Final Results

Polar Capital Technology Trust PLC 13 June 2006 POLAR CAPITAL TECHNOLOGY TRUST PLC Unaudited Preliminary Results for the Year ended 30 April 2006 13 June 2006 ------------ • Net assets increase by 35% and share price by 48% against benchmark of +36%. • World equity markets delivered excellent returns for year to 30 April 2006 and your Company enjoyed a successful year. • Smaller cap technology stocks return to favour in the USA. • Dramatic growth in availability of cheap broadband communications driving change. • Multiple new technologies appear to be approaching inflection points. • Action in broader equity markets likely to dominate technology sector prospects over shorter term, but we remain optimistic about prospects for a new cycle emerging. • Ben Rogoff appointed portfolio manager; Craig Mercer appointed deputy manager. • Brian Ashford-Russell remains a director, focusing on asset allocation and strategy. FINANCIAL HIGHLIGHTS -------------------- (Unaudited) (Restated) Movement Year ended Year ended % 30 April 2006 30 April 2005 ----------- -------------- ----------- Net assets per ordinary share 255.88p 189.77p +34.8 (note1) Price per ordinary share 245.00p 165.50p +48.0 Total net assets £358,202,000 £236,439,000 +51.5 (note 2) Shares in issue 139,990,821 115,320,162 +21.4 --------------------- ----------- -------------- ----------- Note 1: On 30 September 2005, all outstanding warrants were exercised resulting in the issue of 19,195,659 new shares. Also on 6 February 2006 5,752,000 ordinary shares of 25p were issued. The net assets per ordinary share shown for 30 April 2005 is the diluted NAV which includes an adjustment to reflect a theoretical exercise of warrants and a further adjustment for IFRS. The undiluted net assets per share at 30 April 2005 adjusted for IFRS is 205.03p. Note 2: The total net assets figures have been calculated in accordance with IFRS and the 30 April 2005 figure restated. Note 3: As permitted by paragraph 36A of IFRS1 - First-time adoption of International Accounting Standards the comparative information presented in the financial statements has not been restated to comply with IAS 39 Financial Instruments: Recognition and Measurement. --------------------------------------------------- For further information on Polar Capital Technology Trust please contact: Brian Ashford-Russell or Ben Rogoff on 020 7227 2700 OR Adventis Financial PR 020 7034 4756 / 020 7034 4757 Annabel Loveluck 07817 729 778 Annie Evangeli 07778 507 162 For further information on Polar Capital Partners please contact: Financial Dynamics Ed. Gascoigne-Pees 020 7269 7132 CHAIRMAN'S REPORT World equity markets delivered excellent returns for the year to 30 April 2006 and your Company enjoyed a successful year. Our NAV per share, although negatively impacted by the warrant conversion in September 2005, rose by 34.8%, slightly behind our composite benchmark but ahead of the Dow Jones World Technology Index and most other global technology indices. Encouragingly, the discount at which the Company's shares traded relative to their underlying net asset value diminished thereby further enhancing shareholder returns. The wall that markets climbed over the last twelve months was not short of worries. Indeed, oil prices over $70 and soaring commodity prices, US 10 year bond yields climbing above 5% and bellicose rhetoric from a number of world leaders might have been expected to unsettle investors' nerves. Instead, there were just a few short-lived setbacks on the climb to the levels of 30 April. The global economy has been buoyant with a healthy increase in the number of its cylinders firing in the right direction. In particular, the Japanese economy gathered more self sustaining momentum while that in Europe has been led upwards by an increasingly confident corporate sector. Growth elsewhere in Asia has been robust and broader based, while in the USA there are finally some signs that the business sector is taking up the running from the debt-burdened but still surprisingly resilient household sector. Global imbalances, however, remain a concern although their long anticipated consequences for the US dollar failed to materialise: the dollar actually rose over our financial year. Strong economic growth translated to outstanding company results, particularly so as the corporate sector - contrary to most expectations - managed to secure a further rise in margins. With companies still cautious about capital spending, cash flows soared and inevitably attracted the attentions of both corporate and private equity based predators. Merger and acquisition activity took place at levels not seen in years