Neptune-Calculus Income & Growth Regulatory News (NEP)

24 Mar 2009 17:25



Neptune-Calculus Income and Growth VCT plc

Final Results for the Year Ended 31 December 2008

Financial Highlights

		Ordinary Shares	C Shares
		Year ended	Year ended
		31 December	31 December
		2008	2008
Return per share		(19.2)p	(18.0)p
Net asset value per share		77.9p	73.7p
Cumulative dividends paid and proposed		8.0p	3.9p
		As at	As at
		28 February	28 February
		2009*	2009*
Unaudited net asset value per share♦		77.1p	73.4p
*Being the latest practicable date prior to publication. ♦ Including current year revenue

CHAIRMAN'S STATEMENT

In what has been a year of unprecedented turbulence in the economy and the financial markets, I report your Company's activities for the year ended 31 December 2008. Overall, the performance has resulted in a decline in net asset value of both the Ordinary and C Shares. At the end of 2007, an offer for subscription was launched which subsequently closed on 3 April 2008 raising, net of expenses, a combined total of £631,176 for the Ordinary and C Share Funds. 

Investment performance

The combined Ordinary and C Share portfolios have achieved the important target of 70 per cent to be invested in qualifying investments by 31 December 2008 which was an objective required to maintain our VCT status and the tax benefits for original subscribers.

Our qualifying investments are managed by Calculus Capital Limited. The performance of the AIM portfolios in the second half of the year has been very disappointing and reflects a combination of extreme volatility in these markets and some disappointing results and statements from some companies in the portfolios. The FTSE AIM All-Share Index fell 63 per cent. The overall decline in the value of our AIM portfolios during the year on a like-for-like basis was around 49 per cent and the bulk of the decline was in the second half of the year. 

Particularly disappointing was Portland Gas which announced in October that funding plans to build their gas storage project had fallen through. The best performing investment was EpiStem Holdings whose share price has increased by over 30 per cent during the year and was valued on 3 March 2009, the day following its announcement of its major collaborative agreement with Novartis, at 113 per cent more than book cost.

In our unquoted portfolio, the loan stocks and preference shares have retained their value. However some of our unquoted equity investments have been negatively impacted by the derating of comparable quoted companies as we base our valuations on those of similar quoted companies.

Non-qualifying investments are managed by Neptune Investment Management Limited. The performance of these funds has also suffered from the downturn of the overall market. In September we decided in view of market uncertainties to liquidate some of the non-qualifying portfolio and as a result raised approximately £1 million which is held in various cash funds.

You will see from the accounts that the net asset values of the Ordinary and C Shares at 31 December 2008 have declined to 77.9p per Ordinary Share and 73.7p per C Share respectively each representing falls over the year of approximately 20 per cent.

C share conversion

As set out in the prospectus dated 5 October 2005, relating to the issue of the C Shares, the C Shares will be converted into Ordinary Shares on 30 April 2009. The net asset values at 31 December 2008 form the basis for calculating the conversion ratio for converting the C Shares to Ordinary Shares. C shareholders will therefore receive 0.9457 of an Ordinary Share for each C Share that they own on 30 April 2009. The share certificates for the Ordinary Shares arising on conversion will be posted to shareholders by 14 May 2009.

Dividend

In spite of difficult market conditions, the Directors are pleased to propose a final dividend of 1p per Ordinary Share which, subject to shareholder approval,  will be payable on 5 June 2009 to all shareholders, following conversion of the C Shares to Ordinary Shares. This is equivalent to a dividend of 0.9457p per C Share. The record date for the dividend is 8 May 2009.

Changes in accounting policy

You will notice some differences to the way in which the accounts are presented this year. In order to comply with FRS 25 we have been required to treat the C Shares as a liability of the Ordinary Shares rather than as equity. Your board does not consider this treatment to be helpful, particularly to the C shareholders. Accordingly we have provided supplemental information to give, as far as possible, the same information to the Ordinary and C Share holders as was included in last year's accounts.  The treatment does not affect the assets of the C shareholders which are managed and accounted for as a separate investment pool until they are converted into new Ordinary Shares.

VAT reclaim

In my interim statement, I mentioned that the Company was taking action to recover VAT which had been paid on management fees following the decision by HMRC to exempt VCTs from VAT on management fees. I am pleased to report that the Company has already received a VAT refund of £68,665 from one of its Investment Managers and is holding discussions with the other. The timing and amount of the payment is still uncertain and accordingly no contingent asset has been included within these accounts. We do not expect the remaining refund to be material.

Outlook

As the Company has met its target of being 70 per cent invested in qualifying companies, the focus now  is to work to a greater extent with portfolio companies to enable them to thrive, particularly once we move out of the current economic downturn. The Company retains enough cash to play its role in supporting them if required and to take advantage of investment opportunities as they arise.

In the short term, economic conditions will remain difficult and stock markets are likely to remain volatile. The valuations of smaller companies have suffered more than those of larger companies and much of the bad news is already factored into their prices. As is mentioned in the Investment Manager's review (qualifying investments), we are starting to see the emergence of real value in the small and micro cap markets, which offers some grounds for optimism in the medium to longer term.

Philip Stephens

24 March 2009

  

INVESTMENT MANAGERS' REVIEWS

INVESTMENT MANAGER'S REVIEW (QUALIFYING INVESTMENTS)

Calculus Capital advises the Company in respect of qualifying investments made by the Company. The investment focus of the Investment Manager has been to seek out established companies, most of which are cash positive, in preference to early stage companies. Following a high level of investment since each of the funds was launched as we worked toward meeting the HM Revenue & Customs' requirement to be 70 per cent invested in qualifying investments, the priority now is to work closely with portfolio companies to ensure their stability and that they can thrive once we move out of the current economic downturn.

Market commentary

Much has been already written about the credit crunch and the destabilising effect this has had on financial markets. As such, there is little to be gained by further retrospective analysis. The impact on the Company's target market, has, however, been severe. 'Small cap' stocks have a higher perceived risk and the 'small cap' market has suffered a significant de-rating during the past year. For the record, the FTSE 100 Share Index showed a fall over the year of 30 per cent whilst the FTSE AIM All-Share Index fell 63 per cent.

Portfolio developments

At the year end, the Ordinary Share Fund's and C Share Fund's qualifying investments comprised 20 and 18 companies respectively. The major VCT test which the Company needed to meet was an HM Revenue & Customs requirement for the combined Ordinary Share and C Share Funds to be at least 70 per cent invested in qualifying investments by 31 December 2008. I am pleased to say that we achieved this target and the overall qualifying percentage for the two funds combined was 73.5 per cent.

Investments made during the year were:

Company and activity	Activities	Type of investment	Nature of investment	Ordinary Share Fund	C Share Fund
Relax Group plc (formerly Debts.co.uk plc)	Consumer debt advisory and corporate insolvency services	Equity	Follow on	£75,000	£175,000
Heritage House Media Limited	Publishing and media services to the heritage sector	Equity  Loan stock	Follow on	£21,051 £22,454	£42,017 £174,915
Optare plc (formerly Darwen Holdings plc)	Manufacturers of a range of diesel and hybrid low emission buses	Equity	New	-	£300,000
Brulines Group plc	Supplier of IT services to the brewing sector	Equity	Follow on	-	£130,000

In January 2008, Egdon Resources demerged into two AIM quoted companies: Egdon Resources which holds the group's oil and gas exploration and production assets and Portland Gas which holds the group's gas storage assets.

As mentioned, the AIM market suffered a severe drop in value during the financial year.  Disappointing news flow was heavily punished in terms of mark downs and positive news flow received little recognition from the market.  AIM and PLUS market quoted stocks have been marked to market as at 31 December 2008 using the 'bid' price.  The share prices of a number of AIM quoted investments declined during the year.  The most significant were Hexagon Human Capital, Portland Gas and Sport Media Group.  Whereas the decline in Hexagon was not attributable to company specific news flow but was the result of a sector and market de-rating, the decreases in share price for Portland Gas and Sport Media Group were caused by company specific issues. In the case of Portland Gas, the liquidity crisis has delayed the company's ability to finance its major development at Portland in Dorset.  In the case of Sport Media, circulation figures following the relaunch were disappointing.

Despite the prevailing market conditions, the performance of a number of AIM quoted companies continued to improve with the largest contributions coming from EpiStem, which is emerging as an important UK based life sciences company. EpiStem's share price showed consistently strong performance during the financial year and rose to a bid price of £2.65 representing a 113 per cent increase on book cost, on 3 March 2009 the day following its announcement of its major collaborative agreement with Novartis. The agreement with Novartis is likely to have a very positive impact on EpiStem's future performance.

The overall value of the unquoted portfolio rose during the year. The major part of this uplift occurred in the first half of the year and was reported on at the time of the Company's interim statement. The value of the portfolio also showed a small uplift in the second half of the year. A number of factors came into play. Several companies recorded good performances, particularly in terms of their gross margins and operating profits despite more challenging trading conditions. Triage Holdings and RMS Group Holdings, in particular, achieved strong cash generation which reduced their net debt. On the negative side, all companies have set more conservative budgets for 2009 than would have been expected at the interim stage and the prevailing multiples for comparable companies, which form the basis of their valuations, have also fallen. The net result of these factors was that Triage Holdings and RMS Group Holdings increased in value whilst the value of Waterfall Services (formerly Cater Plus Services) fell slightly. Further reductions in the fair value have been taken against Heritage House Media and Pharmasmart to reflect more difficult trading conditions. In the case of Heritage House Media, it has taken longer to integrate the three businesses acquired eighteen months ago than expected.

