Octopus Aim 2 Regulatory News (OSEC)

10 Mar 2008 18:01

Close IHT AIM VCT PLC10 March 2008 CLOSE IHT AIM VCT PLC ANNUAL RESULTS 10 March 2008 Preliminary announcement of the annual financial results for the twelve monthsto 30 November 2007. Copies of the full Report and Financial Statements can befound on www.closeventures.co.uk Close IHT AIM VCT PLC (the "Company"), which invests in companies listed on theAlternative Investment Market (AIM) or PLUS, across a variety of sectors, todayannounces annual results for the year ended 30 November 2007. This announcementwas approved for release by the Board of Directors on 10 March 2008. Financial Highlights Year ended Period ended 30 November 2007 30 November 2006 Revenue return per A and B Ordinary share 1.91p 1.86pCapital return per A and B Ordinary share (0.47)p (0.96)pDividends paid 2.00p 1.40pNet asset value per A and B Ordinary share 94.15p 94.70pNet assets £23,518,000 £23,675,000Movement in FTSE AIM Total Return Index (Source: Close Investments 3.40% 5.79%Ltd) In addition to the above, the Directors have declared a revenue dividend of 1.00pence per A and B ordinary share to be paid on 22 April 2008 to shareholders onthe register as at 25 March 2008. Shareholder value per share since launch Ordinary Shares Pence per share Total dividends paid during the period to 30 November 2006* 1.40Total dividends paid during the year to 30 November 2007 2.00Total dividends 3.40Net asset value at 30 November 2007 94.15Total cumulative return at 30 November 2007 97.55 * Investors subscribing by 17 January 2006 were entitled to this dividend.Investors subscribing thereafter were not entitled to this first dividend. Chairman's statement I have pleasure in presenting the second annual accounts of your Company. Thisset of accounts covers the year to 30 November 2007, which is the first completeyear of your Company's existence. It has been a busy time for our InvestmentManager and the Board believes that the portfolio being assembled will producegood results in the years to come. Dividends Your Board has declared a revenue dividend of 1.00 pence per A and B share. Thiswill be paid on 22 April 2008 to shareholders on the register as at 25 March2008. This dividend is derived from the income of the Company. Together with the1.00 pence per share declared in July 2007, the total dividend for the year is2.00 pence per share. As was explained in the prospectus, the income in thefirst few years may fall as investments are made and the cash balancecorrespondingly reduced. Your Company has realised some profits in the lastyear, which are distributable as dividends in the case of VCTs, but your Boardhas decided to carry forward this profit for the time being so that a dividendcan hopefully be maintained over the next few years when some of the Company'sinvestments may not be paying dividends themselves. Performance In my statement accompanying the interim results, I remarked that your Company'sNet Asset Value ("NAV") improvement had lagged behind the rise in the FTSE AIMAll-Share Index, not least as the Company still held a substantial cash balance. However, this cash has stood the Company in good stead in the turbulent andvolatile conditions which have prevailed in the stockmarket more recently. The result for the year to 30 November 2007 has been satisfactory, showing a NAVrise of 1.5% (after adding back dividends). Although not an absolutecomparison, it is worth noting that the FTSE AIM All-Share Index rose by 3.4% inthe same period. Your Company has maintained a holding in the Close SpecialSituations Fund, but this is expected to reduce as further qualifyinginvestments are made. However, this investment has been very worthwhile and hascontributed to the NAV growth over the life of your Company. The discount at which the shares trade to the NAV has remained narrow and notsurprisingly, there has been little trade in the shares. However, your Companywill buy back shares should shareholders have to sell and will endeavour to doso at a reasonable discount. Shareholders intending to sell their shares might wish to contact the InvestmentManager, Close Investments Limited on 020 7426 4139. The year covered by these accounts has seen significant stockmarket volatility.Shareholders will not need me to remind them of the disturbing events in thesecond half of your Company's year, which included a run on a UK bank and thevirtual freezing of UK bank lending. As this calendar year progresses, thatsituation may in fact lead to smaller companies raising additional equityinstead of bank finance, a proportion of which should qualify for VCTinvestment. In the meantime, the second half of your Company's financial year saw areduction in the number of new issues, although those that did raise capital didso at increasingly more attractive ratings. The Investment Manager's reviewcovers the portfolio and new purchases in detail, so I will not dwell on thosematters here. Suffice to say that your Board believes the Company is on trackto reach its minimum 70% qualifying investment level within the three years setby HM Revenue & Customs. Risks and uncertainties As required under the new Listing Rules under which your Company operates, weare required to comment on the potential risks and uncertainties which couldhave a material impact over the VCTs performance. The key risk derives from theneed to meet HM Revenue & Customs regulations requiring 70% of your Company tobe invested in qualifying holdings within three years. Although the UK economymay still be growing, it could be affected by the current unease in thefinancial and property markets. While this could give rise to additionalinvestment opportunities for a cash rich Company such as yours, a downturn couldaffect existing companies' trading prospects and share prices. Proposed change to the Company's Articles of Association I draw shareholders attention to the proposed resolution to change the Articlesof Association described in the full Report and Financial Statements. The newprovisions of the Companies Act 2006 include the requirement for Directors toavoid actual or potential conflicts of