TIDMAIT
RNS Number : 1353T
Active Capital Trust PLC
22 September 2010
To: RNS
From: Active Capital Trust plc
Date: 22 September 2010
Audited results for the year ended 31 May 2010
The Board of Active Capital Trust plc announces the audited results of the
Company for the year ended 31 May 2010.
Chairman's Statement
At the Company's Annual General Meeting in August 2009, shareholders approved a
new Investment Objective and Policy. Since then the Company has not made any
new investments and the portfolio has been managed to realise investments in an
orderly manner, with a view to balancing the return of cash to shareholders and
maximising value.
During the year the Investment Manager has implemented successfully the new
Investment Policy. The Company's bank borrowings of GBP10.4 million were repaid
within a month of the AGM, and the pace of realisations enabled your Board to
bring forward the first quarterly distribution from January 2010 to November
2009.
During the financial year 28 pence per share was returned to shareholders by way
of capital distribution, and a further 13 pence was paid in July bringing total
distribution to 41 pence per share.
Performance
As the Company is realising assets, a comparison of the asset value performance
with small company indices is not entirely relevant. However, it is worth
noting that over the period the net asset value per share increased from 51.6
pence to 69.6 pence (inclusive of capital repayments). This growth of 34.9%
compares to a 17.1% rise in the FTSE Small Cap (ex IC) Index, and a 31.8%
increase in the FTSE AIM All-Share Index. This demonstrates the strong recovery
in the Company's chosen investments over the year.
Realisation Progress
Up to the year end a total of GBP29.9 million was realised from the portfolio,
represented by sales of 49 companies. By the year end, the portfolio had been
reduced to 14 companies. Three of these holdings have subsequently been sold
realising a further GBP1.1 million.
The Investment Manager adopted a number of strategies to realise the portfolio,
a good number of which comprised high value but illiquid holdings. These
differing strategies included; utilising strong relationships with a number of
brokers who undertook both general trading of shares and placings of holdings,
share buy-backs to the companies themselves, selling to strategic investors in
companies and encouraging take-over activity.
It is particularly pleasing that the tail of the portfolio, which included some
very small illiquid holdings was addressed early in the process, and the active
approach described above has resulted in all of this potential 'rump' now having
been realised. It was also encouraging that the Manager continued to appraise
sales strategies for each holding, and were flexible in their approach to
balancing the cash generation with maximising value. The vast majority of
holdings were realised at or above target prices, but the Manager was not
beholden to target prices and pursued liquidity vigorously.
Your Board meets on a monthly basis to review the realisation process against
plan, and although month-by-month realisation targets were not easy to predict,
the overall result has been satisfactory.
Remaining Portfolio
The stocks remaining after the year-end, which have not yet been sold as
described in the Manager's Report, represent those investments where your
Manager believes that the potential for capital gains significantly outweigh the
short-term realisation potential. The largest strategic holding, AI Claims
Solutions, in which Active Capital holds 27% of the company's equity, seldom
trades and has very little free float or liquidity. A sale of the holding in
the short term would probably have to be at a discount; however, the company is
making significant progress and the strategic value of our holding is
significant. The second largest strategic holding, Cambridge Sensors, is an
unquoted company in which Active Capital holds 17% of the equity. This business
has grown profits strongly over the last two years and has a business plan for
significant growth. Despite this, a sale of the investment is not anticipated
in the short term. Together these two investments account for over 60% of the
remaining strategic portfolio and have very substantial upside potential.
Future Strategy
Since the shareholders agreed to seek an orderly realisation of the Company's
assets, significant progress has been made. The bank debt has been repaid, 41
pence per share has been returned to shareholders and net asset value has
increased by 35% over the past year.
The remaining portfolio comprises eleven holdings with current market value of
some GBP13 million. An analysis conducted by your Investment Manager suggests
these holdings could realise some GBP30-GBP35 million over the next 2-3 years.
This represents a significant upside if exit strategies are successful. On the
other hand, if these holdings were realised in the short-term a discount on
current values would be incurred.
Following a consultation process with Shareholders representing in excess of 70%
of the shareholder base, your Board found that a substantial majority were in
favour of maximising the capital growth potential from the remaining portfolio
by utilising the ongoing realisation strategies identified by the Investment
Manager, and not liquidating the portfolio in the short term - which would
likely incur a substantial discount to the current net asset value.
