24th Oct 2007 18:09
Close Brothers Aim Vct PLC24 October 2007 CLOSE BROTHERS AIM VCT PLC HALF-YEARLY FINANCIAL RESULTS 24 October 2007 Announcement of half-yearly financial results for the six months ended 31 August2007. This announcement constitutes the Half-yearly financial report and copiescan also be accessed via www.closeventures.co.uk Close Brothers AIM VCT PLC (the "Company"), which invests in companies listed onthe Alternative Investment Market, across a variety of sectors, today announcesthe half-yearly financial results for the six months ended 31 August 2007. ThisHalf-yearly Financial Report was approved by the Board on 24th October 2007. Interim Management Report The six months to 31st August 2007, even more than the comparable period in theprevious year, proved a most volatile time for stock markets and particularlyfor small companies. The AIM index peaked in July and then fell by over 14 %before recovering slightly to finish the period under review unchanged from thebeginning of the year. Once again it has proved to be an imperfect benchmark asthe widest gyrations have been in the international resource stocks, which meantthat it recovered more quickly from its trough in July than smaller companies ingeneral. These often more illiquid stocks, which are the stocks found in VCTportfolios, did not see their share prices bounce back in the same way. The mostimportant driver of share prices for such companies is the news from them.However uncertain market conditions, reduction in appetite for risk and lack ofliquidity at the smaller end made share prices react more violently to anydisappointments. This did not help the performance of the Net Asset Values inthe period. Although it is disappointing to have to report that in the first six months ofthe year the Net Asset Value of the Ordinary shares fell by 6.6% (after addingback the first interim dividend), the net asset value of the D shares did managea small increase of 2.3% on the same basis. Not surprisingly, the flow of new issues onto AIM has been slow. Nevertheless atthe end of the period the Ordinary share portfolio and the D share portfoliowere respectively 85 % and 65 % invested in qualifying investments. Dividends It is your Board's policy to strive to maintain annual an dividend of at least5.0p per Ordinary and D share, (where applicable subject to HM Revenue & Customsapproval). Ordinary shares The Board has declared a second interim dividend of 2.5p per Ordinary share(2006 : 2.5p) from realised capital profits. D shares The Board has declared a second interim dividend of 2.5p per D share (2006 :1.3p) which is made up of a revenue dividend of 1.0p and a dividend paid out ofrealised capital profits of 1.5p per share. The dividends paid out of realised capital profits are subject to HM Revenue &Customs approval. Performance Market Background Liquidity was poor throughout the summer, with the supply of fundraisingsnoticeably slower. There was some hope that the end of the holiday period wouldrestore some semblance of normality to the market, but the rumblings from thesub prime market gathered momentum and the subsequent Northern Rock debacleprolonged the uncertainty into the Autumn. Throughout the period, results and statements from companies have generally beengood, with no immediate signs of a drop in economic activity. Ordinary Share Portfolio The period under review has been a disappointing one for the Ordinary portfolio,with a good start to the year eroded by the market conditions discussed above.After adding back the 2.5p dividend paid in August, the NAV fell by 6.6%following a similar pattern to last year. Some of the fall was due to collapsesin confidence which resulted in shares being re-rated. For example, the priceof Colliers has suffered with the decline in sentiment towards the propertymarket, leaving its shares yielding 4%. In addition, several of the larger holdings had specific problems whichcontributed to a decline in the net asset value per share in the period.Interlink Foods found itself unable to trade out of its difficulties and wasforced to appoint an administrator after a bid for the company failed. ResearchNow suffered from the hiatus of having to move premises because of the murder ofits financial controller. This affected sales and cost controls, and led to aprofit warning. It has since reported that it is trading well again. PilatMedia, having issued an upbeat statement with its full year figures in March,reported a much less good second quarter which led to reduced profit estimatesfor the year on the back of a delay in the award of two contracts. The shareprice has almost halved, but the second half of the year is expected to seeseveral existing contracts 'go live' which will free up cash and should restoreconfidence in what remains an exciting growth story. Imprint, the recruitmentoperator, has had its share price hit by the failure of a bid