RMS Group Holdings, together with other UK ports operators, is currently involved in a dispute with the Valuation Office Agency (VOA). The VOA has undertaken a review of the commercial rates paid by all 55 port operators in the UK which is not yet fully complete. Operators which have been reviewed have received significantly increased assessments backdated to 2005. Understandably, the port operators have appealed against these assessments and, in particular, the backdating to 2005. In January, the Treasury Select Committee strongly criticised the VOA's actions and recommended scrapping the backdating and deferring the increases. The port operators have now sought a judicial review of the VOA's actions. We have reflected the possibility of a higher rates charge in our valuation, but if it proves more difficult to pass on all or part of the rates increase to customers, it could have a negative effect on value.

Developments since the year end

Since the year end, the Company has invested a further £120,000 in Managed Support Services as part of a £6 million fundraising to provide funds for the management to exploit acquisition opportunities at the depressed stage of the business cycle.

Outlook

As mentioned above, the priority now is to work closely with portfolio companies to ensure their stability and that they can thrive once we move out of the current economic downturn. The Company retains enough cash to play our part in supporting the existing portfolio if needed and to take advantage of future investment opportunities as they arise.

Stock markets are likely to remain volatile in the short term as the difficult economic conditions and the credit crisis continue to overhang the financial markets. The de-rating of smaller companies has been significant and much of the bad news is already priced into valuations of these stocks. We are starting to see the emergence of real value in the small and micro cap markets, which offers some grounds for optimism in the medium to longer term.

John Glencross

Calculus Capital Limited

24 March 2009

INVESTMENT MANAGER'S REVIEW (NON-QUALIFYING INVESTMENTS)

Portfolio developments

.

Neptune-Calculus Income and Growth VCT invests in the Neptune Income Fund and the Neptune Quarterly Income Fund.

Over the period under review, the FTSE All Share Index fell 30 per cent, with FTSE 100 faring significantly better than the rest of the market. This benefited the portfolio, which is biased towards large-cap stocks. As a guide to the portfolio's performance, the Neptune Income Fund and Neptune Quarterly Income Fund posted negative returns of 26 per cent and 27 per cent respectively for the 12 months. This performance saw both Funds outperforming the IMA UK Equity Income Sector which fell on average 29.0 per cent*. 

The past twelve months were characterised by challenging conditions as the global banking crisis spilled over into the real economy and the UK edged closer to a recession. The policy response was significant, with central banks slashing interest rates and governments worldwide loosening fiscal policy. The combination of lower interest rates and falling commodity prices should give the consumer more spending power through lower interest payments, reduced petrol prices and falling utility costs. However, this benefit will be countered by higher unemployment and an increased savings rate.

On a sector basis, the best performing areas in the market were the more defensive industries, such as healthcare, consumer staples and utilities, where we maintained overweight positions throughout the year. Our holdings in these areas performed particularly well and we continue to feel positive about their future performance. 

The worst performing sectors within the market were, undoubtedly, financials and materials. The banking sector performed particularly badly as the banks wrote down their assets and consequently required capital injections, thereby diluting their existing equity base. Our sector-based research had indicated these problems on the horizon and thus for well over a year we have had no exposure to banks, insurers and property stocks - a conviction call that served us particularly well. Mining shares also performed poorly in the second half of the year resulting in us consistently underweighting the sector. 

Outlook

In light of the financial crisis, we anticipate further volatility in the equity market. Therefore we remain focused on defensive sectors, such as healthcare and consumer staples, and on well-capitalised companies with solid balance sheets and sustainable dividends. We continue to maintain our focus on large-cap stocks with leading market positions which will provide a degree of stability amid the continued market turbulence. 

Robin Geffen

Neptune Investment Management Limited

24 March 2009

*Performance figures sourced from Lipper; as at 31.12.08; based in Sterling; net income reinvested; no initial charges

  

INVESTMENT PORTFOLIOS

Ordinary Share Fund portfolio
The ten largest holdings by value are included below: As at 31 December 2008
Percentage
	Cost	Valuation	of portfolio
	£	£	%
AIM investments (quoted equity)
EpiStem Holdings plc*	125,434	207,165	6.5
Pressure Technologies plc	100,401	163,822	5.2
Brulines Group plc*	124,777	126,563	4.0
Other AIM investments*	1,641,613	428,230	13.5
Unquoted equity investments
RMS Group Holdings Limited	32,000	175,040	5.5
Triage Holdings Limited	16,000	139,856	4.4
Waterfall Services Limited	17,500	70,022	2.2
Heritage House Media Limited	49,121	196	0.0
Other unquoted equity investments	50,000	15,000	0.5
Unquoted preference shares
Triage Holdings Limited preference shares	119,240	119,240	3.7
Waterfall Services Limited preference shares	40,833	40,833	1.3
Unquoted bonds
Heritage House Media Limited loan stock*	225,371	225,371	7.1
RMS Group Holdings Limited loan stock	128,000	128,000	4.0
Waterfall Services Limited loan stock	116,667	116,667	3.7
Triage Holdings Limited loan stock	24,760	24,760	0.8
Other unquoted loan stocks	120,000	120,000	3.8
Non-qualifying equity investments and loan stock*	(38,321)	(33,373)	(1.1)
Total qualifying investments	2,893,396	2,067,392	65.1
Quoted funds
Neptune Quarterly Income Fund Income Units	439,047	412,272	13.0
The Neptune Income Fund Income A Class	435,453	404,567	12.7
Unquoted funds
GS Sterling Liquid Reserves	256,728	256,728	8.1
Other unquoted funds	426	426	0.0
Non-qualifying equity investments and loan stock*	38,321	33,373	1.1
Total non-qualifying investments	1,169,975	1,107,366	34.9
Total investments	4,063,371	3,174,758	100.0

* The valuations of certain Ordinary Share Fund investments include small purchases made which are non-qualifying investments.  These cost £7,334 and are valued at £2,386.  The valuation of Heritage House Media loan stock includes £30,987 of rolled up interest which is non-qualifying.

  INVESTMENT PORTFOLIOS

C Share Fund portfolio
The ten largest holdings by value are included below:  As at 31 December 2008
Percentage
	Cost	Valuation	of portfolio
	£	£	%
AIM investments (quoted equity)
EpiStem Holdings plc*	125,215	206,859	3.4
Other AIM Investments	2,634,111	965,998	15.9
Unquoted equity investments
RMS Group Holdings Limited	68,044	372,015	6.1
Triage Holdings Limited	32,000	279,712	4.6
Waterfall Services Limited	32,629	130,098	2.2
Heritage House Media Limited	98,248	393	0.0
Other unquoted equity investments	250,000	62,500	1.0
Unquoted preference shares
Triage Holdings Limited preference shares	238,480	238,480	3.9
Waterfall Services Limited preference shares	75,834	75,834	1.3
Unquoted bonds
Heritage House Media Limited loan stock*	582,118	582,118	9.6
RMS Group Holdings Limited loan stock	272,000	272,000	4.5
Waterfall Services Limited loan stock	216,666	216,666	3.6
Triage Holdings Limited loan stock	49,520	49,520	0.8
Non-qualifying equity investments and loan stock*	(63,604)	(63,604)	(1.0)
Total qualifying investments	4,611,261	3,388,589	55.9
Quoted funds
Neptune Quarterly Income Fund Income Units	825,366	629,548	10.4
The Neptune Income Fund Income A Class	810,271	608,994	10.1
Unquoted funds
Fidelity Sterling Fund distributing shares class A	614,060	614,060	10.1
SWIP Global Liquidity Fund	500,000	500,000	8.3
GS Sterling Liquid Reserves	256,728	256,728	4.2
Non-qualifying equity investments and loan stock*	63,604	63,604	1.0
Total non-qualifying investments	3,070,029	2,672,934	44.1
Total investments	7,681,290	6,061,523	100.0

* The valuations of certain C Share Fund investments include small purchases made which are non-qualifying investments.  These cost £260 and are valued at £260.  The valuation of Heritage House Media loan stock includes £63,344 of rolled up interest which is non-qualifying.

Management of risk

The Company is exposed to a variety of risks and the principal risks identified by the Board are noted below.

The Company is required at all times to observe the conditions within the Income Tax Act 2007 for the maintenance of approved VCT status. This involves compliance with a number of tests which, if not met, could result in the loss of a number of tax reliefs which are currently available to both the Company and its shareholders under its VCT status. The tests are under continual review by the administrators and (qualifying) Investment Manager of the Company. The Board keep these matters under continual review through the provision of monthly management information and quarterly Board meetings. The Board has also retained the services of a VCT consultant to undertake an independent monitoring role.

The majority of the Company's investments will ultimately be in small and medium size companies as VCT qualifying holdings. These companies may not be publicly traded or freely marketable and realisations of such investments can be difficult and can take a considerable amount of time. They also, by their nature, tend to carry higher risk than a larger or longer established business. This risk is in part mitigated by diversifying the investments and maintaining around 75 per cent of the Company's portfolio in liquid assets to enable any short term cash requirements to be met.

