Albion. Dev Vct Regulatory News (AADV)

7 Apr 2008 16:55

Close Brothers Dev VCT PLC07 April 2008 Close Brothers Development VCT PLC Annual Results announcement 7 April 2008 Preliminary announcement of the statutory financial results for the twelvemonths to 31 December 2007. Copies of the full Report and Financial Statementscan be found on www.closeventures.co.uk Close Brothers Development VCT PLC (the "Company"), which invests in a balancedportfolio of property based investments that provide a strong income stream,combined with investment in a smaller number of higher risk companies withgreater growth prospects, across a variety of sectors, today announces theannual results for the year ended 31 December 2007. This announcement wasapproved for release by the Board of Directors on 7 April 2008. FINANCIAL HIGHLIGHTS Ordinary Shares C Shares Year ended Year ended 31 December 2007 31 December 2007 Dividends paid per share 5.00 5.36Net asset value per share 100.94 108.15 Shareholder value per share since Pence per share Pence per share(ii)launch: (ii) Dividends paid during the period ended 31 December 1999 (i) 1.00 Dividends paid during the year to 31 2.90December 2000 Dividends paid during the year to 31 3.95December 2001 Dividends paid during the year to 31 4.20December 2002 - Dividends paid during the year to 31 December 2003 (iii) 4.50 0.75 Dividends paid during the year to 31 4.00 2.00December 2004 Dividends paid during the year to 31 5.20 5.90December 2005 Dividends paid during the year to 31 3.00 4.50December 2006 Dividends paid during the year to 31 December 2007 (iv) 5.00 5.36 33.75 18.51Net asset value per share as at 31 100.94 108.15December 2007 Total cumulative shareholder return at 31 December 2007 134.69 126.66 In addition to the dividends paid above, the Board has declared a first dividendfor the new financial year of 2.5 pence per share comprising 1.25 pence fromrevenue profits and 1.25 pence from realised capital profits. The dividend willbe payable on 16 May 2008 to those shareholders on the register on 18 April2008. Notes (i) assuming subscription for Ordinary Shares by the First Closing on 26January 1999. (ii) excluding tax benefits received upon subscription. (iii) those subscribing for C Shares after 30 June 2003 were not entitled tothe interim dividend. (iv) The C shares were converted into Ordinary shares on 31 March 2007, with a conversion factor of 1.0715 Ordinary shares for each C share.The net assetvalue per share and all dividends paid subsequent to the conversion of the Cshares to Ordinary shares are multiplied by the conversion factor of 1.0715 inrespect of the C shares return, in order to give an accurate picture of theshareholder value since launch relating to the C shares. CHAIRMAN'S STATEMENT Introduction I am pleased to report that the year to 31 December 2007 has been a successfulone for your Company. The strong investment return over the period wasgenerated by some excellent profits realised from the sale of matureinvestments, which underpinned the policy of paying out an annual dividend of 5pence per share from both revenue and realised capital profits. We would hopethat this will rise as further profitable disposals are made in future. Investment progress and performance The total return per Share was 10.8 pence for the year; part of this was due tothe continued growth in income from the investment portfolio, with the balancefrom the successful realisation of investments. These comprised a profit of £3million for Careforce, which was taken over by the Mears Group in April of thisyear, (with the consideration being mainly in the form of cash, though wereceived some in the form of shares in Mears) and £814,000 from the sale of BoldPub Company. In both cases, the VCT also received annual income from theinvestments of around 10 per cent. on cost. Meanwhile, £5.4 million was invested in 23 existing and new investee companies.These included £1,000,000 into Kensington Health Clubs which owns and operates anew health and fitness club on a 999 year lease at Olympia, West Kensington, and£700,000 into Chichester Holdings, a specialist distributor of food and drink tothe travel industry. PLEASE INSERT PIE CHART HERE Source: Close Ventures Limited The investments held are diversified to ensure a spread of risk across theportfolio. The portfolio split (by cost) is approximately 60% loan stock and40% equity. At 31 December 2007 the portfolio was 82% invested for HM Revenue &Customs purposes, in 