together withincreased nervousness about sliding forecasts which has left the shareslanguishing at a discount to its peers. The small holding in Accuma was sold,as the future of the IVA market began to look less certain. The news has not all been bad. Tanfield's shares doubled in the period underreview, and we have continued to take profits for the payment of future capitaldividends. Pipex announced the sale of its broadband business, and itsintention to break up the rest of its business and return cash to shareholders.Revenue Assurance also announced a takeover by Spice Group which has since gonethrough. This will leave us with a qualifying holding in a company exposed togrowing infrastructure maintenance sector. Additionally two new investments were made at a total cost of £0.65m during theperiod. Since the end of August 2007, a further two investments totalling £0.56mhave been made. D Share Portfolio The D share portfolio benefited from its higher weighting in cash against thebackground of turbulent markets described above. Like the Ordinary portfolio,it suffered from the performance of its holdings in Research Now, Pilat andImprint. It also suffered from the malaise in the telecoms market with itsholding in Adept, where the share price fell despite upbeat trading. The portfolio also benefited from a large holding in Tanfield in which we havetaken profits as we have found new investments to take the Revenue cover towardsthe 70% target. During the period, we made 10 new investments at a cost of £3.0moffset by disposals in Tanfield and Accuma of £0.4m. This put the Revenue coverat 65% at the end of August, and with a further £1.1m invested since the periodend it is now around 70%. Outlook Whilst investors remain cautious about risk this will continue to impact onsmaller company share prices. The key question is to what extent the uncertaintywill affect the wider economy, because small companies need a growing economy tothrive. The Chancellor in his Autumn Pre Budget Report reduced his economicgrowth forecasts to 2% but this still represents economic growth and if thisturns out to be correct small companies ought to be able to make progress. As always, the main challenge is finding enough good quality VCT qualifyingissues to invest in. Fortunately your Company can still invest in companies withup to £15m of gross assets and is not subject to the lower limits and otherrestrictions which are enshrined in the last two Finance Acts. The D shareportfolio is now 70 % invested in qualifying investments. Since August larger company shares have recovered on the back of interest ratecuts in America and the hope of UK rates following suit. However it remains tobe seen whether this trend trickles down to smaller companies. If it does, weare likely to see a repeat of what happened last year when the performance ofthe second half of the year more than made up for the disappointing performancein the first half of the year. Michael ReeveChairman24 October 2007 Investment Portfolio Summary as at 31 August 2007 The ten largest equity holdings by value in the Ordinary share portfolio arelisted below: Ordinary share Portfolio Company Activity Fair value % of net assets £'000 Tanfield Group Engineering and electrical vehicle production 1,514 6.4% companyBond International Provider of business software and support 1,401 6.0% solutions to the recruitment and human resource industryPipex Communications Supplier of telecommunication services 908 3.9%Mears Group Domiciliary care provision to the UK and 860 3.7% international property sectorsColliers CRE Provider of real estate solutions 841 3.6%Clapham House Acquirer and developer of restaurants across the 805 3.4% UKPilat Media Global Software provider for the global multi-channel 779 3.3% broadcasting marketClaimar Care Group Provider of domiciliary care services to local 762 3.2% authorities in the Midlands and North-West of UK Zetar Manufacturer of confectionery and snack foods 725 3.1% Cello Group Marketing services group 714 3.0%Total 9,309 39.6%Other equity investments 10,443 44.5%Total equity portfolio 19,752 84.1%Other investments (floating rate 1,917 8.2%notes)Total investments 21,669 92.3%Net current assets 1,806 7.7%Net assets 23,475 100.0% Investment Portfolio Summary as at 31 August 2007 The ten largest equity holdings by value in the D share portfolio are listedbelow: D share Portfolio Company Activity Fair value % of net assets £'000 Tanfield Group Engineering and electrical vehicle production 1,270 6.3% companyClaimar Care Group Provider of domiciliary care services to local 1,027 5.1% authorities in the Midlands and North-West of UKMattioli Woods Provider of pension consultancy and 676 3.4% administration servicesNeuropharm Group Pharmaceutical company specialising in products 583 2.9% for the central nervous systemVertu Motors Acquirer and consolidator of UK based motor 533 2.7% retail