Annual Report and Accounts
Close Brothers Aim Vct PLC
30 April 2008
CLOSE BROTHERS AIM VCT PLC
ANNUAL RESULTS
30 April 2008
Preliminary announcement of the annual financial results for the twelve months
to 29 February 2008. Copies of the full Report and Financial Statements can be
found on www.closeventures.co.uk
Close Brothers AIM VCT PLC (the 'Company'), which invests in companies listed on
the Alternative Investment Market and PLUS, across a variety of sectors, today
announces annual results for the year ended 29 February 2008. This announcement
was approved by the Board of Directors on 29 April 2008.
Ordinary Shares D Shares
Year to Year to Year to Year to
29 February 28 February 29 February 28 February
2008 2007 2008 2007
Total return per share (pence) (22.80) 4.88 (10.23) 7.99
Net dividend paid per share (pence) 5.00 4.20 5.00 3.30
Net asset value per share (pence) 60.06 87.76 110.23 125.43
Net assets (£million) 17.35 26.29 17.44 20.09
Shareholder value per share since launch:
Ordinary Shares C Shares D Shares
pence per share pence per share pence per share
(subsequently
converted to
Ordinary shares)
Total dividends paid during the period to 28 February 1999 1.88 - -
Total dividends paid during the year to 29 February 2000 3.13 - -
Total dividends paid during the year to 28 February 2001 37.25 - -
Total dividends paid during the year to 28 February 2002 6.50 2.25 -
Total dividends paid during the year to 28 February 2003 3.50 1.50 -
Total dividends paid during the year to 28 February 2004 0.50 0.50 -
Total dividends paid during the year to 28 February 2005 0.50 0.50 0.50
Total dividends paid during the year to 28 February 2006 2.15 2.31 2.25
Total dividends paid during the year to 28 February 2007 4.20 4.52 3.30
Total dividends paid during the year to 29 February 2008 5.00 5.38 5.00
Total dividends (capital and revenue) 64.61 16.96 11.05
Net asset value 29 February 2008 60.06 64.65 110.23
Total cumulative shareholder return at 29 February 2008 124.67 81.61 121.28
In addition to the above, the Directors have declared a dividend of 2.50 pence
per Ordinary share (0.60 pence revenue and 1.90 pence paid out of realised
capital gains) and 2.50 pence per D share, (0.60 pence revenue and 1.90 pence
paid out of realised capital gains) subject to the approval by HM Revenue &
Customs. The record date and payment date of this dividend will be announced on
the London Stock Exchange RNS service.
Chairman's statement
In my Half-yearly statement last October, I noted that shares in larger
companies had recovered on the back of interest rate cuts in the US and the hope
of UK rates following suit. It remained to be seen whether this trend trickled
down to smaller companies. I am afraid not only has it not done so, but the
recovery in larger company shares was short lived and their decline contributed
to an even larger decline in the value of smaller companies.
The second half of the year has continued in the same vein as that of the first,
namely volatile stockmarkets which have particularly impacted the share prices
of smaller companies as appetite for risk has diminished. As a result I have to
report disappointing net asset value declines of 25.9 per cent. and 8.1 per
cent. (after adding back dividends paid of 5.00 pence per each class of share)
for the Ordinary and D shares respectively for the year to 29 February 2008. As
at 29 February 2008 the total cumulative return in respect of the Ordinary and D
Shares was 124.67 pence and 121.28 pence per share respectively. Although this
decline is disappointing it does help demonstrate the importance of our dividend
philosophy of attempting to maintain an annual dividend of at least 5.00 pence
per Ordinary and D Share.
The above performance needs to be placed into context. Although there is not a
perfect comparable index the two most similar indices are the FTSE AIM Index and
the FTSE Small Cap (ex Investment Trusts). The former declined by 7.5 per
cent., reflecting its significant bias (30 per cent.) towards the oil and gas,
and basic materials sectors which performed very well. The latter index, which
does not have the same bias, declined by 25.3 per cent during the year.
