28th Feb 2008 15:37
Crown Place VCT PLC28 February 2008 28 February 2008 CROWN PLACE VCT PLC Preliminary announcement of interim results for the six months ended 31 December2007. Crown Place VCT PLC ("the Company"), managed by Close Ventures Limited, todayannounces the half-yearly results for the six months ended 31 December 2007. Theannouncement has been approved by the Board of Directors on 28 February 2008. FINANCIAL HIGHLIGHTS Shareholder value since launch Proforma (i) Proforma (i) Murray VCT Murray VCT 2 Crown Place PLC PLC VCT PLC*Previous holders of shares in: Dividends per share paid to 31 December 2007 (pence per share) 34.60 35.78 30.48(ii)Net asset value (pence per share) as at 31 December 2007 (i) 31.01 37.07 43.56 65.61 72.85 74.04 (i) The proforma shareholder value is based on the dividends per sharepaid to 31 December 2007, with a pro-rata net asset value per share based uponthe proportion of shares received by Murray VCT PLC (now renamed CP1 VCT PLC)and Murray VCT 2 PLC (now renamed CP2 VCT PLC) shareholders at the time of themerger. (ii) Prior to 6 April 1999, venture capital trusts were able to add 20% todividends, and figures for the period up until 6 April 1999 are included at thegross equivalent rate actually paid to shareholders. * formerly Murray VCT 3 PLC The first dividend for the current financial year of 1.25 pence per share waspaid to shareholders on 28 December 2007. The Directors have also declared asecond dividend of 1.25 pence per Crown Place VCT PLC share (of which 0.25 penceis to be paid from revenue and 1.0 pence out of realised capital gains), subjectto approval from HM Revenue & Customs. The record date and payment date for thisdividend will be announced on the London Stock Exchange RNS Service. Summary of returns since Close Ventures Limited was appointed investment manager (pence per share) Net asset value as at 6 April 2005 (date that Close Ventures Limited was appointedinvestment manager) 43.4 Total dividends paid for the period from 6 April 2005 to 31 December 2007 5.55 Increase in net asset value from 6 April 2005 to 31 December 2007 0.16 Total return to shareholders since Close Ventures Limited was appointed investment 5.71manager Annualised shareholder return percentage since 6 April 2005 4.9% Annualised tax free* yield on share price of 40.5 pence as at 31 December 2007 (onthe basis of the current dividend run rate of 2.5 pence per annum) 6.2% * VCT dividends are not subject to income tax INTERIM MANAGEMENT REPORT Overview The Group aims to provide shareholders with a regular and predictable dividendincome together with protection of capital and the prospects of longer termcapital growth. In the last annual report I indicated that, subject to theperformance of the investment portfolio, the Board would aim to maintain anannualised dividend distribution of 2.5 pence per share. During the six monthperiod to 31 December 2007, the Group paid a first dividend of 1.25 pence pershare to shareholders and expects to pay a second dividend of 1.25 pence pershare in May 2008, subject to HM Revenue & Customs approval. At the end of the six month period and following the payment of the firstdividend of 1.25 pence per share on 28 December 2007, the net asset value pershare was 43.6 pence, compared to 44.8 pence as at 30 June 2007. The reductionin net asset value is as a result of the Board's cautious view of valuations inthe light of the current economic environment. The total shareholder valuecreated, representing the combined dividends paid and change in net asset value,was 0.05 pence per share. Since Close Ventures took over the management of theGroup in April 2005, the total return to shareholders has been 5.7 pence pershare or 5% per annum on the opening net asset value. Results In the six months to 31 December 2007, the Group made a revenue profit after taxof £563,000 and a total loss after tax of £88,000 after allowing for provisionson certain investments. Investment income and deposit interest continued togrow as compared to the previous six months to just under £1 million, whiletotal expenses were in line with budget and with the indications given at thetime of the merger in January 2006. Portfolio review During the six month period the Group continued to make progress in realisingits older unquoted investments and reinvesting the proceeds in investments thatare more suited to the overall portfolio investment policy. Full or partialrealisations were made from six unquoted investments, the proceeds of which wereat or above book value. The total consideration received was £3.9 million.This included the sale of