37 qualifying investments. Risks and uncertainties The key risk facing the Company in the months ahead is the UK economy which,while currently still growing, could be affected by the current unease in thewholesale financial and housing markets. While this could give rise toadditional investment opportunities for a cash rich fund like ourselves, adownturn could affect existing investee companies and make it harder for theManager to assess the prospects of new investment opportunities, as well aspotentially affecting asset values. The Company's policy of limiting externalborrowing and of having a first legal charge wherever possible, mitigates someof these investment risks. Other risks and uncertainties are detailed in theDirectors' report within the Annual Report and financial Statements. Proposed change to the Company's Articles of Association I draw shareholders attention to the proposed resolution to change the Articlesof Association. The new provisions of the Companies Act 2006 include therequirement for Directors to avoid actual or potential conflicts of interestwith effect from 1 October 2008. The Directors are proposing a resolution atthe forthcoming Annual General Meeting to allow Directors to approve actual orpotential conflict situations, should it be in the Company's best interests todo so, and to allow conflicts of interest to be dealt with in a similar way tothe current position. Directorate At the year end Roderick Davidson, Chairman of the Board since the Company'sflotation, resigned as Chairman and Director as he has reached the age of 70.On behalf of the Board and Shareholders, I would like to thank Roderick for hisconsiderable efforts and wise guidance throughout his tenure. I became Chairmanon 31 December 2007 following Roderick's retirement. We would also like towelcome Andrew Phillipps who became a Director of the Company on 30 October2007. Results, dividends and prospects Overall, despite the general economic risks referred to above, your Boardremains positive on the outlook of the Company and its investment portfolio. Webelieve that the income generation potential of the portfolio remains strong andwe have some particularly interesting investments across a broad range ofsectors, which we believe could prove to be strong generators of shareholdervalue in the future. As at 31 December 2007, the net asset value per share was 100.9 pence (2006:94.6 pence). The C Shares were converted into Ordinary Shares during the yearon the basis of 1.0715 new Ordinary Shares for each C Share; taking thisconversion factor into account, the adjusted net asset value for a former holderof C Shares at the year end was 108.2 pence compared to 101.4 pence in 2006.The revenue return after tax was £1.49 million compared with the combinedOrdinary Share and C Share revenue return for 2006 of £1.05 million. The Board has declared a first dividend for the new financial year of 2.5 penceper share comprising 1.25 pence from revenue profits and 1.25 pence fromrealised capital profits. The dividend will be payable on 16 May 2008 to thoseshareholders on the register on 18 April 2008. Change of Auditors During the year, the Board, advised by the Audit Committee, decided to put theaudit of the Company out to tender. Following a formal selection process whichconsidered expertise within the VCT market, depth of experience within the auditfirm and value for money, the Board have decided to propose a resolution for theappointment of PKF (UK) LLP at the forthcoming Annual General Meeting. In view of the proposed change in auditors, Deloitte & Touche LLP who are theauditors for the financial year ended 31 December 2007, have informed theCompany of their intention not to seek reappointment at the forthcoming AnnualGeneral Meeting. David Pinckney Director 7 April 2008 Statement of Directors' responsibilities The Directors are responsible for preparing the Annual Report and the financialstatements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for eachfinancial year. Under that law the Directors have elected to prepare thefinancial statements in accordance with United Kingdom Generally AcceptedAccounting Practice (United Kingdom Accounting Standards and applicable law).The financial statements are required by law to give a true and fair view of thestate of affairs of the Company and of the income statement of the Company forthat period. In preparing these financial statements, the directors are requiredto: • select suitable accounting