During the second half, the D Share Portfolio met and exceeded its 70 per cent
qualifying level for investments. On merging with the Ordinary Shares, the
combined cover will be over 80 per cent giving some flexibility to take profits
in holdings to safeguard future dividend payments.
The mid-market price of the Ordinary and D Shares declined by 35 per cent and 15
per cent respectively during the year. This was despite our ongoing commitment
to manage as best we can the discount to net asset value at as close to a range
of between 8 per cent to 10 per cent via the repurchase of shares.
Performance
The Investment Manager's report in the Report and Financial Statement gives
further details of the market background and the reasons underlying the
performance of the Portfolios.
Dividends
Ordinary Shares
Dividends paid during the financial year to 29 February 2008 totalled 5.00 pence
per Ordinary Share (2007: 4.20 pence per share). In addition, the Board has
declared its first dividend of 2.50 pence per share (2007: 2.50 pence per
share). This dividend is subject to HM Revenue & Customs approval and the
record date and payment date of this dividend will be announced on the London
Stock Exchange RNS service.
D shares
Dividends paid during the financial year to 29 February 2008 totalled 5.00 pence
per D Share (2007: 3.30 pence per share). In addition, the Board has declared a
first dividend of 2.50 pence per share (2007: 2.50 pence per share). This
dividend is subject to HM Revenue & Customs approval and the record date and
payment date of this dividend will be announced on the London Stock Exchange RNS
service.
Management of the discount
Your Board continues to believe that it is in the best interest of all
shareholders for it to manage the discount to net asset value at which the
shares trade with a view to maintaining it as close to 8 per cent as possible.
During the year under review your Board exercised its power to buy back shares.
To this end we repurchased 432,825 Ordinary and 168,341 D Shares for
cancellation and 638,813 Ordinary shares and 28,047 D shares into Treasury,
giving your Board greater flexibility in regard to future re-issuance to meet
potential demand. I would like again to remind shareholders who wish to sell to
contact the Investment Manager at Close Investments Limited, in the interests of
achieving a reasonable price.
Revised arrangements to merge the Ordinary Shares Fund and the D Shares Fund
I wrote to shareholders on 25 March 2008 explaining the reason for the convening
of the Extraordinary General Meeting and the separate class meetings, and the
Board's proposal to review the arrangements of the merger between the Ordinary
Shares Fund and the D Shares Fund. The D Shares were issued in 2004 and 2005 on
the basis that they would be merged and the D Shares would be converted into
Ordinary Shares with effect from 31 May 2008 calculated by reference to the
respective NAVs of the Ordinary Shares and the D Shares as at the close of
business on 29 February 2008. The Directors believed that it would be more
appropriate to effect the merging of the two share classes by converting the
Ordinary Shares into D Shares and then redesignating all of the D Shares into
new Ordinary Shares ('New Shares').
The necessary resolutions to approve your board's proposal were passed at the
Extraordinary General Meeting and the separate class meeting on 22 April 2008.
As a result, the Ordinary shares will convert into D shares at a ratio of 0.5448
D shares for each Ordinary share, with effect from 31 May 2008. All shares of
the Company will be immediately renamed Ordinary shares. Share certificates in
respect of all shares are expected to be posted on 9 June 2008.
Risks and Uncertainties
As required under the new Listing Rules under which your Company operates, we
are required to comment on the potential risks and uncertainties which could
have a material impact over the Company's performance. The key risk derives
from the need to maintain the HM Revenue & Customs regulations requiring 70 per
cent of your Company to be invested in qualifying holdings. Although the UK
economy may still be growing, it could be affected by the current unease in the
financial and property markets. While this could give rise to additional
investment opportunities at lower prices, a downturn could affect existing
companies' trading prospects and share prices.
Proposed change to the Company's 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 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.
Outlook
The year under review has been an exceptionally difficult time for financial
assets and smaller companies in particular. There has been a collapse in
confidence amongst financial institutions and until this is restored markets
will remain fragile. Thus, despite the generally good trading results from many
smaller companies, their share prices have been substantially de-rated compared
with the FTSE 100 companies and with the high level of risk aversion now
paramount in investment decisions, it is possible that small companies may stay
out of favour for a while. However, many of the investments in both portfolios
continue to make good underlying trading progress and this should augur well for
the future once confidence returns to the market.
