - - - - - (604) - (471) (1,075) As at 31 December 2007 6,795 165 5,554 400 (282) 4,067 (2,092) 586 15,193 C shares Called up Realised Unrealised share Share Special capital capital Revenue capital premium reserve reserve reserve reserve Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 As at 1 January 2006 - - - - - - - Net realised gains on investments in the - - - 12 - - 12 year Capitalised investment management fees - - - (738) - - (738) Tax relief on costs charged to capital - - - 221 - - 221 Issue of share capital 17,740 17,740 - - - - 35,480 Issue costs - (1,952) - - - - (1,952) Cancellation of share premium account - (15,788) 15,788 - - - - Cost of cancellation of share premium - - (20) - - - (20) account Movement in unrealised appreciation - - - - 190 - 190 Revenue return attributable to - - - - - 663 663 shareholders - - - - - (177) (177) Dividends As at 31 December 2006 17,740 - 15,768 (505) 190 486 33,679 Net realised gains on investments in the - - - 274 - - 274 year Capitalised investment management fees - - - (725) - - (725) Tax relief on costs charged to capital - - - 211 - - 211 Movement in unrealised appreciation - - - - (790) - (790) Revenue return attributable to - - - - - 1,113 1,113 shareholders - - - - - (887) (887) Dividends As at 31 December 2007 17,740 - 15,768 (745) (600) 712 32,875 Cash flow statement Ordinary shares Year ended Year ended 31 December 2007 31 December 2006 Note £'000 £'000 Operating activities 566 621 Investment income Deposit interest received 166 102 Investment management fees paid (460) (534) Other cash payments (72) (259) Intercompany account movement (100) 114 Net cash inflow from operating activities 9 100 44 Taxation (67) (46) Capital expenditure and financial investment Purchase of investments (1,709) (2,073) Disposal of investments 4,547 1,185 Net cash inflow/(outflow) from investing 2,838 (888) activities Equity dividends paid 6 (1,075) (1,091) Dividends paid Net cash inflow/(outflow) before financing 1,796 (1,981) Financing Purchase of own shares (226) (287) Net cash (outflow) from financing (226) (287) Cash inflow/(outflow) in the year 1,570 (2,268) C shares Year ended Year ended 31 December 2007 31 December 2006 Note £'000 £'000 Operating activities Investment income 1,605 750 Deposit interest received 203 314 Investment management fees paid (983) (735) Other cash payments (141) (109) Intercompany account movement 288 (114) Net cash inflow from operating activities 9 972 106 Taxation (61) - Capital expenditure and financial investment Purchase of investments (11,900) (31,594) Disposal of investments 13,960 297 Net cash inflow/(outflow) from investing activities 2,060 (31,297) Equity dividends paid 6 (887) (177) Dividends paid Net cash inflow/(outflow) before financing 2,084 (31,368) Financing Issue of share capital (net of costs) - 33,513 Net cash inflow from financing - 33,513 Cash inflow in the year 2,084 2,145 Combined Year ended Year ended 31 December 2007 31 December 2006 Note £'000 £'000 Operating activities 2,171 1,371 Investment income Deposit interest received 369 416 Investment management fees paid (1,443) (1,269) Other cash payments (213) (368) Intercompany account movement 188 - 9 1,072 150 Net cash inflow from operating activities Taxation (128) (46) Capital expenditure and financial investment Purchase of investments (13,609) (33,667) Disposal of investments 18,507 1,482 Net cash inflow/(outflow) from investing activities 4,898 (32,185) Equity dividends paid 9 (1,962) (1,268) Dividends paid Net cash inflow/(outflow) before financing 3,880 (33,349) Financing Purchase of own shares (226) 33,513 Issue of share capital (net of costs) - (287) Net cash (outflow)/inflow from financing (226) 33,226 Cash inflow/(outflow) in the year 3,654 (123) Notes to the financial statements for the year ended 31 December 2007 1. Accounting convention The financial statements have been prepared in accordance with the historical cost convention, modified to include the revaluation of investments, 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. 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 of the Income Taxes Act 2007. The absence of Section 266 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 (IPEVCV 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. Loan stocks which are not impaired or past due are considered fully performing in terms of contractual interest and capital repayments and the Board does not consider that there is a current likelihood of a shortfall on security cover for these assets. 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, convertibles and unquoted equity derived instruments are only valued if their exercise or contractual conversion 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 per cent. of the equity are not regarded as associated undertakings. Investment income Quoted and Unquoted equity income Dividend income is included in revenue when the investment is quoted ex-dividend. 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.. Investment management fees and other 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 are allocated to the capital account to the extent that these relate to an enhancement in the value of the investments and in line with the Board's expectation that over the long term 75 per cent. of the Company's investment returns will be in the form of capital gains; and • expenses which are incidental to the purchase or disposal of an investment are charged through the realised capital reserve. Under the terms of the Management Agreement, total expenses including management fees and excluding performance fees will not exceed 3.5 per cent. of net asset value at the year end. Taxation Taxation is applied on a current basis in accordance with FRS 16 'Current tax'. Taxation associated with capital expenses is applied in accordance with the SORP. In accordance with FRS 19 'Deferred tax', deferred taxation is provided in full on timing differences that result in an obligation at the balance sheet date to pay more tax or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the financial statements. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered. The specific nature of taxation of venture capital trusts means that it is unlikely that any deferred tax will arise. The Directors have considered the requirements of FRS 19 and do not believe that any provision should be made. 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. Reserves Realised capital reserves The following are disclosed in this reserve: • gains and losses compared to cost on the realisation of investments; • expenses, together with the related taxation effect, charged in accordance with the above policies; • realised exchange differences of a capital nature; and • dividends paid to equity holders. Unrealised capital reserves The following are disclosed to this reserve: • increases and decreases in the valuation of investments against cost held at the period end; and • unrealised exchange differences of a capital nature. 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 shares held reserve This reserve accounts for amounts by which the distributable reserves of the Company are diminished through the repurchase of the Company's own shares for Treasury. Share premium reserve This reserve accounts for the difference between the price paid for shares and the nominal value of the shares less, issue costs and transfers to the special reserve. 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. Foreign currency Transactions denominated in foreign currencies are recorded in the local currency at the actual exchange rates as at the date of transaction. Monetary assets and liabilities denominated in foreign currencies at the year end are reported at the rates of exchange prevailing at the year end. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss in the capital reserve or in the revenue account depending on whether the gain or loss is of a capital or revenue nature respectively. C Shares Until such time that C shares are converted into Ordinary shares in 2011, all investments and returns attributable to this class of share will be separately identifiable from the existing Ordinary shares. All residual expenses will be allocated on the basis of total funds raised for each class of share. 3. Gains/(losses) on investments Year ended Year ended 31 December 2007 31 December 2006 Ordinary C Ordinary C Shares Shares Total Shares Shares Total £'000 £'000 £'000 £'000 £'000 £'000 Unrealised (losses)/gains on investments held at fair (711) (760) (1,471) (260) 190 (70) value through profit and loss account Unrealised (impairments)/ gains on investments held at (105) (30) (135) 13 22 35 amortised cost Unrealised (losses)/gains sub total (816) (790) (1,606) (247) 212 (35) Realised gains on 1,487 282 1,769 297 - 297 investments held at fair value through profit and loss account Realised impairments on investments held at - - - - - - amortised cost Realised gains sub total 1,487 282 1,769 297 - 297 Net movement on foreign exchange on investments hald 3 4 7 (42) 1 (41) at fair value through profit or loss account Commission on purchase and disposal on investments held (10) (13) (23) (11) (11) (22) at fair value through profit or loss account (7) (9) (16) (53) (10) (63) Total 664 (517) 147 (3) 202 199 Investments valued on amortised cost basis are unquoted loan stock investments. 4. Investment Year ended Year ended income 31 December 2007 31 December 2006 Ordinary C Ordinary C Shares Shares Total Shares Shares Total £'000 £'000 £'000 £'000 £'000 £'000 Income recognised on investments held at fair value through profit and loss UK dividend income 17 73 90 8 - 8 Foreign investment income - - - 8 - 8 Management fees received 14 - 14 7 - 7 from equity investments Floating rate note interest - 1,037 1,037 - 889 889 Bank deposit interest 172 211 383 105 318 423 203 1,321 1,524 128 1,207 1,335 Income recognised on investments held at amortised cost Return on loan stock investments 729 643 1,372 704 115 819 932 1,964 2,896 832 1,322 2,154| Interest income earned on impaired investments at 31 December 2007 for Ordinary shares amounted to £86,000 (2006: £46,000 ) and for C shares amounted to £32,000 (2006: £nil). These investments are all held at amortised cost. 5. Tax charge/(credit) on ordinary activities Ordinary Shares 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 738 324 1,062 658 (354) 304 Tax on profit at the standard rate of 30% 221 97 318 197 (106) 91 Over accrual in previous year (2) - (2) 27 (8) 19 219 97 316 224 (114) 110 Factors affecting the charge Non-taxable gains - (199) (199) - - - Tax attributable to capitalised expenses 99 (99) - 114 (114) - Expenses charged to capital (99) 99 - (114) 114 - Non-taxable income (5) - (5) (5) - (5) Consortium relief (56) - (56) - - - Adjustment for effectve rate of tax (6) 3 (3) - - - 152 (99) 53 219 (114) 105 C Shares 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 1,538 (1,242) 296 947 (536) 411 Tax on profit at the standard rate of 30% 461 (373) 88 284 (161) 123 Over accrual in previous year (2) - (2) - - - 459 (373) 87 284 (161) 123 Factors affecting the charge Non-taxable gains - 155 155 - (60) (60) Tax attributable to capitalised expenses 211 (211) - 221 (221) - Expenses charged to capital (211) 211 - (221) 221 - Non-taxable income (23) - (23) - - - Adjustment for effectve rate of tax (11) 7 (5) - - - 425 (211) 214 284 (221) 63 The tax charge for the year for Ordinary shares is lower than the standard rate of corporation tax of 30 per cent., and higher for C shares. The differences are explained above. 