policies and then apply them consistently; • make judgments and estimates that are reasonable and prudent; • state whether applicable UK Accounting Standards have been followed; and • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The Directors are responsible for keeping proper accounting records thatdisclose with reasonable accuracy at any time the financial position of theCompany and enable them to ensure that the financial statements comply with theCompanies Act 1985. They are also responsible for safeguarding the assets of theCompany and hence for taking reasonable steps for the prevention and detectionof fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the corporateand financial information included on the Company's website. Legislation in theUnited Kingdom governing the preparation and dissemination of financialstatements may differ from legislation in other jurisdictions. INCOME STATEMENT Year Year ended ended 31 December 2007 31/12/2006* Revenue Capital Total Revenue Capital Total Note £'000 £'000 £'000 £'000 £'000 £'000 Gains/(losses) oninvestments 3 - 2,304 2,304 - (1,676) (1,676) Investment income 4 2,206 - 2,206 1,893 - 1,893 Investmentmanagement fee (214) (641) (855) (210) (628) (838) Other expenses (209) - (209) (191) - (191) Return onordinary activitiesbefore tax 1,783 1,663 3,446 1,492 (2,304) (812) Tax (charge)/credit onordinary activities 5 (292) 210 (82) (439) 187 (252) Returnattributable toequity shareholders 1,491 1,873 3,364 1,053 (2,117) (1,064) Basic and diluted return per share (excluding 7 4.8 6.0 10.8 3.2 (6.5) (3.3)treasury shares)(pence) * The comparative figures for the year ended 31 December 2006 comprise theaggregate of the Ordinary shares and C shares amounts for that year. The Cshares were converted into Ordinary shares on 31 March 2007, at a conversionratio of 1.0715 Ordinary shares for each C share. The total column of this Income Statement represents the profit and loss accountof the Company. The supplementary revenue and capital return columns have beenprepared in accordance with the Association of Investment Trust Companies'Statement of Recommended Practice. All revenue and capital items in the above statement derive from continuingoperations. There were no recognised gains or losses other than the results for the year asdisclosed above. Accordingly a statement of total recognised gains and lossesis not required. BALANCE SHEET 31 December 31 December 2007 2006* Notes £'000 £'000 Fixed asset investmentsQualifying investments 23,278 21,875Non-qualifying investments 3,948 3,892 Total fixed asset investments 27,226 25,767 Current assetsDebtors 133 409Cash at bank 3,991 4,236 4,124 4,645 Creditors: amounts falling due within one year (463) (118) Net current assets 3,661 4,527 Total assets less current liabilities 30,887 30,294 Capital and reservesCalled up share capital 8 16,219 15,581Share premium 3,208 3,208Special reserve 9,223 9,889Capital redemption reserve 1,183 1,173Realised capital reserve 1,474 (1,144)Unrealised capital reserve 129 1,652Own treasury shares reserve (1,610) (388)Revenue reserve 1,061 323 Total equity shareholders' funds 30,887 30,294 Net asset value per share (excluding treasury 100.9 94.6shares)(pence) * The comparative figures for the year ended 31 December 2006 comprise theaggregate of the Ordinary shares and C shares amounts for that year. The Cshares were converted into Ordinary shares on 31 March 2007, at a conversionratio of 1.0715 Ordinary shares for each C share. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS Own Called Capital Realised Unrealised Treasury up share Share Special redemption capital capital shares Revenue Total capital premium reserve reserve reserve reserve reserve reserve £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000As at 1 January 2006 15,829 3,208 10,341 925 (549) 3,328 - 339 33,422 Realised gains on investments inthe year - - - - 1 - - - 1 Capitalised investmentmanagement and performance fees - - - - (627) - - - (627) Tax relief on costs charged tocapital - - - - 187 - - - 187 Purchase of own shares forTreasury - - - - - - (388) - (388) Cancellation of own shares (248) - (452) 248 - - - - (452) Movement in unrealisedappreciation - - - - - (1,676) - - (1,676) Revenue return attributable toshareholders - - - - - - - 1,053 1,053 Dividends paid - - - - (156) - - (1,069) (1,225) As at 31 December 2006* 15,581 3,208 9,889 1,173 (1,144) 1,652 (388) 323 30,294 Conversion of C shares toOrdinary shares 