Michael Reeve
Chairman
30 April 2008
Income Statement
for the year ended 29 February 2008
Ordinary Shares D Shares Total
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Losses on investments - (6,436) (6,436) - (1,586) (1,586) - (8,022) (8,022)
Investment income 369 - 369 494 - 494 863 - 863
Investment management fees (133) (398) (531) (114) (341) (455) (247) (739) (986)
Other expenses (114) - (114) (75) - (75) (189) - (189)
Return/(loss) on Ordinary
activities before tax 122 (6,834) (6,712) 305 (1,927) (1,622) 427 (8,761) (8,334)
Tax credit/(charge)on ordinary
activities 3 - 3 (59) 56 (3) (56) 56 -
Return/(loss) attributable to equity
shareholders 125 (6,834) (6,709) 246 (1,871) (1,625) 371 (8,705) (8,334)
Basic and diluted return per share
(pence) 0.42 (23.22) (22.80) 1.55 (11.78) (10.23)
All of the Company's activities derive from continuing operations.
The Company has no recognised gains or losses other than the results for the
year as set out above, accordingly a Statement of Total Recognised Gains or
Losses is not required.
The total column of the Income Statement represents the profit and loss account
of the Company. The supplementary revenue return and capital return columns have
been prepared in accordance with the Association of Investment Companies'
Statement of Recommended Practice.
Income Statement
For the year ended 28 February 2007
Ordinary Shares D Shares Total
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains on investments - 1,828 1,828 - 1,335 1,335 - 3,163 3,163
Investment income 387 - 387 493 - 493 880 - 880
Investment management fees (149) (448) (597) (113) (338) (451) (262) (786) (1,048)
Other expenses (128) - (128) (89) - (89) (217) - (217)
Return/(loss) on Ordinary
activities before tax 110 1,380 1,490 291 997 1,288 401 2,377 2,778
Tax credit/(charge)on
ordinary activities 6 - 6 (60) 54 (6) (54) 54 -
Return/(loss) attributable
to equity
shareholders 116 1,380 1,496 231 1,051 1,282 347 2,431 2,778
Basic and diluted return
per share (pence) 0.38 4.50 4.88 1.44 6.55 7.99
All of the Company's activities derive from continuing operations.
The Company has no recognised gains or losses other than the results for the
year as set out above, accordingly a Statement of Total Recognised Gains or
Losses is not required.
The total column of the Income Statement represents the profit and loss account
of the Company. The supplementary revenue return and capital return columns have
been prepared in accordance with the Association of Investment Companies'
Statement of Recommended Practice.
Balance Sheet
As at 29 February 2008
Ordinary shares D Shares Total
£'000 £'000 £'000
Fixed asset investments
Investments at fair value through profit or loss 16,071 15,950 32,021
Current assets
Debtors 127 115 242
Cash at bank 1,211 1,432 2,643
1,338 1,547 2,885
Creditors: amounts falling due within one year (63) (60) (123)
Net current assets 1,275 1,487 2,762
Net assets 17,346 17,437 34,783
Capital and reserves
Called up share capital 14,762 7,923 22,685
Share premium 1,450 39 1,489
Special reserve 7,311 9,100 16,411
Capital redemption reserve 3,569 159 3,728
Realised capital reserve (7,508) 459 (7,049)
Unrealised capital reserve (2,003) (316) (2,319)
Own shares held in treasury (411) (28) (439)
Revenue reserve 176 101 277
Shareholders' funds 17,346 17,437 34,783
Net asset value per share (pence) 60.06 110.23
Balance Sheet
As at 28 February 2007
Ordinary shares D Shares Total
£'000 £'000 £'000
Fixed asset investments
Investments at fair value through profit or loss 25,031 17,177 42,208
Current assets
Debtors 95 81 176
Cash at bank 1,211 2,895 4,106
1,306 2,976 4,282
Creditors: amounts falling due within one year (49) (65) (114)
Net current assets 1,257 2,911 4,168
Net assets 26,288 20,088 46,376
Capital and reserves
Called up share capital 14,978 8,008 22,986
Share premium 1,450 39 1,489
Special reserve 7,665 9,304 16,969
Capital redemption reserve 3,353 74 3,427
Realised capital reserve (4,055) 277 (3,778)
Unrealised capital reserve 2,846 2,253 5,099
Revenue reserve 51 133 184