Your Board is mindful that as the size of the Company diminishes through selling
investments and returning cash to shareholders, the annual running costs are
becoming a larger percentage of total assets. We are appraising options to
maximise the returns to shareholders whilst minimising the ongoing running costs
and will revert to shareholders in due course.
Jon Pither
Chairman
For further information contact:
Bill Brown/Stuart Rollason
Investment Manager
Bluehone Investors LLP 020 7496 8929
Derek Osborne
Company Secretary
F&C Asset Management plc 0207 628 8000
Income Statement
+-------------------------------+--------------------------+
| For the year ended 31 May | |
| 2010 | |
+-------------------------------+--------------------------+
+-------------------------------+----------+---------+---------+
| | | | |
+-------------------------------+----------+---------+---------+
| | Revenue | Capital | Total |
+-------------------------------+----------+---------+---------+
| Notes | GBP'000 | GBP'000 | GBP'000 |
+-------------------------------+----------+---------+---------+
| | | | |
+-------------------------------+----------+---------+---------+
| Gains on investments | - | 9,542 | 9,542 |
+-------------------------------+----------+---------+---------+
| Liquidation distribution | - | 490 | 490 |
| 6 | | | |
+-------------------------------+----------+---------+---------+
| Income | 318 | - | 318 |
| 3 | | | |
+-------------------------------+----------+---------+---------+
| Investment management fee | (587) | - | (587) |
| 6 | | | |
+-------------------------------+----------+---------+---------+
| Other expenses | (411) | - | (411) |
+-------------------------------+----------+---------+---------+
| | | | |
+-------------------------------+----------+---------+---------+
| | | | |
+-------------------------------+----------+---------+---------+
| Net return before finance | | | |
| costs and | | | |
+-------------------------------+----------+---------+---------+
| tax | (680) | 10,032 | 9,352 |
+-------------------------------+----------+---------+---------+
| | | | |
+-------------------------------+----------+---------+---------+
| Finance costs | (108) | - | (108) |
+-------------------------------+----------+---------+---------+
| | | | |
+-------------------------------+----------+---------+---------+
| Return on ordinary activities | (788) | 10,032 | 9,244 |
| before tax | | | |
+-------------------------------+----------+---------+---------+
| | | | |
+-------------------------------+----------+---------+---------+
| Tax on ordinary activities | 3 | - | 3 |
+-------------------------------+----------+---------+---------+
| | | | |
+-------------------------------+----------+---------+---------+
| Return attributable to | | | |
+-------------------------------+----------+---------+---------+
| Ordinary Shareholders | (785) | 10,032 | 9,247 |
+-------------------------------+----------+---------+---------+
| | | | |
+-------------------------------+----------+---------+---------+
| | | | |
+-------------------------------+----------+---------+---------+
| Transfer (from)/to reserves | (785) | 10,032 | 9,247 |
+-------------------------------+----------+---------+---------+
| | | | |
+-------------------------------+----------+---------+---------+
| Return per share: | | | |
+-------------------------------+----------+---------+---------+
| Ordinary - basic | (1.53)p | 19.50p | 17.97p |
+-------------------------------+----------+---------+---------+
| | | | |
+-------------------------------+----------+---------+---------+
The total column of the Income Statement is the profit and loss account of the
Company. The supplementary revenue and capital columns are both prepared under
guidance published by the Association of Investment Companies.
All revenue and capital items in the above statement derive from continuing
operations.
No operations were acquired or discontinued in the year.
A Statement of Total Recognised Gains and Losses is not required as all gains
and losses of the Company have been reflected in the above Income Statement.