648 - (648) - - - - - - Net realised gains oninvestments in the year - - - - 3,827 - - - 3,827 Capitalised investmentmanagement and performance fees - - - - (641) - - - (641) Tax relief on costs charged tocapital - - - - 210 - - - 210 Cancellation of own shares (10) - (18) 10 - - - - (18) Purchase of own shares forTreasury - - - - - - (1,222) - (1,222) Movement in unrealisedappreciation - - - - - (1,523) - - (1,523) Revenue return attributable toshareholders - - - - - - - 1,491 1,491 Dividends paid - - - - (777) - - (754) (1,531) As at 31 December 2007 16,219 3,208 9,223 1,183 1,474 129 (1,610) 1,061 30,887 * The comparative figures for the year ended 31 December 2006 comprise theaggregate of the Ordinary shares and C shares amounts for that year. The Cshares were converted into Ordinary shares on 31 March 2007, at a conversionratio of 1.0715 Ordinary shares for each C share. CASH FLOW STATEMENT Year ended Year ended 31 December 2007 31 December 2006* Notes £'000 £'000 Operating activitiesInvestment income received 1,266 1,083Deposit income received 377 528Other income received 72 35Investment management fees paid (610) (1,066)Other cash receipts/(payments) 153 (555) Net cash inflow from operating activities 9 1,258 25 Taxation - (412) Capital expenditure and financial investment Purchase of qualifying investments (3,833) (4,818) Purchase of non-qualifying investments - (377) Disposals of qualifying investments 4,975 1 Disposals of non-qualifying investments 136 4,000 Net cash inflow/(outflow) from investingactivities 1,278 (1,194) Equity dividends paid Dividends paid (1,540) (1,225) Net cash inflow/(outflow) before financing 996 (2,806) Financing Cancellation of shares (18) (452) Own treasury shares (1,223) (388) Net cash outflow from financing (1,241) (840) Decrease in cash in the year (245) (3,646) * The comparative figures for the year ended 31 December 2006 comprise theaggregate of the Ordinary shares and C shares amounts for that year. The Cshares were converted into Ordinary shares on 31 March 2007, at a conversionratio of 1.0715 Ordinary shares for each C share. Notes to the financial statements 1. Accounting convention The financial statements have been prepared in accordance with applicableUnited Kingdom law and Accounting Standards and with the Statement ofRecommended Practice: "Financial Statements of Investment Trust Companies"("SORP") issued by the Association of Investment Trust Companies ("AITC") inJanuary 2003 and revised in December 2005. Accounting policies have beenapplied consistently in current and prior periods. The financial statements are prepared under the historical cost convention,modified by the revaluation of certain investments. Throughout the financial statements (except where noted), the comparativefigures for the year ended 31 December 2006 comprise the aggregate of theOrdinary shares and C shares amounts for that year. The C shares were convertedinto Ordinary shares on 31 March 2007, at a conversion ratio of 1.0715 Ordinaryshares for each C share. True and fair override The Company is no longer an investment company within the meaning of s266of the Companies Act 1985. However, it conducts its affairs as a venturecapital trust for taxation purposes under Part 6 Income Taxes Act 2007. The absence of s266 status does not preclude the Company from presenting itsaccounts in accordance with the AITC's SORP and furthermore the Directorsconsider it appropriate to continue to present the accounts in accordance withthe SORP. Under the SORP, the financial performance of the Company ispresented in an income statement in which the total column is the profit andloss account of the Company. In the opinion of the Directors the presentation adopted enables the Company toreport in a manner consistent with the sector within which it operates. TheDirectors therefore consider that these departures from the specific provisionsof Schedule 4 of the Companies Act 1985 relating to the form and content ofaccounts for companies other than investment companies and these departures fromaccounting standards are necessary to give a true and fair view. The departureshave no effect on the total return or balance sheet. 