and naturally helped to lift equity markets. While the vast majority of attention has been focused on the energy and mining areas, technology shares managed to keep pace with the market. Notwithstanding deteriorating conditions in the long mature PC market and growing price pressure in some areas of the medical industry, technology earnings rose strongly. The sector benefited from a modest improvement in its relative rating, the result more of a reduction in the rate of technology mutual fund redemptions than of a marked increase in investor interest. Smaller cap technology stocks did, however, see an encouraging return of investor interest, a development fully justified by the relative earnings performance of the emerging generation of technology companies as compared to their more mature counterparts. Many of these smaller companies represent interesting plays on the emergence of a whole wave of new technologies that are increasingly confining older and more conventional technology areas to the shade. In that and other senses, the last year has done much to reinforce our belief in the prospects for a new technology cycle. For much of the last two years, the global economy appears to have benefited from the collaring effect on its growth path of a number of natural stabilisers. When growth has been at the top end of its range, commodity prices and interest rates have risen thereby dampening the rate of expansion and ensuring that overheating was avoided. When growth has slowed, interest rates and commodity prices have retreated stimulating consumer spending and reaccelerating the economy. To date, these natural stabilisers have worked well in producing the much discussed 'Goldilocks' economy - not too fast and not too slow. Two of the biggest risks to the maintenance of this scenario are a rise in inflation and a collapse in the US housing market. The latter has certainly slowed but appears at this point to be entering a subdued phase rather than a free fall (much as has been the case with our own housing market in the UK). The new Federal Reserve Chairman, Mr Bernanke has a difficult path to tread as he attempts to balance the need to stave off inflationary risks with the desire to avoid tightening too far and for too long. The chalice that he was passed by his predecessor may yet prove to be of a more poisoned form than was apparent from the eulogies that accompanied Dr Greenspan's retirement. After our year end, there was a major correction in equity markets during the middle weeks of May with most indices falling sharply and the Dow Jones World Technology Index dropping 10% to levels last seen in November. There had been some signs earlier in the Spring that investor optimism was reaching excessive levels but the correction was triggered by an unexpectedly large rise in US inflation in April. This led to worries about higher interest rates and lower economic growth. Investors seem to have experienced a serious loss of risk appetite which may hold back markets in our new financial year. For the moment, we are preserving the modest levels of liquidity established in April but in some areas the scale of the falls is beginning to tempt us. Action in the broader equity market is likely to dominate the prospects for the technology sector over the shorter term. However, we have been encouraged by developments at a fundamental level. The continuing commoditisation of broadband communications capacity is ushering in an era of exciting new applications while the impact of technology in areas generally considered outside the core (but increasingly outdated) definition of the industry is hugely under-appreciated. The negative attitudes of both investors and corporations to technology are slowly softening and, with capital spending as a percentage of sales beginning to recover around the world, technology companies should be significant beneficiaries. We remain optimistic about the emergence of a new cycle but believe that the leaders of that cycle will be a very different group of companies from those with which most investors are familiar. During the last quarter of our financial year, our manager, Brian Ashford-Russell, took a sabbatical leave. This gave the Board an opportunity closely to watch how the deputy manager and the rest of Polar's technology team would fare in his absence. The Board was very happy with the results and, as a consequence, now feel it an appropriate time to adopt the management changes which have been agreed with our fund managers, Polar Capital LLP. Ben Rogoff, who has been responsible for the Company's US portfolio over the last three years, will take over as manager while Craig