interest with effect from 1 October 2008.The Directors are proposing a resolution 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. Outlook The end of 2007 will be remembered for the disturbing and quite extraordinaryevents in financial markets worldwide. These have continued into 2008 and lookset to remain a serious threat to stockmarket stability for a while yet. Inaddition there remain a number of other serious economic issues to resolveglobally and, as recent months have shown, it is not possible for smallercompanies to divorce themselves from the concerns prevailing in the wider marketas a whole. Thus, despite the generally good trading results from many smallercompanies, their share prices have been substantially derated compared to theFTSE 100 companies and with the high level of risk aversion now paramount ininvestment decisions, it is possible that small companies may stay out of favourfor a while. Certainly a slowing rate of UK growth is not a helpful background,so it may be later this year before a material change in general sentiment isapparent. All this implies that fundraising by small companies, which isexpected to continue, albeit at a subdued level compared to previous years, willbe at ratings which will look very attractive as the investments mature over thenext few years. I look forward to seeing as many of you as possible at the AGM at 12.00 noon on18 April 2008 in 10 Crown Place, London, EC2A 4FT. Keith MullinsChairman10 March 2008 Investment Manager's report Market Overview After a poor performance in 2006 relative to its larger company peers, AIMrecovered strongly in the first half of 2007 and outperformed all other UKindices. However, it has been a classic tale of two halves, which has seen thenews dominated by the 'credit crisis', slowing global economic growth(particularly in the US), and UK economic concerns relating to property marketweakness and inflation. Against this backdrop, market sentiment has turnednegative. The result has been a "flight to quality" and quality, in suchconditions, does not include small companies as they are seen as riskier assets.As a result many institutional investors retained their position in largercompany stocks and sold down their smaller company holdings. As trading volumesin smaller company shares became a casualty, smaller company shares lost theirpremium ratings relative to larger companies. This has continued to be the casesince the end of November as concerns about the global economic environmentremain an issue. Performance Despite many companies within the portfolio reporting positive trading updates,the performance of your Company's NAV has undoubtedly been affected by the rapidchange in market sentiment and falling smaller company valuations. It is fair tosay that share prices at the moment can sometimes bear little relation toindividual companies' trading performances and are not directly related tosupply and demand as liquidity has become poorer. During the period underreview, your NAV increased by 1.5% (after adding back dividends) against a 3.4%rise in the AIM index. However, as highlighted earlier, the second half of thefinancial year has been particularly weak since the credit crisis hit theheadlines in August. As a result, your Company's NAV has fallen by 7.1% againsta 3.4% fall in the AIM index on a total return basis in the second half of theyear. This outperformance of AIM relative to the portfolio reflects the dominance ofoil and gas and mining stocks, which represent nearly a third of AIM by value.Buoyancy in commodity markets and continued increases in the price of oilprovided an uplift to the share price performance of these stocks on AIM lastyear. It is worth noting that these stocks do not qualify for VCT investment,therefore your portfolio was unable to benefit from this uplift. However, wehave been encouraged by the good trading results reported by various companieswithin the portfolio during the year under review. Portfolio Activity The portfolio consists of 23 qualifying holdings at a cost of £10.2m. At the endof November 2007, the portfolio was 45.8% invested in qualifying holdings, whichis satisfactory. During the year, 14 qualifying investments were made at a cost of £6.4m. In anenvironment of increasing volatility and greater concerns, it is not surprisingthat there have been few worthwhile investment opportunities. However, despiteslowing fundraising and IPO activity, particularly in the second half of theyear, the portfolio made six new investments in the second half out of a totalof 14 for the year. The new investments made in the second half of the year arecovered in more detail in the "New Investments" section. Among the existing holdings, there was mainly good trading news. Thedisappointments have been Telephonetics, Twenty and BGlobal. Telephonetics andTwenty have suffered from a sharp rise in costs resulting in lower profitmargins. However, both companies have announced several contract wins over thelast few months which is encouraging. BGlobal has been affected by theGovernment's consultation on smart metering which caused a delay in large scaleinstallations by a major energy supplier. However, we believe the company isstill well placed to benefit from future market growth. The company recentlyannounced that it is to supply end-to-end smart metering solutions to Scottish &Southern Energy's largest electricity business customers. Claimar Care Group continues to trade well despite ongoing local authoritybudget constraints. The company has made several acquisitions over the last yearand the pipeline of opportunities remains strong. Hexagon Human Capital is nowthe largest senior interim management provider in Europe following its lastacquisition. The company's latest results showed continued improvement in thecore interim management business. The company's share price fall over the lastfew months, though in line with the recruitment sector in general, poorlyreflects the visibility of its income relative to its sector peers. Neuropharm trials for autism appear to be on track and since float, the companyhas signed two major collaborative agreements