In addition, the Company is subject to market risk constituting uncertainty about the future prices of financial instruments held by the Company. The Company has also invested in loan stocks and as a result is subject to credit risk. The majority of the loan stocks are fixed rate so the Board does not consider interest rate risk to be material. The Company has no exposure to foreign currency risk, nor does it have any interest bearing liabilities.

The Board regularly reviews the risks the business faces and their potential impact on the Company. The Board monitors the Company's performance through the use of regular financial information and administrator and management reports.

STATEMENT OF DIRECTORS' RESPONSIBILITIES 

Company law in the United Kingdom requires the Directors to prepare accounts for each financial year, which give a true and fair view of the state of affairs of the Company and of the return of the Company for that period. In preparing these accounts, the Directors have:

selected suitable accounting policies and applied them consistently;

made judgments and estimates that are reasonable and prudent;

followed applicable United Kingdom accounting standards; and

prepared the accounts on the going concern basis.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the accounts comply with the Companies Acts 1985 and 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for ensuring that the Directors' Report and other information included in the Annual Report is prepared in accordance with company law in the United Kingdom. They are also responsible for ensuring that the Annual Report includes information required by the Listing Rules of the Financial Services Authority.

The accounts are published on the www.calculuscapital.com website, which is a website maintained by the Company's Investment Manager, Calculus Capital Limited ("CCL"). The maintenance and integrity of the website maintained by CCL is, so far as it relates to the Company, the responsibility of CCL. The work carried out by the auditors does not involve consideration of the maintenance and integrity of this website and accordingly, the auditors accept no responsibility for any changes that have occurred to the accounts since they were initially presented on the website. Visitors to the website need to be aware that legislation in the United Kingdom governing the preparation and dissemination of the accounts may differ from legislation in their jurisdiction.

RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE ANNUAL FINANCIAL REPORT

We confirm that to the best of our knowledge that:

the accounts, prepared in accordance with applicable accounting standards , give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

the Directors' Report includes a fair review of the development, performance and financial position of the Company together with a description of the principal risks and uncertainties that it faces.

On behalf of the Board

Philip Stephens 

Chairman

24 March 2009

  INCOME STATEMENTS

for the year ended 31 December 2008
Ordinary Share Fund
			Year ended			Year ended
		31 December 2008			31 December 2007
		Revenue	Capital	Total	Revenue	Capital	Total
	Note	£'000	£'000	£'000	£'000	£'000	£'000
Losses on investments at fair value	8	-	(809)	(809)	-	(421)	(421)
Income	2	147	-	147	133	-	133
Investment management fee	3	(15)	(43)	(58)	(19)	(57)	(76)
Other expenses	4	(53)	-	(53)	(55)	-	(55)
Return/(deficit) on ordinary activities before taxation		79	(852)	(773)	59	(478)	(419)
Taxation on ordinary activities	5	(2)	-	(2)	(2)	-	(2)
Return/(deficit) attributable to Ordinary  shareholders		77	(852)	(775)	57	(478)	(421)
Return per Ordinary Share	7	1.91p	(21.12)p	(19.21)p	1.51p	(12.59)p	(11.08)p
C Share Fund
			Year ended		Year ended
		31 December 2008			31 December 2007
		Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000
Losses on investments at fair value	8	-	(1,635)	(1,635)	-	(752)	(752)
Income	2	302	-	302	279	-	279
Investment management fee	3	(28)	(85)	(113)	(38)	(115)	(153)
Other expenses	4	(113)	-	(113)	(119)	-	(119)
Return/(deficit) on ordinary activities before taxation		161	(1,720)	(1,559)	122	(867)	(745)
Taxation on ordinary activities	5	(3)	-	(3)	(3)	-	(3)
Return/(deficit) attributable to C shareholders*		158	(1,720)	(1,562)	119	(867)	(748)
Return per C Share	7	1.82p	(19.79)p	(17.97)p	1.42p	(10.34)p	(8.92)p

\* The return/(deficit) on ordinary activities attributable to C shareholders is shown as a finance charge in the Total Income Statement.

The relevant accompanying notes are an integral part of these statements which do not form part of the Company's statutory accounts but provide supplementary information.

INCOME STATEMENTS

for the year ended 31 December 2008
Total
			Year ended			Year ended
		31 December 2008			31 December 2007
							(restated)*
		Revenue	Capital	Total	Revenue	Capital	Total
	Note	£'000	£'000	£'000	£'000	£'000	£'000
Losses on investments at fair value	8	-	(2,444)	(2,444)	-	(1,173)	(1,173)
Income	2	449	-	449	412	-	412
Investment management fee	3	(43)	(128)	(171)	(57)	(172)	(229)
Other expenses	4	(166)	-	(166)	(174)	-	(174)
Return/(deficit) on ordinary activities before finance charges and taxation		240	(2,572)	(2,332)	181	(1,345)	(1,164)
Finance charges		(158)	1,720	1,562	(119)	867	748
Taxation on ordinary activities	5	(5)	-	(5)	(5)	-	(5)
Return/(deficit) attributable to Ordinary shareholders		77	(852)	(775)	57	(478)	(421)
Return per Ordinary share	7	1.91p	(21.12)p	(19.21)p	1.51p	(12.59)p	(11.08)p

*Details of the restatement are set out in notes 1 and 22.

The total column of this statement is the profit and loss account of the Company.

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year.

There is no statement of recognised gains and losses as there were no other gains and losses.

The relevant accompanying notes are an integral part of this statement.

  

RECONCILIATIONS OF MOVEMENTS IN SHAREHOLDERS' FUNDS

for the year ended 31 December 2008
Ordinary Share Fund
	Share	Share	Special	Capital	Revenue
	capital	premium	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
For the year 1 January 2008 to 31 December 2008
1 January 2008	379	21	3,187	100	34	3,721
Issue of shares	31	277	-	-	-	308
Expenses of share issue	-	(17)	-	-	-	(17)
Net (deficit)/return after taxation for the year	-	-	-	(852)	77	(775)
Dividends paid	-	-	-	(7)	(34)	(41)
31 December 2008	410	281	3,187	(759)	77	3,196
For the year 1 January 2007 to 31 December 2007
1 January 2007	379	21	3,187	681	33	4,301
Net (deficit)/return after taxation for the year	-	-	-	(478)	57	(421)
Dividends paid	-	-	-	(103)	(56)	(159)
31 December 2007	379	21	3,187	100	34	3,721
C Share Fund
	Share	Share	Special	Capital	Revenue
	capital	premium	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
For the year 1 January 2008 to 31 December 2008
1 January 2008	839	-	7,097	(230)	74	7,780
Issue of shares	39	321	-	-	-	360
Expenses of share issue	-	(19)	-	-	-	(19)
Net (deficit)/return after taxation for the year	-	-	-	(1,720)	158	(1,562)
Dividends paid	-	-	-	(14)	(73)	(87)
31 December 2008	878	302	7,097	(1,964)	159	6,472
For the year 1 January 2007 to 31 December 2007
1 January 2007	839	-	7,097	675	85	8,696
Net (deficit)/return after taxation for the year	-	-	-	(867)	119	(748)
Dividends paid	-	-	-	(38)	(130)	(168)
31 December 2007	839	-	7,097	(230)	74	7,780

The relevant accompanying notes are an integral part of these statements which do not form part of the Company's statutory accounts but provide supplementary information.

RECONCILIATIONS OF MOVEMENTS IN SHAREHOLDERS' FUNDS

for the year ended 31 December 2008
Total
	Share	Share	Special	Capital	Revenue
	capital	premium	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
For the year 1 January 2008 to 31 December 2008
1 January 2008 (as previously stated)	1,218	21	10,284	(130)	108	11,501
Restatement of prior years*	(839)	-	(7,097)	230	(74)	(7,780)
1 January 2008 (restated)*	379	21	3,187	100	34	3,721
Issue of shares	31	277	-	-	-	308
Expenses of share issue	-	(17)	-	-	-	(17)
Net (deficit)/return after taxation for the year	-	-	-	(852)	77	(775)
Dividends paid	-	-	-	(7)	(34)	(41)
31 December 2008	410	281	3,187	(759)	77	3,196
For the year 1 January 2007 to 31 December 2007
1 January 2007 (as previously stated)	1,218	21	10,284	1,356	118	12,997
Restatement of prior years*	(839)	-	(7,097)	(675)	(85)	(8,696)
1 January 2007 (restated)*	379	21	3,187	681	33	4,301
Net (deficit)/return after taxation for the year	-	-	-	(478)	57	(421)
Dividends paid	-	-	-	(103)	(56)	(159)
31 December 2007	379	21	3,187	100	34	3,721

*Details of the restatement are set out in  notes 1 and 22.

The relevant accompanying notes are an integral part of this statement

.

  

BALANCE SHEETS

as at 31 December 2008
Ordinary Share Fund
		31 December	31 December
		2008	2007
	Note	£'000	£'000
Fixed Assets
Investments at fair value through profit or loss	8	3,175	3,659
Current Assets
Debtors	10	26	26
Cash at bank		57	57
		83	83
Creditors: Amounts falling due within one year
Creditors	11	(62)	(20)
Bank overdraft		-	(1)
		(62)	(21)
Net Current Assets		21	62
Net Assets		3,196	3,721
Represented by:
CALLED UP SHARE CAPITAL AND RESERVES
Share capital	13	410	379
Share premium	14	281	21
Special reserve	14	3,187	3,187
Capital reserve realised	14	129	231
Capital reserve unrealised	14	(888)	(131)
Revenue reserve	14	77	34
Total Ordinary shareholders' funds		3,196	3,721
Net asset value per Ordinary Share	15	77.94p	98.09p

The relevant accompanying notes are an integral part of this statement which does not form part of the Company's statutory accounts but provides supplementary information.