businessesClerkenwell Ventures Acquirer, developer and operator of leisure 500 2.5% businessesIdox IT company specialising in information sharing 483 2.4%Work Group Provider of recruitment services 480 2.4%Zetar Manufacturer of confectionery and snack food 453 2.3%Hexagon Human Capital Provider of recruitment services 439 2.2%Total 6,444 32.2%Other equity investments 6,424 32.1%Total equity portfolio 12,868 64.3%Other investments (floating rate 4,278 21.4%notes)Total investments 17,146 85.7%Net current assets 2,852 14.3%Net assets 19,998 100.0% Responsibility Statement The Directors have chosen to prepare the financial statements for the Company inaccordance with United Kingdom Generally Accepted Accounting Practice ("UK GAAP") In preparing these condensed financial statements for the period to 31 August2007, we the Directors, confirm that to the best of our knowledge: (a) the condensed set of financial statements has been prepared in accordancewith pronouncement on interim reporting issued by Accounting Standards Board; (b) the interim management report includes a fair review of the informationrequired by DTR 4.2.7R (indication of important events during the first sixmonths and description of principal risks and uncertainties for the remainingsix months of the year); (c) the condensed set of financial statements give a true an fair view inaccordance with UK GAAP of the state of affairs of the Company and of the profitand loss of the Company for that period and comply with UK GAAP and CompaniesAct 1985 and; (d) the interim management report includes a fair review of the informationrequired by DTR 4.2.8R (disclosure of related parties' transactions and changestherein). The Half-yearly financial report has not been audited or reviewed by theauditors. By order of the Board Michael ReeveChairman24 October 2007 Condensed Income Statement Ordinary Shares Unaudited Unaudited Six months to Audited Six months to 31 August 2006 Year to 31 August 2007 28 February 2007 Notes Revenue Capital Total Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 (Losses)/gains on 4 - (1,593) (1,593) - (1,764) (1,764) - 1,828 1,828investments Investment income 3 215 - 215 208 - 208 387 - 387Investment (73) (218) (291) (75) (225) (300) (149) (448) (597)management fee Other expenses (50) - (50) (62) - (62) (128) - (128) Return/(loss) on 92 (1,811) (1,719) 71 (1,989) (1,918) 110 1,380 1,490ordinary activitiesbefore tax Tax (charge) /credit 5 (2) 2 - 2 - 2 6 - 6on ordinaryactivities Return/(loss) 90 (1,809) (1,719) 73 (1,989) (1,916) 116 1,380 1,496attributable toshareholders Basic and diluted 7 0.3 (6.1) (5.8) 0.2 (6.4) (6.2) 0.4 4.5 4.9return/(loss) pershare (pence) All of the Company's activities derive from continuing operations. No operations were acquired or discontinued during the period. The Company has no recognised gains or losses other than those disclosed above,accordingly a statement of total recognised gains and losses is not required. The Total column of the Income Statement represents the profit and loss of theOrdinary shares. The supplementary revenue return and capital return columnshave been prepared in accordance with the Association of Investment Companies'Statement of Recommended Practice. Comparative figures have been extracted from the accounts for the period ended31 August 2006 and the statutory accounts for the year ended 28 February 2007. Condensed Income Statement D Shares Unaudited Unaudited Six months to Audited Six months to 31 August 2006 Year to 31 August 2007 28 February 2007 Notes Revenue Capital Total Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Gains/(losses) on 4 - 500 500 - (447) (447) - 1,335 1,335investments Investment income 3 282 - 282 238 - 238 493 - 493Investment (59) (176) (235) (56) (168) (224) (113) (338) (451)management feeOther expenses (35) - (35) (44) - (44) (89) - (89) Return/(loss) on 188 324 512 138 (615) (477) 291 997 1,288ordinary activitiesbefore tax Tax (charge)/credit 5 (41) 41 - (30) 28 (2) (60) 54 (6)on ordinaryactivities Return/(loss) 147 365 512 108 (587) (479) 231 1,051 1,282attributable toshareholders Basic and diluted 7 0.9 2.3 3.2 0.7 (3.7) (3.0) 1.4 6.6 8.0return/(loss) pershare (pence) All of the Company's activities derive from continuing operations. No operations were acquired or discontinued during the period. The Company has no recognised gains or losses other than those disclosed above,accordingly a statement of total recognised gains and losses is not required. The Total column of the Income Statement represents the profit and loss of the Dshares. The supplementary revenue return and capital return columns have beenprepared in accordance with the Association of Investment Companies' Statementof Recommended Practice. Comparative figures have been extracted from the accounts for the period ended31 August 2006 and the statutory accounts for the year ended 28 February 2007. Condensed Income Statement