2. Accounting policies Investments Quoted and unquoted equity investments In accordance with FRS 26 "Financial Instruments Measurement", quoted andunquoted equity investments are designated as fair value through profit or loss("FVTPL"). Investments listed on recognised exchanges are valued at the closingbid prices at the end of the accounting period. Unquoted investments' fairvalue is determined by the Directors in accordance with the InternationalPrivate Equity and Venture Capital Valuation Guidelines. Fair value movements on equity investments and gains and losses arising on thedisposal of investments are reflected in the capital column of the IncomeStatement in accordance with the AITC SORP and realised gains or losses on thesale of investments will be reflected in the realised capital reserve, andunrealised gains or losses arising from the revaluation of investments will bereflected in the unrealised capital reserve.. Unquoted loan stock Unquoted loan stock is classified as loans and receivables in accordance withFRS 26 and carried at amortised cost using the Effective Interest Rate method ("EIR") less impairment. Movements in the amortised cost relating to interestincome are reflected in the revenue column of the Income Statement, and henceare reflected in the Revenue reserve, and movements in respect of capitalprovisions are reflected in the capital column of the Income Statement and arereflected in the realised capital reserve following sale, or in the unrealisedCapital reserve on revaluation. For unquoted loan stock, the amount of theimpairment is the difference between the asset's carrying value and the presentvalue of estimated future cash flows, discounted at the effective interest rate. Floating rate notes In accordance with FRS 26 "Financial Instruments Measurement", floating ratenotes are designated as fair value through profit or loss ("FVTPL"). Floatingrate notes are valued at market bid price at the balance sheet date. Warrants, convertibles and unquoted equity derived instruments Warrants, convertible and unquoted equity derived instruments are only valued iftheir exercise, conversion terms or contractual terms would allow them to beexercised or converted as at the balance sheet date, and if there is additionalvalue to the Company in exercising or converting as at the balance sheet date.Otherwise these instruments are held at nil value. The valuation techniques usedare those used for the underlying equity investment. Investments are recognised as financial assets on legal completion of theinvestment contract and are de-recognised on legal completion of the sale of aninvestment. Dividend income is not recognised as part of the fair value movement of aninvestment, but is recognised separately as investment income through therevenue reserve when a share becomes ex-dividend. Loan stock accrued interest is recognised in the Balance Sheet as part of thecarrying 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 overinvestee companies. Therefore in accordance with the exemptions under FRS 9 "Associates and joint ventures", those undertakings in which the Company holdsmore than 20% of the equity are not regarded as associated undertakings. Investment income Quoted and Unquoted equity income Dividend income is included in revenue when received. Unquoted Loan stock income The fixed returns on non-equity shares and debt securities are recognised on atime apportionment basis using an effective interest rate over the life of thefinancial instrument. Bank interest income Interest income is recognised on an accrual basis using the rate of interestagreed with the bank. Floating Rate Note Income Floating rate note income is recognised on an accrual basis using the interestrate applicable to the floating rate note at that time. Management fees and expenses All expenses have been accounted for on an accruals basis. Expenses arecharged through the revenue account except the following which are chargedthrough the realised capital reserve: • 75 per cent. of management fees (the balance of the management fee ischarged to the Revenue account) which represents the proportion of theinvestment management fee attributable to the enhancement of the value of theinvestments of the Company; and • expenses which are incidental to the purchase or disposal of an investment. Performance incentive fee In the event that a performance incentive fee crystallises, the fee will beallocated between revenue and realised capital reserves, based upon theproportion to which the calculation of the fee is attributable to revenue andcapital returns. Taxation Taxation is applied on a current basis in accordance with Financial ReportingStandard ('FRS') 16. Taxation associated with capitalised management fees isapplied in accordance with