Income Statement
+-------------------------------+--------------------------+
| For the year ended 31 May | |
| 2009 | |
+-------------------------------+--------------------------+
+-------------------------------+----------+----------+----------+
| | | | |
+-------------------------------+----------+----------+----------+
| | Revenue | Capital | Total |
+-------------------------------+----------+----------+----------+
| Notes | GBP'000 | GBP'000 | GBP'000 |
+-------------------------------+----------+----------+----------+
| | | | |
+-------------------------------+----------+----------+----------+
| Losses on investments | - | (36,478) | (36,478) |
+-------------------------------+----------+----------+----------+
| Liquidation distribution | - | 400 | 400 |
| 6 | | | |
+-------------------------------+----------+----------+----------+
| Realised exchange differences | - | 3 | 3 |
+-------------------------------+----------+----------+----------+
| Income | 733 | - | 733 |
| 3 | | | |
+-------------------------------+----------+----------+----------+
| Investment management fee | 712 | - | 712 |
| 6 | | | |
+-------------------------------+----------+----------+----------+
| Other expenses | (738) | - | (738) |
+-------------------------------+----------+----------+----------+
| | | | |
+-------------------------------+----------+----------+----------+
| | | | |
+-------------------------------+----------+----------+----------+
| Net return before finance | | | |
| costs and | | | |
+-------------------------------+----------+----------+----------+
| tax | 707 | (36,075) | (35,368) |
+-------------------------------+----------+----------+----------+
| | | | |
+-------------------------------+----------+----------+----------+
| Finance costs | (1,227) | - | (1,227) |
+-------------------------------+----------+----------+----------+
| | | | |
+-------------------------------+----------+----------+----------+
| Return on ordinary activities | (520) | (36,075) | (36,595) |
| before tax | | | |
+-------------------------------+----------+----------+----------+
| | | | |
+-------------------------------+----------+----------+----------+
| Taxation on ordinary | (20) | - | (20) |
| activities | | | |
+-------------------------------+----------+----------+----------+
| | | | |
+-------------------------------+----------+----------+----------+
| Return attributable to | | | |
+-------------------------------+----------+----------+----------+
| Ordinary Shareholders | (540) | (36,075) | (36,615) |
+-------------------------------+----------+----------+----------+
| | | | |
+-------------------------------+----------+----------+----------+
| | | | |
+-------------------------------+----------+----------+----------+
| Transfer from reserves | (540) | (36,075) | (36,615) |
+-------------------------------+----------+----------+----------+
| | | | |
+-------------------------------+----------+----------+----------+
| | | | |
+-------------------------------+----------+----------+----------+
| Return per share: | | | |
+-------------------------------+----------+----------+----------+
| Ordinary - basic | (1.05)p | (70.13)p | (71.18)p |
+-------------------------------+----------+----------+----------+
| | | | |
+-------------------------------+----------+----------+----------+
| | | | |
+-------------------------------+----------+----------+----------+
+-----------------------------------------------------------------+
| Balance Sheet |
+-----------------------------------------------------------------+
+---------------------------------------+-------+------------+-----------+
| | | As at | As at |
+---------------------------------------+-------+------------+-----------+
| | | 31 May | 31 May |
+---------------------------------------+-------+------------+-----------+
| | | 2010 | 2009 |
+---------------------------------------+-------+------------+-----------+
| | Notes | GBP'000 | GBP'000 |
+---------------------------------------+-------+------------+-----------+
| | | | |
+---------------------------------------+-------+------------+-----------+
| Current assets | | | |
+---------------------------------------+-------+------------+-----------+
| Investments | | 15,161 | 35,532 |
+---------------------------------------+-------+------------+-----------+
| Debtors | | 525 | 1,841 |
+---------------------------------------+-------+------------+-----------+
| Cash at bank and on deposit | | 6,068 | 17 |
+---------------------------------------+-------+------------+-----------+
| | | _______ | _______ |
+---------------------------------------+-------+------------+-----------+
| | | 21,754 | 37,390 |
+---------------------------------------+-------+------------+-----------+
| Creditors: amounts falling due within | | | |
| one year | | | |
+---------------------------------------+-------+------------+-----------+
| Financial liabilities | | - | (10,400) |
+---------------------------------------+-------+------------+-----------+
| Other creditors | | (373) | (454) |
+---------------------------------------+-------+------------+-----------+
| | | _______ | _______ |
+---------------------------------------+-------+------------+-----------+
| | | (373) | (10,854) |
+---------------------------------------+-------+------------+-----------+
| | | _______ | _______ |
+---------------------------------------+-------+------------+-----------+
| | | | |
+---------------------------------------+-------+------------+-----------+
| Net assets | | 21,381 | 26,536 |
+---------------------------------------+-------+------------+-----------+
| | | | |
+---------------------------------------+-------+------------+-----------+
| Capital and Reserves | | | |
+---------------------------------------+-------+------------+-----------+