Shareholders' funds 26,288 20,088 46,376
Net asset value per share (pence) 87.76 125.43
Reconciliation of movements in shareholders' funds
For the year ended 29 February 2008
Ordinary Shares
Called up Share Special Capital Realised Unrealised Own Revenue Total
share premium reserve redemption capital capital shares reserve
capital reserve reserve reserve held in
Treasury
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
As at 28 February 2007 14,978 1,450 7,665 3,353 (4,055) 2,846 - 51 26,288
Net return after taxation - - - - (1,985) (4,849) - 125 (6,709)
Dividends paid to equity
holders - - - - (1,468) - - - (1,468)
Shares purchased for
cancellation (216) - (354) 216 - - - - (354)
Shares purchased to be held
in Treasury - - - - - - (411) - (411)
As at 29 February 2008 14,762 1,450 7,311 3,569 (7,508) (2,003) (411) 176 17,346
As at 28 February 2006 15,561 1,450 8,547 2,770 (3,231) 1,806 - 57 26,960
Net return after taxation - - - - 340 1,040 - 116 1,496
Dividends paid to equity - - - - (1,164) - - (122) (1,286)
holders
Shares purchased for (583) - (882) 583 - - - - (882)
cancellation
As at 28 February 2007 14,978 1,450 7,665 3,353 (4,055) 2,846 - 51 26,288
Reconciliation of movements in shareholders' funds
For the year ended 28 February 2007
D Shares
Called up Share Special Capital Realised Unrealised Own shares Revenue Total
share premium reserve redemption capital capital held in reserve
capital reserve reserve reserve Treasury
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
As at 28 February 2007 8,008 39 9,304 74 277 2,253 - 133 20,088
Net return after taxation - - - - 698 (2,569) - 246 (1,625)
Dividends paid to equity
holders - - - - (516) - - (278) (794)
Shares purchased for
cancellation (85) - (204) 85 - - - - (204)
Shares purchased to be held
in Treasury - - - - - - (28) - (28)
As at 29 February 2008 7,923 39 9,100 159 459 (316) (28) 101 17,437
As at 28 February 2006 8,040 39 9,373 42 (277) 1,965 - 223 19,405
Net return after taxation - - - - 763 288 - 231 1,282
Dividends paid to equity - - - - (209) - - (321 (530)
holders
Shares purchased for (32) - (69) 32 - - - - (69)
cancellation
As at 28 February 2007 8,008 39 9,304 74 277 2,253 - 133 20,088
Cash Flow Statement
for the year ended 29 February 2008
Ordinary Shares D Shares Total
£'000 £'000 £'000
Operating activities
Dividend income received 145 58 203
Investment income received 175 347 522
Deposit interest received 67 109 176
Investment management fees paid (535) (438) (973)
Other cash payments (99) (68) (167)
Intercompany account movement 17 (17) -
Net cash outflow from operating activities (230) (9) (239)
Capital expenditure and financial investment
Purchase of qualifying investments (1,384) (4,878) (6,262)
Purchase of non-qualifying investments (5) (92) (97)
Disposal of qualifying investments 1,841 1,823 3,664
Disposal of non-qualifying investments 2,006 2,720 4,726
Net cash inflow/(outflow) from capital 2,458 (427) 2,031
expenditure and financial investment
Equity dividends paid
Revenue dividends paid - (278) (278)
Capital dividends paid (1,468) (516) (1,984)
(1,468) (794) (2,262)
Net cash inflow/(outflow) before financing 760 (1,230) (470)
Financing
Cancellation of shares (355) (205) (560)
Own shares held in Treasury (405) (28) (433)
Net cash outflow from financing (760) (233) (993)
Decrease in cash in the year - (1,463) (1,463)
Cash Flow Statement
for the year ended 28 February 2007
Ordinary Shares D Shares Total
£'000 £'000 £'000
Operating activities
Dividend income received 126 27 153
Investment income received 200 340 540
Other income received 7 - 7
Deposit interest received 47 92 139
Investment management fees paid (598) (496) (1,094)
Other cash payments (131) (89) (220)
Intercompany account movement 997 (997) -
Net cash inflow/(outflow) from operating 648 (1,123) (475)
activities
Capital expenditure and financial investment
Purchase of qualifying investments (2,228) (3,322) (5,550)
Purchase of non-qualifying investments (102) - (102)
Disposal of qualifying investments 4,460 7,793 12,253
Disposal of non-qualifying investments 181 - 181
