TIDMAATC
Annual Financial Report
As required by the UK Listing Authority's Disclosure and Transparency Rules 4.1
and 6.3, Albion Technology & General VCT PLC today makes public its information
relating to the Annual Report and Financial Statements for the year ended 31
December 2010.
This announcement was approved for release by the Board of Directors on 28
February 2011.
This announcement has not been audited.
You will shortly be able to view the Annual Report and Financial Statements for
the year to 31 December 2010 (which have been audited) at: www.albion-
ventures.co.uk by clicking on 'Our Funds' and then 'Albion Technology & General
VCT PLC'. The Annual Report and Financial Statements for the year to 31
December 2010 will be available as a PDF document via a link under the 'Investor
Centre' in the 'Financial Reports and Circulars' section. The information
contained in the Annual Report and Financial Statements will include information
as required by the Disclosure and Transparency Rules, including Rule 4.1.
Investment objectives
Albion Technology & General VCT PLC ("the Company") is a Venture Capital Trust
which raised GBP14.3 million in December 2000 and 2002, and raised a further GBP35.0
million during 2006 through the launch of a C share issue. The Company offers
investors the opportunity to participate in a balanced portfolio of technology
and non-technology businesses. The Company's investment portfolio is intended to
be split approximately as follows:
* 40 per cent. in unquoted UK technology-related companies; and
* 60 per cent. in unquoted UK non-technology companies.
The Investment Manager pursues a longer term investment approach, with a view to
providing shareholders with a strong, predictable dividend flow combined with
the prospects of capital growth. This is achieved in two ways. First,
controlling the VCT's exposure to technology risk by ensuring that many of the
companies in the non-technology portfolio have property as their major asset,
with no external borrowings. Second, by balancing the investment portfolio by
sector, so that those areas such as leisure and business services, which are
susceptible to changes in consumer sentiment, are complemented by sectors with
more predictable long term characteristics, such as healthcare and the
environment.
Financial calendar
Annual General Meeting 13 May 2011
Record date for first dividend 1 April 2011
Payment of first dividend 28 April 2011
Announcement of interim results for the six months ended 30 June August 2011
2011
Payment of second dividend subject to Board approval October 2011
Financial summary
Ordinary shares
+-----------------------------------------------------------------------+
148.6p|Net asset value plus dividends from launch(*) to 31 December 2010 |
=------+-----------------------------------------------------------------------+
|
=------+-----------------------------------------------------------------------+
8.0p |Tax free dividend per share paid in the year to 31 December 2010. |
=------+-----------------------------------------------------------------------+
|
=------+-----------------------------------------------------------------------+
2.5p |The Board has declared a first dividend for the year to 31 December |
|2011 of 2.5p per share. |
=------+-----------------------------------------------------------------------+
|
=------+-----------------------------------------------------------------------+
87.6p |Net asset value per share as at 31 December 2010 |
+-----------------------------------------------------------------------+
* The Ordinary shares were launched on 17 January 2001.
C shares
+-------------------------------------------------------------------+
79.6p | Net asset value plus dividends from launch(*) to 31 December 2010 |
=-------+-------------------------------------------------------------------+
|
=-------+-------------------------------------------------------------------+
3.0p | Tax free dividend per share paid in the year to 31 December 2010 |
=-------+-------------------------------------------------------------------+
|
=-------+-------------------------------------------------------------------+
68.1p | Net asset value per share as at 31 December 2010 |
+-------------------------------------------------------------------+
* The C shares were launched on 4 January 2006.
Financial highlights
+-------------------+-----------------------------+----------------------------+
| | Ordinary shares | C shares |
+-------------------+--------------+--------------+--------------+-------------+
| | 31 December| 31 December| 31 December| 31 December|
| | 2010| 2009| 2010| 2009|
| | (pence per| (pence per| (pence per| (pence per|
| | share)| share)| share)| share)|
+-------------------+--------------+--------------+--------------+-------------+
| | | | | |
+-------------------+--------------+--------------+--------------+-------------+
|Dividends paid | 8.0| -| 3.0| 1.0|
+-------------------+--------------+--------------+--------------+-------------+
|Revenue return | 1.6| 2.5| 1.1| 1.5|
+-------------------+--------------+--------------+--------------+-------------+
|Capital | | | | |
|return/(loss) | 1.0| 3.2| (3.0)| (8.1)|
+-------------------+--------------+--------------+--------------+-------------+
|Net asset value | 87.6| 92.7| 68.1| 72.7|
+-------------------+--------------+--------------+--------------+-------------+
Total shareholder net asset value return to 31 December 2010:
Ordinary shares C shares
31 December 2010 31 December 2010
(pence per share) (ii) (pence per share) (ii)
=-------------------------------------------------------------------------------
Total dividends paid during the year ended: 31
December 2001(i) 1.0 -
31 December 2002 2.0 -
31 December 2003 1.5 -
31 December 2004 7.5 -
31 December 2005 9.0 -
31 December 2006 8.0 0.5
31 December 2007 8.0 2.5
31 December 2008 16.0 4.5
31 December 2009 - 1.0
31 December 2010 8.0 3.0
-----------------------------
Total dividends paid to 31 December 2010 61.0 11.5
Net asset value as at 31 December 2010 87.6 68.1
-----------------------------
Total net asset return to 31 December 2010 148.6 79.6
-----------------------------
The Ordinary shares' dividend of 8.0 pence per share for 2009 was paid in
advance on 30 December 2008. The C shares' first dividend for 2009 of 1.5 pence
per share was also paid in advance on 30 December 2008.
In addition to the dividends paid above, the Board has declared a first dividend
for the year ending 31 December 2010, of 2.5 pence per Ordinary share (payable
from the Special reserve) to be paid on 28 April 2011 to shareholders on the
register at 1 April 2011.
In accordance with the Articles of Association, on 31 March 2011, the C shares
will convert to Ordinary shares on the basis of the net assets attributable to
the Ordinary shares and the C shares as disclosed in the audited accounts for
the year to 31 December 2010 and in accordance with the calculation as described
and approved by shareholders' resolution number 4 at the Extraordinary General
Meeting on 8 December 2005. C shareholders will therefore receive 0.7779
Ordinary shares for each C share they currently own.
Notes
(i) Based on subscription by the first closing on 16 January 2001. Investors
subscribing thereafter, up to 30 June 2001 received 0.5 pence per share.
(ii) Excludes tax benefits upon subscription.
Chairman's statement
Introduction
The results for Albion Technology & General VCT for the year to 31 December
2010 show a gradual revival from the low point of the depths of the UK
recession. Despite the real strength and uniqueness of many investee companies,
however, the improvement in performance has been slower than anticipated. The
Ordinary share portfolio showed a positive return of 2.6p pence while the C
share portfolio, after two years of more substantial losses, showed a modest
negative return of 1.9p.
While the value of a number of our investee businesses was written down during
the recession, the portfolio remains almost entirely intact and largely
profitable. The great majority of the portfolio companies have continued to
grow, and we believe that they are beginning to drive an increase in value.
Investment performance and progress
Both portfolios benefitted from the sale of our investment in Geronimo Inns,
which realised a return of just under 25% in the 16 month holding period. The
Ordinary Share portfolio, meanwhile, benefitted from the successful sale during
the year of the investment in RFI Global Services at a level considerably above
its holding value. In addition, there was a welcome write-up of the investment
in Evolutions Television. Against this was a reduction in value of Consolidated
PR, as a result in cut-backs in Government spending, of Oxsensis, and of
Xceleron, following changes in research and development policies by its main
customers.
The C Share portfolio also benefitted from the sale of RFI Global Services,
although to a lesser degree as the investment was considerably smaller. In
addition, there were further improved performances from Blackbay, Mirada
Medical, Kensington Health Clubs and Process Systems Enterprise. Provisions
were made against certain investments where the current climate continues to
have an adverse affect, including Chichester Holdings and The Charnwood Pub
Company.
During the year, some GBP1 million was invested by the Ordinary Share portfolio
and GBP4.2 million by the C Share portfolio. New investments included the Orchard
Portman psychiatric hospital in Somerset, Masters Pharmaceuticals (which
distributes "special" pharmaceuticals on a worldwide basis), Perth Biogas (a
waste food-to-energy power station in Scotland), Street-by-Street Solar (which
installs solar panels on the roofs of residential houses) and Radnor House, a
new independent school by the Thames at Twickenham.
Risks and uncertainties
The outlook for the UK economy continues to be the key risk affecting your
Company. Although current indications are that renewed growth in the UK economy
has become more firmly established, there is continuing uncertainty as to the
impact on the economy of the coalition Government's public spending cuts.
Importantly, investment risk is mitigated through a variety of processes,
including our policy of ensuring that the Company has a first charge over
investee companies' assets wherever possible.
Meanwhile, opportunities within our target sectors continue to arise at
attractive valuations, including in the healthcare and environmental sectors,
which continue to be two core areas of activity.
A detailed analysis of the other risks and uncertainties facing the business is
shown in the Directors' report and enhanced business review within this Annual
Report and Financial Statements and in note 23 to this announcement.
Details of post balance sheet events and related party transactions are set out
in notes 21 and 22 to this announcement.
Conversion of C Shares to Ordinary Shares
As required under your Company's Articles of Association, the C shares convert
into Ordinary shares on the ratio of their respective net asset values per share
at 31 December 2010. The conversion is effective from 31 March 2011. Based on
their respective net asset values, C shareholders will receive 0.7779 new
Ordinary shares for each C share held. New share certificates will be sent out
to shareholders by no later than 30 April 2011. Once the new Ordinary share
certificates have been dispatched, the C share certificates will have no further
value and should be destroyed.
The merged portfolio will comprise investments in 44 companies and will benefit
from both the revenue generating maturity of the older companies within the
Ordinary Share portfolio and the growth potential of the C Share portfolio.
Bearing in mind the projected income generation of the enlarged portfolio,
combined with available reserves and cash resources, it will continue to be the
Company's longer term target to pay out annual dividends of 5 pence per Ordinary
Share, so far as it is able. This means that the equivalent dividend for the C
Share would be approximately 3.9 pence compared to 3 pence in the year just
ended.
Discount management and share buy-backs
It remains the Board's policy to buy back shares in the market, subject to the
overall constraint that such purchases are in the VCT's interests, including the
maintenance of sufficient resources for investment in new and existing investee
companies and the continued payment of dividends to shareholders. It is the
Board's intention for such buy-backs to be in the region of a 10 to 15 per cent.
discount to net asset value, so far as market conditions and liquidity permit.
Details of the issued share capital together with details of the movement in the
Company's share capital during the year are shown in note 15.
Results and dividends
As at 31 December 2010, the net asset value of the Ordinary shares was 87.6
pence per share, and the net asset value of the C shares was 68.1 pence per
share. The revenue return before taxation for the Ordinary shares was GBP275,000
compared to GBP432,000 for the previous period and for the C shares was GBP503,000
compared to GBP544,000 for the previous year. The Company will pay a first
dividend for the financial year to 31 December 2011 of 2.5 pence per Ordinary
share. Dividends will be paid on 28 April 2011 to shareholders on the register
on 1 April 2011.
Supporting enterprise and growth
Recent research undertaken by the Association of Investment Companies has
demonstrated that VCT investment provides substantial benefits for UK small
businesses and the economy in at least three ways: first, by creating jobs;
second, by providing additional management skill to support growing businesses;
and finally, by being cost-effective, in that the cost to the public purse is
more than offset by the increased tax returns by the growth of VCT-backed
companies. In common with other VCTs, your Board recommends that the coalition
Government continues to support the VCT sector as one of the best ways to
support enterprise and future economic growth.
Albion VCTs Linked Top Up Offer
On 1 November 2010 the Company announced the launch of the Albion VCTs Linked
Top Up Offer. In aggregate, the Albion VCTs will be aiming to raise up to GBP15
million across all of the seven VCTs managed by Albion Ventures LLP, of which
Albion Technology & General VCT PLC's share will be approximately GBP2.25
million.
The maximum amount raised by each of the Albion VCTs will be the lower of Euros
2.5 million, and 10 per cent. of its issued share capital (over any one 12 month
period, and including any shares issued under Dividend Reinvestment Schemes),
being the amount that they may issue under the Prospectus Rules without the
publication of a full prospectus. The number of new shares available may change
depending on the GBP: euro exchange rate at the date of allotment. The proceeds
of the Offer will be used to provide further resources to the Albion VCTs at a
time when a number of attractive new investment opportunities are being seen.
An Investor Guide and Offer document have been sent to shareholders.
On 7 January 2011, the Company issued 344,862 Ordinary shares at 94.8 pence per
share and 440,166 C shares at 74.3 pence per share under the Offer. For further
details, please see note 21.
Outlook and prospects
The outlook for the UK economy remains uncertain. In particular, the full
impact of the public sector cuts on the wider economy has not yet been fully
felt. To mitigate this, a number of investee companies in the technology
element of the portfolio operate in international markets and some, such as
Helveta, in fast growing developing countries. A significant number of our
companies have special assets or business capabilities, and we believe that,
over the longer term, they will provide strong returns for shareholders.
There is a widely held view that interest rates will remain low in the short
term, which will continue to depress income from deposits. With this in mind,
the Company is looking to expand further its portfolio of asset based income
producing investments where we have seen an improvement in the pipeline at
attractive prices across a range of industries, with particular emphasis on the
healthcare and environmental sectors.
Dr Neil Cross
Chairman
28 February 2011
Manager's report
The sector analysis of Albion Technology & General VCT PLC's investment
portfolio as at 31 December 2010 is shown below. By valuation, the non-
technology element of the portfolio now accounts for 58 per cent. of the
Ordinary shares' net asset value and 49 per cent. of the C shares' net asset
value, while the technology portfolio accounts for 28 per cent. of the Ordinary
shares and 37 per cent. of the C shares, with cash and liquid resources
providing the balance. On a combined basis, following the merger of the two
share classes, then the aggregate balance would have been 34 per cent. of net
assets in technology and 52 per cent. in non-technology. As a proportion of the
combined portfolio value, the healthcare element now accounts for 22 per cent.
up from 16 per cent at the end of 2009, while the environmental and renewable
portion is now 7 per cent, up from 6 per cent.
Please see the end of this announcement for the PDFs of the sector pie chart for
the Ordinary share portfolio, the C share portfolio and the combined portfolio.
Source: Albion Ventures LLP
Portfolio review
As mentioned in the Chairman's statement, a number of companies within the
technology portfolio have begun to perform strongly. In addition to those
detailed in the Chairman's statement, it is worth mentioning improved prospects
for Dexela, Memsstar (formerly Point 35 Microstructures), and Helveta, while
trading at Lowcosttravel also shows continued growth, with an important new
contract signed with Easyjet. Against this, continued difficult markets led to
the restructuring of Red-M Wireless and Rostima.