the SORP. In accordance with FRS 19, deferredtaxation is provided in full on timing differences that result in an obligationat the balance sheet date to pay more tax or a right to pay less tax, at afuture date, at rates expected to apply when they crystallise based on currenttax rates and law. Timing differences arise from the inclusion of items ofincome and expenditure in taxation computations in periods different from thosein which they are included in the financial statements. Deferred tax assets arerecognised to the extent that it is regarded as more likely than not that theywill be recovered. The specific nature of the taxation of VCTs means that it is unlikely that anydeferred tax will arise. The Directors have considered the requirements of FRS19 and do not believe that any provision should be made. Dividends In accordance with FRS 21 "Events after the balance sheet date", dividendsdeclared by the Company are accounted for in the period in which the dividendhas been paid or approved by shareholders in an Annual General Meeting. Reserves Realised capital reserve The following are accounted for in this reserve: (i) gains and losses compared to cost on the realisation of investments; (ii) capitalised management and performance fees together with the related taxation effect, charged in accordance with the above policies; and (iii) dividends paid to equity holders. Unrealised capital reserve Increases and decreases in the valuation of investments against cost held at theyear end are accounted for in this reserve. Special reserve This reserve is distributable and is primarily used for the cancellation of theCompany's share capital. Capital redemption reserve This reserve accounts for amounts by which the issued share capital isdiminished through the repurchase of the Company's own shares. Own Treasury shares reserve This reserve accounts for amounts by which the distributable reserves of theCompany are diminished through the purchase of the Company's own shares forTreasury. C Share conversion In accordance with the terms of the circular to shareholders issued in September2002 and the Articles of Association, on 31 March 2007, the C shares wereconverted to Ordinary shares on the basis of the net assets attributable to theOrdinary shares and the C shares, as disclosed in the audited accounts for theyear to 31 December 2006 and in accordance with the calculation as described andapproved by shareholders' resolution number 2(4) at the Extraordinary GeneralMeeting on 21 October 2002. C shareholders received 1.0715 Ordinary shares foreach C share. The new share certificates were dispatched on 20 April 2007. 3. Gains/(losses) on investments Year ended Year ended 31 December 2007 31 December 2006 £'000 £'000 Unrealised losses on investments held at fair value through profit and lossaccount (1,292) (1,596) Unrealised impairments on investments held at amortised cost (231) (81) Unrealised losses sub total (1,523) (1,677) Realised gains on investments held at fair value through profit and lossaccount 3,827 1 Impairments on investments held at amortised cost - - Realised gains sub total 3,827 1 Total 2,304 (1,676) 4. Investment income Year ended Year ended 31 December 2007 31 December 2006 £'000 £'000 Income recognised on investments heldat fair value through profit and loss Bank deposit interest 199 288Floating rate note interest 177 194UK dividend income 76 34Management fees received from equity 20 16investments 472 532Income recognised on investments heldat amortised cost Return on loan stock investments 1,734 1,361 2,206 1,893 Interest income earned on impaired investments at 31 December 2007 amounted to£46,000 (2006: £25,000). These investments are all held at amortised cost. 5. Tax charge/(credit) on ordinary activities Year ended Year ended 31 December 2007 31 December 2006 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 UK Corporation tax charge 292 (210) 82 439 (187) 252 The tax charge for the year is based on the UK standard rate of corporation taxat 30%. The actual tax charge for the current and previous year is below thestandard rate for the reasons set out in the following reconciliation: Year ended Year ended 31 December 2007 31 December 2006 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Return before taxation 1,783 1,663 3,445 1,492 (2,304) (812) Tax on profit at the standardrate 535 499 1,034 448 (691) (243) Factors affecting the chargeNon-taxable (gains)/losses (25) (697) (722) (9) 504 495 Consortium