Mercer, our Asian manager, will assume the role of deputy manager. The Board are delighted that Brian Ashford-Russell has agreed to continue as a Director both in order to provide continuity and to work closely with his successor in defining and developing the Company's strategy. Sadly, two of our directors resigned earlier this year due to the pressure of their other commitments. Cor Stutterheim had been a Director of the Company since 1998 and David Rhodes since the Company's foundation in 1996. We are immensely grateful to them for their contribution over the last nine years. The Board has begun the task of seeking suitable replacements. Over the last two years, the Company has bought back a substantial amount of shares. One unforeseen consequence of this has been to raise the high water mark used in the calculation of any performance fees payable. The Board is taking the opportunity afforded by a review of the management contract to look at the high water mark calculation and is considering moving to a high water mark method based on assets per share rather than on the total amount of assets. The objective is to achieve a more equitable calculation method and effectively return the Company to the position prevailing before the buy backs. Details of this change will be announced shortly. In addition, the Board has changed the Company's benchmark to the Dow Jones World Technology Index. This index has now been in existence for more than seven years, is generally accepted as a global technology benchmark and has the considerable merit of avoiding the complexity and opaqueness of our current composite benchmark. It is also more in keeping with the benchmarks used by the Company's peer group. This change takes effect from 1 May 2006. Richard Wakeling 13 June 2006 Consolidated Income Statement for the year ended 30 April 2006 (Unaudited) (Audited) Year ended 30 April 2006 Year ended 30 April 2005 Revenue Capital Total Revenue Capital Total Return Return Return Return Return Return £'000 £'000 £'000 £'000 £'000 £'000 -------- -------- -------- -------- -------- -------- Investment income 2,629 - 2,629 2,573 - 2,573 Other operating income 692 - 692 721 - 721 Gain/(losses) on investments held at fair value - 89,964 89,964 - (13,778) (13,778) -------- -------- -------- -------- -------- -------- Total income 3,321 89,964 93,285 3,294 (13,778) (10,484) -------- -------- -------- -------- -------- -------- Expenses Investment management fee (3,465) - (3,465) (3,224) - (3,224) Other administrative expenses (671) - (671) (609) - (609) -------- -------- -------- -------- -------- -------- Profit/(loss) before finance costs and tax (815) 89,964 89,149 (539) (13,778) (14,317) Finance costs (454) - (454) (501) - (501) -------- -------- -------- -------- -------- -------- Profit/(loss) before tax (1,269) 89,964 88,695 (1,040) (13,778) (14,818) Tax (193) - (193) (154) - (154) -------- -------- -------- -------- -------- -------- Net Profit/(loss) for the year (1,462) 89,964 88,502 (1,194) (13,778) (14,972) -------- -------- -------- -------- -------- -------- Earnings per ordinary share (pence) Basic 69.58p (11.42p) -------- -------- -------- -------- -------- -------- Diluted 67.17p (11.42p) -------- -------- -------- -------- -------- -------- The total column of this statement represents the Group's Income Statement, prepared in accordance with IFRS. The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Trust Companies. All items in the above statement derive from continuing operations. All income is attributable to the equity holders of Polar Capital Technology Trust Plc. There are no minority interests. Consolidated and Company Statements of Changes in Equity for the year ended 30 April 2006 Ordinary Capital Share premium Warrant reserve Warrant Retained Total share redemption exercise earnings capital reserve reserve £'000 £'000 £'000 £'000 £'000 £'000 £'000 ------- -------- ------- ------- ------- ------- ------- Group and Company 36,832 713 88,842 7,147 940 172,162 306,636 Total equity at 30 April 2004 as previously reported Loss for the year to 30 April 2005 - - - - - (14,972) (14,972) Exercise of warrants for ordinary shares 430 - 1,292 (543) 543 - 1,722 Repurchase of warrants - - - (425) - (438) (863) Shares bought back for cancellation (8,432) 8,432 - - - (55,286) (55,286) ------- -------- ------- ------- ------- ------- ------- Total equity at 30 April 2005 as previously reported 28,830 9,145 90,134 6,179 1,483 101,466 237,237 Adjustment to revalue portfolio to bid at 30 April 2005 - - - - - (798) (798) ------- -------- ------- ------- ------- ------- ------- Opening balance at 1 May 2005 to comply with