the Bold Pub Company Limited, a more recentasset-backed investment, realising a 38% profit on cost. Following the periodend the Group realised a further £1.7 million from the sale of its investment inTLC (Tender Loving Childcare) Limited. The majority of the portfolio continued to trade in line with expectations: PSCAInternational Limited, Chichester (Holdings) Limited and Xceleron Limitedcontinued to trade particularly well, and this is reflected in the valuation ofour investments in these companies. Against this, we have prudently reduced thevaluations of our investments in ELE Advanced Technologies Limited, which is inthe process of reorganising its business through a partial move of itsmanufacturing capabilities to Slovakia. Trading at Sanastro PLC and RFI GlobalSolutions Limited was behind plan due to increased competition and thereforetheir respective valuations were reduced. Overall, the unquoted portfolio now has 45 investments, which should ensure abroad diversification of risk. Some 57% of the portfolio, by value, is investedin asset backed businesses with no external debt, 30% in development capitalinvestments and 13% in earlier stage, higher growth businesses. The highpercentage of asset backed investments should position the portfolio well in thecurrent climate of economic uncertainty and is expected to continue to providethe Group with an attractive level of income. Consistent with the policy of the Board, the AIM portfolio was reducedsignificantly as a result of successful realisations during the six monthperiod, so that it represented only 3.8% of the total net assets of the Group asat 31 December 2007. Full realisations were made from the investments in ZetarPLC, Dobbies Garden Centres PLC and Synexus Clinical Research PLC and a partialrealisation was made in Cello Group PLC. The total proceeds of these sales were£2.7 million and each one resulted in a realised profit for the Group. The FTSEAIM All Share index has declined by more than 20% since 30 June 2007 and it isthe view of the Board that the AIM market will continue to underperform in thenear term. Against this background, we are pleased to have made profitablerealisations and scaled down the overall exposure to AIM quoted companies. New investments The Group made five new investments in the period for a total cost of £1.5million. These include the £1 million investment in Sky Hotel (Heathrow)Limited, which owns and operates a hotel near Heathrow's new Terminal 5, aproperty with significant development potential. In addition, the Group madefive follow-on investments for a total cost of £1 million. The Group is one of a small number of venture capital trusts that are able toinvest in hotels and care home companies, an area where the investment managerhas developed significant expertise over the past 12 years. These two sectors,which provide a good fit with the portfolio investment strategy, are notpermitted investments for venture capital trusts raised after 1997, thusdifferentiating the Group from other VCTs. Cash and cash equivalents Following the successful realisations listed above, the Group had cash and cashequivalents of £8.6 million as at 31 December 2007. In addition, the Group heldNationwide Building Society floating rate notes of £2.7 million. Combined,these represent 34% of the net asset value of the Group as at that date and willprovide sufficient liquidity to allow the Group to capitalise on investmentopportunities in the short to medium term. Dividends The Group's policy is to pay regular and predictable dividends to investors outof revenue income and realised capital gains. In the last annual report Iindicated that, subject to the performance of the investment portfolio, theBoard will aim to maintain an annualised dividend distribution of 2.5 pence pershare. The first dividend for the current financial year of 1.25 pence pershare was paid to shareholders on 28 December 2007. The Board has declared asecond dividend of 1.25 pence per share (of which 0.25 pence is to be paid fromrevenue and 1.0 pence out of realised capital gains) which is expected to bepaid in May 2008, subject to HM Revenue & Customs approval. These dividends arefree of tax to shareholders. Discount management and share buy backs It is the Group's policy to continue to buy back shares in the market, subjectto the overall constraint that such purchases are in the Group's interest,including the maintenance of sufficient resources for investment in existing andnew investee companies. The Group bought back 1,456,436 shares for cancellationin the six month period under review at prices ranging from 