In our non-technology portfolio, cinemas have performed particularly well, while
revenues and profitability continued to climb at our health and fitness clubs
leading to a write-up of the Kensington Health Club. The Charnwood Pub Company
Limited, which operates food-led pubs in central England, saw a reduction in
value as its core customer base struggled in a difficult economic climate, while
Chichester Holdings' markets have also suffered.
Realisations
The successful sale of RFI Global Services Limited realised initial proceeds
across both portfolios of GBP565,000 against cost of GBP342,000 and a value as at
31 December 2009 of GBP295,000. In addition, the sale of Geronimo Inns generated
proceeds of GBP1.716 million, in addition to annual income of 8%, against cost of
GBP1.52 million.
New investments
Two new investments were made during the year in Orchard Portman Hospital, a
freehold psychiatric hospital based in Somerset, and Masters Pharmaceuticals
Limited. The broader healthcare sector remains a core area for concentration
going forwards as we believe that the sector, at all stages of technology and
service, offers growth opportunities over future years, despite the undoubted
adverse effect of the impending spending cuts. In addition, your Company has
made its first renewable energy investments. TEG Biogas (Perth) Limited is
constructing a waste-food-to-energy plant in Scotland, which will become
operational in the Spring of 2011. We have also made an investment in the solar
energy sector through Street-by-Street Solar, which installs and owns PV panels
on residential buildings in the Thames Valley. In general, renewable energy is
also set to be an important area for concentration, with a portfolio weighting
of up to 15%, as, like healthcare, we see that it has strong, longer term growth
prospects.
The pipeline of potential new investments is strong; subsequent to the year end,
contracts have been exchanged on a second psychiatric treatment centre in which
the fund will invest in 2011. In addition, terms have been agreed with a number
of renewable energy projects in the anaerobic digestion, hydroelectricity and
wind sectors.
Albion Ventures LLP
Manager
28 February 2011
Responsibility Statement
In preparing these financial statements for the year to 31 December 2010, the
Directors of the Company, being Dr. Neil Cross, Lt. Gen. Sir Edmund Burton,
Michael Hart and Patrick Reeve, confirm that to the best of their knowledge:
- summary financial information contained in this announcement and the full
Annual Report and Financial Statements for the year ended 31 December 2010 for
the Company has been prepared in accordance with United Kingdom Generally
Accepted Accounting Practice (UK Accounting Standards and applicable law) and
give a true and fair view of the assets, liabilities, financial position and
profit and loss of the Company for the year ended 31 December 2010 as required
by DTR 4.1.12.R;
-the Chairman's statement and Manager's report include a fair review of the
information required by DTR 4.2.7R (indication of important events during the
year ended 31 December 2010 and description of principal risks and uncertainties
that the Company faces); and
-the Chairman's statement and Manager's report include a fair review of the
information required by DTR 4.2.8R (disclosure of related parties transactions
and changes therein).
A detailed "Statement of Directors' responsibilities for the preparation of the
Company's financial statements" is contained within the full audited Annual
Report and Financial Statements.
By order of the Board
Dr Neil Cross
Chairman
Income statement
+-------------------------+----+-----------------------+-----------------------+
| | | Combined | Combined |
+-------------------------+----+-----------------------+-----------------------+
| | |Year ended 31 December |Year ended 31 December |
| | | 2010 | 2009 |
+-------------------------+----+-------+-------+-------+-------+-------+-------+
| | |Revenue|Capital| Total|Revenue|Capital| Total|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
| |Note| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Losses on investments | 3 | -| (391)| (391)| -|(1,979)|(1,979)|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Investment income | 4 | 1,197| -| 1,197| 1,396| -| 1,396|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Investment management | | | | | | | |
|fees | 5 | (225)| (673)| (898)| (233)| (698)| (931)|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Recovery of VAT | | -| -| -| 23| 68| 91|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Other expenses | 6 | (194)| -| (194)| (210)| -| (210)|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Return/(loss) on ordinary| | | | | | | |
|activities before tax | | 778|(1,064)| (286)| 976|(2,609)|(1,633)|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Tax (charge)/credit on | | | | | | | |
|ordinary activities | 8 | (198)| 183| (15)| (122)| 187| 65|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Return/(loss) | | | | | | | |
|attributable to | | | | | | | |
|shareholders | | 580| (881)| (301)| 854|(2,422)|(1,568)|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
The accompanying notes form an integral part of these Financial Statements.
The total column of this Income statement represents the profit and loss account
of the Company. The supplementary revenue and capital columns have been prepared
in accordance with the Association of Investment Companies' Statement of
Recommended Practice.
All revenue and capital items in the above statement derive from continuing
operations.
There are no recognised gains or losses other than the results for the year
disclosed above. Accordingly a statement of total recognised gains and losses is
not required.
The difference between the reported loss on ordinary activities before tax and
the historical profit/(loss) is due to the fair value movements on investments.
As a result a note on historical cost profit and losses has not been prepared.
Disclosure of basic and diluted earnings per share is given in the underlying
Ordinary and C share funds on the following pages.
Income statement (non-statutory analysis)
+-------------------------+----+-----------------------+-----------------------+
| | | Ordinary shares | Ordinary shares |
+-------------------------+----+-----------------------+-----------------------+
| | |Year ended 31 December |Year ended 31 December |
| | | 2010 | 2009 |
+-------------------------+----+-------+-------+-------+-------+-------+-------+
| | |Revenue|Capital| Total|Revenue|Capital| Total|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
| |Note| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Gains on investments |3 | -| 291| 291| -| 502| 502|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Investment income |4 | 406| -| 406| 547| -| 547|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Investment management | | | | | | | |
|fees |5 | (74)| (220)| (294)| (72)| (215)| (287)|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Recovery of VAT | | -| -| -| 23| 68| 91|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Other expenses |6 | (57)| -| (57)| (66)| -| (66)|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Return on ordinary | | | | | | | |
|activities before tax | | 275| 71| 346| 432| 355| 787|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Tax (charge)/credit on | | | | | | | |
|ordinary activities |8 | (67)| 61| (6)| (104)| 54| (50)|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Return attributable to | | | | | | | |
|shareholders | | 208| 132| 340| 328| 409| 737|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Basic and diluted return | | | | | | | |
|per share (pence)* |10 | 1.6| 1.0| 2.6| 2.5| 3.2| 5.7|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
* excluding treasury shares
+-------------------------+----+-----------------------+-----------------------+
| | | C shares | C shares |
+-------------------------+----+-----------------------+-----------------------+
| | |Year ended 31 December |Year ended 31 December |
| | | 2010 | 2009 |
+-------------------------+----+-------+-------+-------+-------+-------+-------+
| | |Revenue|Capital| Total|Revenue|Capital| Total|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
| |Note| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Losses on investments | 3 | -| (682)| (682)| -|(2,481)|(2,481)|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Investment income | 4 | 791| -| 791| 849| -| 849|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Investment management | | | | | | | |
|fees | 5 | (151)| (453)| (604)| (161)| (483)| (644)|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Other expenses | 6 | (137)| -| (137)| (144)| -| (144)|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Return/(loss) on ordinary| | | | | | | |
|activities before tax | | 503|(1,135)| (632)| 544|(2,964)|(2,420)|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Tax (charge)/credit on | | | | | | | |
|ordinary activities | 8 | (131)| 122| (9)| (18)| 133| 115|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Return/(loss) | | | | | | | |
|attributable to | | | | | | | |
|shareholders | | 372|(1,013)| (641)| 526|(2,831)|(2,305)|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Basic and diluted | | | | | | | |
|return/(loss) per share | | | | | | | |
|(pence) * | 10 | 1.1| (3.0)| (1.9)| 1.5| (8.1)| (6.6)|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
* excluding treasury shares
Balance sheet
+-----------------------------------------+--+----------------+----------------+
| | | Combined| Combined|
+-----------------------------------------+--+----------------+----------------+
| | |31 December 2010|31 December 2009|
+-----------------------------------------+--+----------------+----------------+
| | | GBP'000| GBP'000|
+-----------------------------------------+--+----------------+----------------+
|Fixed asset investments | | | |
+-----------------------------------------+--+----------------+----------------+
|Qualifying | | 28,018| 26,819|
+-----------------------------------------+--+----------------+----------------+
|Non-qualifying | | 1,369| 566|
+-----------------------------------------+--+----------------+----------------+
|AIM | | -| 20|
+-----------------------------------------+--+----------------+----------------+
|Total fixed asset investments |11| 29,387| 27,405|
+-----------------------------------------+--+----------------+----------------+
| | | | |
+-----------------------------------------+--+----------------+----------------+
|Current assets | | | |
+-----------------------------------------+--+----------------+----------------+
|Trade and other debtors |13| 304| 319|
+-----------------------------------------+--+----------------+----------------+
|Current asset investment |13| 1,005| 1,014|
+-----------------------------------------+--+----------------+----------------+
|Cash at bank and in hand |17| 3,895| 8,749|
+-----------------------------------------+--+----------------+----------------+
| | | 5,204| 10,082|
+-----------------------------------------+--+----------------+----------------+
| | | | |
+-----------------------------------------+--+----------------+----------------+
|Creditors: amounts falling due within one| | | |
|year |14| (500)| (375)|
+-----------------------------------------+--+----------------+----------------+
| | | | |
+-----------------------------------------+--+----------------+----------------+
|Net current assets | | 4,704| 9,707|
+-----------------------------------------+--+----------------+----------------+
| | | | |
+-----------------------------------------+--+----------------+----------------+
|Net assets | | 34,091| 37,112|
+-----------------------------------------+--+----------------+----------------+
| | | | |
+-----------------------------------------+--+----------------+----------------+
|Capital and reserves | | | |
+-----------------------------------------+--+----------------+----------------+
|Called up share capital |15| 24,772| 24,680|
+-----------------------------------------+--+----------------+----------------+
|Share premium | | 294| 259|
+-----------------------------------------+--+----------------+----------------+
|Capital redemption reserve | | 400| 400|
+-----------------------------------------+--+----------------+----------------+
|Unrealised capital reserve | | (9,312)| (10,083)|
+-----------------------------------------+--+----------------+----------------+
|Special reserve | | 14,914| 21,327|
+-----------------------------------------+--+----------------+----------------+
|Treasury shares reserve | | (2,166)| (1,372)|
+-----------------------------------------+--+----------------+----------------+
|Realised capital reserve | | 4,278| 845|
+-----------------------------------------+--+----------------+----------------+
|Revenue reserve | | 911| 1,056|
+-----------------------------------------+--+----------------+----------------+
|Total equity shareholders' funds | | 34,091| 37,112|
+-----------------------------------------+--+----------------+----------------+
The accompanying notes form an integral part of these Financial Statements.
These financial statements were approved by the Board of Directors, and
authorised for issue on 28 February 2011 and were signed on its behalf by
Dr Neil Cross
Chairman
Company number: 4114310
Balance sheet (non-statutory analysis)
+---------------------------------------+----+----------------+----------------+
| | | Ordinary shares| Ordinary shares|
+---------------------------------------+----+----------------+----------------+
| | |31 December 2010|31 December 2009|
+---------------------------------------+----+----------------+----------------+
| |Note| GBP'000| GBP'000|
+---------------------------------------+----+----------------+----------------+
|Fixed asset investments | | | |
+---------------------------------------+----+----------------+----------------+
|Qualifying | | 8,817| 9,312|
+---------------------------------------+----+----------------+----------------+
|Non-qualifying | | 717| 452|
+---------------------------------------+----+----------------+----------------+
|AIM | | -| 20|
+---------------------------------------+----+----------------+----------------+
|Total fixed asset investments | 11| 9,534| 9,784|
+---------------------------------------+----+----------------+----------------+
| | | | |
+---------------------------------------+----+----------------+----------------+
|Current assets | | | |
+---------------------------------------+----+----------------+----------------+
|Trade and other debtors | 13| 70| 60|
+---------------------------------------+----+----------------+----------------+
|Cash at bank and in hand | 17| 1,601| 2,168|
+---------------------------------------+----+----------------+----------------+
| | | 1,671| 2,228|
+---------------------------------------+----+----------------+----------------+
| | | | |
+---------------------------------------+----+----------------+----------------+
|Creditors: amounts falling due within | | | |
|one year | 14| (132)| (110)|
+---------------------------------------+----+----------------+----------------+
| | | | |
+---------------------------------------+----+----------------+----------------+
|Net current assets | | 1,539| 2,118|
+---------------------------------------+----+----------------+----------------+
| | | | |
+---------------------------------------+----+----------------+----------------+
|Net assets | | 11,073| 11,902|
+---------------------------------------+----+----------------+----------------+
| | | | |
+---------------------------------------+----+----------------+----------------+
|Capital and reserves | | | |
+---------------------------------------+----+----------------+----------------+
|Called up share capital | 15| 6,885| 6,851|
+---------------------------------------+----+----------------+----------------+
|Share premium | | 234| 215|
+---------------------------------------+----+----------------+----------------+
|Capital redemption reserve | | 400| 400|
+---------------------------------------+----+----------------+----------------+
|Unrealised capital reserve | | (3,631)| (3,930)|
+---------------------------------------+----+----------------+----------------+
|Special reserve | | 2,194| 5,554|
+---------------------------------------+----+----------------+----------------+
|Treasury shares reserve | | (1,008)| (808)|
+---------------------------------------+----+----------------+----------------+
|Realised capital reserve | | 5,486| 2,913|
+---------------------------------------+----+----------------+----------------+
|Revenue reserve | | 513| 707|
+---------------------------------------+----+----------------+----------------+
|Total equity shareholders' funds | | 11,073| 11,902|
+---------------------------------------+----+----------------+----------------+
| | | | |
+---------------------------------------+----+----------------+----------------+
|Basic and diluted net asset value per | | | |
|share (pence)* | 16| 87.6| 92.7|
+---------------------------------------+----+----------------+----------------+
* excluding treasury shares
The accompanying notes form an integral part of these Financial Statements.