Net cash inflow from capital expenditure and 2,311 4,471 6.,782
financial investment
Equity dividends paid
Revenue dividends paid (122) (321) (443)
Capital dividends paid (1,164) (209) (1,373)
(1,286) (530) (1,816)
Net cash inflow before financing 1,673 2,818 4,491
Financing
Cancellation of shares (1,186) (69) (1,255)
Net cash outflow from financing (1,186) (69) (1,255)
Increase in cash in the year 487 2,749 3,236
Notes to the financial statements
for the year ended 29 February 2008
The principal activity of the Company is that of a Venture Capital Trust. It has
been approved by HM Revenue & Customs as a Venture Capital Trust under Part 6 of
the Income Taxes Act 2007.
1. About the Investment Manager
Close Brothers AIM VCT PLC is managed by Close Investments Limited. Close
Investments Limited is authorised and regulated by the Financial Services
Authority and is a subsidiary of Close Brothers Group plc.
2. Accounting convention
The financial statements have been prepared under the historical cost
convention, modified by the revaluation of certain 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 the current and prior years.
3. Accounting policies
The financial statements are prepared in accordance with United Kingdom
applicable accounting standards. The particular accounting policies are
described below:
Investments
In accordance with Financial Reporting Standard ('FRS') 26 'Financial
Instruments: Measurement', equity investments, units in an authorised UK smaller
company unit trust and debt securities are designated as fair value through
profit or loss ('FVTPL').
Qualifying investments, non-qualifying AIM investments and non-qualifying
listed investments are valued at either the closing bid prices or last traded
price at the end of the accounting period. The total column of the Income
Statement represents the Company's profit and loss account. Fair value movements
on equity investments and gains and losses arising on the disposal of
investments are reflected in the capital column of the Income Statement in
accordance with the AITC's SORP.
Investments are recognised as financial assets on legal completion of the
investment contract and are de-recognised on legal completion of the sale of an
investment.
The Directors are conscious of the fact that because shares are traded on AIM,
this does not guarantee their liquidity. The nature of AIM investments is such
that the prices can be volatile and realisation may not achieve current book
value, especially when such a sale represents a significant proportion of that
company's market capital. Nevertheless, on the grounds that the investments are
not intended for immediate realisation, the Directors regard bid or last traded
prices as the most objective and appropriate method of valuation.
Investment income
Dividends receivable on quoted equity are taken to revenue on an ex-dividend
basis. Returns on listed debt securities and cash on deposit are recognised on
an accruals basis using the interest rate applicable to the instrument or
deposit at the time.
Investment management fees and other expenses
All expenses are accounted for on an accruals basis. Expenses are charged
through the revenue account except as follows:
• expenses which are incidental to the acquisition of an
investment are included within the cost of the investment;
• expenses which are incidental to the disposal of an investment
are deducted from the disposal proceeds of the investment; and
• expenses are allocated between capital and revenue where a
connection with maintenance or enhancement of the value of the investments held
can be demonstrated. In respect of the Investment Manager's fee, 75 per cent has
been allocated to the realised capital reserve and 25 per cent to revenue in the
Income Statement.
Performance incentive
In the event that a performance fee crystallises, 100 per cent of the fee will
be allocated to the realised capital reserve, in order to reflect the Director's
expected long-term view of the nature of the investments return of the Company.