39.0 pence per shareto 40.5 pence per share. As at 31 December 2007, the Company held 7,260,410Ordinary Shares in Treasury, representing 8.8% of the issued share capital.These shares may be re-issued at a future date. Outlook The Board and the Manager continue to take a cautious view on the outlook forthe wider UK economy and our approach to valuations is in line with this view.Against this background, the Manager's conservative investment policy, fullyendorsed by the Board, of building up a portfolio with a high proportion inasset backed businesses without external gearing, should provide a comfortingdegree of capital protection if economic conditions deteriorate. In addition,the Group has a very low exposure to the AIM market and holds approximately 34%of its net assets in cash and similar instruments. This will help protect thecapital base of the Group in the short term, while in the medium term it willallow the Group to take advantage of attractive investment opportunitiespresented to it as a result of tighter credit conditions. Overall, the Boardbelieves that VCTs should be seen as a long term savings product and in thiscontext the directors consider that the Group is well positioned to delivershareholder value. Patrick CrosthwaiteChairman 28 February 2008 RESPONSIBILITY STATEMENT The Directors have chosen to prepare this Half-yearly Financial Report for theGroup in accordance with International Financial Reporting Standards ("IFRS"). In preparing these summarised financial statements for the six month period to31 December 2007, the Directors, confirm that to the best of their knowledge: (a) the summarised set of financial statements has been prepared in accordancewith International Accounting Standard (IAS) 34 "Interim Financial Reporting"issued by the International 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 summarised set of financial statements give a true and fair view inaccordance with IFRS of the assets, liabilities, financial position and profitand loss of the Group for the period and comply with IFRS and Companies Act 1985and 2006 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). This Half-yearly Financial Report has not been audited or reviewed by theauditors. By order of the BoardPatrick CrosthwaiteChairman28 February 2008 SUMMARY CONSOLIDATED INCOME STATEMENT Unaudited Audited Unaudited Six months to 31 Sixteen months to 30 June Ten months to 31 December 2007 2007 December 2006 Revenue Capital Total Revenue Capital Total Revenue Capital Total Notes £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Investment income and 3 986 - 986 2,519 - 2,519 1,644 - 1,644deposit interest Investment management (87) (260) (347) (291) (872) (1,163) (150) (450) (600)fees Other expenses (160) - (160) (509) 23 (486) (355) 23 (332) Non-recurring operating - - - (4) - (4) (4) - (4)expenses Operating profit/(loss) 739 (260) 479 1,715 (849) 866 1,135 (427) 708 (Losses)/gains on 2 - (476) (476) - 2,932 2,932 - 1,158 1,158investments Profit/(loss) before 739 (736) 3 1,715 2,083 3,798 1,135 731 1,866taxation Taxation 4 (176) 85 (91) (294) 273 (21) (135) 135 - Profit/(loss) for the 563 (651) (88) 1,421 2,356 3,777 1,000 866 1,866period Basic and diluted return 6 (0.12) 4.76 2.32per Ordinary share(pence) (excluding treasury shares) The accompanying notes are an integral part of this Half-yearly FinancialReport. The total column of this statement represents the Group's income statement,prepared in accordance with International Financial Reporting Standards ('IFRS'). The supplementary revenue and capital reserve columns are prepared underguidance published by the Association of Investment Trust Companies. The consolidated income statements include the results of the subsidiaries CP1VCT PLC and CP2 VCT PLC. Comparative figures have been extracted from the interim accounts for the tenmonth period ended 31 December 2006 and the statutory accounts for the sixteenmonth period ended 30 June 2007. SUMMARY CONSOLIDATED BALANCE SHEET Unaudited Audited 31 December 2007 30 June 2007 Notes £'000 £'000 Non-current assetsInvestments 7 24,414 26,237 Current assetsTrade and other receivables 105 322Cash and cash equivalents 8,629 8,367 8,734 8,689 Total assets 33,148 34,926 Current liabilitiesTrade and other payables (387) (552) Total assets less current 32,761 34,374liabilities Equity attributable toequityholdersOrdinary share capital 8 8,246 8,392Share premium 14,422 14,422Capital redemption reserve 614 468Own shares held (2,849) (2,849)Retained earnings 12,328 13,941 Total shareholders' funds 32,761 34,374 Net asset value per Ordinaryshare (excluding