Balance sheet (non-statutory analysis)
+-----------------------------------------+--+----------------+----------------+
| | | C shares| C shares|
+-----------------------------------------+--+----------------+----------------+
| | |31 December 2010|31 December 2009|
+-----------------------------------------+--+----------------+----------------+
| | | GBP'000| GBP'000|
+-----------------------------------------+--+----------------+----------------+
| | | | |
+-----------------------------------------+--+----------------+----------------+
|Fixed asset investments | | | |
+-----------------------------------------+--+----------------+----------------+
|Qualifying | | 19,201| 17,507|
+-----------------------------------------+--+----------------+----------------+
|Non-qualifying | | 652| 114|
+-----------------------------------------+--+----------------+----------------+
|Total fixed asset investments |11| 19,853| 17,621|
+-----------------------------------------+--+----------------+----------------+
| | | | |
+-----------------------------------------+--+----------------+----------------+
|Current assets | | | |
+-----------------------------------------+--+----------------+----------------+
|Trade and other debtors |13| 234| 259|
+-----------------------------------------+--+----------------+----------------+
|Current asset investment |13| 1,005| 1,014|
+-----------------------------------------+--+----------------+----------------+
|Cash at bank and in hand |17| 2,294| 6,581|
+-----------------------------------------+--+----------------+----------------+
| | | 3,533| 7,854|
+-----------------------------------------+--+----------------+----------------+
| | | | |
+-----------------------------------------+--+----------------+----------------+
|Creditors: amounts falling due within one| | | |
|year |14| (368)| (265)|
+-----------------------------------------+--+----------------+----------------+
| | | | |
+-----------------------------------------+--+----------------+----------------+
| | | | |
|Net current assets | | 3,165| 7,589|
+-----------------------------------------+--+----------------+----------------+
| | | | |
+-----------------------------------------+--+----------------+----------------+
|Net assets | | 23,018| 25,210|
+-----------------------------------------+--+----------------+----------------+
| | | | |
+-----------------------------------------+--+----------------+----------------+
|Capital and reserves | | | |
+-----------------------------------------+--+----------------+----------------+
|Called up share capital |15| 17,887| 17,829|
+-----------------------------------------+--+----------------+----------------+
|Share premium | | 60| 44|
+-----------------------------------------+--+----------------+----------------+
|Unrealised capital reserve | | (5,681)| (6,153)|
+-----------------------------------------+--+----------------+----------------+
|Special reserve | | 12,720| 15,773|
+-----------------------------------------+--+----------------+----------------+
|Treasury shares reserve | | (1,158)| (564)|
+-----------------------------------------+--+----------------+----------------+
|Realised capital reserve | | (1,208)| (2,068)|
+-----------------------------------------+--+----------------+----------------+
|Revenue reserve | | 398| 349|
+-----------------------------------------+--+----------------+----------------+
|Total equity shareholders' funds | | 23,018| 25,210|
+-----------------------------------------+--+----------------+----------------+
| | | | |
+-----------------------------------------+--+----------------+----------------+
|Basic and diluted net asset value per | | | |
|share (pence)* |16| 68.1| 72.7|
+-----------------------------------------+--+----------------+----------------+
* excluding treasury shares
The accompanying notes form an integral part of these Financial Statements.
Reconciliation of movements in shareholders' funds
Combined
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
| |Called-| | | | | | | | |
| | up| | Capital|Unrealised| |Treasury|Realised| | |
| | share| Share|redemption| capital| Special| share| capital| Revenue| |
| |capital|premium| reserve| reserve *|reserve*|reserve*|reserve*|reserve*| Total|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
| | GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|As at 1 | | | | | | | | | |
|January 2010| 24,680| 259| 400| (10,083)| 21,327| (1,372)| 845| 1,056| 37,112|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Net realised| | | | | | | | | |
|losses on | | | | | | | | | |
|investments | | | | | | | | | |
|in the year | -| -| -| -| -| -| (161)| -| (161)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Unrealised | | | | | | | | | |
|losses on | | | | | | | | | |
|investments | -| -| -| (230)| -| -| -| -| (230)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Transfer of | | | | | | | | | |
|previously | | | | | | | | | |
|unrealised | | | | | | | | | |
|losses on | | | | | | | | | |
|sale of | | | | | | | | | |
|investments | -| -| -| 1,001| -| -| (1,001)| -| -|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Capitalised | | | | | | | | | |
|investment | | | | | | | | | |
|management | | | | | | | | | |
|fee | -| -| -| -| -| -| (673)| -| (673)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Tax on | | | | | | | | | |
|capitalised | | | | | | | | | |
|management | | | | | | | | | |
|fees | -| -| -| -| -| -| 183| -| 183|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Purchase of | | | | | | | | | |
|own treasury| | | | | | | | | |
|shares | -| -| -| -| -| (794)| -| -| (794)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Issue of | | | | | | | | | |
|equity (net | | | | | | | | | |
|of costs) | 92| 35| -| -| -| -| -| | 127|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Transfer | | | | | | | | | |
|from Special| | | | | | | | | |
|reserve to | | | | | | | | | |
|Realised | | | | | | | | | |
|capital | | | | | | | | | |
|reserve* | -| -| -| -| (5,152)| -| 5,152| -| -|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Revenue | | | | | | | | | |
|return | | | | | | | | | |
|attributable| | | | | | | | | |
|to | | | | | | | | | |
|shareholders| -| -| -| -| -| -| | 580| 580|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Dividends | | | | | | | | | |
|paid | -| -| -| -| (1,261)| -| (67)| (725)|(2,053)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|As at 31 | | | | | | | | | |
|December | | | | | | | | | |
|2010 | 24,772| 294| 400| (9,312)| 14,914| (2,166)| 4,278| 911| 34,091|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
* The Special reserve allows the Company, amongst other things, to facilitate
the payment of dividends earlier than would otherwise have been possible as
transfers can be made from this reserve to the Realised capital reserve to
offset gross losses on disposal of investments. Accordingly, a transfer of
GBP2,807,000 in respect of the Ordinary shares and GBP2,345,000 in respect of the C
shares, representing gross realised losses on disposal of investments from
launch to 31 December 2010, has been made from the Special reserve to the
Realised capital reserve.
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
| |Called-| | | | | | | | |
| | up| | Capital|Unrealised| |Treasury|Realised| | |
| | share| Share|redemption| capital| Special| share| capital| Revenue| |
| |capital|premium| reserve| reserve *|reserve*|reserve*|reserve*|reserve*| Total|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
| | GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|As at 1 | | | | | | | | | |
|January 2009| 24,660| 256| 400| (9,176)| 21,327| (743)| 2,360| 551| 39,635|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Net realised| | | | | | | | | |
|gains on | | | | | | | | | |
|investments | | | | | | | | | |
|in the year | -| -| -| -| -| -| 282| -| 282|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Unrealised | | | | | | | | | |
|losses on | | | | | | | | | |
|investments | -| -| -| (2,261)| -| -| -| -|(2,261)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Transfer of | | | | | | | | | |
|previously | | | | | | | | | |
|unrealised | | | | | | | | | |
|losses on | | | | | | | | | |
|sale of | | | | | | | | | |
|investments | -| -| -| 1,354| -| -| (1,354)| -| -|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Capitalised | | | | | | | | | |
|investment | | | | | | | | | |
|management | | | | | | | | | |
|fee | -| -| -| -| -| -| (698)| -| (698)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Capitalised | | | | | | | | | |
|recoverable | | | | | | | | | |
|VAT | -| -| -| -| -| -| 68| -| 68|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Tax on | | | | | | | | | |
|capitalised | | | | | | | | | |
|management | | | | | | | | | |
|fees | -| -| -| -| -| -| 187| -| 187|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Purchase of | | | | | | | | | |
|own treasury| | | | | | | | | |
|shares | -| -| -| -| -| (629)| -| -| (629)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Issue of | | | | | | | | | |
|equity (net | | | | | | | | | |
|of costs) | 20| 3| -| -| -| -| -| -| 23|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Revenue | | | | | | | | | |
|return | | | | | | | | | |
|attributable| | | | | | | | | |
|to | | | | | | | | | |
|shareholders| -| -| -| -| -| -| -| 854| 854|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Dividends | | | | | | | | | |
|paid | -| -| -| -| -| -| -| (349)| (349)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|As at 31 | | | | | | | | | |
|December | | | | | | | | | |
|2009 | 24,680| 259| 400| (10,083)| 21,327| (1,372)| 845| 1,056| 37,112|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
*Included within these reserves is an amount of GBP8,625,000 (2009: GBP11,773,000)
which is considered distributable. The Special reserve has been treated as
distributable in determining the amounts available for distribution.
Reconciliation of movements in shareholders' funds
Ordinary shares (non-statutory analysis)
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
| |Called-| | | | | | | | |
| | up| | Capital|Unrealised| |Treasury|Realised| | |
| | share| Share|redemption| capital| Special| share| capital| Revenue| |
| |capital|premium| reserve| reserve *|reserve*|reserve*|reserve*|reserve*| Total|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
| | GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|As at 1 | | | | | | | | | |
|January 2010| 6,851| 215| 400| (3,930)| 5,554| (808)| 2,913| 707| 11,902|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Net realised| | | | | | | | | |
|profits on | | | | | | | | | |
|investments | | | | | | | | | |
|in the year | -| -| -| -| -| -| 185| -| 185|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Unrealised | | | | | | | | | |
|gains on | | | | | | | | | |
|investments | -| -| -| 106| -| -| -| -| 106|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Transfer of | | | | | | | | | |
|previously | | | | | | | | | |
|unrealised | | | | | | | | | |
|losses on | | | | | | | | | |
|sale of | | | | | | | | | |
|investments | -| -| -| 193| -| -| (193)| -| -|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Capitalised | | | | | | | | | |
|investment | | | | | | | | | |
|management | | | | | | | | | |
|fee | -| -| -| -| -| -| (220)| -| (220)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Tax on | | | | | | | | | |
|capitalised | | | | | | | | | |
|management | | | | | | | | | |
|fees | -| -| -| -| -| -| 61| -| 61|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Purchase of | | | | | | | | | |
|own treasury| | | | | | | | | |
|shares | -| -| -| -| | (200)| -| -| (200)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Issue of | | | | | | | | | |
|equity (net | | | | | | | | | |
|of costs) | 34| 19| -| -| -| -| -| -| 53|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Transfer | | | | | | | | | |
|from Special| | | | | | | | | |
|reserve to | | | | | | | | | |
|Realised | | | | | | | | | |
|capital | | | | | | | | | |
|reserve | -| -| -| -| (2,807)| -| 2,807| -| -|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Revenue | | | | | | | | | |
|return | | | | | | | | | |
|attributable| | | | | | | | | |
|to | | | | | | | | | |
|shareholders| -| -| -| -| -| -| -| 208| 208|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Dividends | | | | | | | | | |
|paid | -| -| -| -| (553)| -| (67)| (402)|(1,022)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|As at 31 | | | | | | | | | |
|December | | | | | | | | | |
|2010 | 6,885| 234| 400| (3,631)| 2,194| (1,008)| 5,486| 513| 11,073|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
+------------+-------+-------+----------+----------+--------+--------+--------+--------+------+
| |Called-| | | | | | | | |
| | up| | Capital|Unrealised| |Treasury|Realised| | |
| | share| Share|redemption| capital| Special| share| capital| Revenue| |
| |capital|premium| reserve| reserve *|reserve*|reserve*|reserve*|reserve*| Total|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+------+
| | GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+------+
|As at 1 | | | | | | | | | |
|January 2009| 6,851| 215| 400| (4,747)| 5,554| (713)| 3,321| 379|11,260|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+------+
|Net realised| | | | | | | | | |
|gains on | | | | | | | | | |
|investments | | | | | | | | | |
|in the year | -| -| -| -| -| -| 431| -| 431|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+------+
|Unrealised | | | | | | | | | |
|losses on | | | | | | | | | |
|investments | -| -| -| 71| -| -| -| -| 71|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+------+
|Transfer of | | | | | | | | | |
|previously | | | | | | | | | |
|unrealised | | | | | | | | | |
|gains on | | | | | | | | | |
|sale of | | | | | | | | | |
|investments | -| -| -| 746| -| -| (746)| -| -|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+------+
|Capitalised | | | | | | | | | |
|investment | | | | | | | | | |
|management | | | | | | | | | |
|fee | -| -| -| -| -| -| (215)| -| (215)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+------+
|Capitalised | | | | | | | | | |
|recoverable | | | | | | | | | |
|VAT | -| -| -| -| -| -| 68| -| 68|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+------+
|Tax on | | | | | | | | | |
|capitalised | | | | | | | | | |
|management | | | | | | | | | |
|fees | -| -| -| -| -| -| 54| -| 54|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+------+
|Purchase of | | | | | | | | | |
|own treasury| | | | | | | | | |
|shares | -| -| -| -| -| (95)| -| -| (95)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+------+
|Revenue | | | | | | | | | |
|return | | | | | | | | | |
|attributable| | | | | | | | | |
|to | | | | | | | | | |
|shareholders| -| -| -| -| -| -| -| 328| 328|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+------+
|As at 31 | | | | | | | | | |
|December | | | | | | | | | |
|2009 | 6,851| 215| 400| (3,930)| 5,554| (808)| 2,913| 707|11,902|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+------+
*Included within these reserves is an amount of GBP3,554,000 (2009: GBP4,436,000)
which is considered distributable. The Special reserve has been treated as
distributable in determining the amounts available for distribution.