IFRS 28,830 9,145 90,134 6,179 1,483 100,668 236,439 Profit for the year to 30 April 2006 - - - - - 88,502 88,502 Exercise of warrants for ordinary shares 4,799 - 14,397 (6,053) 6,053 - 19,196 Repurchase of warrants - - - (126) - (150) (276) Shares bought back for cancellation (69) 69 - - - (468) (468) Issue of ordinary share capital 1,438 - 13,371 - - - 14,809 ------- -------- ------- ------- ------- ------- ------- Total equity at 30 April 2006 34,998 9,214 117,902 - 7,536 188,552 358,202 ------- -------- ------- ------- ------- ------- ------- Consolidated and Company Balance Sheets at 30 April 2006 (Unaudited) (Audited) Group Company Group Company 30 April 30 April 2006 30 April 2005 30 April 2005 2006 £'000 £'000 £'000 £'000 ----------- ----------- ----------- ----------- Non current assets Investments held at fair value 362,701 363,113 220,341 222,128 ----------- ----------- ----------- ----------- Current assets Other receivables 4,350 7,500 29,408 32,464 Cash and cash equivalents 42,050 38,488 58,222 53,379 ----------- ----------- ----------- ----------- 46,400 45,988 87,630 85,843 Total assets 409,101 409,101 307,971 307,971 ----------- ----------- ----------- ----------- Current liabilities Other payables (7,493) (7,493) (26,468) (26,468) Bank loans (19,318) (19,318) (13,774) (13,774) ----------- ----------- ----------- ----------- (26,811) (26,811) (40,242) (40,242) Total assets less current liabilities 382,290 382,290 267,729 267,729 Non current liabilities Bank loans (24,088) (24,088) (30,492) (30,492) ----------- ----------- ----------- ----------- Net assets 358,202 358,202 237,237 237,237 ----------- ----------- ----------- ----------- Equity attributable to equity shareholders Ordinary share capital 34,998 34,998 28,830 28,830 Capital redemption reserve 9,214 9,214 9,145 9,145 Share premium 117,902 117,902 90,134 90,134 Warrant reserve - - 6,179 6,179 Warrant exercise reserve 7,536 7,536 1,483 1,483 Retained earnings 188,552 188,552 101,466 101,466 ----------- ----------- ----------- ----------- Total equity 358,202 358,202 237,237 237,237 ----------- ----------- ----------- ----------- Consolidated and Company Cash Flow Statements for the year ended 30 April 2006 (Unaudited) (Audited) 30 April 2006 30 April 2005 Group Company Group Company £'000 £'000 £'000 £'000 Cash flows from operating activities Profit/(loss) before finance costs and tax 89,149 89,149 (14,317) (14,317) ----------- ----------- ---------- ---------- Adjustments for: (Increase)/decrease in investments (143,941) (142,567) 53,220 53,044 Decrease in receivables 25,072 24,978 5,147 5,061 (Decrease) in payables (17,742) (17,742) (4,782) (4,782) (136,611) (135,331) 53,585 53,323 ----------- ----------- ---------- ---------- Net cash from operating activities before tax (47,462) (46,182) 39,268 39,006 Taxation paid (207) (207) (140) (140) ----------- ----------- ---------- ---------- Net cash from operating activities (47,669) (46,389) 39,128 (38,866) Cash flows from financing activities Exercise of warrants 19,196 19,196 1,722 1,722 Repurchase of warrants (405) (405) (734) (734) Cost of shares repurchased (1,574) (1,574) (55,269) (55,269) Issue of share capital 14,809 14,809 - - Loans taken out (25,102) (25,102) (10,396) (10,396) Loans matured 24,399 24,399 10,396 10,396 Finance costs (452) (452) (506) (506) ----------- ----------- ---------- ---------- Net cash from financing activities 30,871 30,871 (54,787) (54,787) ----------- ----------- ---------- ---------- Net decrease in cash and cash equivalents (16,798) (15,518) (15,659) (15,921) Cash and cash equivalents at the beginning of the year 58,222 53,379 74,254 69,673 Effect of foreign exchange rate changes 626 627 (373) (373) ----------- ----------- ---------- ---------- Cash and cash equivalents at the end of the year 42,050 38,488 58,222 53,379 ----------- ----------- ---------- ---------- NOTES 1. General Information The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), which comprise standards and interpretations approved by the International Accounting Standards Board (IASB) and International Accounting Standards Committee (IASC), as adopted by the European Union. The Group's functional currency and the currency used for presentation of these financial statements is pounds sterling because that is the currency which is most relevant to the majority of the Company's shareholders and creditors and the currency in which most of the Group's operating expenses are paid. These are the Group's first annual results prepared in accordance with IFRS. Previous financial statements were prepared in accordance with UK Generally Accepted Accounting Principles (UK GAAP) including