| Called-up share capital | | | |
+---------------------------------------+-------+------------+-----------+
| Ordinary | | 52 | 52 |
| shares | | | |
+---------------------------------------+-------+------------+-----------+
| Founder | | - | 8 |
| shares | | | |
+---------------------------------------+-------+------------+-----------+
| Special reserve | | 19,638 | 34,040 |
+---------------------------------------+-------+------------+-----------+
| Capital reserve | | 17,014 | 6,982 |
+---------------------------------------+-------+------------+-----------+
| Capital redemption | | 39 | 31 |
| reserve | | | |
+---------------------------------------+-------+------------+-----------+
| Revenue reserve | | (15,362) | (14,577) |
+---------------------------------------+-------+------------+-----------+
| | | | |
+---------------------------------------+-------+------------+-----------+
| Shareholders' funds | | 21,381 | 26,536 |
+---------------------------------------+-------+------------+-----------+
| | | | |
+---------------------------------------+-------+------------+-----------+
| Net asset value per share: | | | |
| Ordinary - basic | 5 | 41.6p | 51.6p |
+---------------------------------------+-------+------------+-----------+
Reconciliation of Movements in Shareholders' Funds
+-----------------------+---------+----------+---------+------------+----------+----------------+
| For the year ended 31 | | | | | | |
| May 2010 | | | | | | |
+-----------------------+---------+----------+---------+------------+----------+----------------+
| | | | | | | Total |
| | Called | | | Capital | | Share-holders' |
| | up | Special | Capital | Redemption | Revenue | Funds |
| | Share | Reserve | Reserve | Reserve | Reserve | |
| | Capital | | | | | |
+-----------------------+---------+----------+---------+------------+----------+----------------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-----------------------+---------+----------+---------+------------+----------+----------------+
| | | | | | | |
+-----------------------+---------+----------+---------+------------+----------+----------------+
| Opening shareholders' | 60 | 34,040 | 6,982 | 31 | (14,577) | 26,536 |
| funds | | | | | | |
+-----------------------+---------+----------+---------+------------+----------+----------------+
| Return of capital to | - | (14,402) | - | - | - | (14,402) |
| shareholders | | | | | | |
+-----------------------+---------+----------+---------+------------+----------+----------------+
| Founder shares | (8) | - | - | 8 | - | - |
| cancelled | | | | | | |
+-----------------------+---------+----------+---------+------------+----------+----------------+
| Return attributable | | | 10,032 | | (785) | 9,247 |
| to ordinary | - | - | | - | | |
| shareholders | | | | | | |
+-----------------------+---------+----------+---------+------------+----------+----------------+
| Closing shareholders' | 52 | 19,638 | 17,014 | 39 | (15,362) | 21,381 |
| funds | | | | | | |
+-----------------------+---------+----------+---------+------------+----------+----------------+
| | | | | | | |
+-----------------------+---------+----------+---------+------------+----------+----------------+
+-----------------------+---------+---------+----------+------------+-----------+----------------+
| For the year ended 31 | | | | | | |
| May 2009 | | | | | | |
+-----------------------+---------+---------+----------+------------+-----------+----------------+
| | | | | | | Total |
| | Called | | | Capital | | Share-holders' |
| | up | Special | Capital | Redemption | Revenue | Funds |
| | Share | Reserve | Reserve | Reserve | Reserve | |
| | Capital | | | | | |
+-----------------------+---------+---------+----------+------------+-----------+----------------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-----------------------+---------+---------+----------+------------+-----------+----------------+
| | | | | | | |
+-----------------------+---------+---------+----------+------------+-----------+----------------+
| Opening shareholders' | 60 | 34,040 | 43,057 | 31 | (14,037) | 63,151 |
| funds | | | | | | |
+-----------------------+---------+---------+----------+------------+-----------+----------------+
| Return attributable | | | (36,075) | | (540) | (36,615) |
| to Ordinary | - | - | | - | | |
| Shareholders | | | | | | |
+-----------------------+---------+---------+----------+------------+-----------+----------------+
| Closing shareholders' | 60 | 34,040 | 6,982 | 31 | (14,577) | 26,536 |
| funds | | | | | | |
+-----------------------+---------+---------+----------+------------+-----------+----------------+
| | | | | | | |
+-----------------------+---------+---------+----------+------------+-----------+----------------+
Cash Flow Statement
For the year ended 31 May 2010
+------------------------------------------+----------+------------+----------+------------+----------+
| | | |
+-----------------------------------------------------+-----------------------+-----------------------+
| | | |
+-----------------------------------------------------+-----------------------+-----------------------+
| | 2010 | 2009 |
+-----------------------------------------------------+-----------------------+-----------------------+
| | GBP'000 | GBP'000 |
+-----------------------------------------------------+-----------------------+-----------------------+
| Operating activities | | |
+-----------------------------------------------------+-----------------------+-----------------------+
| Investment income received | 366 | 544 |
+-----------------------------------------------------+-----------------------+-----------------------+
| Deposit interest received | 13 | 75 |
+-----------------------------------------------------+-----------------------+-----------------------+