Reconciliation of movements in shareholders' funds
C shares (non-statutory analysis)
+------------+-------+-------+----------+--------+--------+--------+--------+-------+
| |Called-| | | | | | | |
| | up| |Unrealised| |Treasury|Realised| | |
| | share| Share| capital| Special| share| capital| Revenue| |
| |capital|premium| reserve *|reserve*|reserve*|reserve*|reserve*| Total|
+------------+-------+-------+----------+--------+--------+--------+--------+-------+
| | GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000|
+------------+-------+-------+----------+--------+--------+--------+--------+-------+
|As at 1 | | | | | | | | |
|January 2010| 17,829| 44| (6,153)| 15,773| (564)| (2,068)| 349| 25,210|
+------------+-------+-------+----------+--------+--------+--------+--------+-------+
|Net realised| | | | | | | | |
|losses on | | | | | | | | |
|investments | | | | | | | | |
|in the year | -| -| -| -| -| (346)| -| (346)|
+------------+-------+-------+----------+--------+--------+--------+--------+-------+
|Unrealised | | | | | | | | |
|losses on | | | | | | | | |
|investments | -| -| (336)| -| -| -| -| (336)|
+------------+-------+-------+----------+--------+--------+--------+--------+-------+
|Transfer of | | | | | | | | |
|previously | | | | | | | | |
|unrealised | | | | | | | | |
|losses on | | | | | | | | |
|sale of | | | | | | | | |
|investments | -| -| 808| -| -| (808)| -| -|
+------------+-------+-------+----------+--------+--------+--------+--------+-------+
|Capitalised | | | | | | | | |
|investment | | | | | | | | |
|management | | | | | | | | |
|fee | -| -| -| -| -| (453)| -| (453)|
+------------+-------+-------+----------+--------+--------+--------+--------+-------+
|Tax on | | | | | | | | |
|capitalised | | | | | | | | |
|management | | | | | | | | |
|fees | -| -| -| -| -| 122| -| 122|
+------------+-------+-------+----------+--------+--------+--------+--------+-------+
|Purchase of | | | | | | | | |
|own treasury| | | | | | | | |
|shares | -| -| -| -| (594)| -| -| (594)|
+------------+-------+-------+----------+--------+--------+--------+--------+-------+
|Issue of | | | | | | | | |
|equity (net | | | | | | | | |
|of costs) | 58| 16| -| -| -| -| -| 74|
+------------+-------+-------+----------+--------+--------+--------+--------+-------+
|Transfer | | | | | | | | |
|from Special| | | | | | | | |
|reserve to | | | | | | | | |
|Realised | | | | | | | | |
|capital | | | | | | | | |
|reserve | -| -| -| (2,345)| -| 2,345| -| -|
+------------+-------+-------+----------+--------+--------+--------+--------+-------+
|Revenue | | | | | | | | |
|return | | | | | | | | |
|attributable| | | | | | | | |
|to | | | | | | | | |
|shareholders| -| -| -| -| -| -| 372| 372|
+------------+-------+-------+----------+--------+--------+--------+--------+-------+
|Dividends | | | | | | | | |
|paid | -| -| -| (708)| -| -| (323)|(1,031)|
+------------+-------+-------+----------+--------+--------+--------+--------+-------+
|As at 31 | | | | | | | | |
|December | | | | | | | | |
|2010 | 17,887| 60| (5,681)| 12,720| (1,158)| (1,208)| 398| 23,018|
+------------+-------+-------+----------+--------+--------+--------+--------+-------+
+-----------+-------+-------+----------+--------+--------+--------+--------+-------+
| |Called-| | | | | | | |
| | up| |Unrealised| |Treasury|Realised| | |
| | share| Share| capital| Special| share| capital| Revenue| |
| |capital|premium| reserve|reserve*|reserve*|reserve*|reserve*| Total|
+-----------+-------+-------+----------+--------+--------+--------+--------+-------+
| | GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000|
+-----------+-------+-------+----------+--------+--------+--------+--------+-------+
|As at 1 | | | | | | | | |
|January | | | | | | | | |
|2009 | 17,809| 41| (4,429)| 15,773| (30)| (961)| 172| 28,375|
+-----------+-------+-------+----------+--------+--------+--------+--------+-------+
|Net | | | | | | | | |
|realised | | | | | | | | |
|gains on | | | | | | | | |
|investments| | | | | | | | |
|in the year| -| -| -| -| -| (149)| -| (149)|
+-----------+-------+-------+----------+--------+--------+--------+--------+-------+
|Unrealised | | | | | | | | |
|losses on | | | | | | | | |
|investments| -| -| (2,332)| -| -| -| -|(2,332)|
+-----------+-------+-------+----------+--------+--------+--------+--------+-------+
|Transfer of| | | | | | | | |
|previously | | | | | | | | |
|unrealised | | | | | | | | |
|gains on | | | | | | | | |
|sale of | | | | | | | | |
|investments| -| -| 608| -| -| (608)| -| -|
+-----------+-------+-------+----------+--------+--------+--------+--------+-------+
|Capitalised| | | | | | | | |
|investment | | | | | | | | |
|management | | | | | | | | |
|fee | -| -| -| -| -| (483)| -| (483)|
+-----------+-------+-------+----------+--------+--------+--------+--------+-------+
|Capitalised| | | | | | | | |
|recoverable| | | | | | | | |
|VAT | -| -| -| -| -| 133| -| 133|
+-----------+-------+-------+----------+--------+--------+--------+--------+-------+
|Tax on | | | | | | | | |
|capitalised| | | | | | | | |
|management | | | | | | | | |
|fees | -| -| -| -| (534)| -| -| (534)|
+-----------+-------+-------+----------+--------+--------+--------+--------+-------+
|Release of | | | | | | | | |
|previous | | | | | | | | |
|cost | | | | | | | | |
|accrual | 20| 3| -| -| -| -| -| 23|
+-----------+-------+-------+----------+--------+--------+--------+--------+-------+
|Purchase of| | | | | | | | |
|own | | | | | | | | |
|treasury | | | | | | | | |
|shares | -| -| -| -| -| -| 526| 526|
+-----------+-------+-------+----------+--------+--------+--------+--------+-------+
|Issue of | | | | | | | | |
|equity (net| | | | | | | | |
|of costs) | -| -| -| -| -| -| (349)| (349)|
+-----------+-------+-------+----------+--------+--------+--------+--------+-------+
|As at 31 | | | | | | | | |
|December | | | | | | | | |
|2009 | 17,829| 44| (6,153)| 15,773| (564)| (2,068)| 349| 25,210|
+-----------+-------+-------+----------+--------+--------+--------+--------+-------+
* Included within these reserves is an amount of GBP5,071,000 (2009: GBP7,337,000)
which is considered distributable. The Special reserve has been treated as
distributable in determining the amounts available for distribution.
Cash flow statement
Combined
+---------------------------------------+----+----------------+----------------+
| | | Year ended| Year ended|
| | |31 December 2010|31 December 2009|
+---------------------------------------+----+----------------+----------------+
| |Note| GBP'000| GBP'000|
+---------------------------------------+----+----------------+----------------+
|Operating activities | | | |
+---------------------------------------+----+----------------+----------------+
|Investment income received | | 1,095| 1,449|
+---------------------------------------+----+----------------+----------------+
|Deposit interest received | | 105| 92|
+---------------------------------------+----+----------------+----------------+
|Dividend income received | | 4| 68|
+---------------------------------------+----+----------------+----------------+
|Investment management fees paid | | (904)| (726)|
+---------------------------------------+----+----------------+----------------+
|Recovery of VAT | | -| 714|
+---------------------------------------+----+----------------+----------------+
|Other cash payments | | (193)| (196)|
+---------------------------------------+----+----------------+----------------+
|Interclass account movement | | -| 341|
+---------------------------------------+----+----------------+----------------+
|Net cash inflow from operating | | | |
|activities | 18| 107| 1,742|
+---------------------------------------+----+----------------+----------------+
| | | | |
+---------------------------------------+----+----------------+----------------+
|Taxation | | | |
+---------------------------------------+----+----------------+----------------+
|UK corporation tax recovered/(paid) | | 131| (339)|
+---------------------------------------+----+----------------+----------------+
| | | | |
+---------------------------------------+----+----------------+----------------+
|Capital expenditure and financial | | | |
|investments | | | |
+---------------------------------------+----+----------------+----------------+
|Purchase of fixed asset investments | | (5,148)| (3,668)|
+---------------------------------------+----+----------------+----------------+
|Disposal of fixed asset investments | | 2,776| 1,109|
+---------------------------------------+----+----------------+----------------+
|Net cash (outflow) from investing | | | |
|activities | | (2,372)| (2,559)|
+---------------------------------------+----+----------------+----------------+
| | | | |
+---------------------------------------+----+----------------+----------------+
|Management of liquid resources | | | |
+---------------------------------------+----+----------------+----------------+
|Purchase of current asset investment | | -| (1,000)|
+---------------------------------------+----+----------------+----------------+
|Disposal of current asset investments | | -| 10,001|
+---------------------------------------+----+----------------+----------------+
|Net cash inflow from liquid resources | | -| 9,001|
+---------------------------------------+----+----------------+----------------+
| | | | |
+---------------------------------------+----+----------------+----------------+
|Equity dividends paid (net of costs of | | | |
|issuing shares under the Dividend | | | |
|Reinvestment Scheme) | | (1,911)| (326)|
+---------------------------------------+----+----------------+----------------+
| | | | |
+---------------------------------------+----+----------------+----------------+
|Net cash inflow/(outflow) before | | | |
|financing | | (4,045)| 7,519|
+---------------------------------------+----+----------------+----------------+
| | | | |
+---------------------------------------+----+----------------+----------------+
|Financing | | | |
+---------------------------------------+----+----------------+----------------+
|Purchase of own shares | 15| (794)| (629)|
+---------------------------------------+----+----------------+----------------+
|Costs of issue of share capital | | (15)| -|
+---------------------------------------+----+----------------+----------------+
|Net cash outflow from financing | | (809)| (629)|
+---------------------------------------+----+----------------+----------------+
| | | | |
+---------------------------------------+----+----------------+----------------+
|Cash (outflow)/inflow in the year | 17| (4,854)| 6,890|
+---------------------------------------+----+----------------+----------------+
Cash flow statement
Ordinary shares (non-statutory analysis)
+---------------------------------------+----+----------------+----------------+
| | | Year ended| Year ended|
| | |31 December 2010|31 December 2009|
+---------------------------------------+----+----------------+----------------+
| |Note| GBP'000| GBP'000|
+---------------------------------------+----+----------------+----------------+
|Operating activities | | | |
+---------------------------------------+----+----------------+----------------+
|Investment income received | | 401| 497|
+---------------------------------------+----+----------------+----------------+
|Deposit interest received | | 25| 29|
+---------------------------------------+----+----------------+----------------+
|Dividend income received | | 4| 11|
+---------------------------------------+----+----------------+----------------+
|Investment management fees paid | | (299)| (229)|
+---------------------------------------+----+----------------+----------------+
|Recovery of VAT | | -| 368|
+---------------------------------------+----+----------------+----------------+
|Other cash payments | | (57)| (59)|
+---------------------------------------+----+----------------+----------------+
|Interclass account movement | | -| 355|
+---------------------------------------+----+----------------+----------------+
|Net cash inflow from operating | | | |
|activities | 18| 74| 972|
+---------------------------------------+----+----------------+----------------+
| | | | |
+---------------------------------------+----+----------------+----------------+
|Taxation | | | |
+---------------------------------------+----+----------------+----------------+
|UK corporation tax recovered/(paid) | | 10| (122)|
+---------------------------------------+----+----------------+----------------+
| | | | |
+---------------------------------------+----+----------------+----------------+
|Capital expenditure and financial | | | |
|investments | | | |
+---------------------------------------+----+----------------+----------------+
|Purchase of fixed asset investments | | (1,026)| (1,285)|
+---------------------------------------+----+----------------+----------------+
|Disposal of fixed asset investments | | 1,545| 1,051|
+---------------------------------------+----+----------------+----------------+
|Net cash inflow/(outflow) from | | | |
|investing activities | | 519| (234)|
+---------------------------------------+----+----------------+----------------+
| | | | |
+---------------------------------------+----+----------------+----------------+
| | | | |
+---------------------------------------+----+----------------+----------------+
|Equity dividends paid (net of costs of | | | |
|issuing shares under the Dividend | | | |
|Reinvestment Scheme) | 9| (963)| -|
+---------------------------------------+----+----------------+----------------+
|Net cash (outflow)/inflow before | | | |
|financing | | (360)| 616|
+---------------------------------------+----+----------------+----------------+
| | | | |
+---------------------------------------+----+----------------+----------------+
|Financing | | | |
+---------------------------------------+----+----------------+----------------+
|Purchase of own shares | 15| (200)| (95)|
+---------------------------------------+----+----------------+----------------+
|Costs of issue of share capital | | (7)| -|
+---------------------------------------+----+----------------+----------------+
|Net cash outflow from financing | | (207)| (95)|
+---------------------------------------+----+----------------+----------------+
| | | | |
+---------------------------------------+----+----------------+----------------+
|Cash (outflow)/inflow in the year | 17| (567)| 521|
+---------------------------------------+----+----------------+----------------+
Cash flow statement
C shares (non-statutory analysis)
+---------------------------------------+----+----------------+----------------+
| | | Year ended| Year ended|
| | |31 December 2010|31 December 2009|
+---------------------------------------+----+----------------+----------------+
| |Note| GBP'000| GBP'000|
+---------------------------------------+----+----------------+----------------+
|Operating activities | | | |
+---------------------------------------+----+----------------+----------------+
|Investment income received | | 694| 952|
+---------------------------------------+----+----------------+----------------+
|Deposit interest received | | 80| 63|
+---------------------------------------+----+----------------+----------------+
|Dividend income received | | -| 57|
+---------------------------------------+----+----------------+----------------+
|Investment management fees paid | | (605)| (497)|
+---------------------------------------+----+----------------+----------------+
|Recovery of VAT | | -| 346|
+---------------------------------------+----+----------------+----------------+
|Other cash payments | | (136)| (137)|
+---------------------------------------+----+----------------+----------------+
|Interclass account movement | | -| (14)|
+---------------------------------------+----+----------------+----------------+
|Net cash inflow from operating | | | |
|activities | 18| 33| 770|
+---------------------------------------+----+----------------+----------------+
| | | | |
+---------------------------------------+----+----------------+----------------+
|Taxation | | | |
+---------------------------------------+----+----------------+----------------+
|UK corporation tax recovered/(paid) | | 121| (217)|
+---------------------------------------+----+----------------+----------------+
| | | | |
+---------------------------------------+----+----------------+----------------+
|Capital expenditure and financial | | | |
|investments | | | |
+---------------------------------------+----+----------------+----------------+
|Purchase of fixed asset investments | | (4,122)| (2,383)|
+---------------------------------------+----+----------------+----------------+
|Disposal of fixed asset investments | | 1,231| 58|
+---------------------------------------+----+----------------+----------------+
|Net cash (outflow) from investing | | | |
|activities | | (2,891)| (2,325)|
+---------------------------------------+----+----------------+----------------+
| | | | |
+---------------------------------------+----+----------------+----------------+
|Management of liquid resources | | | |
+---------------------------------------+----+----------------+----------------+
|Purchase of current asset investment | | -| (1,000)|
+---------------------------------------+----+----------------+----------------+
|Disposal of current asset investments | | -| 10,001|
+---------------------------------------+----+----------------+----------------+
|Net cash inflow from liquid resources | | -| 9,001|
+---------------------------------------+----+----------------+----------------+
| | | | |
+---------------------------------------+----+----------------+----------------+
|Equity dividends paid (net of costs of | | | |
|issuing shares under the Dividend | | | |
|Reinvestment Scheme) | 9| (948)| (326)|
+---------------------------------------+----+----------------+----------------+
| | | | |
+---------------------------------------+----+----------------+----------------+
|Net cash (outflow)/inflow before | | | |
|financing | | (3,685)| 6,903|
+---------------------------------------+----+----------------+----------------+
| | | | |
+---------------------------------------+----+----------------+----------------+
|Financing | | | |
+---------------------------------------+----+----------------+----------------+
|Purchase of own shares | 15| (594)| (534)|
+---------------------------------------+----+----------------+----------------+
|Costs of issue of share capital | | (8)| -|
+---------------------------------------+----+----------------+----------------+
|Net cash outflow from financing | | (602)| (534)|
+---------------------------------------+----+----------------+----------------+
| | | | |
+---------------------------------------+----+----------------+----------------+
|Cash outflow in the year | 17| (4,287)| 6,369|
+---------------------------------------+----+----------------+----------------+
Notes to the Financial Statements
1. Accounting convention
The Financial Statements have been prepared in accordance with the historical
cost convention, modified to include the revaluation of investments, in
accordance with applicable United Kingdom law and accounting standards and with
the Statement of Recommended Practice "Financial Statements of Investment Trust
Companies and Venture Capital Trusts" ('AIC SORP') issued by the Association of
Investment Companies in January 2009. Accounting policies have been applied
consistently in current and prior periods.