the Statement of Recommended Practice ('the SORP') Financial Statements of Investment Trust Companies' issued by the Association of Investment Trust Companies ('the AITC') in January 2003 (revised December 2005). The date of transition for the Group is 1 May 2004. The Group is required to determine its IFRS accounting policies and apply them retrospectively to establish its opening balance sheet under IFRS except as noted below. In preparing these financial statements certain accounting and valuation methods previously applied in UK GAAP financial statements have been amended to comply with IFRS as follows: Under IAS 39 'Financial Instruments: Recognition and Measurement', the Company has designated its investments as held at fair value through profit or loss resulting in a move from a mid-market price to a bid price basis and hence a change in the value of the investment portfolio. As per the Company's investment portfolio, the trading stock of PCT Finance Limited has also been recassified as held at fair value through profit or loss. These amendments represent a change in accounting policy. As permitted by paragraph 36A of IFRS1 First-time adoption of International Accounting Standards the comparative information has not been restated to comply with IAS 39 Financial Instruments: Recognition and Measurement. The principal accounting policies followed are set out below: 2. Accounting Polices (a) Basis of Preparation The consolidated financial statements have been prepared on a going concern basis under the historical cost convention, as modified by the inclusion of investments at fair value. The principal accounting policies adopted are set out below. Where presentational guidance, set out in the SORP is consistent with the requirements of IFRS, the directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP. (b) Basis of consolidation The Group financial statements consolidate the financial statements of the Company and entities controlled by the Company (its wholly owned subsidiary undertaking, PCT Finance Limited) made up to 30 April each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. All intra-group transactions, balances, income and expenses are eliminated on consolidation. The Income Statement, is only presented in consolidated form, as provided by Section 230 of the Companies Act 1985. (c) Presentation of Consolidated Income Statement In order to better reflect the activities of an investment trust company, and in accordance with the guidance set out by the AITC, supplementary information which analyses the Consolidated Income Statement between items of a revenue and capital nature has been presented alongside the Consolidated Income Statement. In accordance with the Company's status as a UK investment company under section 266 of the Companies Act 1985, net capital returns may not be distributed by way of dividend. Additionally, the net revenue is the measure the directors believe appropriate in assessing the Group's compliance with certain requirements set out in section 842 of the Income and Corporation Taxes Act 1988. (d) Income Dividends receivable from equity shares are taken to the revenue return column of the Consolidated Income Statement on an ex-dividend basis. Special dividends are recognised on an ex-dividend basis and may be considered to be capital items. The facts and circumstances are considered on a case by case basis before a conclusion on appropriate allocation is reached. Where the Company has received dividends in the form of additional shares rather than in cash, the amount of the cash dividend foregone is recognised in the revenue return column of the Consolidated Income Statement. Any excess in value of shares received over the amount of the cash dividend foregone is recognised in the capital return column of the Consolidated Income Statement. The fixed returns on debt securities and non-equity shares are recognised under the effective interest rate method. Bank interest and other income receivable are accounted for on an accruals basis. The dealing profits of the subsidiary undertaking, representing realised gains and losses on the sale of non-current asset investments, are dealt with in the Group financial statements as a revenue item. (e) Expenses and Finance costs All expenses, including the management fee are accounted for on an accruals basis. Expenses have been presented as revenue items except as follows: -any performance fees payable are allocated wholly to capital, reflecting the fact that, although they are calculated on a total return basis, they are expected to be attributable largely, if not wholly, to capital performance. -transaction costs incurred