treasuryshares) (pence) 43.6 44.8 The consolidated balance sheets include the balance sheets of the subsidiariesCP1 VCT PLC and CP2 VCT PLC. Comparative figures have been extracted from the statutory accounts for theperiod ended 30 June 2007. These financial statements were agreed by the Board of Directors, and authorisedfor issue on 28 February 2008 and were signed on its behalf by Patrick CrosthwaiteChairman SUMMARY COMPANY BALANCE SHEET Unaudited Audited 31 December 2007 30 June 2007 Notes £'000 £'000 Fixed assetsFixed asset investments 7 24,414 26,237Investment in subsidiary 18,088 17,978undertakings 42,502 44,215Current assetsDebtors 94 313Cash at bank 3,088 3,900 3,182 4,213 Total assets 45,684 48,428 Creditors: amounts falling due (12,923) (14,054)within one year Total assets less current 32,761 34,374liabilities Capital and reservesOrdinary share capital 8 8,246 8,392Share premium 14,422 14,422Capital redemption reserve 614 468Own shares held (2,849) (2,849)Retained earnings 12,328 13,941 Total shareholders' funds 32,761 34,374 Net asset value per Ordinaryshare (excluding treasuryshares) (pence) 43.6 44.8 This Company balance sheet has been prepared in accordance with UK GAAP. Comparative figures have been extracted from the statutory accounts for theperiod ended 30 June 2007. These financial statements were approved by the Board of Directors, andauthorised for issue on 28 February 2008 and were signed on its behalf by Patrick CrosthwaiteChairman SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) Ordinary Capital Own share Share redemption shares Retained capital premium reserve held earnings Total £'000 £'000 £'000 £'000 £'000 £'000 As at 30 June 2007 8,392 14,422 468 (2,849) 13,941 34,374 Net profit for the period - - - - (88) (88) Purchase of own shares forcancellation(including costs) (146) - 146 - (581) (581) Dividends paid in period - - - - (944) (944) As at 31 December 2007 8,246 14,422 614 (2,849) 12,328 32,761 As at 28 February 2006 8,610 14,422 250 (1,908) 13,581 34,955 Net profit for the period - - - - 3,777 3,777 Purchase of own shares forcancellation (including costs) (218) - 218 - (816) (816) Cost of ordinary shares purchased forTreasury (including dealing costs) - - - (941) - (941) Dividends paid in period - - - - (2,601) (2,601) As at 30 June 2007 8,392 14,422 468 (2,849) 13,941 34,374 As at 28 February 2006 8,610 14,422 250 (1,908) 13,581 34,955 Net profit for the period - - - - 1,866 1,866 Cost of ordinary shares purchased forTreasury (including dealing costs) - - - (940) - (940) Dividends paid in period - - - - (995) (995) As at 31 December 2006 8,610 14,422 250 (2,848) 14,452 34,886 SUMMARY CONSOLIDATED CASH FLOW STATEMENT Unaudited Audited Unaudited Six months to Sixteen months to Ten months to 31 December 2007 30 June 2007 31 December 2006 Note £'000 £'000 £'000 Cash flows from operating activitiesInvestment income received 599 2,549 1,472Deposit interest received 213 347 167Secretarial fees paid (29) (85) (51)Investment management fees paid (565) (1,242) (825)Other cash payments (89) (634) (469) Cash generated from operations 129 935 294 Tax (paid)/recovered (52) 1,431 1,431 Net cash flows from operating activities 9 77 2,366 1,725 Cash flows from investing activitiesPurchases of investments (4,949) (7,773) (2,507)Disposals of investments 6,690 14,949 7,413Payment re loan guarantee - (1,662) (1,406) Net cash flows from investing activities 1,741 5,514 3,500 Cash flows from financing activitiesEquity dividends paid (944) (2,601) (995)Repurchase of Ordinary shares for (612) (817) -cancellation Purchase of Ordinary shares for treasury - (941) (974) Net cash flows used in financingactivities (1,556) (4,359) (1,969) Increase in cash and cash equivalents 262 3,521 3,256 Cash and cash equivalents at start of 8,367 4,846 4,846period Cash and cash equivalents at end of 10 8,629 8,367 8,102period The consolidated cash flow statements include the transactions of thesubsidiaries CP1 VCT PLC and CP2 VCT PLC. Comparative figures have been extracted from the interim accounts for the tenmonth period ended 31 December 2006 and the statutory accounts for the sixteenmonth period ended 30 June 2007. NOTES TO THE SUMMARISED SET OF FINANCIAL STATEMENTS for the six months ended 31 December 2007 (unaudited) 1. Accounting policies Group accounting policies Basis of accounting The Half-yearly Financial Report has been prepared using InternationalAccounting Standard (IAS) 34 "Interim Financial Reporting" and other accountingpolicies consistent with International Financial Reporting Standards ('IFRS')adopted for use in the European Union and