2. Accounting policies
Investments
Quoted and unquoted equity investments, debt issued at a discount, and
convertible bonds
In accordance with FRS 26 "Financial Instruments Recognition and Measurement",
quoted and unquoted equity, debt issued at a discount and convertible bonds are
designated as fair value through profit or loss ("FVTPL"). Investments listed
on recognised exchanges are valued at the closing bid prices at the end of the
accounting period. Unquoted investments' fair value is determined by the
Directors in accordance with the September 2009 International Private Equity and
Venture Capital Valuation Guidelines (IPEVCV guidelines).
Desk top reviews are carried out by independent RICS qualified surveyors by
updating previously prepared full valuations for current trading and market
indices. Full valuations are prepared by similarly qualified surveyors but in
full compliance with the RICS Red Book.
Fair value movements on equity investments and gains and losses arising on the
disposal of investments are reflected in the capital column of the Income
statement in accordance with the AIC SORP and realised gains or losses on the
sale of investments will be reflected in the realised capital reserve, and
unrealised gains or losses arising from the revaluation of investments will be
reflected in the unrealised capital reserve.
Warrants and unquoted equity derived instruments
Warrants and unquoted equity derived instruments are only valued if their
exercise or contractual conversion terms would allow them to be exercised or
converted as at the balance sheet date, and if there is additional value to the
Company in exercising or converting as at the balance sheet date. Otherwise
these instruments are held at nil value. The valuation techniques used are those
used for the underlying equity investment.
Unquoted loan stock
Unquoted loan stock (excluding convertible bonds and debt issued at a discount)
is classified as loans and receivables in accordance with FRS 26 and carried at
amortised cost using the Effective Interest Rate method less impairment.
Movements in respect of capital provisions are reflected in the capital column
of the Income Statement and are reflected in the Realised capital reserve
following sale, or in the unrealised capital reserve on revaluation.
For all unquoted loan stock, fully performing, renegotiated, past due and
impaired, the Board considers whether the fair value is equal to or greater than
the security value of these assets. For unquoted loan stock, the amount of any
impairment is the difference between the asset's cost and the present value of
estimated future cash flows, discounted at the effective interest rate. The
future cash flows are estimated based on the fair value of the security held
less estimated selling costs.
Floating rate notes
In accordance with FRS 26, floating rate notes are designated as fair value
through profit or loss and are valued at market bid price at the balance sheet
date. Floating rate notes are classified as current asset investments as they
are investments held for the short term.
Investments are recognised as financial assets on legal completion of the
investment contract and are de-recognised on legal completion of the sale of an
investment.
Dividend income is not recognised as part of the fair value movement of an
investment, but is recognised separately as investment income through the
revenue reserve when a share becomes ex-dividend.
Loan stock accrued interest is recognised in the Balance sheet as part of the
carrying value of the loans and receivables at the end of each reporting period.
It is not the Company's policy to exercise control or significant influence over
investee companies. Therefore in accordance with the exemptions under FRS 9
"Associates and joint ventures", those undertakings in which the Company holds
more than 20 per cent. of the equity are not regarded as associated
undertakings.
Investment income
Unquoted equity income
Dividend income is included in revenue when the investment is quoted ex-
dividend.
Unquoted loan stock and other preferred income
Fixed returns on non-equity shares and debt securities are recognised on a time
apportionment basis using the effective interest rate over the life of the
financial instrument. Income which is not capable of being received within a
reasonable period of time is reflected in the capital value of the investment.
Bank interest income
Interest income is recognised on an accrual basis using the rate of interest
agreed with the bank.
Floating rate note income
Floating rate note income is recognised on an accrual basis using the interest
rate applicable to the floating rate note at that time.
Investment management fees and other expenses
All expenses have been accounted for on an accruals basis. Expenses are charged
through the revenue account except the following which are charged through the
realised capital reserve:
· 75 per cent. of management fees are allocated to the capital account
to the extent that these relate to an enhancement in the value of the
investments and in line with the Board's expectation that over the long term 75
per cent. of the Company's investment returns will be in the form of capital
gains; and
· expenses which are incidental to the purchase or disposal of an
investment are charged through the Realised capital reserve.
Under the terms of the Management agreement, total expenses including management
fees and excluding performance fees will not exceed 3.5 per cent. of net asset
value of the Company at the year end.
Performance incentive fee
In the event that a performance incentive fee crystallises, the fee will be
allocated between revenue and realised capital reserves based upon the
proportion to which the calculation of the fee is attributable to revenue and
capital returns.
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 the
SORP. In accordance with FRS 19 "Deferred tax", deferred taxation is provided in
full on timing differences that result in an obligation at the balance sheet
date to pay more tax or a right to pay less tax, at a future date, at rates
expected to apply when they crystallise based on current tax rates and law.
Timing differences arise from the inclusion of items of income and expenditure
in taxation computations in periods different from those in which they are
included in the Financial Statements. Deferred tax assets are recognised to the
extent that it is regarded as more likely than not that they will be recovered.
The Directors have considered the requirements of FRS 19 and do not believe that
any provision should be made for deferred tax.
Reserves
Share premium account
This reserve accounts for the difference between the price paid for shares and
the nominal value of the shares, less issue costs and transfers to the special
reserve.
Capital redemption reserve
This reserve accounts for amounts by which the issued share capital is
diminished through the repurchase and cancellation of the Company's own shares.
Unrealised capital reserves
Increases and decreases in the valuation of investments held at the year end
against cost are included in this reserve.
Special reserve
The cancellation of the share premium account has created a special reserve that
can be used to fund market purchases and subsequent cancellation of own shares,
to cover gross realised losses, and for other distributable purposes.
Treasury shares reserve
This reserve accounts for amounts by which the distributable reserves of the
Company are diminished through the repurchase of the Company's own shares for
treasury.
Realised capital reserve
The following are disclosed in this reserve:
· gains and losses compared to cost on the realisation of investments;
· expenses, together with the related taxation effect, charged in
accordance with the above policies; and
· dividends paid to equity holders.
Dividends
In accordance with FRS 21 "Events after the balance sheet date", dividends
declared by the Company are accounted for in the period in which the dividend
has been paid or approved by shareholders in an Annual General Meeting.
C shares
Until such time that C shares are converted into Ordinary shares, all
investments and returns attributable to this class of share will be separately
identifiable from the existing Ordinary shares. All residual expenses will be
allocated on the basis of total funds raised for each class of share.
3. Gains/(losses) on investments
Year ended 31 December Year ended 31 December
2010 2009
Ordinary C Ordinary C
shares shares Total shares shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Unrealised (losses)/gains on
fixed asset investments held at
fair value through profit or
loss account (57) 170 113 660 (1,072) (412)
Unrealised gains/(impairments)
on fixed asset investments held
at amortised cost 163 (496) (333) (589) (1,274) (1,863)
-------------------------------------------------
Unrealised gains / (losses) on
fixed asset investments 106 (326) (220) 71 (2,346) (2,275)
Unrealised (losses)/gains on
current asset investments held
at fair value through profit or
loss account - (10) (10) - 14 14
-------------------------------------------------
Unrealised gains / (losses)
sub-total 106 (336) (230) 71 (2,332) (2,261)
Realised gains/(losses) on
fixed asset investments held at
fair value through profit or
loss account 187 (243) (56) 447 (97) 350
Realised losses on fixed asset
investments held at amortised
cost (2) (103) (105) (16) (115) (131)
Realised gains on current asset
investments held at fair value
through profit or loss account - - - - 63 63
-------------------------------------------------
Realised gains/(losses) sub-
total 185 (346) (161) 431 (149) 282
-------------------------------------------------
Total 291 (682) (391) 502 (2,481) (1,979)
-------------------------------------------------
Investments measured on an amortised cost basis are unquoted loan stock
investments as described in note 2.
4. Investment income
Year ended 31 December Year ended 31 December
2010 2009
Ordinary C Ordinary C
shares shares Total shares shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Income recognised on investments
held at fair value through
profit or loss
Dividend income 4 - 4 11 57 68
Floating rate note interest - 27 27 - 114 114
Bank deposit interest 25 69 94 29 60 89
Income from convertible bonds
and discounted debt 25 28 53 - - -
Other interest - 2 2 - - -
------------------------------------------------
54 126 180 40 231 271
Income recognised on investments
held at amortised cost
Return on loan stock investments 352 665 1,017 507 618 1,125
------------------------------------------------
406 791 1,197 547 849 1,396
------------------------------------------------
Interest income earned on impaired investments at 31 December 2010 for Ordinary
shares amounted to GBP77,000 (2009: GBP217,000) and for C shares amounted to
GBP169,000 (2009: GBP258,000). These investments are all held at amortised cost.
5. Investment management fees
Year ended 31 December Year ended 31 December
2010 2009
Ordinary C Ordinary C
shares shares Total shares shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Investment management fee
charged to revenue 74 151 225 72 161 233
Investment management fee
charged to capital 220 453 673 215 483 698
------------------------------------------------
294 604 898 287 644 931
------------------------------------------------
Further details of the Management agreement under which the investment
management fee is paid are given in the Directors' report and enhanced business
review in the full Annual Report and Financial Statements.
6. Other expenses
Year ended 31 December Year ended 31 December
2010 2009
Ordinary C Ordinary C
shares shares Total shares shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Directors' fees (including VAT
and NIC) 22 55 77 22 55 77
Other administrative expenses 22 51 73 30 57 87
Tax services 5 12 17 6 14 20
Auditors' remuneration for
statutory audit services 8 19 27 8 18 26
------------------------------------------------
57 137 194 66 144 210
------------------------------------------------
7. Directors' fees
The amounts paid to Directors during the year are as follows:
Year ended 31 December Year ended 31 December
2010 2009
Ordinary C Ordinary C
shares shares Total shares shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=----------------------------------------------------------------------------
Directors' fees 20 50 70 20 50 70
National insurance and/or VAT 2 5 7 2 5 7
------------------------------------------------
22 55 77 22 55 77
------------------------------------------------
Further information regarding Directors' remuneration can be found on the
Directors' remuneration report in the full Annual Report and Financial
Statements.
8. Tax (charge)/credit on ordinary activities
The Company's combined tax charge of GBP15,000 (2009: credit of GBP65,000) is
analysed between the two share classes as follows:
Ordinary shares
Year ended 31 December Year ended 31 December
2010 2009
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
UK corporation tax in respect of
current year (72) 61 (11) (113) 54 (59)
UK corporation tax in respect of
prior year 5 - 5 9 - 9
------------------------------------------------
Total (67) 61 (6) (104) 54 (50)
------------------------------------------------
Factors affecting the tax charge:
Year ended Year ended
31 December 2010 31 December 2009
GBP'000 GBP'000
Return on ordinary activities before taxation 346 787
----------------------------------
Tax on return at the standard rate (28%) (97) (220)
Factors affecting the charge:
Non-taxable profits 82 141
Non-taxable income 1 2
Consortium relief in respect of prior years 5 9
Marginal relief 3 18
----------------------------------
(6) (50)
----------------------------------
C shares
Year ended 31 December Year ended 31 December
2010 2009
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
UK corporation tax in respect of
current year (132) 122 (10) (139) 133 (6)
UK corporation tax in respect of
prior year 1 - 1 121 - 121
------------------------------------------------
Total (131) 122 (9) (18) 133 115
------------------------------------------------
Factors affecting the tax charge:
Year ended Year ended
31 December 2010 31 December 2009
GBP'000 GBP'000
=----------------------------------------------------------------------------
Loss on ordinary activities before taxation (632) (2,420)
----------------------------------
Tax on loss at the standard rate (28%) 177 678
Factors affecting the charge:
Non-taxable losses (191) (704)
Non-taxable income - 16
Consortium relief in respect of prior years 1 121
Marginal relief 4 4
----------------------------------
(9) 115
----------------------------------
The tax charge for the year shown in the Income statement is lower than the
standard rate of corporation tax in the UK of 28 per cent. (2009: 28 per cent.).
The differences are explained above.
Consortium relief is recognised in the accounts in the period in which the claim
is submitted to HMRC and is shown as tax in respect of prior year.
Notes
(i) Venture Capital Trusts are not subject to corporation tax on capital gains.
(ii) Tax relief on expenses charged to capital has been determined by allocating
tax relief to expenses by reference to the applicable corporation tax rate and
allocating the relief between revenue and capital in accordance with the SORP.
(iii) No deferred tax asset or liability has arisen in the year.
9. Dividends
Ordinary shares
Year ended 31 December 2010 Year ended 31 December
2009
Paid from Paid from
Realised Realised
Revenue capital Special Revenue capital
reserve reserve reserve Total reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Dividend of 4.0p (1.95p
from revenue reserves,
and 2.05p from the
special reserve) per
share paid on 21 May 2010 250 - 262 512 - - -
Dividend of 4.0p (1.19p
from revenue reserves,
0.53p from realised
capital reserves and
2.28p from the special
reserve) per share paid
on 29 October 2010 152 67 291 510 - - -
-------------------------------------------------------
402 67 553 1,022 - - -
-------------------------------------------------------
Shareholders are reminded that the Ordinary share dividend of 8p for the year to
31 December 2009 was paid in advance on 30 December 2008.
C shares
Year ended 31 December Year ended 31 December
2010 2009
Paid from Paid from
Realised
Revenue Special Revenue capital
reserve reserve Total reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Revenue dividend of 1.0p per
share paid on
18 September 2009 - - - 349 - 349
Dividend of 1.5p (0.17p paid
from revenue reserves and1.33p
from the special reserve) per
share paid on 21 May 2010 59 462 521 - - -
Dividend of 1.5p (0.78p paid
from revenue reserves and
0.72p from the special
reserve) per share paid on 29
October 2010 264 246 510 - - -
--------------------------------------------------
323 708 1,031 349 - 349
--------------------------------------------------
Shareholders are reminded that the first C share dividend of 1.5p for the year
to 31 December 2009 was paid in advance on 30 December 2009.
In addition to the dividends summarised above, the Board has declared a first
dividend for the year ending 31 December 2011 of 2.5 pence per Ordinary share
(post-conversion). This dividend will be paid on 28 April 2011 to shareholders
on the register as at 1 April 2011. The total dividend will be approximately
GBP973,000.
10. Basic and diluted return per share
Ordinary shares
Year ended 31 December Year ended 31 December
2010 2009
Revenue Capital Total Revenue Capital Total
=-------------------------------------------------------------------------------
The return per share has been
based on the following figures:
Return attributable to equity
shares ( GBP'000) 208 132 340 328 409 737
Weighted average shares in issue
(excluding treasury shares) 12,800,207 12,911,888
Return attributable per equity
share (pence) 1.6 1.0 2.6 2.5 3.2 5.7
The weighted average number of shares is calculated excluding treasury shares of
1,125,870 (2009: 868,094).
C shares
Year ended 31 December Year ended 31 December
2010 2009
Revenue Capital Total Revenue Capital Total
=-------------------------------------------------------------------------------
The return per share has been
based on the following figures:
Return/(loss) attributable to
equity shares ( GBP'000) 372 (1,013) (641) 526 (2,831) (2,305)
Weighted average shares in issue
(excluding treasury shares) 34,251,343 35,130,628
Return/(loss) attributable per
equity share (pence) 1.1 (3.0) (1.9) 1.5 (8.1) (6.6)
The weighted average number of shares is calculated excluding treasury shares of
1,986,267 (2009: 995,032).