Taxation
Taxation is applied on a current basis in accordance with FRS 16 'Current Tax',
and is based on the return before taxation for the year. Taxation associated
with capitalised expenses is applied in accordance with the SORP. In accordance
with FRS 19 'Deferred Tax', deferred taxation is provided in full on timing
differences that result in an obligation at the Balance Sheet date to pay more
tax or a right to pay less tax, at a future date, at rates expected to apply
when they crystallise based on current tax rates and law. Timing differences
arise from the inclusion of items of income and expenditure in taxation
computations in periods different from those in which they are included in the
financial statements. Deferred tax assets are recognised to the extent that it
is regarded as more likely than not that they will be recovered.
The specific nature of taxation of venture capital trusts means that it is
unlikely that any deferred tax will arise. The Directors have considered the
requirements of FRS 19 and do not believe that any provision should be made.
Reserves
The realised capital reserve contains gains and losses on the realisation of
investments, capital dividends paid to shareholders and investment management
fees allocated to the capital reserve and taxation thereon. The unrealised
capital reserve contains increases and decreases in the valuation of investments
held at the year end. The special reserve is distributable and is primarily used
for the cancellation of the Company's share capital. The capital redemption
reserve accounts for amounts by which the issued share capital is diminished
through the repurchase of the Company's own shares.
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 is
paid or approved by shareholders at an Annual General Meeting.
D shares
Until such time that Ordinary shares are converted into D shares in May 2008,
all investments and returns attributable to this class of share will be
separately identifiable from existing Ordinary shares. All residual expenses
will be allocated on the basis of total funds raised for each class of share.
4. (Losses)/gains on Investments
Year to 29 February 2008 Year to 28 February 2007
Ordinary D Ordinary D
Shares Shares Total Shares Shares Total
£'000 £'000 £'000 £'000 £'000 £'000
Realised (losses)/gains on disposals (1,587) 983 (604) 788 1,047 1,835
(Decrease)/increase in unrealised (4,849) (2,569) (7,418) 1,040 288 1,328
revaluation
Total (losses)/gains for the year (6,436) (1,586) (8,022) 1,828 1,335 3,163
5. Investment Income
Year to 29 February 2008 Year to 28 February 2007
Ordinary D Ordinary D
Shares Shares Total Shares Shares Total
£'000 £'000 £'000 £'000 £'000 £'000
Income from investments
UK franked investment dividend income 135 62 197 136 30 166
UK unfranked investment income 158 330 488 197 349 546
293 392 685 333 379 712
Other income
Bank deposit interest 76 102 178 47 114 161
Other income - - - 7 - 7
Total income 369 494 863 387 493 880
All of the Company's income is derived from operations based in the United
Kingdom.
6. Tax (credit)/charge on ordinary activities
Ordinary Shares D Shares
Year to 29 February 2008 Year to 29 February 2008
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
UK corporation tax
(3) - (3) 59 - 59
Tax attributable to capital expenses - - - - (56) (56)
(3) - (3) 59 (56) 3
Ordinary Shares D Shares
Year to 29 February 2007 Year to 29 February 2007
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
UK corporation tax
(6) - (6) 60 - 60
Tax attributable to capital expenses - - - - (54) (54)
(6) - (6) 60 (54) 6
The standard rate of tax for the year, based on the UK standard rate of
corporation tax is 30 per cent (2007: 30 per cent). The actual tax charge for
the current and previous year differs from the amount resulting from applying
the standard rate, for the reasons set out in the following reconciliation.