therefore complies with the Articlesof the EU IAS regulation and with the Statement of Recommended Practice: "Financial Statements of Investment Trust Companies" ('SORP') issued by theAssociation of Investment Trust Companies ("AITC") in January 2003 and revisedin December 2005, in so far as this does not conflict with IFRS. The informationin this document does not include all of the disclosures required by IFRS andSORP in full annual financial statements, and it should be read in conjunctionwith the consolidated financial statements of the Group for the six month periodended 30 June 2007. This interim financial information has been preparedapplying the accounting policies and presentation that were applied in thepreparation of the Group's published consolidated financial statements for thesix month period ended 30 June 2007. Accounting policies Basis of consolidation The summarised financial statements incorporate the financial statements of theCompany and the entities controlled by the Company (its subsidiaries), for thesix month period ended 31 December 2007. Where necessary, adjustments are made to the financial statements ofsubsidiaries to bring the accounting policies into line with those used by theGroup. All intra-group transactions, balances, income and expenses are eliminated onconsolidation. As permitted by Section 230 of the Companies Act 1985, the Company has notpresented its own profit and loss account. The amount of the Company's lossbefore taxation for the period to 31 December 2007 dealt with in the accounts ofthe Group is £107,000 (sixteen months to 30 June 2007: profit £3,554,000; tenmonths to 31 December 2006: profit £1,716,000). Segmental reporting The Directors are of the opinion that the Group is engaged in a single segmentof business, being investment business. The Group invests in smaller companiesbased in the UK. Business combinations The acquisition of subsidiaries is accounted for using the purchase method. Thecost of the acquisition is measured at the aggregate of the fair values, at thedate of exchange, of assets given, liabilities incurred or assumed, and equityinstruments issued by the Group in exchange for control of the subsidiaries,plus any costs directly attributable to the business combination. Thesubsidiary's identifiable assets, liabilities and contingent liabilities thatmeet the conditions for recognition under IFRS 3 "Business Combinations" arerecognised at their fair value at the acquisition date. Estimates The preparation of the Group's Half-yearly Financial Report requires estimates,assumptions and judgements to be made, which affect the reported results andbalances. Actual outcomes may differ from these estimates, with a consequentimpact on the results of future periods. The significant estimates, assumptionsand judgements made in preparing the Group's Half-yearly Financial Report werethe same as those applied in the preparation of the Group's consolidatedfinancial statements for the sixteen month period ended 30 June 2007. Investments In accordance with IAS 39, equity investments are designated as fair valuethrough profit or loss ('FVTPL'). Investments listed on recognised exchanges arevalued at the closing bid prices at the end of the accounting period. Unquotedinvestments' fair value is determined by the Directors in accordance with theInternational Private Equity and Venture Capital Valuation Guidelines. Fairvalue movements on equity investments and gains and losses arising on thedisposal of investments are reflected in the capital column of the IncomeStatement in accordance with the AITC SORP. Unquoted loan stock is classified as loans and receivables in accordance withIAS 39 and carried at amortised cost using the Effective Interest Rate method ('EIR'). Movements in the amortised cost relating to interest income arereflected in the revenue column of the Income Statement and movements in respectof capital provisions are reflected in the capital column of the IncomeStatement. Loan stock accrued interest is recognised in the Balance Sheet aspart of the carrying value of the loans and receivables at the end of eachreporting period. Investments are recognised as financial assets on legal completion of theinvestment contract and are de-recognised on legal completion of the sale of aninvestment. It is not the Group's policy to exercise control or significant influence overinvestee companies. Therefore in accordance with the exemptions under IAS 27 "Consolidated and separate financial statements", those undertakings in which theGroup holds more than 20% of the equity are not regarded as associatedundertakings. Issue