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 The company news service from the London Stock Exchange

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