on the acquisition or disposal of investments are expensed and included in the costs of acquisitions or deducted from the proceeds of sale as appropriate. Finance costs are calculated using the effective yield method and are accounted for on an accrual basis. (f) Taxation The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the Consolidated Income Statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax substantively enacted at the balance sheet date. In line with the recommendations of the SORP, the allocation method used to calculate tax relief on expenses presented against capital returns in the supplementary information in the Consolidated Income Statement is the 'marginal basis'. Under this basis, if taxable income is capable of being offset entirely by expenses presented in the revenue return column of the Consolidated Income Statement, then no tax relief is transferred to the capital return column. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Investment trusts which have approval as such under section 842 of the Income and Corporation Taxes Act 1988 are not liable for taxation on capital gains. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the Consolidated Income Statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. (g) Investments When a purchase or sale is made under contract, the terms of which require delivery within the timeframe of the relevant market, the investments concerned are recognised or derecognised on the trade date. On initial recognition the Group has designated all of its investments as held at fair value through profit or loss as defined by IFRS. All investments are measured at subsequent reporting dates at fair value, which is either the bid price or the last traded price, depending on the convention of the exchange on which the investment is quoted. Investments in subsidiary undertakings are stated in the Company's accounts at fair value. Investments in unit trusts or OEICs are valued at the closing price, the bid price or the single price as appropriate, released by the relevant investment manager. Fair value for unquoted investments, or for investments for which there is only an inactive market, are established by using various valuation techniques. These may include recent arm's length market transactions, the current fair value of another instrument that is substantially the same, discounted cash flow analysis and option pricing models. Where there is a valuation technique commonly used by market participants to price the instrument and that technique has been demonstrated to provide reliable estimates of prices obtained in actual market transactions, that technique is utilised. Where no reliable fair value can be estimated for such instruments, they are carried at cost, subject to any provision for impairment. Changes in fair value of all investments held at fair value and realised gains and losses on disposal are recognised in the capital return column of the Consolidated Income Statement. All investments held at fair value through profit or loss are subject to an annual assessment of impairment on an annual basis. (h) Investment in associates An associate is an entity over which the Group is in a position to exercise influence, but not control or joint control, through participation in the financial and operating policy decisions of the entity. The Group's associates are accounted for in accordance with IAS 39 Financial Instruments: Recognition and Measurement ('IAS 39') as investments designated at fair value through profit or loss, and therefore, in accordance with paragraph 1 of IAS 28 Investments in Associates ('IAS 28'), equity accounting is not required. (i) Other receivables Other receivables do not carry any interest and are short-term in nature and are accordingly stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts. (j) Cash and cash equivalents Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash. (k) Other payables Other payables are not interest-bearing and are stated at their nominal value. (l) Non current liabilities All bank loans are initially recognised at cost, being the fair value of the consideration received, less issue costs where applicable. After initial recognition these loans are subsequently measured at amortised cost. Amortised cost is calculated by taking into account any discount or premium on settlement. The amounts falling due for repayment within one year are included under current liabilities in the Balance Sheet. (m) Rates of exchange Transactions in foreign currencies are translated into sterling at the rate of exchange ruling on the date of each transaction. Foreign currency assets or liabilities, are