costs Issue costs associated with the allotment of share capital have been deductedfrom the share premium account in accordance with IAS 32. Taxation Taxation is applied on a current basis in accordance with IAS 12 "Income taxes". Taxation associated with capital expenses is applied in accordance with theSORP. In accordance with IAS 12, deferred taxation is provided in full ontiming differences that result in an obligation at the balance sheet date to paymore tax or a right to pay less tax, at a future date, at rates expected toapply when they crystallise based on current tax rates and law. Timingdifferences arise from the inclusion of items of income and expenditure intaxation computations in periods different from those in which they are includedin the financial statements. Deferred tax assets are recognised to the extentthat it is regarded as more likely than not that they will be recovered. Thespecific nature of taxation of venture capital trusts means that it is unlikelythat any deferred tax will arise. The Directors have considered the requirementsof IAS 12 and do not believe that any provision should be made. Dividends In accordance with IAS 10 "Events after the balance sheet date", dividends areaccounted for by the Group in the period in which the dividend has been paid, orapproved by shareholders. Company accounting policies Accounting convention The Half-yearly Financial Report has been prepared using accounting policiesconsistent with Financial Reporting Standards ('FRS'). The information in thisdocument does not include all of the disclosures required by FRS and SORP infull annual financial statements, and it should be read in conjunction with theconsolidated financial statements of the Company for the sixteen month periodended 30 June 2007. This interim financial information has been preparedapplying the accounting policies and presentation that were applied in thepreparation of the Company's published consolidated financial statements for thesixteen month period ended 30 June 2007 and with the Statement of RecommendedPractice: "Financial Statements of Investment Trust Companies" ('SORP') issuedby the Association of Investment Trust Companies ("AITC") in January 2003 andrevised in December 2005. True and fair override The Company is no longer an investment company within the meaning of s266, ofthe Companies Act 1985. However, it conducts its affairs as a venture capitaltrust for taxation purposes under s842AA of the Income and Corporation Taxes Act1988. The absence of Section 266 status does not preclude the Company from presentingits accounts in accordance with the AITC SORP and furthermore the Directorsconsider it appropriate to continue to present the accounts in accordance withthe SORP. In the opinion of the Directors the presentation adopted enables the Company toreport in a manner consistent with the sector within which it operates. TheDirectors therefore consider that these departures from the specific provisionsof Schedule 4 of the Companies Act relating to the form and content of accountsfor companies other than investment companies and these departures fromaccounting standards are necessary to give a true and fair view. The departureshave no effect on the return or balance sheet. Investments in subsidiaries The acquisition of subsidiaries is accounted for using the purchase method. Thecost of the acquisition is measured at the aggregate of the fair values, at thedate of exchange of assets given, liabilities incurred or assumed plus any costsdirectly attributable to the business combination. The assets and liabilities ofthe subsidiaries have subsequently been measured at their fair value as at thebalance sheet date. The investments in subsidiaries are carried at fair valuedetermined by Directors based on the net assets method. Investments In accordance with FRS 26, equity investments are designated as FVTPL. Unquotedinvestments' fair value is determined by the Directors in accordance with theInternational Private Equity and Venture Capital Valuation Guidelines. Fairvalue movements on equity investments and gains and losses arising on thedisposal of investments are reflected in the capital column of the IncomeStatement in accordance with the AITC SORP. Unquoted loan stock is classified as loans and receivables in accordance withFRS 26 and carried at amortised cost using the EIR method. Loan stock accruedinterest is recognised in the Balance Sheet as part of the carrying value of theloans and receivables at the end of each reporting period. Investments listed on recognised exchanges are valued at the closing bid pricesat the end of the accounting period. Investments are recognised as financial assets on legal completion of theinvestment contract and are de-recognised on legal completion of the sale of aninvestment. It is not the Company's policy to exercise control or significant influence overinvestee companies. Therefore in accordance with the exemptions under FRS 9 "Associates and joint ventures", those undertakings in which the Company holdsmore than 20% of the equity are not regarded as associated undertakings. 