Ordinary Shares D Shares
Year to 29 February 2008 Year to 29 February 2008
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Return on ordinary activities before
taxation 122 (6,834) (6,712) 305 (1,928) (1,623)
Tax on profit at the standard rate of 30% 37 (2,050) (2,013) 91 (578) (487)
Factors affecting the charge
Non-taxable income (41) - (41) (19) - (19)
Marginal relief adjustment 1 - 1 (13) - (13)
Excess management expenses - 119 119 - 46 46
Non-taxable losses on investments - 1,931 1,931 - 476 476
Total (3) - (3) 59 (56) 3
Ordinary Shares D Shares
Year to 29 February 2007 Year to 29 February 2007
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Return on ordinary activities before
taxation 110 1,380 1,490 291 997 1,288
Tax on profit at the standard rate of 30% 33 414 447 87 299 386
Factors affecting the charge
Non-taxable income (41) - (41) (9) - (9)
Marginal relief adjustment 2 - 2 (18) 47 29
Excess management expenses - 134 134 - - -
Non-taxable losses on investments - (548) (548) - (400) (400)
Total (6) - (6) 60 (54) 6
(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 per cent (2007: 30 per cent) and
allocating the relief in accordance with the SORP.
(ii) No deferred tax asset liability has arisen in the year.
(iv) The Company has not recognised a deferred tax asset on
timing differences relating to the management expenses going forward due to the
uncertainty surrounding its recovery. The amount of this unrecognised asset is
£561,000 (2007: £439,000). The asset would be recovered if the Company made
sufficient taxable gains in the future to utilise these losses.
7. Dividends
Year to 29 February 2008 Year to 29 February 2007
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Dividends paid on equity shares:
- Dividends of 5.00 pence per Ordinary Share
(2007: 4.20 pence) paid August and December 2007 - 1,468 1,468 122 1,164 1,286
- Dividends of 5.00 pence per D Share
(2007: 3.30 pence) paid August and December 2007 278 516 794 321 209 530
278 1,984 2,262 443 1,373 1,816
In addition to the above dividends the Board has declared the following first
dividend for the year ended 28 February 2009:
- 2.50 pence per Ordinary Share (comprising 0.60 pence to be paid out of revenue
and 1.90 pence to be paid out of realised capital gains)
- 2.50 pence per D Share (comprising 0.60 pence to be paid out of revenue and
1.90 pence to be paid out of realised capital gains)
In accordance with FRS 21 these dividends have not been accrued as a liability
in these financial statements. The dividends are subject to HM Revenue &
Customs' approval.
8. Return per share
Year to 29 February 2008 Year to 29 February 2007
Revenue Capital Revenue Capital
Basic (pence per share)
- Ordinary Shares 0.42 (23.22) 0.38 4.50
- D Shares 1.55 (11.78) 1.44 6.55
Ordinary Shares
The revenue return per Ordinary Share is based on the revenue return on ordinary
activities after taxation of £125,000 (2007: £116,000), whilst the capital
return is based on the capital loss on ordinary activities after taxation of £
(6,834,000) (2007: profit £1,380,000). This is in respect of 29,426,743 Ordinary
Shares (2007: 30,655,972 shares), being the weighted average number of Ordinary
shares in issue during the year.
There are no dilutive elements and hence the basic return per share is the same
as the diluted return per share.
D Shares
The revenue return per D Share is based on the revenue return on ordinary
activities after taxation of £246,000 (2007: £231,000), whilst the capital
return is based on the capital loss on ordinary activities after taxation of £
(1,872,000) (2007: profit £1,051,000). This is in respect of 15,882,684 D Shares
(2007: 16,051,466 shares), being the weighted average number of D shares in
issue during the year.
There are no dilutive elements and hence the basic return per share is the same
as the diluted return per share.
9. Called up share capital
29 February 2008 29 February 2007
£'000 £'000
Authorised:
45,000,000 (2007: 45,000,000) Ordinary Shares of 50 pence 22,500 22,500
each
25,000,000 (2007: 25,000,000) D Shares of 50 pence each 12,500 12,500
35,000 35,000
Allotted, called up and fully paid (including Treasury
shares)
29,522,615 (2007: 29,955,440) Ordinary Shares of 50 pence each 14,762 14,978
15,846,847 (2007: 16,015,183) D Shares of 50 pence each 7,923 8,008
22,685 22,986
All classes of shares rank pari passu as to rights to attend and vote at any
general meeting of the Company.
The rights of members to receive dividends is derived from the net income
attributable to the net assets of each class of share.