  

BALANCE SHEETS

as at 31 December 2008
C Share Fund
		31 December	31 December
		2008	2007
	Note	£'000	£'000
Fixed Assets
Investments at fair value through profit or loss	8	6,061	7,581
Current Assets
Debtors	10	43	26
Cash at bank		492	217
		535	243
Creditors: Amounts falling due within one year
Creditors	11	(124)	(44)
Net Current Assets		411	199
Net Assets		6,472	7,780
Represented by:
CALLED UP SHARE CAPITAL AND RESERVES
Share capital	13	878	839
Share premium	14	302	-
Special reserve	14	7,097	7,097
Capital reserve realised	14	(344)	(82)
Capital reserve unrealised	14	(1,620)	(148)
Revenue reserve	14	159	74
Total C Shareholders' funds		6,472	7,780
Net asset value per C Share	15	73.74p	92.69p

The relevant accompanying notes are an integral part of these statements which do not form part of the Company's statutory accounts but provide supplementary information.

The amounts attributable to the C shareholders are shown as a liability in the Total Balance Sheet.  BALANCE SHEETS

as at 31 December 2008
Total
			31 December	31 December
			2008	2007
				(restated)*
	Note		£'000	£'000
Fixed Assets
Investments at fair value through profit or loss	8		9,236	11,240
Current Assets
Debtors	10		69	52
Cash at bank			549	274
			618	326
Creditors: Amounts falling due within one year
Creditors	11	(186)		(64)
Liability to the C Share Fund	12	(6,472)		(7,780)
Bank overdraft		-		(1)
		(6,658)		(7,845)
Net Current Liabilities		(6,040)		(7,519)
Net Assets		3,196		3,721
Represented by:
CALLED UP SHARE CAPITAL AND RESERVES
Share capital	13		410	379
Share premium	14		281	21
Special reserve	14		3,187	3,187
Capital reserve realised	14		129	231
Capital reserve unrealised	14		(888)	(131)
Revenue reserve	14		77	34
Total Ordinary shareholders' funds			3,196	3,721
Net asset value per Ordinary share	15		77.94p	98.09p

*Details of the restatement are set out in notes 1 and 22.

The relevant accompanying notes are an integral part of this statement

CASH FLOW STATEMENTS

for the year ended 31 December 2008
Ordinary Share Fund
		Year ended	Year ended
		31 December	31 December
		2008	2007
	Note	£'000	£'000
Operating activities
Investment income received		114	108
Deposit income received		4	5
Other income received		1	-
Investment management fees paid		(16)	(94)
Administration fees paid		(9)	(13)
Other cash payments		(42)	(38)
Net cash inflow/(outflow) from operating activities	16	52	(32)
Investing activities
Purchase of investments		(369)	(2,683)
Sale of investments		75	2,875
Net cash (outflow)/inflow from investing activities		(294)	192
Equity dividends paid		(41)	(159)
Financing
Proceeds of share issue		308	-
Expenses of share issue		(24)	(4)
Net cash inflow/(outflow) from financing		284	(4)
Increase/(decrease) in cash	17	1	(3)

The relevant accompanying notes are an integral part of this statement which does not form part of the Company's statutory accounts but provides supplementary information.  CASH FLOW STATEMENTS

for the year ended 31 December 2008
C Share Fund
		Year ended	Year ended
		31 December	31 December
		2008	2007
	Note	£'000	£'000
Operating activities
Investment income received		214	260
Deposit income received		23	8
Other income received		2	-
Investment management fees paid		(48)	(198)
Administration fees paid		(18)	(26)
Other cash payments		(95)	(84)
Net cash inflow/(outflow) from operating activities	16	78	(40)
Investing activities
Purchase of investments		(2,078)	(4,033)
Sale of investments		2,028	4,407
Net cash (outflow)/inflow from investing activities		(50)	374
Equity dividends paid		(87)	(168)
Financing
Proceeds of share issue		360	-
Costs of share issue		(26)	(109)
Net cash inflow/(outflow) from financing		334	(109)
Increase in cash	17	275	57

The relevant accompanying notes are an integral part of this statement which does not form part of the Company's statutory accounts but provides supplementary information.  CASH FLOW STATEMENTS

for the year ended 31 December 2008
Total
		Year ended	Year ended
		31 December	31 December
		2008	2007
			(restated)*
	Note	£'000	£'000
Operating activities
Investment income received		328	368
Deposit income received		27	13
Other Income received		3	-
Investment management fees paid		(64)	(292)
Administration fees paid		(27)	(39)
Other cash payments		(137)	(122)
Net cash inflow/(outflow) from operating activities	16	130	(72)
Investing activities
Purchase of investments		(2,447)	(6,716)
Sale of investments		2,103	7,282
Net cash (outflow)/inflow from investing activities		(344)	566
Equity dividends paid		(41)	(159)
Financing
Distributions made to C shareholders		(87)	(168)
Net proceeds from C Share issue		334	(109)
Net proceeds from Ordinary Share issue		284	(4)
Net cash inflow/(outflow) from financing		531	(281)
Increase in cash	17	276	54

Details of the restatement are set out in notes 1 and 22.

The relevant accompanying notes are an integral part of this statement.

NOTES 

1 Accounting Policies

Basis of accounting

The accounts have been prepared under the historical cost convention, except for the valuation of investments at fair value, and in accordance with applicable UK accounting standards. Whilst Venture Capital Trusts ("VCTs") are not included within the scope of the Statement of Recommended Practice January 2003, revised December 2005 ("the SORP") for Investment Trust Companies produced by the Association of Investment Companies ("AIC"), VCTs share many of the characteristics of Investment Trust Companies and so the Directors have prepared the accounts on a basis compliant with the recommendations of the SORP.

Changes in accounting policy

Prior to 1 January 2008,, the C Shares were treated as forming part of the Company's overall share capital and therefore the reserves relating to these shares were included in the total balance sheet of the Company. This was in accordance with industry practice.

From 1 January 2008, in accordance with the technical interpretation of FRS 25, the C Shares are classed as debt, not equity as they are convertible into a variable number of Ordinary Shares and are therefore shown as a liability of the Company. This is because the C Shares will be converted into a variable number of Ordinary Shares. The C Shares will convert to equity on the 30th April 2009 when they are converted into Ordinary Shares in accordance with the Company's Articles. In the accounts and the notes to the accounts the values given for the Ordinary Share Fund and for the C Share fund are an allocation of the total values.Investments

As the Company's business is investing in financial assets with a view to profiting from their total return in the form of increases in fair value, financial assets are designated as fair value through profit or loss on initial recognition in accordance with FRS 26. The Company manages and evaluates the performance of these investments on a fair value basis in accordance with its investment strategy, and information about the investments is provided on this basis to the Board of Directors.

Investments held at fair value through profit or loss are initially recognised at fair value, being the consideration given and excluding transaction or other dealing costs associated with the investment, which are expensed and included in the capital column of the Income Statement.

After initial recognition, investments, which are classified as fair value through profit or loss, are measured at fair value. Gains or losses on investments classified as fair value through profit or loss are recognised in the capital column of the Income Statement, and allocated to the realised and unrealised capital reserves as appropriate.

Transaction and dealing costs, showing the total amounts included in disposals and additions are disclosed in Note 8 to the accounts, as recommended by the SORP

All purchases and sales of investments are accounted for on the trade date basis.

For quoted investments fair value is established by reference to bid, or last, market prices depending on the convention of the exchange on which the investment is quoted.

Unquoted investments are valued using an appropriate valuation technique so as to establish what the transaction price would have been at the balance sheet date. Such investments are valued with the International Private Equity and Venture Capital Association (''IPEVCA'') guidelines. Primary indicators of fair value are derived from earnings multiples, recent arm's length market transactions or from net assets. Where fair value cannot be reliably measured the investment will be carried at cost for recent investments, or the valuation as at the previous reporting date.

Those venture capital investments that may be termed associated undertakings are carried at fair value as determined by the Directors in accordance with the Company's accounting policy and are not equity accounted as required by the company law. The Directors consider that, as these investments are held as part of the Company's portfolio with a view to the ultimate realisation of capital gains, equity accounting would not give a true and fair view of the Company's interests in these investments. Quantification of the effect of this departure is not practicable. Carrying investments at fair value is specifically permitted under FRS 9 "Associates and Joint Ventures", where venture capital entities hold investments as part of a portfolio.

.

  Income

Dividends receivable on equity shares and on unquoted funds are recognised as income on the date on which the shares or units are marked as ex-dividend. Where no ex-dividend date is available, the income is recognised when the Company's right to receive it has been established.

Interest receivable from fixed income securities is recognised in income using the effective interest rate method.

Interest receivable on bank deposits is included in the accounts on an accruals basis.

Other income is credited to the revenue column of the Income Statement when the Company's right to receive the income is established.