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 providedin full 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 specific nature of taxation of venture capital trusts mean that it isunlikely that any deferred tax will arise. The Directors have considered therequirements of FRS 19 and do not believe that any provision should be made. Dividends In accordance with FRS 21 "Events after the balance sheet date", dividends areaccounted for in the period in which the dividend has been paid, or approved byshareholders. Issue costs Issue costs associated with the allotment of share capital have been deductedfrom the share premium account in accordance with FRS 25. Group and Company accounting policies Investment income Dividends receivable on equity investments are taken to revenue on anex-dividend basis. Fixed returns on debt securities are recognised on a timeapportionment basis using an effective interest rate over the life of thefinancial instrument. Investment management fees, performance incentive fees and other expenses All expenses have been accounted for on an accruals basis. Expenses are chargedthrough the revenue account of the Income Statement, except for management feesand performance incentive fees. These are allocated in part to the capitalaccount, to the extent that these relate to an enhancement in the value of theinvestments and in line with the Board's expectation that over the long term 75%of the Company's investment returns will be in the form of capital gains. Debtors and creditors • Debtors are non-interest bearing, are short term in nature and areaccordingly stated at their nominal value, as reduced by appropriate allowancesfor estimated irrecoverable amounts. The Directors consider that the carryingamount of debtors approximates their fair value. • Current liabilities are non-interest bearing and are stated attheir nominal value. The Directors consider that the carrying amount of currentliabilities approximates their fair value. Reserves Capital redemption reserve This reserve accounts for amounts by which the issued share capital isdiminished through the repurchase and cancellation of the Company's own shares. Own shares held reserve This reserve accounts for amounts paid on buying Treasury shares. 2. (Losses)/gains on investments Six months Sixteen months Ten months to 31 December to 30 June to 31 December 2007 2007 2006 £'000 £'000 £'000 Net realised gains/(losses) 258 853 (1,234)Unrealised (losses)/gains (734) 2,079 2,392 (476) 2,932 1,158 3. Investment income and deposit interest Six months Sixteen months Ten months to 31 December to 30 June to 31 December 2007 2007 2006 £'000 £'000 £'000 Loan stock interest income 653 1,839 1,172Dividend income 60 148 140Floating rate note income 63 199 185Other income - 48 32Bank deposit income 210 285 115 986 2,519 1,644 4. Taxation The tax charge for the sixteen months to 31 December 2007 is £91,158 (sixteenmonths to 30 June 2007: £21,009; ten months to 31 December 2006: £nil). The taxcharge is calculated on return on ordinary activities excluding any (losses)/gains on investments. The tax charge is based on a tax rate of 30% less marginalrelief. Additionally, the tax charges of the subsidiaries are reduced to £nilas a result of trading losses. 5. Amounts recognised as distributions to equity shareholders in theperiod Six months to 31 December 2007 Sixteen months to 30 June 2007 Ten months to 31 December 2006 Revenue Capital Total Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 First dividend paidon 28December 2007 -1.25pper share 604 340 944 - - - - - -First dividend paidon 22September 2006 -1.25pper share - - - - 997 997 - 997 997Second dividendpaid on 19January 2007 -1.25pper share - - - 443 542 985 - - -Third dividend paidon 15June 2007 - 0.8pper share - - - - 619 619 - - - 604 340 944 443 2,158 2,601 - 997 997 The Board has declared a second dividend of 1.25 pence per share (of which 0.25pence is to be paid from revenue and 1.0 pence out of realised capital gains).,subject to approval from HM Revenue & Customs. The record date and payment dateof this dividend will be announced on the London Stock Exchange RNS service. 