The capital and assets of the Company shall on winding up, prior to the
conversion of each class of shares, be divided amongst the holders of each class
of share pro rata according to their shareholding.
During the year the Company purchased for cancellation 432,825 Ordinary Shares
and 168,341 D shares at a cost of £353,878 and £204,767 respectively. This
represented 1.44 per cent of the Ordinary Shares and 1.05 per cent of the D
Shares in issue at 28 February 2007.
10. Net asset value per share
Ordinary Shares
Net asset value per share is based on net assets attributable to Ordinary
shareholders of £17,346,000 (2007: £26,288,000) and on 28,883,802 (2007:
29,955,440) Ordinary shares in issue, excluding shares held in Treasury, at the
year end.
D Shares
Net asset value per share is based on net assets attributable to D shareholders
of £17,437,000 (2007: £20,088,000) and 15,818,800 (2007: 16,015,188) D shares in
issue, excluding shares held in Treasury, at the year end.
11. Reconciliation of cash (outflow)/inflow from operating activities
29 February 2008 29 February 2007
Ordinary D Ordinary D
Shares Shares Total Shares Shares Total
£'000 £'000 £'000 £'000 £'000 £'000
Net revenue before finance costs and taxation 122 305 427 110 291 401
Investment management fee charged to capital (398) (341) (739) (448) (338) (786)
Decrease/ (increase) in operating debtors 16 19 35 (9) (33) (42)
Increase/ (decrease) in operating creditors 13 25 38 (2) (46) (48)
Intercompany account movement 17 (17) - 997 (997) -
Net cash (outflow)/inflow from operating (230) (9) (239) 648 (1,123) (475)
activities
12. Related party transactions
Close Investments Limited, as Investment Manager of the Company is considered to
be a related party by virtue of its management contract with the Company. During
the year, services with a total value of £986,000 were purchased by the Company
from Close Investments Limited. At the financial year end, the amount due to
Close Investments Limited disclosed under creditors was £35,000.
As at 29 February 2008 and the date of this announcement, Close Investments
Limited held 7,050 Ordinary Shares and 8,264 D Shares in the Company.
Buybacks of shares for cancellation during the year were transacted through
Winterflood Securities Limited, a subsidiary of Close Brothers Group plc, the
ultimate parent company of the Investment Manager, Close Investments Limited. A
total of 331,189 Ordinary Shares and 164,754 D Shares were purchased at a cost
of £270,421 and £199,286 respectively. The average price paid was 82 pence per
Ordinary share and 121 pence per D share.
Buybacks of shares to be held in Treasury were also transacted through
Winterflood Securities Limited. A total of 508,512 Ordinary shares and 28,047 D
Shares were purchased at a cost of £331,815 and £27,741 respectively. The
average price paid was 65 pence per Ordinary share and 99 pence per D share.
13. Post balance sheet events
Conversion of Ordinary shares into D shares
At an Extraordinary General Meeting and separate class meetings held on 22 April
2008, shareholders approved extraordinary resolutions to revise the merger
arrangement. The revised arrangements made to the Articles of Association will
merge the two share classes by converting the Ordinary Shares into D Shares ('
the Conversion'), at a ratio of 0.5448 D shares for each Ordinary share, and
then redesignating all of the D Shares into new Ordinary Shares ('New Shares')
on 31 May 2008.
Since 29 February 2008 the Company has completed the following investments:
• Invested £2,000 in Pressure Technologies plc
Since 29 February 2008 the Company has completed the following disposals:
• Tanfield Group plc for proceeds of £413,000
• Freedom4 Communications plc for proceeds of £486,000
14. 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 29 February 2008 and 28 February 2007, and is unaudited. The
information for the year ended 28 February 2007 is derived from the statutory
accounts for the financial year, which have been delivered to the Registrar of
Companies. The auditors reported on those accounts; their report was unqualified
and did not contain a statement under Section 237(2) or (3) of the Companies Act
1985.
15. 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:
Andrew Buchanan / Kate Tidbury Karen Wagg
Close Investments Limited Polhill Communications
Tel: 020 7426 4000 Tel: 020 7655 0540
This information is provided by RNS
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