There are no convertible instruments, derivatives or contingent share agreements
in issue, and therefore no dilution affecting the return per share. The basic
return per share is therefore the same as the diluted return per share.
11. Fixed asset investments
31 December 2010 31 December 2009
=-------------------------------------------------------------------------------
Ordinary C Ordinary C
shares shares Total shares shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Qualifying
investments 8,817 19,201 28,018 9,312 17,507 26,819
Non-qualifying
investments 717 652 1,369 452 114 566
AIM instruments - - - 20 - 20
---------------------------------------------------------------
9,534 19,853 29,387 9,784 17,621 27,405
---------------------------------------------------------------
The classification of investments by nature of instruments is as follows:
31 December 2010 31 December 2009
Ordinary C Ordinary C
shares shares Total shares shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Unquoted equity 2,666 7,553 10,219 2,935 6,024 8,959
Quoted equity - - - 20 - 20
Unquoted loan stock
(including convertible bond
loan stocks) 6,868 12,300 19,168 6,810 11,597 18,407
Warrants - - - 19 - 19
----------------------------------------------------
9,534 19,853 29,387 9,784 17,621 27,405
----------------------------------------------------
Ordinary shares
Qualifying Non-qualifying AIM
investments investments investments Total
GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Opening valuation as at 1
January 2010 9,312 452 20 9,784
Transfer of non-qualifying to
qualifying investment 17 (17) - -
Purchases at cost 727 306 - 1,033
Disposal proceeds (1,537) (13) (21) (1,571)
Realised gains 184 - 1 185
Movement in loan stock accrued
income (3) - - (3)
Unrealised gains/(losses) 117 (11) - 106
-------------------------------------------------
Closing valuation as at 31
December 2010 8,817 717 - 9,534
Movement in loan stock accrued
income
Opening accumulated movement in
loan stock accrued income 158 - - 158
Movement in loan stock accrued
income (3) - - (3)
-------------------------------------------------
Closing accumulated movement in
loan stock accrued income 155 - - 155
-------------------------------------------------
Movement in unrealised losses
Opening accumulated unrealised
losses (3,897) (32) (81) (4,010)
Transfer of previously
unrealised losses to realised
reserve on disposal of
investments 112 - 81 193
Movement in unrealised
gains/(losses) 117 (11) - 106
-------------------------------------------------
Closing accumulated unrealised
losses (3,668) (43) - (3,711)
-------------------------------------------------
Historic cost basis
Opening book cost 13,051 484 101 13,636
Transfer of non-qualifying to
qualifying investment 17 (17) - -
Purchases at cost 727 306 - 1,033
Sales at cost (1,465) (13) (101) (1,579)
-------------------------------------------------
Closing book cost 12,330 760 - 13,090
-------------------------------------------------
Fixed asset investments held at fair value through the profit or loss account
total GBP4,023,000 (2009: GBP2,974,000) and include convertible bonds and debt with
a carrying value of GBP1,201,000 at 31 December 2010 which have been re-presented
from the amortised cost to fair value category in the accounts having previously
been designated at fair value through profit or loss on initial recognition.
Investments held at amortised cost total GBP5,511,000 (2009: GBP6,810,000).
The purchases of GBP1,026,000 per the Cash flow statement do not agree to the
purchases at cost above of GBP1,033,000 due to a GBP19,000 investment in Opta Sports
Data Limited which had not settled as at 31 December 2010 and is disclosed in
other debtors, as well as GBP26,000 not yet drawn down by Bravo Inns II Limited.
The disposal proceeds of GBP1,545,000 per the Cash flow statement do not agree to
the disposal proceeds above of GBP1,571,000 due to GBP26,000 in respect of deferred
proceeds from the disposal of RFI Global Services Limited that will be held in
escrow until December 2011.
The Company's single remaining AIM investment in OneClickHR plc was sold in the
year to 31 December 2010 (proceeds totalled GBP21,000).
C shares
=-------------------------------------------------------------------------
Qualifying Non-qualifying
investments investments Total
GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Opening valuation as at 1 January 2010 17,507 114 17,621
Transfer of non-qualifying investment to
qualifying 102 (102) -
Purchases at cost 3,365 796 4,161
Disposal proceeds (1,088) (158) (1,246)
Realised losses (346) - (346)
Movement in loan stock accrued income (11) - (11)
Unrealised (losses)/gains (328) 2 (326)
------------------------------------
Closing valuation as at 31 December 2010 19,201 652 19,853
------------------------------------
Movement in loan stock accrued income
Opening accumulated movement in loan stock
accrued income 295 - 295
Movement in loan stock accrued income (11) - (11)
------------------------------------
Closing accumulated movement in loan stock
accrued income 284 - 284
------------------------------------
Movement in unrealised (losses)/gains
Opening accumulated unrealised
(losses)/gains (6,149) 12 (6,137)
Transfer of previously unrealised losses to
realised reserve on disposal of investments 808 - 808
Movement in unrealised (losses )/gains (328) 2 (326)
------------------------------------
Closing accumulated unrealised
(losses)/gains (5,669) 14 (5,655)
------------------------------------
Historic cost basis
Opening book cost 23,361 102 23,463
Transfer of non-qualifying investment to
qualifying 102 (102) -
Purchases at cost 3,365 796 4,161
Sales at cost (2,242) (158) (2,400)
------------------------------------
Closing book cost 24,586 638 25,224
------------------------------------
Fixed asset investments held at fair value through the profit or loss account
total GBP9,128,000 (2009: GBP6,024,000) and include convertible bonds and debt with
a carrying value of GBP1,004,000 at 31 December 2010 which have been re-presented
from the amortised cost to fair value category in the accounts having previously
been designated at fair value through profit or loss on initial recognition.
Investments held at amortised cost total GBP10,725,000 (2009: GBP11,597,000).
The purchases of GBP4,122,000 per the Cash flow statement do not agree to the
purchases at cost above of GBP4,161,000 due to a GBP73,000 investment in Opta Sports
Data Limited which had not settled as at 31 December 2010 and is disclosed in
other debtors, and GBP4,000 relating to payment of retained fees on investments,
and GBP116,000 not yet drawn down by Bravo Inns II Limited.
The disposal proceeds of GBP1,231,000 per the Cash flow statement do not agree to
the disposal proceeds above of GBP1,246,000 due to GBP15,000 in respect of deferred
proceeds from the disposal of RFI Global Services Limited that will be held in
escrow until December 2011.
Unquoted loan stock investments (excluding convertible loan stock and debt
issued at a discount) are measured on an amortised cost basis. Loan stock in the
Ordinary share portfolio using a fixed interest rate total GBP6,546,000 (2009:
GBP6,747,000) and in the C share portfolio total GBP11,803,000 (2009: GBP9,698,000).
Loan stock in the Ordinary share portfolio using a floating rate total GBP25,000
(2009: GBP44,000) and C share portfolio using a floating rate total GBP407,000
(2009: GBP1,899,000).
The Directors believe that the carrying value of loan stock measured at
amortised cost is not materially different to fair value.
The Company does not hold any assets as the result of the enforcement of
security during the period, and believes that the carrying values for both
impaired and past due assets are covered by the value of security held for these
loan stock investments.
Fixed asset investment valuation methodologies
Unquoted equity investments and warrants are valued in accordance with the
IPEVCV guidelines as follows:
31 December 2010 31 December 2009
Ordinary C Ordinary C
shares shares Total shares shares Total
Investment methodology GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Cost reviewed for impairment 413 1,790 2,203 188 1,132 1,320
Net asset value supported by
independent third party
valuation 370 325 695 562 548 1,110
Net asset value supported by
independent desktop review 9 110 119
Price of recent investment 230 1,751 1,981 880 3,360 4,240
Earnings multiple 1,093 872 1,965 1,324 984 2,308
Revenue multiple 550 2,705 3,255 - - -
---------------------------------------------------
2,665 7,553 10,218 2,954 6,024 8,978
---------------------------------------------------
The unquoted equity investments in the Ordinary shares portfolio had the
following movements between valuation methodologies between 31 December 2009 and
31 December 2010:
Value as at
Change in valuation methodology 31 December 2010
(2009 to 2010) GBP'000 Explanatory note
=-------------------------------------------------------------------------------
Cost reviewed for impairment to
recent investment price 94 Most recent price
Cost reviewed for impairment to Improvement in investment
earnings multiple 118 performance
Recent investment price to Improvement in investment
revenue multiple 158 performance
The unquoted equity investments in the C shares portfolio had the following
movements between valuation methodologies between 31 December 2009 and 31
December 2010:
Value as at
Change in valuation methodology 31 December 2010
(2009 to 2010) GBP'000 Explanatory note
=-------------------------------------------------------------------------------
Cost reviewed for impairment to
recent investment price 531 Most recent price
Cost reviewed for impairment to Improvement in investment
earnings multiple 502 performance
Price of recent investment to Improvement in investment
revenue multiple 760 performance
The valuation will be the most appropriate valuation methodology for an
investment within its market, with regard to the financial health of the
investment and the September 2009 IPEVCV Guidelines. The Directors believe that,
within these parameters, there are no other possible methods of valuation which
would be reasonable as at 31 December 2010.
The amended FRS 29 'Financial Instruments: Disclosures' requires the Company to
disclose the inputs to the valuation methods applied to its investments measured
at fair value through profit or loss in a fair value hierarchy according to the
following definitions:
+--------------------+---------------------------------------------------------+
|Fair value hierarchy|Definition |
+--------------------+---------------------------------------------------------+
|Level 1 |Unadjusted quoted (bid) prices applied |
| | |
+--------------------+---------------------------------------------------------+
|Level 2 |Inputs to valuation are from observable sources and are|
| |directly or indirectly derived from prices |
| | |
+--------------------+---------------------------------------------------------+
|Level 3 |Inputs to valuations not based on observable market data |
| | |
+--------------------+---------------------------------------------------------+
The Ordinary shares' investments as at 31 December 2010 are categorised in
accordance with FRS 29 as follows:
31 December 2010 Level 1 Level 2 Level 3
GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Financial assets at fair value through
profit or loss:
Unquoted equity 2,666 - - 2,666
Unquoted loan stock (including
convertible and discounted) 1,357 - - 1,357
-----------------------------------------
4,023 - - 4,023
-----------------------------------------
The Ordinary shares' investments as at 31 December 2009 are categorised in
accordance with FRS 29 as follows:
31 December 2009 Level 1 Level 2 Level 3
GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Financial assets at fair value through
profit or loss:
AIM quoted equity 20 20 - -
Unquoted equity 2,954 - - 2,954
-----------------------------------------
2,974 20 - 2,954
-----------------------------------------
The C shares' investments as at 31 December 2010 are categorised in accordance
with FRS 29 as follows:
31 December 2010 Level 1 Level 2 Level 3
GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Financial assets at fair value through
profit or loss:
Floating rate notes (current asset
investment) 1,005 1,005 - -
Unquoted equity 7,553 - - 7,553
Unquoted loan stock 1,575 - - 1,575
-----------------------------------------
10,133 1,005 - 9,128
-----------------------------------------
The C shares' investments as at 31 December 2009 are categorised in accordance
with FRS 29 as follows:
31 December 2009 Level 1 Level 2 Level 3
GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Financial assets at fair value through
profit or loss:
Floating rate notes (current asset
investment) 1,014 1,014 - -
Unquoted equity 6,024 - - 6,024
-----------------------------------------
7,038 1,014 - 6,024
-----------------------------------------
The Ordinary shares and C shares investments held at fair value through profit
or loss (level 3) had the following movements in the year to 31 December 2010:
Ordinary shares C Shares
GBP'000 GBP'000
=--------------------------------------------------------------------------
Opening balance 2,954 6,024
Additions 642 2,999
Disposals (540) (470)
Realised losses 72 (798)
Re-presentation of convertible bond and debt 1,201 1,004
Unrealised (losses)/gains (306) 369
-----------------------------
Closing balance 4,023 9,128
-----------------------------
The Ordinary shares and C shares investments held at fair value through profit
or loss (level 3) had the following movements in the year to 31 December 2009:
Ordinary shares C Shares
GBP'000 GBP'000
=-------------------------------------------------------
Opening balance 1,871 5,938
Additions 520 1,265
Disposals (22) (97)
Unrealised gains/(losses) 585 (1,082)
-----------------------------
Closing balance 2,954 6,024
-----------------------------
FRS 29 requires the Directors to consider the impact of changing one or more of
the inputs used as part of the valuation process to reasonable possible
alternative assumptions. The valuation methodology applied to 65 per cent. of
the equity, discounted debt and convertible bond investments (by valuation) in
the Ordinary share portfolio and 72 per cent. of the equity, discounted debt
and convertible bond investments (by valuation) in the C share portfolio is
based on third-party independent evidence and recent investment price. The
Directors believe that changes to reasonable possible alternative assumptions
for the valuation of the portfolio could result in an increase in the valuation
of investments by GBP371,000 for the Ordinary share portfolio and GBP742,000 for the
C share portfolio or a decrease of in the valuation of investments by GBP341,000
for the Ordinary share portfolio and GBP1,330,000 for the C share portfolio.
12. Significant interests
The principal activity of the Company is to select and hold a portfolio of
investments in unquoted securities. Although the Company, through the Manager,
will, in some cases, be represented on the board of the investee company, it
will not take a controlling interest or become involved in the management. The
size and structure of the companies with unquoted securities may result in
certain holdings in the portfolio representing a participating interest without
there being any partnership, joint venture or management consortium agreement.
The Company has interests of greater than 20 per cent. of the nominal value of
any class of the allotted shares in the investee companies as at 31 December
2010 as described below:
% total
Country of Principal % class and voting
Company incorporation activity share type rights
=-------------------------------------------------------------------------------
Bio-analytical 26.0% A
Xceleron Limited Great Britain services Ordinary 16.2%
Evolutions Television and 22.6% A
Television Limited Great Britain post production Ordinary 11.1%
The Q Garden Garden centre 67.0% A
Company Limited Great Britain operator Ordinary 33.3%
Consolidated PR Public relations 50.0% A
Limited Great Britain agency Ordinary 12.3%
Owner of
Smiles Pub Company residential 22.6% A
Limited Great Britain property Ordinary 22.6%
Mobile data 24.2% A
Blackbay Limited Great Britain solutions Ordinary 7.5%
Prime Care Domiciliary care 31.2% A
Holdings Limited Great Britain services Ordinary 15.5%
As permitted by FRS 9, the investments listed above are held as part of an
investment portfolio, and their value to the Company is as part of a portfolio
of investments. Therefore these investments are not considered to be associated
undertakings.