Total Unaudited Unaudited Six months to Six months to Audited 31 August 2007 31 August 2006 Year to 28 February 2007 Notes Revenue Capital Total Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 (Losses)/gains on 4 - (1,093) (1,093) - (2,211) (2,211) - 3,163 3,163investments Investment income 3 497 - 497 446 - 446 880 - 880 Investment (132) (394) (526) (131) (393) (524) (262) (786) (1,048)management fee Other expenses (85) - (85) (106) - (106) (217) - (217) Return/(loss) on 280 (1,487) (1,207) 209 (2,604) (2,395) 401 2,377 2,778ordinary activitiesbefore tax Tax (charge)/credit 5 (43) 43 - (28) 28 - (54) 54 -on ordinaryactivities Return/(loss) 237 (1,444) (1,207) 181 (2,576) (2,395) 347 2,431 2,778attributable toequity shareholders All of the Company's activities derive from continuing operations. No operations were acquired or discontinued during the period. The Company has no recognised gains or losses other than those disclosed above,accordingly a statement of total recognised gains and losses is not required. The Total column of the Income Statement represents the profit and loss of theOrdinary shares. The supplementary revenue return and capital return columnshave been prepared in accordance with the Association of Investment Companies'Statement of Recommended Practice. Comparative figures have been extracted from the accounts for the period ended31 August 2006 and the statutory accounts for the year ended 28 February 2007. Condensed Balance Sheet Ordinary Shares Unaudited Unaudited Audited 31 August 31 August 28 February Notes 2007 2006 2007 £'000 £'000 £'000Fixed asset investmentsat fair value through profit or lossQualifying investments 19,478 19,543 20,875Non-qualifying investments 2,191 4,112 4,156 Total fixed asset investments 21,669 23,655 25,031 Current assetsDebtors 88 117 95Cash at bank 2,048 450 1,211 2,136 567 1,306 Creditors: (330) (69) (49)amounts falling due within one year Net current assets 1,806 498 1,257 Net assets 23,475 24,153 26,288 Capital and reservesCalled up share capital 8 14,761 15,310 14,978Share premium 1,450 1,450 1,450Special reserve 7,311 8,182 7,665Capital redemption reserve 3,570 3,021 3,353Realised capital reserve (6,490) (4,124) (4,055)Unrealised capital reserve 2,732 184 2,846Revenue reserve 141 130 51 Equity shareholders' funds 23,475 24,153 26,288 Net asset value per share (pence) 79.52 78.88 87.76 Comparative figures have been extracted from the accounts for the period ended31 August 2006 and the statutory accounts for the year ended 28 February 2007. Condensed Balance Sheet D Shares Unaudited Unaudited Audited 31 August 31 August 28 February Notes 2007 2006 2007 £'000 £'000 £'000Fixed asset investmentsat fair value through profit or lossQualifying investments 12,792 8,774 10,100Non-qualifying investments 4,354 7,009 7,077 Total fixed asset investments 17,146 15,783 17,177 Current assetsDebtors 65 78 81Cash at bank 3,356 2,755 2,895 3,421 2,833 2,976 Creditors: (569) (44) (65)amounts falling due within one year Net current assets 2,852 2,789 2,911 Net assets 19,998 18,572 20,088 Capital and reservesCalled up share capital 8 7,924 8,025 8,008Share premium 39 39 39Special reserve 9,099 9,341 9,304Capital redemption reserve 158 57 74Realised capital reserve 179 (621) 277Unrealised capital reserve 2,438 1,561 2,253Revenue reserve 161 170 133 Equity shareholders' funds 19,998 18,572 20,088 Net asset value per share (pence) 126.19 115.72 125.43 Comparative figures have been extracted from the accounts for the period ended31 August 2006 and the statutory accounts for the year ended 28 February 2007. Condensed Balance Sheet Total Unaudited Unaudited Audited 31 August 31 August 28 February Notes 2007 2006 2007 £'000 £'000 £'000Fixed asset investmentsat fair value through profit or lossQualifying investments 32,270 28,317 30,975Non-qualifying investments 6,545 11,121 11,233 Total fixed asset investments 38,815 39,438 42,208 Current assetsDebtors 153 195 176Cash at bank 5,404 3,205 4,106 5,557 3,400 4,282 Creditors: (899) (113) (114)amounts falling due within one year Net current assets 4,658 3,287 4,168 Net assets 43,473 42,725 46,376 Capital and reservesCalled up share capital 8 22,685 23,335 22,986Share premium 1,489 1,489 1,489Special reserve 16,410 17,523 16,969Capital redemption reserve 3,728 3,078 3,427Realised capital reserve (6,311) (4,745) (3,778)Unrealised capital reserve 5,170 1,745 5,099Revenue reserve 302 300 184 Equity shareholders' funds 43,473 42,725 46,376 Comparative figures have been extracted from the accounts for the period ended31 August 2006 and the statutory accounts for the year ended 28 February 2007. Condensed Reconciliation of Movements in Shareholders' Funds Ordinary Shares Share Share Special Capital Realised Unrealised Revenue Total capital premium reserve redemption capital capital reserve reserve reserve reserve £'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 