relief (218) - (218) - - - Marginal relief - (12) (12) - - - 292 (210) 82 439 (187) 252 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 allocatingtax relief to all expenses proportionately by reference to the applicablecorporation tax rate of 30% and allocating relief in accordance with the SORP. (iii) No deferred tax asset or liability has arisen in the year. 6. Amounts recognised as distributions to equity shareholders in the period Year ended Year ended 31 December 2007 31 December 2006 £'000 £'000 First Interim 2006 revenue dividend paid of 1.00p per Ordinaryshare and 1.50p per C share - 411 Second Interim 2006 revenue dividend paid of 2.0p per Ordinaryshare and 2.15p per C share - 658 Second Interim 2006 capital dividend paid of 0.85p per C share - 156 First Interim 2007 revenue dividend paid of 1.50 p per Ordinary share 478 - Second Interim 2007 revenue dividend paid of 1.0p per Ordinary share 276 - Second Interim 2007 capital dividend paid of 2.5p per Ordinary share 777 - Total dividends 1,531 1,225 7. Basic and diluted return per share Year ended Year ended 31 December 2007 31 December 2006 Revenue Capital Total Revenue Capital Total pence pence pence pence pence pence Ordinary Shares 4.8 6.0 10.8 3.2 (6.5) (3.3) Revenue return per share is based on the net revenue return attributable toequity holders for the financial year of £1,491,000 in respect of the weightedaverage number of shares in issue during the year, being 31,229,055 shares(excluding Treasury shares). Capital return per share is based on net capital profit attributable to equityholders for the financial year of £1,873,000 and based on the same weightedaverage number of shares as for revenue return shown above. Also disclosed under note 8, the C shares were converted into Ordinary shares on31 March 2007. In accordance with the FRS 22 "Earnings per share" the return pershare calculation for the year ended 31 December 2006 has been calculated as ifthe conversion had taken place during the year. The revenue return per share for the year ended 31 December 2006 is calculatedby aggregating the Ordinary share revenue return of £396,000 and the C sharerevenue return of £657,000 giving a total revenue return of £1,053,000. The capital return per share for the year ended 31 December 2006 is calculatedby aggregating the Ordinary share capital loss of £ 1,088,000 and the C sharecapital loss of £ 1,029,000, giving a total capital loss of £2,117,000. The weighted average number of Ordinary shares for the year ended 31 December2006 is calculated by converting the weighted average number of C shares for theyear ended 31 December 2006 being (18,136,143) at the conversion ratio (1.0715),into Ordinary shares (19,432,877). This total is added to the weighted averagenumber of Ordinary shares for the year ended 31 December 2006 (13,075,011) togive a total converted weighted average number of Ordinary shares of 32,507,888. All calculations exclude Treasury shares. There are no convertible instruments, derivatives or contingent share agreementsrelating to the Company's share capital in issue for Close Brothers DevelopmentVCT PLC and hence no dilution affecting the return per share. The basic returnper share is therefore the same as the diluted return per share. Return per share calculations treat Treasury shares as if they had beencancelled. 8. Share Capital 31 December 31 December 2007 2006 £'000 £'000 Authorised:50,000,000 Ordinary Shares of 50p each (2006: 25,000,000) 25,000 12,500(2006: 25,000,000 C Ordinary Shares of 12,50050p each) - 25,000 25,000 Allotted, called-up and fully-paid (including treasuryshares):32,438,309 Ordinary Shares of 50p each 16219 -(2006: 13,042,663 Ordinary Shares of 50p 6,521each -and 18,120,057 C Ordinary Shares of 50p 9,060each) - 16,219 15,581 Conversion of C shares and Ordinary shares In accordance with the terms of the circular to shareholders issued in September2002 and the Articles of Association, on 31 March 2007, the C shares wereconverted to Ordinary shares on the basis of the net assets attributable to theOrdinary shares and the C shares as disclosed in the audited accounts for theyear to 31 December 2006 and in accordance with the calculation as described andapproved by shareholders' resolution number 2(4) at the Extraordinary GeneralMeeting on 21 October 2002. C shareholders received 1.0715 Ordinary shares foreach C share. This conversion was achieved in two stages; firstly 1,295,584 'bonus' C shares were issued in