| Interest recovered from HMRC | - | 159 |
+-----------------------------------------------------+-----------------------+-----------------------+
| Investment management fees paid | (399) | (619) |
+-----------------------------------------------------+-----------------------+-----------------------+
| VAT on management fees recovered from HMRC | - | 1,276 |
+-----------------------------------------------------+-----------------------+-----------------------+
| Liquidation distribution | - | 400 |
+-----------------------------------------------------+-----------------------+-----------------------+
| Other cash payments | (663) | (460) |
+-----------------------------------------------------+-----------------------+-----------------------+
| | | | |
+------------------------------------------+-----------------------+-----------------------+----------+
| Net cash inflow/(outflow) from operating | (683) | 1,375 | |
| activities | | | |
+------------------------------------------+-----------------------+-----------------------+----------+
| | | | |
+------------------------------------------+-----------------------+-----------------------+----------+
| Service of finance | | | |
+------------------------------------------+-----------------------+-----------------------+----------+
| Interest paid on bank loans | (108) | (1,309) | |
+------------------------------------------+-----------------------+-----------------------+----------+
| | | | |
+------------------------------------------+-----------------------+-----------------------+----------+
| Net cash outflow from servicing of | (108) | (1,309) | |
| finance | | | |
+------------------------------------------+-----------------------+-----------------------+----------+
| | | | |
+------------------------------------------+-----------------------+-----------------------+----------+
| Taxation | 3 | - | |
+------------------------------------------+-----------------------+-----------------------+----------+
| | | | |
+------------------------------------------+-----------------------+-----------------------+----------+
| Capital expenditure and financial | | | |
| investment | | | |
+------------------------------------------+-----------------------+-----------------------+----------+
| Purchases of investments | - | (200) | |
+------------------------------------------+-----------------------+-----------------------+----------+
| Disposals of investments | 31,641 | 13,212 | |
+------------------------------------------+-----------------------+-----------------------+----------+
| | | | |
+------------------------------------------+-----------------------+-----------------------+----------+
| Net cash inflow from capital expenditure | | | |
| and financial investment | 31,641 | 13,012 | |
+------------------------------------------+-----------------------+-----------------------+----------+
| | | | |
+------------------------------------------+-----------------------+-----------------------+----------+
| Net cash inflow before financing | 30,853 | 13,078 | |
+------------------------------------------+-----------------------+-----------------------+----------+
| | | | |
+------------------------------------------+-----------------------+-----------------------+----------+
| Financing | | | |
+------------------------------------------+-----------------------+-----------------------+----------+
| Loan repaid | (10,400) | (19,600) | |
+------------------------------------------+-----------------------+-----------------------+----------+
| Return of capital to shareholders | (14,402) | - | |
+------------------------------------------+-----------------------+-----------------------+----------+
| | | | |
+------------------------------------------+-----------------------+-----------------------+----------+
| Net cash outflow from financing | (24,802) | (19,600) | |
+------------------------------------------+-----------------------+-----------------------+----------+
| | | | |
+------------------------------------------+-----------------------+-----------------------+----------+
| Increase/(decrease) in cash in the year | 6,051 | (6,522) | |
+------------------------------------------+-----------------------+-----------------------+----------+
| | | | |
+------------------------------------------+-----------------------+-----------------------+----------+
| Reconciliation of net cash flow to | | | |
| movement in net debt | | | |
+------------------------------------------+-----------------------+-----------------------+----------+
| Increase/(decrease) in cash | 6,051 | (6,522) | |
+------------------------------------------+-----------------------+-----------------------+----------+
| Opening net debt | (10,383) | (23,464) | |
+------------------------------------------+-----------------------+-----------------------+----------+
| Loan repaid | 10,400 | 19,600 | |
+------------------------------------------+-----------------------+-----------------------+----------+
| Currency gains | - | 3 | |
+------------------------------------------+-----------------------+-----------------------+----------+
| | | | |
+------------------------------------------+-----------------------+-----------------------+----------+
| Closing net debt | 6,068 | (10,383) | |
+------------------------------------------+-----------------------+-----------------------+----------+
| | | | | | |
+------------------------------------------+----------+------------+----------+------------+----------+
Principal Risks and Risk Management
The Company's assets consist mainly of listed and quoted securities and its
principal risks are therefore market-related. More detailed explanations of
these risks and the way in which they are managed are contained in note 9.