13. Current assets include the following:
31 December 2010 31 December 2009
C C
Trade and other Ordinary shares shares Total Ordinary shares shares Total
debtors GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Prepayments and
accrued income 4 12 16 25 12 37
UK corporation taxable
receivable 20 116 136 35 247 282
Other debtors 46 106 152 - - -
----------------------------------------------------------
70 234 304 60 259 319
----------------------------------------------------------
The Directors consider that the carrying amount of debtors is not materially
different to their fair value.
31 December 2010 31 December 2009
C C
Current asset Ordinary shares shares Total Ordinary shares shares Total
investments GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
UBS FRN May 2011 - 1,005 1,005 - 1,014 1,014
----------------------------------------------------------
The investment in the UBS floating rate note represents money held for
investment. The floating rate note can be converted to cash within five working
days.
14. Creditors: amounts falling due within one year
31 December 2010 31 December 2009
C C
Ordinary shares shares Total Ordinary shares shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Trade creditors 77 157 234 - - -
Accruals and deferred
income 22 47 69 102 200 302
Other creditors 33 164 197 8 65 73
----------------------------------------------------------
132 368 500 110 265 375
----------------------------------------------------------
The Directors consider that the carrying amount of creditors is not materially
different to their fair value.
15. Called up share capital
31 December 2010 31 December 2009
GBP'000 GBP'000
=-------------------------------------------------------------------------------
Authorised
70,000,000 Ordinary shares of 50p each (2009:
70,000,000) 35,000 35,000
40,000,000 C shares of 50p each (2009:
40,000,000) 20,000 20,000
----------------------------------
55,000 55,000
----------------------------------
Allotted, called up and fully paid
13,770,233 Ordinary shares of 50p each (2009:
13,702,045) 6,885 6,851
35,774,708 C shares of 50p each (2009:
35,657,472) 17,887 17,829
----------------------------------
24,772 24,680
----------------------------------
Shares in issue
12,644,363 Ordinary shares of 50p each in
issue (net of treasury shares) (2009:
12,833,951) and 33,788,441 C shares of 50p
each in issue (net of treasury shares) (2009:
34,662,440).
The Company purchased 257,776 Ordinary shares (2009: 137,457) to be held in
treasury at a cost of GBP200,000 (2009: GBP95,000) and 991,235 C shares (2009:
956,236) at a cost of GBP594,000 (2009: GBP534,000) to be held in treasury and
representing 1.9 per cent and 2.8 per cent. respectively of the shares in issue
(excluding treasury shares) as at 1 January 2010. The shares purchased for
treasury were funded from the Ordinary shares and C shares Own treasury shares
reserve.
The Company holds a total of 1,125,870 Ordinary shares and 1,986,267 C shares in
treasury, representing 8.2 per cent. and 5.7 per cent. respectively of the
Ordinary and C shares in issue as at 31 December 2010.
Under the terms of the Dividend Reinvestment Scheme Circular dated 18 April
2008, the following Ordinary shares and C shares of nominal value 50 pence per
share were allotted in the year to 31 December 2009:
Opening market
price per share
Aggregate on allotment
Issue price nominal value Consideration date
Date of (pence per Number of of shares received (pence per
allotment share) shares allotted ( GBP'000) ( GBP'000) share)
=----------------------------------------------------------------------------------------
Ordinary C Ordinary C Ordinary C Ordinary C Ordinary C
shares shares shares shares shares shares shares shares shares shares
21 May 88.7 71.2 33,738 57,168 17 28 30 41 74 62
2010
29 88.0 69.1 34,450 60,068 17 30 30 42 78 61
October
2010
16. Basic and diluted net asset value per share
31 December 2010 31 December 2009
Ordinary shares C shares Ordinary shares C shares
(pence per (pence per (pence per (pence per
share) share) share) share)
=-------------------------------------------------------------------------------
Basic and
diluted net
asset values per
share 87.6 68.1 92.7 72.7
The basic and diluted net asset values per share at the year end are calculated
in accordance with the Articles of Association and are based upon total shares
in issue (less treasury shares) of 12,644,363 Ordinary shares (2009:
12,833,951) and 33,788,441 C shares (2009: 34,662,440) in issue at 31 December
2010.
17. Analysis of changes in cash during the year
Year ended 31 December 2010 Year ended 31 December 2009
Ordinary Total Ordinary Total
shares C shares GBP'000 shares C shares GBP'000
GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Opening cash balances 2,168 6,581 8,749 1,647 212 1,859
Net cash
(outflow)/inflow (567) (4,287) (4,854) 521 6,369 6,890
-----------------------------------------------------------
Closing cash balances 1,601 2,294 3,895 2,168 6,581 8,749
-----------------------------------------------------------
18. Reconciliation of net return on ordinary activities before taxation to net
cash inflow from operating activities
Year ended 31 December 2010 Year ended 31 December 2009
Ordinary Ordinary
shares C shares Total shares C shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Revenue return on
ordinary activities
before taxation 275 503 778 432 544 976
Investment management
fee charged to capital (220) (453) (673) (215) (483) (698)
Recoverable VAT
capitalised - - - 68 - 68
Movement in accrued
amortised loan stock
interest 3 11 14 5 81 86
Decrease/(increase) in
debtors 20 (2) 18 254 461 715
(Decrease)/increase in
creditors (4) (26) (30) 73 182 255
Interclass account
movement - - - 355 (15) 340
--------------------------------------------------------
Net cash inflow from
operating activities 74 33 107 972 770 1,742
--------------------------------------------------------
19. Capital and financial instruments risk management
The Company's capital comprises Ordinary shares and C shares as described in
note 15. The Company is permitted to buy-back its own shares for cancellation or
treasury purposes, and this is described in more detail in the Directors' report
and enhanced business review within the full Annual Report and Financial
Statements.
On 1 November 2010 the Company announced the launch of the Albion VCTs Linked
Top Up Offer. In aggregate, the Albion VCTs will be aiming to raise up to GBP15
million across all of the seven VCTs managed by Albion Ventures LLP, of which
Albion Technology & General VCT PLC's share will be approximately GBP2.25
million.
On 7 January 2011, the Company issued 344,862 Ordinary shares at 94.8 pence per
share and 440,166 C shares at 74.3 pence per share under the Offer. For further
details, please see note 21.
The Company's financial instruments comprise equity and loan stock investments
in unquoted companies, floating rate notes, cash balances and short term debtors
and creditors which arise from its operations. The main purpose of these
financial instruments is to generate cashflow and revenue and capital
appreciation for the Company's operations. The Company has no gearing or other
financial liabilities apart from short term creditors. The Company does not use
any derivatives for the management of its balance sheet.
The principal risks arising from the Company's operations are:
· Investment (or market) risk (which comprises investment price and
cash flow interest rate risk);
· credit risk; and
· liquidity risk.
The Board regularly reviews and agrees policies for managing each of these
risks. There have been no changes in the nature of the risks that the Company
has faced during the past year, and apart from where noted below, there have
been no changes in the objectives, policies or processes for managing risks
during the past year. The key risks are summarised below.
Investment risk
As a venture capital trust, it is the Company's specific nature to evaluate and
control the investment risk of its portfolio in unquoted and in quoted
investments, details of which are shown in the full Annual Report and Financial
Statements. Investment risk is the exposure of the Company to the revaluation
and devaluation of investments. The main driver of investment risk is the
operational and financial performance of the investee company and the dynamics
of market quoted comparators. The Manager receives management accounts from
investee companies, and members of the investment management team often sit on
the boards of unquoted investee companies; this enables the close
identification, monitoring and management of investment risk.
The Manager and the Board formally reviews investment risk (which includes
market price risk), both at the time of initial investment and at quarterly
Board meetings.
The Board monitors the prices at which sales of investments are made to ensure
that profits to the Company are maximised, and that valuations of investments
retained within the portfolio appear sufficiently prudent and realistic compared
to prices being achieved in the market for sales of unquoted investments.
The maximum investment risk as at the balance sheet date is the value of the
fixed and current asset investment portfolio which is GBP9,534,000 (2009:
GBP9,784,000) for Ordinary shares and GBP20,858,000 for the C shares (2009:
GBP18,635,000). Fixed and current asset investments form 86 per cent. of the
Ordinary shares' net asset value as at 31 December 2010 (2009: 82 per cent.) and
91 per cent. of the C shares' net asset value as at 31 December 2010 (2009: 74
per cent.).
More details regarding the classification of fixed and current asset investments
are shown in notes 11 and 13.
Investment price risk
Investment price risk is the risk that the fair value of future investment cash
flows will fluctuate due to factors specific to an investment instrument or to a
market in similar instruments. To mitigate the investment price risk for the
Company as a whole, the strategy of the Company is to invest in a broad spread
of industries with up to two-thirds of the unquoted investments comprising debt
securities, which, owing to the structure of their yield and the fact that they
are usually secured, have a lower level of price volatility than equity. Details
of the industries in which investments have been made are contained in the
Portfolio of investments section of the full Annual Report and Financial
Statements and in the Manager's report.
Valuations are based on the most appropriate valuation methodology for an
investment within its market, with regard to the financial health of the
investment and the IPEVCV Guidelines.
As required under FRS 29 "Financial Instruments: Disclosures", the Board is
required to illustrate by way of a sensitivity analysis the degree of exposure
to market risk. The Board considers that the value of the fixed and current
asset investment portfolio is sensitive to a 10 per cent. change based on the
current economic climate. The impact of a 10 per cent. change has been selected
as this is considered reasonable given the current level of volatility observed
both on a historical basis and future expectations.
The sensitivity of a 10 per cent. increase or decrease in the valuation of the
fixed and current asset investments (keeping all other variables constant) would
increase or decrease the net asset value and return for the year of Ordinary
shares by GBP953,000 (2009: GBP978,000) and for C shares by GBP2,086,000 (2009:
GBP1,864,000).
Cash flow interest rate risk
It is the Company's policy to accept a degree of interest rate risk on its
financial assets through the effect of interest rate changes. On the basis of
the Company's analysis, it is estimated that a rise of one percentage point in
all interest rates would have increased total return before tax for the year by
approximately GBP15,000 for the Ordinary shares (2009: GBP29,000) and GBP54,000 for
the C shares (2009: GBP112,000). Furthermore, it is considered that a fall of
interest rates below current levels during the year would have been very
unlikely.
The weighted average interest rate applied to the Company's fixed rate assets
during the year was approximately 4.1 per cent. (2009: 6.5 per cent.) for the
Ordinary shares and 5.5 per cent. for the C shares (2009: 5.0 per cent.). The
weighted average period to maturity for the fixed rate assets is approximately
2.3 years for the Ordinary shares and approximately 2.8 years for the C shares
(2009: 2.9 years for the Ordinary shares and 3.0 years for C shares).
The Company's financial assets and liabilities as at 31 December 2010, all
denominated in pounds sterling, consist of the following:
Ordinary shares
31 December 2010 31 December 2009
Non- Non-
Fixed Floating interest Fixed Floating interest
rate rate bearing Total rate rate bearing Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Unquoted
equity - - 2,666 2,666 - - 2,954 2,954
Quoted
equity - - - - - - 20 20
Unquoted
loan stock 6,546 25 297 6,868 6,729 63 18 6,810
Debtors - - 70 70 - - 60 60
Current
liabilities - - (132) (132) - - (110) (110)
Cash 1,194 407 - 1,601 1,949 219 - 2,168
--------------------------------------------------------------------
Total net
assets 7,740 432 2,901 11,073 8,678 282 2,942 11,902
--------------------------------------------------------------------
C shares
31 December 2010 31 December 2009
Non- Non-
Fixed Floating interest Fixed Floating interest
rate rate bearing Total rate rate bearing Total
GBP'000 GBP'000- GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Unquoted
equity - - 7,553 7,553 - - 6,024 6,024
Unquoted
loan stock 11,803 407 90 12,300 9,688 1,899 10 11,597
Floating
rate notes - 1,005 - 1,005 - 1,014 - 1,014
Debtors - - 234 234 - - 259 259
Current
liabilities - - (368) (368) - - (265) (265)
Cash 1,883 411 - 2,294 6,502 79 - 6,581
--------------------------------------------------------------------
Total net
assets 13,686 1,823 7,509 23,018 16,190 2,992 6,028 25,210
--------------------------------------------------------------------
Credit risk
Credit risk is the risk that the counterparty to a financial instrument will
fail to discharge an obligation or commitment that it has entered into with the
Company. The Company is exposed to credit risk through its debtors, investment
in unquoted loan stock, and through the holding of floating rate notes and cash
on deposit with banks.
The Manager evaluates credit risk on loan stock and floating rate note
instruments prior to investment, and as part of its ongoing monitoring of
investments. In doing this, it takes into account the extent and quality of any
security held. Typically loan stock instruments have a first fixed charge or a
fixed and floating charge over the assets of the investee company in order to
mitigate the gross credit risk. The Manager receives management accounts from
investee companies, and members of the investment management team often sit on
the boards of unquoted investee companies; this enables the close
identification, monitoring and management of investment specific credit risk.
The Manager and the Board formally review credit risk (including debtors) and
other risks, both at the time of initial investment and at quarterly Board
meetings.
The Company's total gross credit risk for Ordinary shares at 31 December 2010
was limited to GBP6,868,000 (2009: GBP6,810,000) of unquoted loan stock instruments
and GBP1,601,000 (2009: GBP2,168,000) cash deposits with banks.
The cost, impairment and carrying value of impaired loan stocks in the Ordinary
share portfolio held at amortised cost at 31 December 2010 and 31 December 2009
are as follows:
31 December 2010 31 December 2009
Cost Impairment Carrying value Cost Impairment Carrying value
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Impaired loan
stock 4,713 (1,738) 2,975 4,859 (1,878) 2,981
Impaired loan stock instruments have a first fixed charge or a fixed and
floating charge over the assets of the investee company and the Board deem the
security value to be the carrying value.
The Company's total gross credit risk for C shares at 31 December 2010 is
limited to GBP12,300,000 (2009: GBP11,597,000) of unquoted loan stock instruments,
GBP1,005,000 (2009: GBP1,014,000) of floating rate notes and GBP2,294,000 (2009:
GBP6,581,000) cash deposits with banks.
The cost, impairment and carrying value of impaired loan stocks in the C share
portfolio held at amortised cost at 31 December 2010 and 31 December 2009 are as
follows:
31 December 2010 31 December 2009
Cost Impairment Carrying value Cost Impairment Carrying value
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Impaired loan
stock 4,702 (1,792) 2,910 4,751 (1,203) 3,548
Impaired loan stock instruments have a first fixed charge or a fixed and
floating charge over the assets of the investee company and the Board deem the
security value to be the carrying value.
As at the balance sheet date, the cash held by the Company is held with the
Royal Bank of Scotland plc, Lloyds TSB Bank plc, Scottish Widows, Standard Life
and UBS Wealth Management. Credit risk on cash transactions is mitigated by
transacting with counterparties that are regulated entities subject to
regulatory supervision, with Moody's credit ratings of at least 'A' or
equivalent as assigned by international credit-rating agencies.