Expenses

All expenses are accounted for on an accruals basis. Expenses are charged through revenue in the Income Statement except as follows:

expenses which are incidental to the acquisition or disposal of an investment are taken to the capital column of the Income Statement;

expenses are charged to the capital column in the Income Statement where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. In this respect management fees have been allocated 75 per cent to capital reserve (realised) and 25 per cent to revenue column in the Income Statement, being in line with the Board's expected long-term split of returns, in the form of capital gains and income respectively, from the investment portfolio of the Company;

expenses associated with the issue of shares are deducted from share premium.

Allocation of income and expenses between Ordinary Shares and C Shares

The assets attributable to the Ordinary shareholders and C shareholders are managed and accounted for as two separate investments pools and will be until the date on which the C Shares are converted into new Ordinary Shares. Income and expenses which relate directly to the Ordinary Share assets are allocated to those assets and income and expenses which relate directly to the C Shares are allocated to the C Shares assets. Other income and expenditure is allocated proportionately to each class of assets based on the number of shares in issue for that investment class divided by the total number of shares in issue.

Capital reserve

Realised

The following are accounted for as realised returns:

gains and losses on realisation of investments; and

expenses, together with the related tax effect, charged to this account in accordance with the above policies.

Unrealised

The following are accounted for as unrealised returns:

• increases and decreases in the valuation of investments held at the year end.

  Taxation

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future have occurred at the balance sheet date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversals of the underlying timing differences can be deducted. Timing differences are differences between the Company's taxable profits and its results as stated in the accounts.

Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantially enacted by the balance sheet date. Deferred tax is measured on a non-discounted basis.

No taxation liability arises on gains from sales of fixed asset investments by the Company by virtue of its venture capital trust status. However, the net revenue (excluding UK dividend income) accruing to the Company is liable to corporation tax at the prevailing rates.

Dividends

Dividends to shareholders are accounted for in the period in which they are paid or approved in general meetings.

Dividends payable to equity shareholders are recognised in the Reconciliation of Movements in Shareholders' Funds when they are paid, or have been approved by shareholders in the case of a final dividend and become a liability of the Company.

2 Income

Ordinary Share Fund
	Year ended	Year ended
	31 December 2008	31 December 2007
	£'000	£'000
Income from listed investments
UK dividend income	60	75
Unfranked investment income	10	16
Dividends reinvested	7	4
	77	95
Income from unlisted investments
Unfranked investment income	41	26
Interest reinvested	24	8
	65	34
Other income
Bank interest	4	4
Interest on VAT recovered	1	-
	5	4
Total income	147	133
Total income comprises
Dividends	77	95
Interest	70	38
	147	133

  2 Income (continued)

C Share Fund
	Year ended	Year ended
	31 December 2008	31 December 2007
	£'000	£'000
Income from listed investments
UK dividend income	135	185
Unfranked investment income	18	17
Dividends reinvested	15	22
	168	224
Income from unlisted investments
Unfranked investment income	58	33
Interest reinvested	50	15
	108	48
Other income
Bank interest	24	7
Interest on VAT recovered	2	-
	26	7
Total income	302	279
Total income comprises
Dividends	168	224
Interest	134	55
	302	279

Total
	Year ended	Year ended
	31 December 2008	31 December 2007
	£'000	£'000
Income from listed investments
UK dividend income	195	260
Unfranked investment income	28	33
Dividends reinvested	22	26
	245	319
Income from unlisted investments
Unfranked investment income	99	59
Interest reinvested	74	23
	173	82
Other income
Bank interest	28	11
Interest on VAT recovered	3	-
	31	11
Total income	449	412
Total income comprises
Dividends	245	319
Interest	204	93
	449	412

3 Investment management fee

Ordinary Share Fund
	Year ended			Year ended
	31 December 2008			31 December 2007
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Investment management fee	19	56	75	16	49	65
Irrecoverable VAT	3	7	10	3	8	11
VAT recovered	(7)	(20)	(27)	-	-	-
	15	43	58	19	57	76
C Share Fund
	Year ended			Year ended
	31 December 2008			31 December 2007
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Investment management fee	34	101	135	32	98	130
Irrecoverable VAT	4	16	20	6	17	23
VAT recovered	(10)	(32)	(42)	-	-	-
	28	85	113	38	115	153

Total
	Year ended			Year ended
	31 December 2008			31 December 2007
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Investment management fee	53	157	210	48	147	195
Irrecoverable VAT	7	23	30	9	25	34
VAT recovered	(17)	(52)	(69)	-	-	-
	43	128	171	57	172	229

For the year ended 31 December 2008, the Investment Managers waived £1,993 of their fees on the Ordinary Share Fund (2007: £22,375) and £21,728 of their fees on the C Share Fund (2007: £46,786). At 31 December 2008, there were £37,809 (31 December 2007: no fees) outstanding payable to the Investment Managers in respect of the Ordinary Share Fund and £57,321, (31 December 2007: no fees) outstanding payable to the Investment Managers in respect of the C Share Fund.

  

4 Other expenses

Ordinary Share Fund
	Year ended	Year ended
	31 December 2008	31 December 2007
	£'000	£'000
Administration expenses
Fees payable to the Company's auditor for the audit of the Company's individual accounts	6	4
Fees payable to the Company's auditor for other services:
Other services relating to taxation	1	1
Other services	1	-
Directors' remuneration and social security contribution	13	13
Other expenses	32	37
	53	55
C Share Fund
	Year ended	Year ended
	31 December 2008	31 December 2007
	£'000	£'000
Administration expenses
Fees payable to the Company's auditor for the audit of the Company's individual accounts	13	9
Fees payable to the Company's auditor for other services:
Other services relating to taxation	3	2
Other services	2	-
Directors' remuneration and social security contribution	28	29
Other expenses	67	79
	113	119

 

Total
	Year ended	Year ended
	31 December 2008	31 December 2007
	£'000	£'000
Administration expenses
Fees payable to the Company's auditor for the audit of the Company's individual accounts	19	13
Fees payable to the Company's auditor for other services:
Other services relating to taxation	4	3
Other services	3	-
Directors' remuneration and social security contribution	41	42
Other expenses	99	116
	166	174

  

5 Taxation on ordinary activities

Ordinary Share Fund

	Year ended	Year ended
	31 December 2008	31 December 2007
	£'000	£'000
Withholding tax on unfranked investment income	2	2
Total current tax charge	2	2
Revenue return on ordinary activities before taxation:	79	59
Revenue return on ordinary activities multiplied by Corporation tax at 28.5% (2007: 30%)	23	18
Effect of:
UK dividends not chargeable to tax	(18)	(22)
Excess expenses for the period	(5)	4
Income tax on unfranked investment income	2	2
Total amount of current taxation	2	2

C Share Fund

	Year ended	Year ended
	31 December 2008	31 December 2007
	£'000	£'000
Withholding tax on unfranked investment income	3	3
Total current tax charge	3	3
Revenue return on ordinary activities before taxation:	161	122
Revenue return on ordinary activities multiplied by Corporation tax at 28.5% (2007: 30%)	46	37
Effect of:
UK dividends not chargeable to tax	(41)	(56)
Excess expenses for the period	(5)	19
Income tax on unfranked investment income	3	3
Total amount of current taxation	3	3

Total

	Year ended	Year ended
	31 December 2008	31 December 2007
	£'000	£'000
Withholding tax on unfranked investment income	5	5
Total current tax charge	5	5
Revenue return on ordinary activities before taxation:	240	181
Revenue return on ordinary activities multiplied by Corporation tax  at 28.5% (2007: 30%)	69	55
Effect of:
UK dividends not chargeable to tax	(59)	(78)
Excess expenses for the period	(10)	23
Income tax on unfranked investment income	5	5
Total amount of current taxation	5	5

At 31 December 2008, the Company had £597,581 (31 December 2007: £501,471) of excess management expenses to carry forward against future taxable profits.

  

6 Dividends

	Year ended	Year ended
	31 December  2008	31 December  2007
	£'000	£'000
Declared and paid:
2007 Final dividend : nil (2006: 3.2p) per eligible Ordinary Share	-	121
2007 Final dividend: nil (2006: 1.0p)per eligible C Share	-	84
2008 Interim dividend of 1.0p (2007: 1.0p) per eligible Ordinary Share	41	38
2008 Interim dividend of 1.0p (2007: 1.0p) per eligible C Share	87	84
Proposed:
2008 Final dividend of 1.0p (2007: nil) per eligible Ordinary Share post conversion	124	-

The Company paid an interim dividend on 20 October 2008 of 1p per Ordinary Share (2007: 1p) and an interim dividend of 1p per C Share (2007: 1p). The Directors are proposing a final dividend of 1p per Ordinary Share in respect of the year ended 31 December 2008 payable to all shareholders following conversion of the C Shares. This is equivalent to 0.9457p per C Share (2007: Ordinary Shares nil; C Shares nil). Subject to shareholder approval, the dividends will be paid on 5 June 2009 to shareholders on the register on 8 May 2009.

7 Return per share

			Year ended		Year ended
		31 December 2008			31 December 2007
	Revenue	Capital	Total	Revenue	Capital Total
	pence	pence	pence	pence	pence pence
Ordinary Share	1.91	(21.12)	(19.21)	1.51	(12.59) (11.08)
C Share	1.82	(19.79)	(17.97)	1.42	(10.34) (8.92)
Total	1.91	(21.12)	(19.21)	1.51	(12.59) (11.08)

Ordinary Shares and Total

Revenue return per Ordinary Share and Total Revenue return per share is based on the net revenue on ordinary activities attributable to the Ordinary Shares of £77,000 (31 December 2007: £57,000) and on 4,034,196 (31 December 2007: 3,793,562) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the year.