26,288Net return after taxation for the - - - - (1,695) (114) 90 (1,719)periodDividends - - - - (740) - - (740)Shares purchased for cancellation (217) - (354) 217 - - - (354) As at 31 August 2007 14,761 1,450 7,311 3,570 (6,490) 2,732 141 23,475 As at 28 February 2006 15,561 1,450 8,547 2,770 (3,231) 1,806 57 26,960Net return after taxation for the - - - - (367) (1,622) 73 (1,916)periodDividends - - - - (526) - - (526)Shares purchased for cancellation (251) - (365) 251 - - - (365) As at 31 August 2006 15,310 1,450 8,182 3,021 (4,124) 184 130 24,153 As at 28 February 2006 15,561 1,450 8,547 2,770 (3,231) 1,806 57 26,960Net return after taxation for the - - - - 340 1,040 116 1,496yearDividends - - - - (1,164) - (122) (1,286)Shares purchased for cancellation (583) - (882) 583 - - - (882) As at 28 February 2007 14,978 1,450 7,665 3,353 (4,055) 2,846 51 26,288 Condensed Reconciliation of Movements in Shareholders' Funds D Shares Share Share Special Capital Realised Unrealised Revenue Total capital premium reserve redemption capital capital reserve reserve reserve reserve £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 As at 28 February 2007 8,008 39 9,304 74 277 2,253 133 20,088Net return after taxation for the - - - - 180 185 147 512periodDividends - - - - (278) - (119) (397)Shares purchased for cancellation (84) - (205) 84 - - - (205) As at 31 August 2007 7,924 39 9,099 158 179 2,438 161 19,998 As at 28 February 2006 8,040 39 9,373 42 (277) 1,965 223 19,405Net return after taxation for the - - - - (183) (404) 108 (479)periodDividends - - - - (161) - (161) (322)Shares purchased for cancellation (15) - (32) 15 - - - (32) As at 31 August 2006 8,025 39 9,341 57 (621) 1,561 170 18,572 As at 28 February 2006 8,040 39 9,373 42 (277) 1,965 223 19,405Net return after taxation for the - - - - 763 288 231 1,282yearDividends - - - - (209) - (321) (530)Shares purchased for cancellation (32) - (69) 32 - - - (69) As at 28 February 2007 8,008 39 9,304 74 277 2,253 133 20,088 Condensed Reconciliation of Movements in Shareholders' Funds Total Share Share Special Capital Realised Unrealised Revenue Total capital premium reserve redemption capital capital reserve reserve reserve reserve £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 As at 28 February 2007 22,986 1,489 16,969 3,427 (3,778) 5,099 184 46,376Net return after taxation for the - - - - (1,515) 71 237 (1,207)periodDividends - - - - (1,018) - (119) (1,137)Shares purchased for cancellation (301) - (559) 301 - - - (559) As at 31 August 2007 22,685 1,489 16,410 3,728 (6,311) 5,170 302 43,473 As at 28 February 2006 23,601 1,489 17,920 2,812 (3,508) 3,771 280 46,365Net return after taxation for the - - - - (550) (2,026) 181 (2,395)periodDividends - - - - (687) - (161) (848)Shares purchased for cancellation (266) - (397) 266 - - - (397) As at 31 August 2006 23,335 1,489 17,523 3,078 (4,745) 1,745 300 42,725 As at 28 February 2006 23,601 1,489 17,920 2,812 (3,508) 3,771 280 46,365Net return after taxation for the - - - - 1,103 2,778year 1,328 347Dividends - - - - (1,373) - (443) (1,816)Shares purchased for cancellation (615) - (951) 615 - - - (951) As at 28 February 2007 22,986 1,489 16,969 3,427 (3,778) 5,099 184 46,376 Condensed Cash Flow Statement Ordinary Shares Unaudited Unaudited Audited Six months to Six months to Year to 31 August 31 August 28 February 2007 2006 2007 £'000 £'000 £'000 Operating activitiesDividend income received 87 61 126Investment income received 115 102 200Other income received - - 7Deposit interest received 19 30 47Investment management fees paid (261) (317) (598)Other cash payments (59) (41) (131) Net cash outflow from operating activities (99) (165) (349) Capital expenditure and financial investmentPurchase of qualifying investments (400) (1,314) (2,228)Purchase of non-qualifying investments (5) (77) (102)Disposal of qualifying investments 420 1,304 4,460Disposal of non-qualifying investments 2,000 180 181 Net cash inflow from investing activities 2,015 93 2,311 Equity dividends paidRevenue dividends paid - - (122)Capital dividends paid (740) (526) (1,164) Total equity dividends paid (740) (526) (1,286) Net cash inflow/(outflow) before financing 1,176 (598) 676 FinancingIntercompany account movement 17 986 997Cancellation of shares (356) (662) (1,186) Net cash (outflow)/inflow from financing (339) 324 (189) Increase/(decrease) in cash 837 (274) 487 Condensed Cash Flow Statement D Shares Unaudited Unaudited Unaudited Six months to Six months to Year to 31 August 31 August 28 February 2007 2006 2007 £'000 £'000 £'000 Operating activitiesDividend income received 33 13 27Investment income received 213 180 340Deposit interest received 58 37 92Investment management fees paid (198) (278) (496)Other cash payments (41) (52) (89) Net cash inflow/(outflow) from operating activities 65 (100) (126) Capital expenditure and financial investmentPurchase of qualifying investments (2,496) (1,841) (3,322)Purchase of non-qualifying investments (17) - -Disposal of qualifying investments 810 890 7,793Disposal of non-qualifying investments 2,718 5,000 - Net cash inflow from investing activities 1,015 4,049 4,471 Equity dividends paidRevenue dividends paid (119) (161) (321)Capital dividends paid (278) (161) (209) Total equity dividends paid (397) (322) (530) Net cash inflow before financing 683 3,627 3,815FinancingIntercompany account movement (17) (986) (997)Cancellation of shares (205) (32) (69)Net cash outflow from financing (222) (1,018) (1,066) Increase in cash 461 2,609 2,749 Condensed Cash Flow Statement for the six months to 31 August 2007 Total Unaudited Unaudited Audited Six months to Six months to Year to 31 August 31 August 28 February 2007 2006 2007 £'000 £'000 £'000 Operating activitiesDividend income received 120 74 153Investment income received 328 282 540Other income received - - 7Deposit interest received 77 67 139Investment management fees paid (459) (595) (1,094)Other cash payments (100) (93) (220) Net cash outflow from operating activities (34) (265) (475) Capital expenditure and financial investmentPurchase of qualifying investments (2,896) (3,155) (5,550)Purchase of non-qualifying investments (22) (77) (102)Disposal of qualifying investments 1,230 2,194 12,253Disposal of non-qualifying investments 4,718 5,180 181 Net cash inflow from investing activities 3,030 4,142 6,782 Equity dividends paidRevenue dividends paid (119) (161) (443)Capital dividends paid (1,018) (687) (1,373) Total equity dividends paid (1,137) (848) (1,816) Net cash inflow before financing 1,859 3,029 4,491 FinancingCancellation of shares (561) (694) (1,255)Net cash outflow from financing (561) (694) (1,255) Increase in cash 1,298 2,335 3,236 Notes to the Condensed set of Financial Statements for the six months to 31 August 2007 The principal activity of the Company is that of a Venture Capital Trust. It hasbeen approved by HM Revenue & Customs as a Venture Capital Trust under Section842AA of the Income and Corporation Taxes Act 1988. 1. Accounting convention The financial statements have been prepared under the historical costconvention, as modified by the revaluation of certain financial instruments, inaccordance with applicable law and United Kingdom Accounting Standards, and withthe Statement of Recommended Practice "Financial Statements of Investment TrustCompanies" ("SORP") issued by the Association of Investment Trust Companies ("AITC") in January 2003 and revised in December 2005. True and fair override The Company is no longer an investment company within the meaning of Section 266of the Companies Act 1985. However it conducts its affairs as a Venture CapitalTrust for taxation purposes under Section 842AA of the Income and CorporationTaxes Act 1988. The absence of Section 266 status does not preclude the Company from presentingits accounts in accordance with the AITC's SORP, and furthermore the Directorsconsider it appropriate to continue to present the accounts in this manner as itis consistent with the sector within which it operates. The Directors therefore consider that the departures from accounting standardsand the specific provisions of Schedule 4 of the Companies Act relating to theform and content of accounts for companies other than investment companies arenecessary to give a true and fair view. The departures have no effect on thetotal return or balance sheet. 2. Accounting policies The accounting policies used in this half-yearly financial report are consistentwith the accounting policies adopted at the year end. The principal accounting policies are described below: a) Investments In accordance with FRS 26 "Financial Instruments: Measurement", equityinvestments are designated as fair value through profit or loss ("FVTPL"). TheTotal column of the Income Statement represents the Company's profit and lossaccount. Investments listed on recognised exchanges are valued at the closingbid prices at the end of the accounting period. Fair value movements on equityinvestments and gains and losses arising on the disposal of investments arereflected in the Capital column of the Income Statement in accordance with theAITC's SORP. Investments are recognised as financial assets on legal completion of theinvestment contract and are de-recognised on legal completion of the sale of aninvestment. The Directors are conscious of the fact that because shares are traded on AIMthis does not guarantee their liquidity. The nature of AIM investments is suchthat the prices can be volatile and realisation may not achieve current bookvalue, especially when such a sale represents a significant proportion of thatCompany's market capital. Nevertheless, on the grounds that the investments arenot intended for immediate realisation, they regard bid-market price as the mostobjective and appropriate method of valuation. b) Investment income