Other risks faced by the Company include the following:
· External investor risks - any events or developments which can affect the
general level of shares prices including, for instance, terrorism, disease,
protectionism, inflation or deflation, economic recessions and movements in
interest rates.
· Investment and strategic - inappropriate strategy, asset allocation,
diversification, borrowing policy and stock selection can all lead to poor
returns for shareholders.
· Regulatory - breach of regulatory rules might lead to a suspension of the
Company's stock exchange listing, financial penalties or a qualified audit
report. Breach of Section 1158 of the Corporation Taxes Act 2010 (formerly s842
of the Income and Corporate Taxes Act 1988) rules may lead to the Company being
subject to capital gains tax.
· Reputational - inadequate or failed controls might result in breaches of
regulations or loss of shareholder trust, thereby affecting the discount at
which the shares trade to their net asset value.
· Operational - failure of the accounting systems or disruption to its
business might lead to an inability to provide accurate reporting and
monitoring, again leading to a loss of shareholders' confidence.
· Financial - inadequate controls might lead to misappropriation of assets.
Inappropriate accounting policies or failure to comply with accounting
standards might lead to misreporting or breaches of regulations.
· Market Risk - investments in AiM-traded companies or PLUS companies, by
their nature, involve a higher degree of risk than investment in companies
traded on the main market. In particular, smaller companies often have limited
product lines, markets or financial resources and may be dependent for their
management on a smaller number of key individuals. In addition, the market for
stock in smaller companies is often less liquid than that for stock in larger
companies, bringing with it potential difficulties in acquiring, valuing and
disposing such stock.
· Liquidity Risk - The Company's investments may be difficult to realise.
The fact that a share is traded on AiM does not guarantee its liquidity. The
spread between the buying and selling price of such shares may be wide and thus
the price used for valuation may not be achievable.
In the mitigation and management of these risks, the Board regularly monitors
the investment environment, the management of the Company's investment portfolio
and applies the principles detailed in the internal control guidance issued by
the Financial Reporting Council.
Statement of Directors' Responsibilities in Respect of the Annual Financial
Report
In accordance with Chapter 4 of the Disclosure and Transparency Rules, we
confirm that to the best of our knowledge, in respect of the annual report for
the year ended 31 May 2010, of which this statement of results is an extract:
· The financial statements have been prepared in accordance with applicable
UK Accounting Standards, on a break-up basis as having assessed the ability of
the Company to continue as a going concern, management is conducting an orderly
realisation of its investment portfolio, and give a true and fair view of the
assets, liabilities, financial position and loss of the Company;
· The Manager's Review includes a fair review of the important events that
have occurred during the financial year and their impact on the financial
statements;
· The principal risks section of the Report of the Directors and Business
Review describes the principal risks and uncertainties for the forthcoming
financial year; and
· The Annual Report includes details of related party transactions that
have taken place during the financial year.
On behalf of the Board
J P Pither
Director
Notes
1. The financial statements have been prepared under UK Generally Accepted
Accounting Practice ("UK GAAP") and in accordance with guidelines set out in the
Statement of Recommended Practice issued in January 2009 for Investment Trusts
and Venture Capital Trusts, issued by the Association of Investment Companies.