taken to the capital return column of the Consolidated Income Statement. (n) Derivative financial instruments The Group's activities expose it primarily to the financial risks of changes in market prices, foreign currency exchange rates and interest rates. Derivative transactions which the Company may enter into comprise forward exchange contracts, the purpose of which is to manage the currency risks arising from the Company's investing activities, quoted options on shares held within the portfolio, or on indices appropriate to sections of the portfolio, the purpose of which is to provide protection against falls in capital values of the holdings. The Group does not use derivative contracts for speculative purposes. The use of financial derivatives is governed by the Group's policies as approved by the Board, which has set written principles for the use of financial derivatives. A derivative instrument is considered to be used for hedging purposes, when it alters the market risk profile of an existing underlying exposure of the Group. The use of financial derivatives by the Group does not qualify for hedge accounting. As a result changes in the fair value of derivative instruments are recognised in the Consolidated Income Statement as they arise. If capital in nature, the associated change in value is presented in the capital return column of the Consolidated Income Statement. (o) Segmental Reporting Geographical segments are considered to be the primary reporting segments. An analysis of investments held and investment income by geographical segment is set out below: 30 April 2006 Value of Gross Income Investments £'000 £'000 North America 177,284 507 Europe 111,529 1,539 Asia 73,888 583 ------------ ----------- Total 362,701 2,629 ============ =========== Analysis of expenses by geographical segment and of profit by geographical segment have not been given as it is not possible to prepare such information in a meaningful way. Analysis of the remaining assets and liabilities by geographical region has not been given as either it is not possible to prepare such information in a meaningful way, or the results are not considered to be significant. Business segments are the secondary reporting segments. The Directors are of the opinion that the Group is engaged in a single business segment with the objective of maximising capital growth for its shareholders through investing in a diversified portfolio of technology companies around the world. 2005 Accounts The figures and financial information for the period ended 30 April 2005 are an extract of the latest published accounts of the Group and do not constitute the statutory accounts for that year. Those accounts have been delivered to the Registrar of Companies and included the report of the auditors which was unqualified and did not contain a statement under either section 237(2) or section 237(3) of the Companies Act 1985. 2006 Accounts The preliminary figures for the year ended 30 April 2006 are an extract from the Group's accounts for that period and do not constitute the statutory accounts for that year. These accounts have not yet been delivered to the Registrar of Companies, nor have the Auditors yet reported on them. Basis of consolidation The Group accounts consolidate the accounts of the Company and its wholly owned subsidiary undertaking, PCT Finance Limited. Copies of Report and Accounts The full annual report and accounts will be posted to shareholders in late June 2006 and copies will be available thereafter from the Company Secretary at the Company's Registered Office, 4 Matthew Parker Street, London SW1H 9NP (020 7227 2700). Annual General Meeting The Annual General Meeting will be held at 12:30 pm on Friday, 21 July 2006 at the offices of UBS Investment Bank, 1 Finsbury Avenue, London EC2M 2PP. ------------------------------------------------ Portfolio Review - Equity Investments over 0.75% of net assets at 30 April 2006 ------------------------------------------------ North America £'000 Stock Activity % of net assets ------ ------------------ ------------------- ----------- 4,808 Qualcomm Wireless IP 1.3% 3,967 Network Appliance Storage hardware 1.1% 3,894 Infosys IT services 1.1% 3,702 Genentech Biotechnology 1.0% 3,537 Lockheed Martin Aerospace/Defence 1.0% 3,412 Apple Computers Computing 1.0% 3,361 iShares Nasdaq Biotechnology 0.9% Biotechnology 3,303 Lam Research Semiconductor capital 0.9% equipment 3,081 Advanced Micro Devices Semiconductors 0.9% 3,010 Automatic Data IT Services 0.8% Processing 2,952 Millipore Life sciences 0.8% 2,917 First Data IT services 0.8% 2,916 Corning Telecom equipment 0.8% 2,851 Agilent Technologies