Dividends receivable on quoted equity shares are taken to revenue on anex-dividend basis. Returns on listed fixed interest securities are recognised ona time apportionment basis from the date of purchase so as to reflect theeffective yield on the securities. c) Investment management fees and other expenses All expenses are accounted for on an accruals basis. Expenses are chargedthrough the income statement 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% has been allocated to capital reserve (realised) and 25% to revenue in the Income Statement. In respect of the Investment Manager's performance fee, 100% is allocated to capital reserve (realised), in order to reflect the Directors' expected long-term view of the nature of the investment return of the Company. d) Taxation Taxation is applied on a current basis in accordance with FRS 16 "current tax".Taxation associated with capital expenses is applied in accordance with theSORP. In accordance with FRS 19 "deferred tax", deferred taxation is provided infull on timing differences that result in an obligation at the balance sheetdate to pay more tax or a right to pay less tax, at a future date, at ratesexpected to apply when they crystallise based on current tax rates and law.Timing differences arise from the inclusion of items of income and expenditurein taxation computations in periods different from those in which they areincluded in the financial statements. Deferred tax assets are recognised to theextent that it is regarded as more likely than not that they will be recovered.The Directors have considered the requirements of FRS 19 and do not believe thatany provision should be made. e) Debtors and creditors • Debtors 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. The Directors consider that the carrying amount of debtors approximates to their fair value. • Creditors are non-interest bearing and are stated at their nominal value. The Directors consider that the carrying amount of creditors approximate to their fair value. f) Reserves The realised capital reserve contains gains and losses on the realisation ofinvestments, capital dividends paid to shareholders and investment managementfees allocated to the capital reserve and taxation thereon. The unrealisedcapital reserve contains increases and decreases in the valuation of investmentsheld at the period end. The special reserve is distributable and is primarilyused for the cancellation of the Company's share capital. The capital redemptionreserve accounts for amounts by which the issued capital is diminished throughthe repurchase of the Company's own shares. g) Dividends In accordance with FRS 21 "Events after the balance sheet date", interimdividends are not accounted for until paid, and final dividends are accountedfor when approved by shareholders at an Annual General Meeting. h) D shares Until such time that D shares are converted into Ordinary shares in 2008, allinvestments and returns attributable to this class of share will be separatelyidentifiable from the existing Ordinary shares. All residual expenses will beallocated on the basis of total funds raised for each class of share. 3. Investment income Six months to 31 August 2007 Six months to 31 August 2006 Year to 28 February 2007 Ordinary D shares Ordinary D shares Ordinary D shares shares £'000 Total shares £'000 Total shares £'000 Total £'000 £'000 £'000 £'000 £'000 £'000Income from investmentsUK franked investment 84 32 116 79 12 91 136 30 166incomeUK unfranked investment 98 197 295 97 168 265 197 349 546income 182 229 411 176 180 356 333 379 712 Other incomeDeposit interest 33 53 86 32 58 90 47 114 161Other income - - - - - - 7 - 7 Total income 215 282 497 208 238 446 387 493 880 4. (Losses)/gains on investments Six months to 31 August 2007 Six months to 31 August 2006 Year to 28 February 2007 Ordinary D shares Ordinary D shares Ordinary D shares shares £'000 Total shares £'000 Total shares £'000 Total £'000 £'000 £'000 £'000 £'000 £'000 Realised(losses)/gains (1,339) 377 (962) (142) (43) (185) 788 1,047 1,835(Decrease)/increase in (254) 123 (131) (1,622) (404) (2,026) 1,040 288 1,328unrealised appreciation (1,593) 500 (1,093) (1,764) (447) (2,211) 1,828 1,335 3,163 5. Tax credit/(charge) on ordinary activities The tax charge for the half-year is nil (31 August 2006: nil, 28 February 2007:nil) based on an estimated effective tax rate of 0% for the year ending 28February 2008. The estimated effective tax rate is 0% as investment gains areexempt from tax owing to the Company's status as a Venture Capital Trust andthere is expected to be an excess of management expenses over taxable income. 