Given that the Company is conducting an orderly realisation of its investment
portfolio, the Directors do not consider the going concern basis to be
appropriate. These financial statements have therefore been prepared on a
break-up basis. In applying this basis, assets and liabilities continue to be
stated at their fair values which materially equate to their residual values. A
provision has been made for estimated costs to be incurred in relation to the
realisation of the investment portfolio.
2. Basic return per ordinary share is based on a weighted average of
51,437,364 ordinary shares in issue (2009: same).
3. Income for the year to 31 May 2010 is derived from:
+-----------------------+----------------+--------------------+
| | Year to 31 May | Year to 31 May |
| | 2010 | 2009 |
+-----------------------+----------------+--------------------+
| | GBP'000 | GBP'000 |
+-----------------------+----------------+--------------------+
| | | |
+-----------------------+----------------+--------------------+
| Franked investment | 303 | 399 |
| income | | |
+-----------------------+----------------+--------------------+
| Unfranked investment | - | 80 |
| income | | |
+-----------------------+----------------+--------------------+
| Overseas income | - | 44 |
+-----------------------+----------------+--------------------+
| Deposit interest | 15 | 51 |
+-----------------------+----------------+--------------------+
| Interest recovered | | |
| from HMRC (note 6) | - | 159 |
+-----------------------+----------------+--------------------+
| | 318 | 733 |
+-----------------------+----------------+--------------------+
4. No dividend will be paid in respect of the year to 31 May 2010 (2009:nil).
5. The Basic NAV per Ordinary Share is calculated on Ordinary Shareholders'
funds of GBP21,381,000 (2009:GBP26,528,000) and 51,437,364 (2009:same) ordinary
shares. Founder Shareholders' funds represent Nil (2009: GBP8,000).
+------------------------------------+---------+----------+
| | As at | As at |
| | | |
+------------------------------------+---------+----------+
| | 31 | 31 May |
| | May | 2009 |
| | 2010 | |
+------------------------------------+---------+----------+
| | GBP'000 | GBP'000 |
+------------------------------------+---------+----------+
| | | |
| Basic net assets attributable to | 21,381 | 26,528 |
| Ordinary Shareholders | | |
+------------------------------------+---------+----------+
| Founder shares | - | 8 |
+------------------------------------+---------+----------+
| | | |
| Net assets | 21,381 | 26,536 |
+------------------------------------+---------+----------+
| | | |
+------------------------------------+---------+----------+
6. Investment Management Fee
+--------------------------------+------------+------------+
| | Year to 31 | Year to 31 |
| | May 2010 | May 2009 |
+--------------------------------+------------+------------+
| | GBP'000 | GBP'000 |
+--------------------------------+------------+------------+
| Investment management fee - | 295 | 564 |
| basic fee | | |
+--------------------------------+------------+------------+
| Investment management fee - | 292 | - |
| realisation fee | | |
+--------------------------------+------------+------------+
| Recovered VAT | - | (1,276) |
+--------------------------------+------------+------------+
| | 587 | (712) |
+--------------------------------+------------+------------+
| | | |
+--------------------------------+------------+------------+
As a result of the European Court of Justice decision that investment management
fees payable by investment trusts are not, and should never have been, liable to
value added tax ('VAT'), the Company recovered VAT of GBP1,276,000 during the
year ended 31 May 2009 in respect of investment management fees paid in the
period since the launch of the Company in 2001 until 30 September 2007. The
amount recovered has been recognised in the revenue column of the Income
Statement.
The Company merged with The AIM Trust plc in July 2003 and received a
liquidation distribution of GBP400,000 during the year ended 31 May 2009, in
respect of VAT paid on investment management fees by The AIM Trust plc in
respect of the period 1 January 2001 to the date of the merger. The Company
expects to receive a further distribution of GBP490,000 and this has been
recognised in the accounts for the year ended 31 May 2010.
7. The Annual General Meeting will be held on 26 October 2010.
8. This announcement is not the Company's statutory accounts. The statutory
accounts for the year ended 31 May 2009 have been delivered to the Registrar of
Companies and have received an audit report which was unqualified and did not
contain any emphasis of matter.
The Annual Report for the year ended 31 May 2010 will be sent to shareholders
during September 2010 and will be available for inspection at Exchange House,
Primrose Street, London, the registered office of the Company. The full Annual
Report and Accounts will be available on the Company's website,
www.activecapitaltrust.co.uk.