Capital return per Ordinary Share and Total Capital return per share is based on the net capital deficit for the year of £852,000 (31 December 2007: £478,000) and on 4,034,196 (31 December 2007: 3,793,562) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the year.

Total return per Ordinary Share and Total return per share is based on the total deficit on ordinary activities attributable to the Ordinary Shares of £775,000 (31 December 2007: £421,000) and on 4,034,196 (31 December 2007: 3,793,562) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the year.

C Shares

Revenue return per C Share is based on the net revenue on ordinary activities attributable to the C Shares of £158,000 (31 December 2007: £119,000) and on 8,691,723 (31 December 2007: 8,393,209) C Shares, being the weighted average number of C Shares in issue during the year.

Capital return per C Share is based on the net capital deficit for the year of £1,720,000 (31 December 2007: £867,000) and on 8,691,723 (31 December 2007: 8,393,209) C Shares, being the weighted average number of C Shares in issue during the year.

Total return per C Share is based on the total deficit on ordinary activities attributable to the C Shares of £1,562,000 (31 December 2007: £748,000) and on 8,691,723 (31 December 2007: 8,393,209) C Shares, being the weighted average number of C Shares in issue during the year.

8 Investments at fair value through profit or loss

Ordinary Share Fund
	31 December 2008	31 December 2007
	£'000	£'000
AIM investments	926	1,530
Other investments quoted on a recognised exchange	817	1,170
Unquoted investments	1,432	959
	3,175	3,659
	£'000	£'000
Opening book cost	3,790	3,795
Opening unrealised (depreciation)/appreciation	(131)	477
Opening valuation	3,659	4,272
Movements in the year:
Purchases at cost	400	2,683
Sales - proceeds	(75)	(2,875)
Sales - realised (losses)/gains on sales	(52)	187
Unrealised depreciation	(757)	(608)
Closing valuation	3,175	3,659
Closing book cost	4,063	3,790
Closing unrealised depreciation	(888)	(131)
Closing valuation	3,175	3,659
	£'000	£'000
Realised (loss)/gain on disposal of investments	(52)	187
Movement in unrealised depreciation	(757)	(608)
Total losses on investments	(809)	(421)

8 Investments at fair value through profit or loss (continued)

C Share Fund
	31 December 2008	31 December 2007
	£'000	£'000
AIM investments	1,172	1,798
Other investments quoted on a recognised exchange	1,239	3,900
Unquoted investments	3,650	1,883
	6,061	7,581
	£'000	£'000
Opening book cost	7,729	7,944
Opening unrealised (depreciation)/appreciation	(148)	763
Opening valuation	7,581	8,707
Movements in the year:
Purchases at cost	2,227	4,033
Sales - proceeds	(2,112)	(4,407)
Sales - realised (losses)/gains on sales	(163)	159
Unrealised depreciation	(1,472)	(911)
Closing valuation	6,061	7,581
Closing book cost	7,681	7,729
Closing unrealised depreciation	(1,620)	(148)
Closing valuation	6,061	7,581
	£'000	£'000
Realised (loss)/gain on disposal of investments	(163)	159
Movement in unrealised depreciation	(1,472)	(911)
Total losses on investments	(1,635)	(752)

8 Investments at fair value through profit or loss (continued)

Total
	31 December 2008	31 December 2007
	£'000	£'000
AIM investments	2,098	3,328
Other investments quoted on a recognised exchange	2,056	5,070
Unquoted investments	5,082	2,842
	9,236	11,240
	£'000	£'000
Opening book cost	11,519	11,739
Opening unrealised (depreciation)/ appreciation	(279)	1,240
Opening valuation	11,240	12,979
Movements in the year:
Purchases at cost	2,627	6,716
Sales - proceeds	(2,187)	(7,282)
- realised (losses)/gains on sales	(215)	346
Unrealised depreciation	(2,229)	(1,519)
Closing valuation	9,236	11,240
Closing book cost	11,744	11,519
Closing unrealised depreciation	(2,508)	(279)
Closing valuation	9,236	11,240
	£'000	£'000
Realised (loss)/gain on disposal of investments	(215)	346
Movement in unrealised depreciation	(2,229)	(1,519)
Total losses on investments	(2,444)	(1,173)

Transaction costs

 During the year, the Company incurred transaction costs of £32 (Ordinary Share Fund £nil, C Share Fund £32) (31 December 2007: £785 (Ordinary Share Fund £91, C Share Fund £694)) on purchases of investments and £1,783 (Ordinary Share Fund £nil, C Share Fund £1,783) (31 December 2007: £7,489 (Ordinary Share Fund £2,996, C Share Fund £4,493)) on sales of investments. These amounts are included in "Losses on investments at fair value" as disclosed in the Income Statement.

9 Significant interests

The Company had the following interests of 3 per cent or more in the share capital of its portfolio companies:

	Class of shares	Number held	Proportion of class held
FSG Security plc	Ordinary 20p	1,333,334	7.21%
PharmaSmart Limited	Ordinary 5p	1,033,333	3.06%

  10 Debtors

Ordinary Share Fund

	31 December 2008	31 December 2007
	£'000	£'000
Accrued income	15	14
Other debtors and prepayments	11	12
	26	26

C Share Fund

	31 December 2008	31 December 2007
	£'000	£'000
Accrued income	9	5
Other debtors and prepayments	34	21
	43	26

Total

	31 December 2008	31 December 2007
	£'000	£'000
Accrued income	24	19
Other debtors and prepayments	45	33
	69	52

11 Creditors - amounts falling due within one year

Ordinary Share Fund

	31 December 2008	31 December 2007
	£'000	£'000
Accruals and other creditors	62	20

C Share Fund

	31 December 2008	31 December 2007
	£'000	£'000
Accruals and other creditors	124	44

Total

	31 December 2008	31 December 2007
	£'000	£'000
Accruals and other creditors	186	64

12 Liability to the C share Fund 

	31 December 2008	31 December 2007
	£'000	£'000
Amount due to the C Share Fund*	6,472	7,780

* The breakdown of the C Share Fund is shown in the C Share Fund balance sheet. The movement in the liability to the C Share Fund can be seen in the C Share Fund Reconciliation of Movements in Shareholders' Funds.  13 Called up share capital

Ordinary Share Fund
	31 December 2008		31 December 2007
Authorised:	Number	£'000	Number	£'000
Ordinary Shares of 10p each	50,000,000	5,000	50,000,000	5,000
Authorised, issued and fully paid:	31 December 2008		31 December 2007
Ordinary Shares of 10p each	Number	£'000	Number	£'000
As at 1 January	3,793,562	379	3,793,562	379
Issue of shares	307,244	31	-	-
As at 31 December	4,100,806	410	3,793,562	379
C Share Fund
	31 December 2008		31 December 2007
Authorised:	Number	£'000	Number	£'000
C Shares of 10p each	15,000,000	1,500	15,000,000	1,500
Authorised, issued and fully paid:	31 December 2008		31 December 2007
C Shares of 10p each	Number	£'000	Number	£'000
As at 1 January	8,393,209	839	8,393,209	839
Issue of shares	383,555	39	-	-
As at 31 December	8,776,764	878	8,393,209	839
Total
	31 December 2008		31 December 2007
Authorised:	Number	£'000	Number	£'000
Ordinary Shares of 10p each	50,000,000	5,000	50,000,000	5,000
Authorised, issued and fully paid:	31 December 2008		31 December 2007
Ordinary Shares of 10p each	Number	£'000	Number	£'000
As at 1 January	3,793,562	379	3,793,562	379
Issue of shares	307,244	31	-	-
As at 31 December	4,100,806	410	3,793,562	379

Pursuant to an offer for subscription, 264,797 Ordinary Shares and 289,961 C Shares were allotted on 18 March 2008 and 42,447 Ordinary Shares and 93,594 C Shares were allotted on 4 April 2008. The allotment price on each occasion was 100.1p per Ordinary Share and 93.8p per C Share

The assets attributable to the C shareholders will be managed and accounted for as a separate investment pool until the date on which the C Shares are converted into new Ordinary Shares. Dividends on the Ordinary Shares have to be paid out of the reserves attributable to the Ordinary shareholders and dividends on the C Shares have to be paid out of the reserves attributable to the C shareholders. The payment of dividends on each investment pool is subject to the Company as a whole having sufficient distributable reserves. It is expected that C Shares will be converted into new Ordinary Shares on 30 April 2009. The C Shares will convert into Ordinary Shares at a rate reflecting the relative values of the total net assets attributable to each class of share on 31 December 2008, so that each holding of C Shares is converted into a holding of Ordinary Shares with the same underlying net asset value. C shareholders will receive 0.9457 Ordinary Shares per C Share. 

The Ordinary Shares and the C Shares rank pari passu as to rights to attend and vote at any general meeting of the Company.