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 expenses by reference to the applicable corporation tax rate of 30 per cent. and allocating the relief between revenue and capital in accordance with the SORP. (i) No deferred tax asset or liability has arisen in the year. 6. Dividends Ordinary shares Year ended 31 December 2007 Year ended 31 December 2006 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Dividend of 4.0p (capital) per share - - - - 550 550 paid on 26 May 2006 Dividend of 4.0p (1.5p revenue and - - - 203 338 541 2.5p capital) per share paid on 3 November 2006 Dividend of 4.0p (1.5p revenue and 204 337 541 - - - 2.5p capital) per share paid on 25 May 2007 Dividend of 4.0p (2.0p revenue and 267 267 534 - - - 2.0p capital) per share paid on 2 November 2007 471 604 1,075 203 888 1,091 C shares Year ended 31 December 2007 Year ended 31 December 2006 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Revenue dividend of 0.5p per share paid - - - 177 - 177 on 3 November 2006 Revenue dividend of 1.0p per share paid 355 - 355 - - - on 25 May 2007 Revenue dividend of 1.5p per share paid 532 - 532 - - - on 2 November 2007 887 - 887 177 - 177 In addition to the dividends summarised above, the Directors have declared a first dividend of 4.0 pence per Ordinary share and 1.5 pence per C share to be paid on 30 May 2008 to shareholders on the register at 2 May 2008. 7. Basic and diluted return per share Year ended Year ended 31 December 2007 31 December 2006 Revenue Capital Total Revenue Capital Total Ordinary shares (pence per share) 4.4 3.2 7.6 3.2 (1.8) 1.4 C shares (pence per share) 3.1 (2.9) 0.2 2.3 (1.1) 1.2 Ordinary shares Revenue return per Ordinary share is based upon the net revenue return attributable to shareholders for the year of £586,000 (2006: £439,000) in respect of the weighted average number of shares in issue during the year, being 13,438,783 (2006: 13,661,733). Capital return per Ordinary share is based upon the net capital profit attributable to shareholders for the year of £423,000 (2006: loss £240,000) in respect of the same weighted average number of shares as for the revenue return above. C shares Revenue return per C share is based upon the net revenue return attributable to shareholders for the year of £1,113,000 (2006: £663,000) in respect of the weighted average number of shares in issue during the year, being 35,479,122 (2006: 35,479,122). Capital return per C share is based upon the net capital loss attributable to shareholders for the year of £1,031,000 (2006: loss £315,000) in respect of the same weighted average number of shares as for the revenue return above. 8. Net asset value per share The net asset values per share at the year end calculated in accordance with the Articles of Association were as follows, based upon the shares in issue, less the treasury shares of 13,317,542 Ordinary Shares and 35,479,122 C Shares in issue at 31 December 2007, (2006: 13,534,404 Ordinary Shares and 35,479,122 C Shares). 31 December 2007 31 December 2006 Ordinary C Ordinary C shares shares shares shares Net asset value per share attributable 114.1 92.7 114.4 94.9 (pence) 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 Ordinary C Ordinary C Shares Shares Shares Shares £'000 £'000 £'000 £'000 Revenue return on ordinary 738 1,538 658 947 activities before taxation Investment management fee (340) (725) (351) (738) charged to capital Movement in accrued amortised (196) (202) (106) (88) loan stock interest Decrease/(increase) in debtors (12) 40 32 (180) (Decrease)/increase in creditors 10 33 (303) 279 Intercompany account movement (100) 288 114 (114) Net cash inflow/(outflow) from 100 972 44 106 operating activities 10. Post balance sheet events Since 31 December 2007 the Company has completed the following investments: • Investment in Blackbay Limited of £85,000 • Investment in Consolidated Communications Management Limited of £33,000 • Investment in Opta Sportsdata Limited of £625,000 • Investment in Rostima Limited of £138,000 • Sale of Abbey National FRN for £5,001,000 • Proposal of Dividend Reinvestment Scheme as described in the Chairman's Statement 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 £1,426,000 (2006:£1,452,000) 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 £347,000 (2006: £364,000). Buy-backs of Ordinary shares during the period were transacted through Winterflood Securities Limited, a subsidiary of Close Brothers Group plc. A total of 216,862 shares were purchased for cancellation at an average price of 99.4 pence per share. 12. Financial Information The information set out in this announcement does not constitute the Company's statutory accounts within the terms of Section 240 of the Companies Act 1985 for the year ended 31 December 2007 and 31 December 2006, but is derived from those statutory accounts. Statutory accounts for the year ended 31December 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 report was 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 Report and Financial Statements is being sent to shareholders and copies will be made available electronically at www.closeventures.co.uk. The full 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 020 7422 7830 This information is provided by RNS The company news service from the London Stock Exchange
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