The Company has an informal policy of limiting counterparty banking and floating
rate note exposure to a maximum of 20 per cent. of net asset value for any one
counterparty.
As at the year end the Company held one floating rate note with UBS GBP1,005,000
(2009: one floating rate note with UBS of GBP1,014,000).
Liquidity risk
Liquid assets are held as cash on current account, cash on deposit or short term
money market account and as floating rate notes. Under the terms of its
Articles, the Company has the ability to borrow up to 10 per cent. of its
adjusted capital and reserves of the latest published audited balance sheet,
which amounts to GBP1,107,000 for Ordinary shares (2009: GBP1,190,000) and
GBP2,302,000 for C shares (2009: GBP2,521,000) as at 31 December 2010.
The Company has no committed borrowing facilities as at 31 December 2010 (2009:
GBPnil). Ordinary shares had cash balances of GBP1,601,000 (2009: GBP2,168,000) and C
share cash balances were GBP2,294,000 (2009: GBP6,581,000) together with GBP1,005,000
(2009: GBP1,014,000) invested in one floating rate note, which is considered to be
readily realisable within the timescales required to make cash available for
investment. The main cash outflows are for new investments, share buy-backs and
dividend payments, which are within the control of the Company. The Manager
formally reviews the cash requirements of the Company on a monthly basis, and
the Board on a quarterly basis as part of its review of management accounts and
forecasts. All the Company's financial liabilities are short term in nature and
total GBP132,000 for the Ordinary shares (2009: GBP110,000) and GBP368,000 for the C
shares (2009: GBP265,000) at 31 December 2010.
The UBS floating rate note matures in less than one year on 20 May 2011.
Ordinary shares
The carrying value of loan stock investments held at amortised cost and at fair
value through profit and loss at 31 December 2010 as analysed by expected
maturity dates is as follows:
Fully Past due
performing loan Renegotiated loan Impaired loan loan stock
stock stock stock GBP'000 Total
Redemption date GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Less than one
year - - 1,157 205 1,362
1-2 years 642 248 156 282 1,328
2-3 years 379 - 1,031 756 2,166
3-5 years 863 45 631 463 2,002
+5 years 10 - - - 10
-----------------------------------------------------------------
Total 1,894 293 2,975 1,706 6,868
-----------------------------------------------------------------
Loan stock categorised as past due includes:
· Loan stock valued at GBP114,000 yielding 14.6% which has capital past
due by 2 months, and loan stock valued at GBP205,000 yielding 6.5% which has
capital past due by 6 months;
· Loan stock valued at GBP756,000 which has interest overdue for the past
10 months, payment for which has been deferred to December 2011;
· Loan stock valued at GBP413,000 which has yielded 4.3% in 2010, and
loan stock valued at GBP168,000 which has yielded 7.2% in 2010;
· Loan stock valued at a total of GBP50,000 has interest overdue for in
excess of 15 months.
The carrying value of loan stock investments held at amortised cost at 31
December 2009 as analysed by expected maturity dates is as follows:
Fully performing Renegotiated loan Impaired loan
loan stock stock stock Total
Redemption date GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Less than one year 80 238 96 414
1-2 years 476 520 529 1,525
2-3 years 221 446 1,116 1,783
3-5 years 1,606 242 1,240 3,088
--------------------------------------------------------------
Total 2,383 1,446 2,981 6,810
--------------------------------------------------------------
Loan stock investments disclosed above as renegotiated would otherwise have been
disclosed as past due.
C shares
The carrying value of loan stock investments held at amortised cost and at fair
value through profit and loss at 31 December 2010 as analysed by expected
maturity dates is as follows:
Fully Past due
performing loan Renegotiated loan Impaired loan loan
stock stock stock stock Total
Redemption date GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Less than one
year - - 60 - 60
1-2 years 1,175 - 1,019 1,596 3,790
2-3 years 1,400 - 317 1,426 3,143
3-5 years 3,553 - 1,514 196 5,263
+5 years 44 - - - 44
-----------------------------------------------------------------
Total 6,172 - 2,910 3,218 12,300
-----------------------------------------------------------------
Loan stock categorised as past due includes:
· Loan stock valued at GBP551,000 which has interest overdue for the past
10 months, payment for which has been deferred to December 2011;
· Loan stock valued at GBP423,000 which has yielded 4.2% in 2010, and
loan stock valued at GBP2,153,000 which has yielded 7.2% in 2010;
· Loan stock valued at a total of GBP91,000 has interest overdue for the
past 15 months.
The carrying value of loan stock investments held at amortised cost at 31
December 2009 as analysed by expected maturity dates is as follows:
Fully performing Renegotiated loan Impaired loan
loan stock stock stock Total
Redemption date GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Less than one year - 114 - 114
1-2 years 1,115 41 45 1,201
2-3 years 1,234 226 2,494 3,954
3-5 years 4,123 1,196 1,009 6,328
--------------------------------------------------------------
Total 6,472 1,577 3,548 11,597
--------------------------------------------------------------
Loan stock investments disclosed above as renegotiated would otherwise have been
disclosed as past due.
In view of the factors identified above, the Board considers that the Company is
subject to low liquidity risk.
Fair values of financial assets and financial liabilities
All the Company's financial assets and liabilities as at 31 December 2010 are
stated at fair value as determined by the Directors, with the exception of loans
and receivables included within investments, which are carried at amortised
cost, in accordance with FRS 26. The Directors believe that the current carrying
value of loan stock is not materially different to the fair value. There are no
financial liabilities other than creditors. The Company's financial liabilities
are all non-interest bearing. It is the Directors' opinion that the book value
of the financial liabilities is not materially different to the fair value and
all are payable within one year.
20. Commitments and contingencies
As at 31 December 2010, the Company was committed to making a further investment
of GBP375,000 ( GBP54,000 in respect of the Ordinary share portfolio and GBP321,000 in
respect of the C share portfolio) in TEG Biogas (Perth) Limited, following its
initial investment of GBP169,000 ( GBP24,000 in respect of the Ordinary share
portfolio and GBP145,000 in respect of the C share portfolio) in July 2010.
There are no contingent liabilities or guarantees given by the Company as at 31
December 2010 (31 December 2009: nil).
21. Post balance sheet events
Since 31 December 2010 the Company has had the following post balance sheet
events:
· Investment in Opta Sports Data Limited of GBP19,000 (Ordinary shares)
and GBP91,000 (C shares) in January 2011;
· Investment in Regenerco Renewable Energy Limited of GBP12,000 (Ordinary
shares) and GBP55,000 (C shares) in January 2011;
· Investment in AVESI Limited of GBP10,000 (Ordinary shares) and GBP44,000
(C shares) in February 2011;
· Investment in Orchard Portman Hospital Limited of GBP15,000 (Ordinary
shares) and GBP26,000 (C shares) in February 2011;
· Investment in Xceleron Limited of GBP48,000 (Ordinary shares) and
GBP59,000 (C shares) in February 2011;
· On 1 November 2010 the Company announced the launch of the Albion
VCTs Linked Top Up Offer. In aggregate, the Albion VCTs will be aiming to raise
up to GBP15 million across all of the seven VCTs managed by Albion Ventures LLP,
of which Albion Technology & General VCT PLC's share will be approximately GBP2.25
million. The maximum amount raised by each of the Albion VCTs will be the lower
of Euros 2.5 million, and 10 per cent. of its issued share capital (over any one
12 month period, and including any shares issued under Dividend Reinvestment
Schemes), being the amount that they may issue under the Prospectus Rules
without the publication of a full prospectus. The number of new shares available
may change depending on the GBP: euro exchange rate at the date of allotment.
The proceeds of the Offer will be used to provide further resources to the
Albion VCTs at a time when a number of attractive new investment opportunities
are being seen. An Investor Guide and Offer document have been sent to
shareholders. A General Meeting which agreed the proposal of special resolutions
to permit the allotment of new ordinary shares in the Company in relation to
Albion VCTs Linked Top Up Offer was held on Wednesday, 8 December 2010.
The following Ordinary shares and C shares of nominal value 50 pence per share
were allotted under the Offer on 7 January 2011:
Opening market
price per share
Aggregate Net on allotment
Issue price nominal value consideration date
Date of (pence per Number of shares of shares received (pence per
allotment share) allotted ( GBP'000) ( GBP'000) share)
=-----------------------------------------------------------------------------------------
Ordinary C Ordinary C Ordinary C Ordinary C Ordinary C
shares shares shares shares shares shares shares shares shares shares
7 January 94.8 74.3 344,862 440,166 172 220 302 302 76 60
2011
22. Related party transactions
The Manager, Albion Ventures LLP, is considered to be a related party by virtue
of the fact that Patrick Reeve, a Director of the Company, is also a Partner of
the Manager. The Manager is party to a Management agreement from the Company.
During the year, services of a total value of GBP898,000 (2009: GBP931,000) were
purchased by the Company from Albion Ventures LLP. At the financial year end,
the amount due to Albion Ventures LLP in respect of these services disclosed as
trade creditors was GBP229,000 (2009: accrual of GBP221,000).
Patrick Reeve is the Managing Partner of the Manager, Albion Ventures LLP.
During the year, the Company was charged by Albion Ventures LLP GBP21,000
(including VAT) in respect of his services as a Director (2009: GBP20,000). At the
year end, the amount due to Albion Ventures LLP in respect of these services
disclosed as accruals and deferred income was GBP5,000 (2009: GBP5,000).
23. Principal risks and uncertainties
In addition to the current economic risks outlined in the Chairman's statement,
the Board considers that the Company faces the following major risks and
uncertainties:
1. Investment risk
This is the risk of investment in poor quality assets which reduces the capital
and income returns to shareholders, and negatively impacts on the Company's
reputation. By nature, smaller unquoted businesses, such as those that qualify
for venture capital trust purposes, are more fragile than larger, long
established businesses.
To reduce this risk, the Board places reliance upon the skills and expertise of
the Manager and its strong track record for investing in this segment of the
market. The Company's policy is to lower investment risk by investing part of
the portfolio in asset-based businesses and taking a first charge over the
relevant assets. In addition, the Manager operates a formal and structured
investment process, which includes an Investment Committee, comprising
investment professionals from the Manager and at least one external investment
professional. The Manager also invites comments from all non-executive Directors
on investments discussed at the Investment Committee meetings. Investments are
actively and regularly monitored by the Manager (investment managers normally
sit on investee company boards) and the Board receives detailed reports on each
investment as part of the Manager's report at quarterly board meetings.
2. Venture Capital Trust approval risk
The Company's current approval as a venture capital trust allows investors to
take advantage of tax reliefs on initial investment and ongoing tax free capital
gains and dividend income. Failure to meet the qualifying requirements could
result in investors losing the tax relief on initial investment and loss of tax
relief on any tax-free income or capital gains received. In addition, failure to
meet the qualifying requirements could result in a loss of listing of the
shares.
To reduce this risk, the Board has appointed the Manager, who has a team with
significant experience in venture capital trust management, used to operating
within the requirements of the venture capital trust legislation. In addition,
to provide further formal reassurance, the Board has appointed
PricewaterhouseCoopers LLP as its taxation advisors. PricewaterhouseCoopers LLP
report quarterly to the Board to independently confirm compliance with the
venture capital trust legislation, to highlight areas of risk and to inform on
changes in legislation.
3. Compliance risk
The Company is listed on The London Stock Exchange and is required to comply
with the rules of the UK Listing Authority, as well as with the Companies Act,
Accounting Standards and other legislation. Failure to comply with these
regulations could result in a delisting of the Company's shares, or other
penalties under the Companies Act or from financial reporting oversight bodies.
Board members and the Manager have experience of operating at senior levels
within quoted businesses. In addition, the Board and the Manager receive regular
updates on new regulation from its auditors, lawyers and other professional
bodies.
4. Internal control risk
Failures in key controls, within the Board or within the Manager's business,
could put assets of the Company at risk or result in reduced or inaccurate
information being passed to the Board or to shareholders.
The Audit and Risk Committee meets with the Manager's internal auditors,
Littlejohn LLP, at least once a year, receiving a report regarding the last
formal internal audit performed on the Manager, and providing the opportunity
for the Audit and Risk Committee to ask specific and detailed questions. During
the year, the Board has met with the Partner of Littlejohn LLP internal audit to
discuss the most recent Internal Audit Report completed on the Manager. The
Manager has a comprehensive business continuity plan in place in the event that
operational continuity is threatened. Further details regarding the Board's
management and review of the Group's internal controls through the
implementation of the Turnbull guidance are detailed in the Statement of
corporate governance in the full Annual Report and Financial Statements.
Measures are in place to mitigate information risk in order to ensure the
integrity, availability and confidentiality of information used within the
business.
5. Reliance upon third parties risk
The Company is reliant upon the services of Albion Ventures LLP for the
provision of investment management and administrative functions. There are
provisions within the management agreement for the change of Manager under
certain circumstances (for more detail, see the management agreement paragraph
in the full Annual Report and Financial Statements). In addition, the Manager
has demonstrated to the Board that there is no undue reliance placed upon any
one individual within Albion Ventures LLP.
6. Financial risks
By its nature, as a venture capital trust, the Company is exposed to investment
risk (which comprises investment price risk and cash flow interest rate risk),
credit risk and liquidity risk. The Company's policies for managing these risks
and its financial instruments are outlined in full in note 19.
All of the Company's income and expenditure is denominated in sterling and hence
the Company has no foreign currency risk. The Company is financed through equity
and does not have any borrowings. The Company does not use derivative financial
instruments.
24. Other information
The information set out in this announcement does not constitute the Company's
statutory accounts within the terms of section 434 of the Companies Act 2006 for
the periods ended 31 December 2010 and 31 December 2009, and is derived from
the statutory accounts for those financial years, which have been, or in the
case of the accounts for the year ended 31 December 2010, which will be,
delivered to the Registrar of Companies. The Auditors reported on those
accounts; their reports were unqualified and did not contain a statement under
s498 (2) or (3) of the Companies Act 2006.
The Company's Annual General Meeting will be held at The City of London Club,
19 Old Broad Street, London, EC2N 1DS on 13 May 2011 at 12 noon.
25. Publication
The full audited Annual Report and Financial Statements are being sent to
shareholders and copies will be made available to the public at the registered
office of the Company, Companies House, the National Storage Mechanism and also
electronically at www.albion-ventures.co.uk under the 'Our Funds' section, by
clicking on 'Albion Technology & General VCT PLC', where the Report can be
accessed as a PDF document via a link under the 'Investor Centre' in the
'Financial Reports and Circulars' section.
Albion Combined Chart:
http://hugin.info/141789/R/1493163/428932.pdf
Albion C share Chart:
http://hugin.info/141789/R/1493163/428931.pdf
Albion Ordinary Chart:
http://hugin.info/141789/R/1493163/428930.pdf
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Albion Technology & General VCT PLC - C Shares via Thomson Reuters ONE
[HUG#1493163]
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