14 Reserves

Ordinary Share Fund

	Share		Capital	Capital
	premium	Special	reserve	reserve	Revenue
	account	reserve	realised	unrealised	reserve
	£'000	£'000	£'000	£'000	£'000
At 1 January 2008	21	3,187	231	(131)	34
Issue of shares	277	-	-	-	-
Expenses of issue of shares	(17)	-	-	-	-
Loss on realisation of investments	-	-	(52)	-	-
Transfer on disposal of investments	-	-	-	-	-
Increase in unrealised depreciation	-	-	-	(757)	-
Investment management fee charged to capital	-	-	(43)	-	-
Dividends paid	-	-	(7)	-	(34)
Retained net revenue for the year	-	-	-	-	77
At 31 December 2008	281	3,187	129	(888)	77

C Share Fund

	Share		Capital	Capital
	premium	Special	reserve	reserve	Revenue
	account	reserve	realised	unrealised	reserve
	£'000	£'000	£'000	£'000	£'000
At 1 January 2008	-	7,097	(82)	(148)	74
Issue of shares	321	-	-	-	-
Expenses of share issue	(19)	-	-	-	-
Loss on realisation of investments	-	-	(332)	-	-
Transfer on disposal of investments	-	-	169	(169)	-
Increase in unrealised depreciation	-	-	-	(1,303)	-
Investment management fee charged to capital	-	-	(85)	-	-
Dividends paid	-	-	(14)	-	(73)
Retained net revenue for the year	-	-		-	158
At 31 December 2008	302	7,097	(344)	(1,620)	159

  

Total

	Share		Capital	Capital
	premium	Special	reserve	reserve	Revenue
	account	reserve	realised	unrealised	reserve
	£'000	£'000	£'000	£'000	£'000
At 1 January 2008(as previously stated)	21	10,284	149	(279)	108
Restatement of prior years	-	(7,097)	82	148	(74)
At 1 January 2008 (restated)*	21	3,187	231	(131)	34
Issue of shares	277	-	-	-	-
Expenses of share issue	(17)	-	-	-	-
Gain on realisation of investments	-	-	(384)	-	-
Transfer on disposal of investments			169	(169)	-
Increase in unrealised depreciation	-	-	-	(2,060)	-
Investment management fee charged to capital	-	-	(128)	-	-
Finance charges	-	-	248	1472	-
Dividends paid	-	-	(7)	-	(34)
Retained net revenue for the year	-	-	-	-	77
At 31 December 2008	281	3,187	129	(888)	77

The Special reserve has been created to (i) create a distributable reserve which can be used by the Company to fund purchases of its own shares; (ii) to enable the Company to offset the effects of any future unrealised losses on future dividends payable in respect of shares; and (iii) since the Company revoked its status as an investment company, for any other purpose.

The Company is therefore able to make distributions out of the aggregate of its revenue reserves, special reserve, realised capital reserves and unrealised capital reserves.

Details of the restatement are set out in notes 1 and 22.

15 Net asset value per share

	31 December 2008	31 December 2007
	pence	pence
Ordinary Shares of 10p each	77.94	98.09
C Shares of 10p each	73.74	92.69
Total	77.94	98.09

The basic net asset value per Ordinary Share and the total basic net asset per Share is based on net assets (including current period revenue) of £3,196,000 (31 December 2007: £3,721,000) and on 4,100,806 (31 December 2007: 3,793,562) Ordinary Shares, being the number of shares in issue at the end of the year.

The basic net asset value per C Share is based on net assets (including current period revenue) of £6,472,000 (31 December 2007: £7,780,000) and on 8,776,764 (31 December 2007: 8,393,209) C Shares, being the number of shares in issue at the end of the year.

  

16 Reconciliation of net deficit before finance charges and taxation to net cash inflow/(outflow) from operating activities

Ordinary Share Fund

	Year ended  31 December 2008	Year ended 31 December 2007
	£'000	£'000
Net deficit before taxation	(773)	(419)
Net capital deficit	852	478
Decrease/(increase) in prepayments and accrued income	7	(17)
Increase/(decrease) in creditors	42	(15)
Investment management fee charged to capital	(43)	(57)
Income reinvested	(31)	-
Taxation	(2)	(2)
Net cash inflow/(outflow) from operating activities	52	(32)

C Share Fund

	Year ended 31 December 2008	Year ended 31 December 2007
	£'000	£'000
Net deficit before taxation	(1,559)	(745)
Net capital deficit	1,720	867
Increase in prepayments and accrued income	(10)	(8)
Increase/(decrease) in creditors	80	(36)
Investment management fee charged to capital	(85)	(115)
Income reinvested	(65)	-
Taxation	(3)	(3)
Net cash inflow/(outflow) from operating activities	78	(40)

Total

	Year ended 31 December 2008	Year ended 31 December 2007
	£'000	£'000
Net deficit before taxation	(2,332)	(1,164)
Net capital deficit	2,572	1,345
Increase in prepayments and accrued income	(3)	(25)
Increase/(decrease) in creditors	122	(51)
Investment management fee charged to capital	(128)	(172)
Income reinvested	(96)	-
Taxation	(5)	(5)
Net cash inflow/(outflow) from operating activities	130	(72)

  17 Reconciliation of net cash flow to movement in net funds

 

Ordinary Share Fund

	Year ended 31 December 2008	Year ended 31 December 2007
	£'000	£'000
Increase/(decrease) in cash in year	1	(3)
Net funds at beginning of year	56	59
Net funds at end of year	57	56

C Share Fund

	Year ended 31 December 2008	Year ended 31 December 2007
	£'000	£'000
Increase in cash in year	275	57
Net funds at beginning of year	217	160
Net funds at end of year	492	217

Total

	Year ended 31 December 2008	Year ended 31 December 2007
	£'000	£'000
Increase in cash in year	276	54
Net funds at beginning of year	273	219
Net funds at end of year	549	273

18 Analysis of changes in net funds

Ordinary Share Fund

	At 1 January 2008	Cash flows	At 31 December 2008
	£'000	£'000	£'000
Cash at bank	57	-	57
Bank overdraft	(1)	1	-
Total	56	1	57

C Share Fund

	At 1 January 2008	Cash flows	At 31 December 2008
	£'000	£'000	£'000
Cash at bank	217	275	492

Total

	At 1 January 2008	Cash flows	At 31 December 2008
	£'000	£'000	£'000
Cash at bank	274	275	549
Bank overdraft	(1)	1	-
Total	273	276	549

  

19 Financial commitments

At 31 December 2008 and 2007 the Company did not have any financial commitments which had not been accrued.

20 Analysis of financial assets and liabilities

The objective of the Company is to generate long term capital growth and tax free dividends for investors. The investment policy is to invest approximately 75 per cent of the Company's funds over a three year period in a diversified portfolio of holdings in qualifying investments, whether unquoted or traded on AIM. Investments are made selectively across a diverse range of sectors in companies which have the potential to generate growth and enhance their value. The investments in a particular company may be made in loan stocks or preference shares as well as equity shares where it is felt this would enhance shareholder return. The Company does not invest in start-up or seed capital situations. In accordance with the Company's risk averse approach, the Investment Manager will only invest when it believes it has identified the right investment opportunity. The balance of approximately 25 per cent of the Company's funds will be invested in a combination of Neptune income funds and money market instruments.

The Company's financial instruments comprise securities, cash balances and debtors and creditors that arise from its operations.

The Company has little exposure to cash flow or interest rate risk and no exposure to foreign currency risk.

The principal risks the Company faces in its portfolio management activities are:

- Market risk (including interest rate and price risk)

- Liquidity risk

- Credit risk

The Investment Manager's policies for managing these risks are summarised below and have been applied throughout the year.

The Board keeps the risks under continual review through the provision of monthly management information and quarterly board meetings.

(i) Market risk (including interest rate risk and price risk)

Market risk arises from uncertainty about the future prices of financial instruments held in accordance with the Company's investment objectives. It represents the potential loss that the Company might suffer through holding market positions in the face of market movements. These risks are monitored by the Investment Managers on a regular basis and the Board at meetings with the Investment Managers.

The Board reviews each investment purchase in the qualifying portfolio to ensure that any acquisition allows the Company to maintain an appropriate spread of market risk and that it falls within the VCT qualifying criteria at the time of purchase. It considers the associated business risks of each investment. These include, but are not restricted to, the industry sector, management expertise and financial stability of each company

The Company does not use derivative instruments to hedge against market risk.

The Company does not have any interest bearing liabilities. Interest is earned on cash balances and is linked to the banks' variable deposit rates. The board does not consider interest rate risk to be material. Interest rate risk arising on loan stock instruments is not considered significant with the main risk on these investments being credit risk.

The ten largest holdings by value and the amounts invested in quoted equity, unquoted equity, unquoted bonds, unquoted preference shares, quoted funds and unquoted funds for the Ordinary Share and the C Share portfolios are set out in the Investment Portfolios. The amounts invested in equity shares, loan stocks and cash by fund is also set out therein.

The total value of investments in the Ordinary Share fund at 31 December 2008 was £3,174,758. A 10 per cent increase/(decrease) in the aggregate value of these investments would have increased/(decreased) the net assets attributable to the Ordinary shareholders and of the Company and increased/(decreased) the deficit attributable to the Ordinary shareholders and of the Company by £317,476. This represents 9.9 per cent of the net assets attributable to the Ordinary shareholders and of the Company at 31 December 2008 and 41.0 per cent of the deficit attributable to Ordinary shareholders and of the Company for the year ended 31 December 2008.