6. Dividends The amounts recognised as distributions to equity shareholders in the periodwere as follows: Six months to 31 August 2007 Six months to 31 August 2006 Year to 28 February 2007 Ordinary D shares Ordinary D shares Ordinary D shares shares £'000 Total shares £'000 Total shares £'000 Total £'000 £'000 £'000 £'000 £'000 £'000 Dividends paid per - 740 740 - 526 526 122 1,164 1,286 Ordinary shareDividends paid per 119 278 397 161 161 322 321 209 530 D share 119 1,018 1,137 161 687 848 443 1,373 1,816 Ordinary shares The Directors have declared a dividend of 2.50 pence per share (to be paid outof realised gains) subject to approval by HM Revenue & Customs. The record dateand payment date of this dividend will be announced on the London Stock ExchangeRNS service. D shares The Directors have declared a dividend of 2.50 pence per share (1.00 pencerevenue and 1.50 pence to be paid out of realised gains) subject to approval byHM Revenue & Customs. The record date and payment date of this dividend will beannounced on the London Stock Exchange RNS service. 7. Basic and diluted return per share Return per share has been calculated on 29,683,973 (2006: 30,927,771) Ordinaryshares and 15,922,959 (2006: 16,075,418) D shares being the weighted averagenumber of shares in issue for the period. There are no convertible instruments, derivatives or contingent share agreementsin issue for Close Brothers AIM VCT PLC hence there are no dilution effects tothe return per share. The basic return per share is therefore the same as thediluted return per share. Management performance incentive fee A management performance incentive was approved by shareholders at theExtraordinary General Meeting on 26 November 2004 and became effective from 1March 2005. The Board has the discretion to make payments under this incentiveby cash or shares. This could have a dilutive effect on the return per sharecalculation. For the period to 31 August 2007, no payment had become due under this incentiveand as a result, there were no dilutive effects on the return per sharecalculation. 8. Called up share capital 31 August 31 August 28 February 2007 2006 2007 £'000 £'000 £'000Authorised45,000,000 Ordinary shares of 50p each 22,500 22,500 22,50025,000,000 D shares of 50p each 12,500 12,500 12,500 35,000 35,000 35,000 Allotted called up and fully paid29,522,615 Ordinary shares of 50p each 14,761 15,310 14,97815,846,847 D shares of 50p each 7,924 8,025 8,008 22,685 23,335 22,986 During the period, the Company purchased for cancellation 432,825 Ordinaryshares and 168,341 D shares at a cost of £354,000, and £205,000 respectively.This represented 1.44% of the Ordinary shares and 1.05% of the D shares as at 31August 2007. 9. Reconciliation of net return before taxation to net cash outflow fromoperating activities Six months to 31 August 2007 Six months to 31 August Year to 28 February 2007 2006 Ordinary D shares Ordinary D Ordinary D shares Total shares shares Total shares shares Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Net return before taxation 92 188 280 71 138 209 110 291 401Investment management fee (218) (176) (394) (225) (168) (393) (448) (338) (786)charged to capital(Increase)/decrease in (9) 16 7 (24) (11) (35) (9) (33) (42) other debtorsIncrease/(decrease) in 36 37 73 13 (59) (46) (2) (46) (48) other creditors Net cash outflow from operating (99) 65 (34) (165) (100) (265) (349) (126) (475)activities 10. Related party transactions Close Investments Limited, as Investment Manager of the Company is considered tobe a related party by virtue of its management contract with the Company. Duringthe half-year, services of a total value of £526,000 (31 August 2006: £524,000,28 February 2007: £1,048,000) were purchased by the Company from CloseInvestments Limited. At the 31 August 2007, the amount due to Close InvestmentsLimited disclosed under creditors was £89,000. As at 31 August 2007 and the date of this report, Close Investments Limited held7,050 Ordinary Shares and 8,264 D Shares in the Company. 11. Other information The information set out in this announcement does not constitute the Company'sstatutory accounts within the terms of S240 of the Companies Act 1985 for theperiod ended 31 August 2007 and 31 August 2006, and is unaudited. Theinformation for the year ended 28 February 2007 does not constitute statutoryaccounts within the terms of S240 of the Companies Act 1985 and is derived fromthe statutory accounts for the financial year, which have been delivered to theRegistrar of Companies. The auditors reported on those accounts; their reportwas unqualified and did not contain a statement under S237(2) or (3) of theCompanies Act 1985. 12. Publication The half-yearly financial report is being sent to shareholders and copies willbe made available electronically at www.closeventures.co.uk. The half-yearlyfinancial reports will also be made available to the public at the registeredoffice of the Company and at Companies House. For further information, please contact: Andrew Buchanan / Kate Tidbury Karen WaggClose Investments Limited Polhill CommunicationsTel: 020 7426 4000 Tel: 020 7655 0540 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Coats