Test and measurement 0.8% 2,810 Amgen Biotechnology 0.8% 2,771 DST Systems IT services 0.8% 2,766 Harris Telecom Equipment 0.8% 2,710 IBM IT Services 0.8% 2,684 Autodesk Design software 0.8% ------ ----------- 61,452 Total investments over 17.2% 0.75% 115,832 Other investments 32.3% ------ ----------- 177,284 Total North American investments 49.5% ------ ----------------------------------- ----------- Europe £'000 Stock Activity % of net assets ------ ------------------ ------------------- ----------- 4,561 Wincor Nixdorf ATM/P O S hardware 1.3% 3,961 SAP Enterprise software 1.1% 3,927 Aveva Software 1.1% 3,886 Fresnius Medical Care Renal care products & 1.1% services 3,626 Atos Origin IT Services 1.0% 3,598 NDS Encryption software 1.0% 3,409 EDB Business Partner IT Services 1.0% 3,392 Sinosoft Software 0.9% 2,972 Inmarsat Satellite operator 0.8% 2,915 Psion Mobile computing 0.8% 2,898 Wacker Chemie Silicon manufacturer 0.8% 2,894 SES Global Satellite operator 0.8% 2,765 Sword IT Services 0.8% 2,759 Nokia Telecom equipment 0.8% 2,725 Austriamicrosystems Semiconductors 0.8% 2,707 GN Store Nord Digital hearing aids 0.8% ------ ----------- 52,995 Total investments over 14.9% 0.75% 42,374 Other investments 11.8% ------ ----------- 95,369 Total European 26.7% investments ------ ------------------ ------------------- ----------- Asia £'000 Stock Activity % of net assets ------ ------------------ ------------------- ----------- 4,428 Nomura Research Institute IT Services 1.2% 4,210 JSR LCD materials 1.2% 4,103 NHN Internet portal 1.1% 4,072 Aruze Gaming equipment 1.1% 4,063 Dena Internet/Mobile commerce 1.1% 3,994 Murata Components 1.1% 3,959 Keyence Components 1.1% 3,840 NEC Computing 1.1% 3,832 Cdnetworks Content delivery services 1.1% 3,592 Sharp Consumer electronics 1.0% 3,543 Kuroda Electric Components 1.0% 3,257 Nippon Sheet Glass Optical equipment 0.9% 3,082 Aiphone Entryphone systems 0.9% 3,035 Konica Minolta Office equipment 0.8% 2,804 Optex Surveillance sensors 0.8% ------ ----------- 55,814 Total investments over 0.75% 15.5% 18,074 Other investments 5.0% ------ ------------ 73,888 Total Asian investments 20.5% ------ ------------------ ------------------- ----------- Portfolio Review - Classification of Investments at 30 April 2006 --------------------------------------------------- TOTAL TOTAL North America Europe Asia 30 April 2006 30 April * 2005 % % % % % -------- ------- ------ -------- -------- Computing 7.9 2.1 3.5 13.5 10.8 Components 12.5 1.3 5.3 19.1 22.2 Software 8.2 7.6 - 15.8 18.3 Services 1.7 3.0 4.0 8.7 2.5 Communications 4.4 2.5 0.4 7.3 4.0 Life Sciences 7.9 3.3 0.9 12.1 12.6 Consumer, Media and Internet 1.9 2.6 3.5 8.0 6.6 Other Technology 4.3 4.0 2.9 11.2 5.8 Unquoted Investments 0.7 0.3 - 1.0 0.6 -------- ------- ------ -------- -------- Equity Investments 49.5 26.7 20.5 96.7 83.4 -------- ------- ------ -------- -------- Money Market Funds - 4.0 - 4.0 7.9 Corporate - - - - 0.7 Bonds Net Current Assets 0.4 2.0 9.0 11.4 26.7 Loans - - (12.1) (12.1) (18.7) -------- ------- ------ -------- -------- Other net assets/(liabil ities) 0.4 6.0 (3.1) 3.3 16.6 -------- ------- ------ -------- -------- Grand total 49.9 32.7 17.4 100.0 - (net assets of £358,202,000) -------- ------- ------ -------- -------- At 30 April 2005 41.9 44.4 13.7 - 100.0 (net assets of £ 236,439,000)* -------- ------- ------ -------- -------- *The net assets at 30 April 2005 and the 30 April 2005 classifications have been adjusted to reflect the impact of IFRS. INDEX CHANGES (total return) over the year to 30 April 2006 Local Currency Sterling Adjusted % % ------------ ---------- Benchmark (to 30 April 2006) - 35.7 Technology Indices: Dow Jones World Technology 25.7 32.1 NYSE Arca Technology 100 24.5 30.9 MS Eurotec (based in US dollars) 29.0 35.5 FTSE Techmark 100 - 35.0 Tecdax 46.5 50.2 Tokyo SE Electronics 50.1 44.9 DS Asia Ex Japan Electronics 24.6 30.9 Market Indices: FTSE World - 33.2 S&P 500 Composite 15.4 21.3 FTSE All-Share - 32.4 FTSE World Europe (ex UK) - 41.8 Tokyo SE (Topix) 53.6 48.3 FTSE World Pacific Basin (ex Japan) - 45.3 EXCHANGE RATES ------------------ ------------ ---------- 30 April 2006 30 April 2005 ------------ ---------- US$ to £ 1.8177 1.9099 Japanese Yen to £ 207.58 200.38 Euro to £ 1.4430 1.4794 ----------------------------------- FUND DISTRIBUTION BY MARKET CAPITALISATION as at 30 April 2006 ----------------------------------- ---------- ---------- Market % of invested Capitalisation assets < $2bn 33.8% $2bn-$10bn 29.6% > $10bn 36.6% This information is provided by RNS The company news service from the London Stock Exchange KRNURNAAR

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