The total value of investments in the C Share Fund at 31 December 2008 was £6,061,523. A 10 per cent increase/(decrease) in the aggregate value of these investments would have increased/(decreased) the net assets attributable to the C shareholders and increased/(decreased) the deficit attributable to the C shareholders by £606,152. This represents 9.4 per cent of the net assets attributable to the C shareholders at 31 December 2008 and 38.8 per cent of the deficit attributable to C shareholders for the year ended 31 December 2008. The increase/(decrease) would make no difference to the net assets of the Company or the deficit of the Company.

In current market conditions, an increase/(decrease) in the aggregate values of investments by 10 per cent is reasonably possible.

 (ii) Liquidity risk

The investments the Company holds includes AIM quoted securities where the liquidity is generally below that of securities listed/quoted in the main market and unquoted investments where there is no ready market for the securities. The ability of the Company to realise positions may therefore be restricted when there are no willing purchasers

Although the Company's AIM quoted investments and unquoted investments are less liquid than securities listed on the London Stock Exchange, the Board seeks to ensure that an appropriate proportion of the Company's investment portfolio is invested in cash and readily realisable securities, which are sufficient to meet any funding commitments that may arise.

(iii) Credit risk

The failure of a counterparty to a transaction to discharge its obligations under that transaction could result in the Company suffering a loss. The Board does not consider this risk to be significant. The Company manages this risk by ensuring that where an investment is made in an unquoted loan, it is made as part of the overall equity and debt package. The recoverability of the debt is assessed as part of the overall investment process and is then monitored on an ongoing basis by the Investment Manager who reports to the Board on any recoverability issues. It also ensures that cash at bank is held only with reputable banks with high quality external credit ratings. None of the Company's financial assets are secured by collateral or other credit enhancements.

The total exposure to loan stocks is set out below.

Financial assets

As required by FRS 29 an analysis of financial assets and liabilities, which identifies the risk of the Company's holding of such items is provided. The Company's financial assets comprise equity and preference shares, loan stock and cash and debtors.

The interest rate profile of the Company's financial assets is given in the table below:

Ordinary Share Fund
	As at 31 December 2008			As at 31 December 2007
	Fair value interest rate risk	Cash flow interest rate risk		Fair value interest rate risk	Cash flow interest rate risk
	£'000	£'000		£'000	£'000
Loan stock	615	-		644	-
Liquidity Funds	-	257		-	-
Cash	-	57		-	57
	615	314		644	57

  20 Analysis of financial assets and liabilities (continued)

 

C Share Fund
	As at 31 December 2008			As at 31 December 2007
	Fair value interest rate risk	Cash flow interest rate risk		Fair value interest rate risk	Cash flow interest rate risk
	£'000	£'000		£'000	£'000
Loan stock	1,120	-		1,022	-
Liquidity Funds	-	1,371		-	106
Cash	-	492		-	217
	1,120	1,863		1,022	323

Total
	As at 31 December 2008			As at 31 December 2007
	Fair value interest rate risk	Cash flow interest rate risk		Fair value interest rate risk	Cash flow interest rate risk
	£'000	£'000		£'000	£'000
Loan stock	1,735	-		1,666	-
Liquidity Funds	-	1,628		-	106
Cash	-	549		-	274
	1,735	2,177		1,666	380

The variable rate is based on the banks' deposit rate.

Financial liabilities

The Company finances its operations through its issued share capital and existing reserves. The only financial liabilities of the Company are creditors all of which are sterling denominated which are due within one year. The creditors are disclosed in Note 11. No interest is paid on these liabilities. There is no risk to the Ordinary shareholders from the C Share Fund as the net assets of the C share fund are wholly attributable to the C share Fund. 

All assets and liabilities are carried at fair value.

Capital management policies and procedures

The Company's capital management objectives are to ensure that the it will be able to continue as a going concern and to maximise the income and capital return to its Ordinary shareholders and C shareholders.

The Board, with the assistance of the Investment Manager monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes the planned level of gearing, which takes account of the Manager's views on the market; the need for new issues of equity shares; and the extent to which revenue in excess of that which is required to be distributed should be retained.

The Company's objectives, policies and processes for managing capital are unchanged from the preceding accounting period. The Company is subject to several externally imposed capital requirements. As a public company, the Company has to have a minimum share capital of £50,000 and in order to be able to pay dividends out of profits available for distribution by way of dividends, the Company has to be able to meet one of the two capital restriction tests imposed on investment companies by company law. These requirements are unchanged since last year, and the Company has complied with them.

  

21 Related party transactions

The Company's investments are managed by Calculus Capital Limited and Neptune Investment Management Limited. John Glencross, a Director of the Company, has an interest in Calculus Capital Limited. The amounts paid to the Managers are disclosed in Note 3.

Calculus Capital Limited also acts as Administrators to the VCT and received a fee of £35,082 (31 December 2007: £39,608).

The Company has invested in The Neptune Income Fund Income A Class and in the Neptune Quarterly Income Fund Income Units. Details of these investments are set out below. Neptune Investment Management charges an annual fee of 1.6 per cent on these investments.

	31 December			31 December
	2008			2007
	Ordinary Shares	C Shares	Total	Ordinary Shares	C Shares	Total
Neptune Income Fund Income Class A	£	£	£	£	£	£
Investment at cost	435,453	810,271	1,245,724	435,453	825,000	1,260,453
Valuation at 31 December	404,567	608,994	1,013,561	573,982	892,648	1,466,630
Neptune Quarterly Income  Fund Income units
Investment at cost	439,047	825,366	1,264,413	439,047	810,000	1,249,047
Valuation at 31 December	412,272	629,548	1,041,820	595,612	879,428	1,475,040

22 C Share Restatement

As a result of the change in accounting policy relating to the classification of the C Shares as debt not equity, the comparative figures have had to be restated. Reconciliations between the previously reported Total figures and the restated figures are set out below.

INCOME STATEMENT	Year ended
	31 December 2007
	(last period presented showing C Shares as equity)
Total	Previous	C Share	Restated
		liability
	Total	Total	Total
	£'000	£'000	£'000
Losses on investments at fair value	(1,173)	-	(1,173)
Income	412	-	412
Investment management fee	(229)	-	(229)
Operating expenses	(174)	-	(174)
Deficit on ordinary activities
before finance charges and taxation	(1,164)	-	(1,164)
Finance charges	-	748	748
Taxation on ordinary activities	(5)	-	(5)
Deficit attributable to Ordinary shareholders	(1,169)	748	(421)

BALANCE SHEETS	As at			As at
Total	31 December 2007			31 December 2006
	(restated)			(restated)
	(end of last period presented  showing C Shares as equity)			(date of transition)
	Previous	C Share	Restated	Previous	C Share	Restated
		liability			liability
	£'000	£'000	£'000	£'000	£'000	£'000
Fixed Assets
Investments at fair value through profit or loss	11,240	-	11,240	12,979	-	12,979
Current Assets
Debtors	52	-	52	27	-	27
Cash at bank	274	-	274	219	-	219
	326	-	326	246	-	246
Creditors: amounts falling due
within one year
Creditors	(64)	-	(64)	(228)	-	(228)
Liability to the C Share Fund	-	(7,780)	(7,780)	-	(8,696)	(8,696)
Bank overdraft	(1)	-	(1)	-	-	-
	(65)	(7,780)	(7,845)	(228)	(8,696)	(8,924)
Net Current Assets/(Liabilities)	261	(7,780)	(7,519)	18	(8,696)	(8,678)
Net Assets	11,501	(7,780)	3,721	12,997	(8,696)	4,301
Represented by:
CALLED UP SHARE CAPITAL AND RESERVES
Share capital	1,218	(839)	379	1,218	(839)	379
Share premium	21	-	21	21	-	21
Special reserve	10,284	(7,097)	3,187	10,284	(7,097)	3,187
Capital reserve realised	149	82	231	116	88	204
Capital reserve unrealised	(279)	148	(131)	1,240	(763)	477
Revenue reserve	108	(74)	34	118	(85)	33
Total Ordinary shareholders' funds	11,501	(7,780)	3,721	12,997	(8,696)	4,301

  

CASH FLOW STATEMENT
Total
	As at 31 December 2007
	(restated)
	Previous	C Share	Restated
		liability
	£'000	£'000	£'000
Operating activities
Investment income received	368	-	368
Deposit income received	13	-	13
Investment management fees paid	(292)	-	(292)
Administration fees paid	(39)	-	(39)
Other cash payments	(122)	-	(122)
Net cash outflow from operating activities	(72)	-	(72)
Investing activities
Purchase of investments	(6,716)	-	(6,716)
Sale of investments	7,282	-	7,282
Net cash inflow from investing activities	566	-	566
Equity dividends paid	(327)	168	(159)
Financing
Distributions made to C shareholders	-	(168)	(168)
Net proceeds from C Share issue	(109)	-	(109)
Net proceeds from Ordinary Share issue	(4)	-	(4)
Net cash outflow from financing	(113)	(168)	(281)
Increase in cash	54	-	54

23 Nature of information

These are not full accounts in terms of Section 240 of the Companies Account 1985. Full audited accounts for the year ended 31 December 2007 have been lodged with the Registrar of Companies. The Report and Accounts for the year ended 31 December 2008 will be sent to shareholders shortly and will be available for inspection at 104, Park Street, London W1K 6NF, the Company's registered office, and will be published on the www.calculuscapital.com website, which is a website maintained by the Company's Investment Manager, Calculus Capital Limited. The audited accounts for the year ended 31 December 2008 contain an unqualified audit report. 

ENDFR SEFFWLSUSESD