6. Basic and diluted return per share Return per share has been calculated on 76,215,222 (30 June 2007: 79,277,922; 31December 2006: 80,268,569) Ordinary Shares being the weighted average number ofshares in issue for the six month period (excluding treasury shares). There are no convertible instruments, derivatives or contingent share agreementsin issue for the Company hence there are no dilution effects to the return pershare. The basic return per share is therefore the same as the diluted returnper share. 7. Consolidated fixed asset investments 31 December 30 June 2007 2007 £'000 £'000 Investments held at 'fair value through 11,775 12,587profit or loss'Investments held at amortised cost 12,639 13,650 24,414 26,237 8. Ordinary share capital 31 December 30 June 2007 2007 £'000 £'000 Authorised140,000,000 Ordinary shares of 10p each 14,000 14,000 Allotted82,463,998 Ordinary shares of 10p each (30 June 2007: 8,246 8,39283,920,434) Allotted excluding treasury shares75,203,588 Ordinary shares of 10p each (30 June 2007: 7,520 7,66676,660,024) The Company purchased 1,456,436 Ordinary shares for cancellation during the sixmonth period to 31 December 2007 (June 2007: 2,179,439) at a cost of £581,000(30 June 2007: £818,000). This represented approximately 1.7% of the sharecapital as at 1 July 2007. The shares purchased for cancellation were fundedfrom the retained earnings reserve. Treasury shares During the six month period to 31 December 2007 the Company purchased none (30June 2007: 2,504,826) of its own Ordinary Shares to be held in treasury. Thetotal number of shares held in treasury as at 31 December 2007 was 7,260,410representing 8.8% of the share capital. 9. Reconciliation of net return on ordinary activities before taxation tonet cash inflow from operating activities Six months Sixteen months Ten months to 31 December to 30 June to 31 December 2007 2007 2006 £'000 £'000 £'000 Revenue operating profit 739 1,715 1,135Capitalised expenses (260) (849) (427)(Increase)/decrease in debtors (269) 1,642 1,353(Decrease)/increase in creditors (133) (142) (336) Net cash inflow from operating 77 2,366 1,725activities 10. Analysis of changes in cash during the period Six months Sixteen months Ten months to 31 December to 30 June to 31 December 2007 2007 2006 £'000 £'000 £'000 Opening cash balances 8,367 4,846 4,846Net cash inflow 262 3,521 3,256 8,629 8,367 8,102 11. Contingencies, guarantees and financial commitments The Company did not have any contingencies or guarantees as at 31 December 2007. 12. Post Balance Sheet Events The following transactions have completed since 31 December 2007: • Partial redemption from PSCA International Limited for £37,000. • Divestment of TLC (Tender Loving Childcare) Limited for £1.7 million • Investment of £150,000 in Opta Limited 13. Related Party Transactions The Manager, Close Ventures Limited, is considered to be a related party byvirtue of the fact that it is party to a management contract from the Group.During the period, services of a total value of £347,000 (sixteen months to June2007: £1,163,000; ten months to December 2006: £600,000) were provided to theGroup. At 31 December 2007, the amount due to Close Ventures Limited, disclosedas accruals, was £167,000 (30 June 2007: £397,000). Buy-backs of Ordinary shares during the six month period to 31 December 2007were transacted through Winterflood Securities Limited, a subsidiary of CloseBrothers Group plc, the ultimate parent company of Close Ventures Limited. Atotal of 1,456,436 shares were purchased for cancellation at an average price of40 pence per share. 14. Other information The information set out in the Half-yearly Financial Report does not constitutethe Group's statutory accounts for the six month period ended 31 December 2007or the ten month period ended 31 December 2006. The financial information forthe sixteen month period ended 30 June 2007 does not constitute statutoryaccounts as defined in section 240 of the Companies Act 1985. A copy of thestatutory accounts for that period has been delivered to the Registrar ofCompanies. The auditors' report on those accounts was not qualified and did notcontain statements under s237 (2) or (3) of the Companies Act 1985. 15. Publication This Half-yearly Financial Report is being sent to shareholders and copies willbe made available to the public at the registered office of the Company and atCompanies House. The Half-yearly Financial Report will also be made available tothe public via the FSA viewing facility. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Albion Crown