order to provide the correct number of sharesdetermined by the conversion ratio, and then all C shares were converted intoOrdinary shares on a 1:1 basis. The new Ordinary share certificates in respectof the C share conversion were dispatched on 20 April 2007. In order to deal with the fractional shares arising from the rounding of theconversion, 331 shares were issued to Close Ventures Limited. These shares areto be sold at a later date for the benefit of the Company. The cost of issuing bonus shares was funded through the special reserve. During the year to 31 December 2007 the Company purchased 20,000 (2006: 313,118)of its own shares for cancellation at a cost of £17,654 (2006: £281,000)representing 0.6 per cent. of the share capital as at 31 December 2007. TheCompany also purchased 1,395,286 shares to be held in Treasury at a cost of£1,223,070 (2006: £ 388,000) representing 4.4 per cent. of the share capital asat 31 December 2007. The shares purchased for cancellation were funded from thespecial reserve and the shares purchased for Treasury were funded from the OwnTreasury shares reserve. Total treasury shares held as at 31 December 2007 are 1,838,323 sharesrepresenting 5.7 per cent. of the shares in issue. 9. Reconciliation of net return on ordinary activities before taxation to net cash inflow from operating activities Year ended Year ended 31 December 2007 31 December 2006 Shares Shares £'000 £'000 Return on ordinary activities before taxation 1,783 1,492Investment management fee charged to capital (604) (628)Performance incentive fee charged to capital (37) -Movement in loan stock carrying value (505) (278)Decrease/(increase) in debtors 276 (308)Increase/(decrease) in creditors 345 (253) Net cash inflow from operating activities 1,258 25 10. Post balance sheet events Since 31 December 2007 the Company has completed the following investments • Investment of £140,000 in Opta Limited • Investment of £33,289 in Consolidated Communications Limited 11. Related party transactions The Manager, Close Ventures Limited, is considered to be a related party, byvirtue of the fact that it is party to a management contract from the Company.During the year, services of a total value of £855,000 (2006: £838,000) werepurchased by the Company from Close Ventures Limited. At the financial yearend, the amount due to Close Ventures Limited disclosed as accruals and deferredincome was £278,000 (2006£16,000). Buy-backs of 1,335,286 Treasury shares during the year were purchased at anaverage price of 88.8 pence per share through Winterflood Securities Limited, asubsidiary of Close Brothers Group plc. Close Ventures Limited hold 331 fractional entitlement shares of the Company asa result of the conversion of C shares to Ordinary shares in March 2007. Theseshares will be sold for the benefit of the Company at a future date. Close Ventures Limited also holds 14,000 Ordinary shares as a result of thefailure of an original subscriber to pay cleared funds on initial subscription. 12. Financial Information The financial information set out in this announcement does not constitute theCompany's statutory accounts for the years ended 31 December 2007 and 31December 2006, but is derived from those statutory accounts. Statutory accountsfor the year ended 31 December 2006 have been delivered to the Registrar ofCompanies and those for the year ended 31 December 2007 will be deliveredfollowing the Company's Annual General Meeting. The auditors reported on thoseaccounts; their reports were unqualified and did not contain a statement underSection 237(2) or (3) of the Companies Act 1985. Whilst the financial information included in this preliminary announcement hasbeen computed in accordance with United Kingdom Generally Accepted AccountingPractice (UK GAAP), this announcement does not itself contain sufficientinformation to comply with UK GAAP. The Company expect to publish full financialstatements that comply with UK GAAP. 13. Publication The full Annual Report and Financial Statements is being sent to shareholdersand copies will be made available electronically at www.closeventures.co.uk. Thefull Annual Report and Financial Statements will also be made available to thepublic at the registered office of the Company, Companies House and via the FSAviewing facility. For further information please contact: Patrick ReeveClose Ventures Limited - tel: 020 7422 7830 This information is provided by RNS The company news service from the London Stock Exchange