9. Financial instruments
The Company's financial instruments comprise its investment portfolio, cash
balances, debtors and creditors that arise directly from its operations. As an
investment trust the Company holds a portfolio of financial assets in pursuit of
its investment objective.
Listed and quoted investments held are valued at fair value. For listed and
quoted securities this is the bid price. The unquoted holdings are valued by
the Directors at their fair valuation on the basis of all the information
available to them at the time of the valuation which is accordance with
International Private Equity and Venture Capital valuation guidelines. The fair
value of all other financial assets and liabilities is represented by their
carrying value in the Balance Sheet. The fair value of the loans is not
materially different from the carrying value in the Balance Sheet. Cash which
is held in variable rate bank accounts, can be withdrawn on demand with no
penalty.
The main risks that the Company faces arising from its financial instruments
are:
1. market price risk, being the risk that the value of investment holdings
will fluctuate as a result of changes in market prices caused by factors other
than interest rate or currency rate movements;
2. interest rate risk, being the risk that the future cash flows of a
financial instrument will fluctuate because of changes in market interest rates;
3. credit risk, being the risk that a counterparty to a financial instrument
will fail to discharge an obligation or commitment that it has entered into with
the Company; and
4. liquidity risk, being the risk that the Company may not be able to
liquidate quickly its investments to meet its financial obligations.
The Company's financial instruments are predominantly denominated in sterling,
therefore, currency risk arising from exchange rate fluctuations has no material
affect on profit or loss, or Shareholders' funds.
Market price risk
The management of market price risk is part of the fund management process and
is typical of equity investment. The portfolio is managed with an awareness of
the effects of adverse price movements through detailed and continuing analysis
with an objective of maximising overall returns to shareholders. The Managers
do not use derivatives to manage portfolio risk.
Interest rate risk - floating rate
When the Company decides to hold cash balances, all balances are held on
variable rate bank accounts yielding rates of interest linked to bank base rate
which at 31 May 2010 was 0.5 per cent (2009:5.0 per cent). The Company's policy
is to hold cash in variable rate bank accounts.
Credit risk
Credit risk is the risk that an issuer or counterparty will be unable or
unwilling to meet a commitment that it has entered into with the Company.
The Company's principal financial assets are bank balances and cash and other
receivables which represent the Company's maximum exposure to credit risk in
relation to financial assets. The Company did not have any exposure to any
financial assets which were past due or impaired at the period end.
The Company is exposed to potential failure by counterparties to deliver
securities for which the Company has paid, or to pay for securities which the
Company has delivered. A list or pre-approved counterparties used in such
transactions is maintained and regularly reviewed by the Manager, and
transactions must be settled on a basis of delivery against payment. Broker
counterparties are selected based on a combination of criteria, including credit
rating, balance sheet strength and membership of a relevant regulatory body.
Risk relating to unsettled transactions is considered to be small due to the
short settlement period involved and the high credit quality of the brokers
used. The rate of default in the past has been insignificant.
All of the assets of the Company, other than cash deposits, are held by JP
Morgan Chase Bank, the Company's custodian. Bankruptcy or insolvency of the
custodian may cause the Company's rights with respect to the securities held by
the custodian to be delayed or limited. The Board monitors the Company's risk
by reviewing the custodian's internal control reports.
The credit risk on liquid funds and derivative financial instruments is limited
because the counterparties are banks with high credit ratings, rated normally AA
or higher, assigned by international credit rating agencies. Bankruptcy or
insolvency of such financial institutions may cause the Company's ability to
access cash placed on deposit to be delayed or limited. The Company has no
significant concentration of credit risk with exposure spread over a number of
counterparties.
Liquidity risk
The Company's financial instruments include investments in AiM-traded companies
and companies quoted on the PLUS market, which by their nature, involve a higher
degree of risk than investments in the main market. As a result, the Company
may not be able to liquidate quickly some of these investments at an amount
close to their fair value in order to meet its liquidity requirements.
The Company's listed securities are considered to be readily realisable as they
are traded on the London Stock Exchange.
The Company's liquidity risk is managed on an ongoing basis by the Investment
Manager. The Company's overall liquidity risks are monitored on a quarterly
basis by the Board.
The Company maintains sufficient investments in cash and readily realisable
securities to pay accounts payable and accrued expenses.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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