in the US. IDOX has fullyintegrated CAPS Solution which it acquired in June 2007. The trading performanceof both IDOX and CAPS Solution has been strong and the installed base of itssystems continues to grow among local authorities. Both Vertu Motors and theIndividual Restaurant Company have issued positive trading statements despiteconcerns about the UK consumer which resulted in both companies sufferingsignificant share price weakness. New Investments The following new investments were made during the six months to the end ofNovember 2007: Clerkenwell Ventures Clerkenwell Ventures is a cash shell formed for the purpose of acquiringbusinesses in the restaurant sector. Craneware Craneware develops and supplies billing software analysis for the US healthcareservices sector. Fishworks Fishworks is a fish restaurant chain operator and fish/seafood retailer. Melorio Melorio floated on AIM in October and is a newly formed vehicle aimed atconsolidating the UK vocational training market. Optimisa Optimisa is a media consultancy and market research company specialising ininterpreting market data and forecasting business models for new and existingproduct lines. Plastics Capital Plastics Capital is a manufacturer and supplier of high margin plastic mouldingsand extrusions to the industrial sector. Outlook Undoubtedly, the economic outlook, both global and domestic, remains uncertain.Continued fears about a "fragile" UK consumer on the back of falling houseprices, rising energy and food prices and financial sector woes as a result ofthe credit crisis, have resulted in downward revisions to UK GDP growth in 2008.The Bank of England's decision to cut interest rates first in December and againin February, appears to mark the beginning of efforts to alleviate some of thesedifficulties. However, inflationary pressures remain high on their list ofconcerns, but a global economic slowdown in 2008 should mitigate some of thesepressures. Against this economic and market background, the rate of qualifying issues hasslowed down further over the last few months. However, since the year end, theportfolio has invested in three new qualifying holdings and at the time ofwriting was 49.9% invested for HM Revenue & Customs purposes. We believe this issatisfactory with three months still to go to achieve the 70% level. It remainsour challenge as Investment Managers to find and invest in well managed, soundcompanies which can grow steadily and we believe the current market environmentcreates the opportunity to find such companies at sensible valuations. Although the current economic environment and negative market sentiment is nothelpful to smaller companies, share prices may now discount most of the badnews. Moreover, even though there may be more uncertainty that has yet to beweathered, we believe that small companies operating in growing markets canstill prosper and this will be reflected in their share prices over time. Close Investments Limited10 March 2008 Statement of Directors' responsibilities The Directors have chosen to prepare the financial statements for the Company inaccordance with the United Kingdom Generally Accepted Accounting Practice ("UKGAAP"). Company law requires the Directors to prepare such financial statements for eachfinancial year which give a true and fair view in accordance with the UK GAAP ofthe state of affairs of the Company and of the total return of the Company forthat year and comply with UK GAAP and the Companies Act 1985. In preparing thosefinancial statements, the Directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and estimates that are reasonable and prudent; • state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; 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 whichdisclose with reasonable accuracy at any time the financial position of theCompany and which enable them to ensure that the financial statements complywith the Companies Act 1985. They are also responsible for the system ofinternal control, for safeguarding the assets of the Company and hence fortaking reasonable steps for the prevention and detection of fraud and otherirregularities. The Directors confirm that applicable accounting standards havebeen followed in the financial statements accompanying this report. The Directors are responsible for ensuring that any electronic publication ordistribution of financial information properly presents the financialinformation and any report by us thereon and for the controls over, and securityof, the website. The Directors are also responsible for establishing andcontrolling the process for electronically distributing annual reports and otherinformation. Income statement Year ended 30 November 2007 4 August 2005 to 30 November 2006 Revenue Capital Total Revenue Capital Total Note £'000 £'000 £'000 £'000 £'000 £'000 Gains on investments at fair - 230 230 - 56 56value 4 Investment income 5 858 - 858 760 - 760 Investment management fees (144) (432) (576) (114) (342) (456) Other expenses (138) - (138) (119) - (119) Return/(loss) on ordinaryactivities before finance costs and tax 576 (202) 374 527 (286) 241 Finance costs - - - (4) - (4) Return/(loss) on ordinary 576 (202) 374 523 (286) 237activities before tax Tax (charge)/credit on ordinaryactivities 6 (97) 85 (12) (95) 65 (30) Return/(loss) attributable to equity shareholders 479 (117) 362 428 (221) 207 Basic and diluted return/(loss)per A and B Ordinary share(pence) 8 1.91p (0.47)p 1.44p 1.86p (0.96)p 0.90p All of the Company's activities derive from continuing operations. The Company has no recognised gains or losses other than the results for theyear as disclosed above. Accordingly a statement of total recognised gains andlosses is not required. The total column of the Income Statement represents the profit and loss of theCompany. The supplementary revenue return and capital return columns have beenprepared in accordance with the AITC Statement of Recommended Practice. Balance sheet As at As at Note 30 November 30 November 2006 2007 £'000 £'000Fixed AssetsInvestments at fair value through profit or 22,531 22,342loss Current assetsDebtors 123 139Cash at bank 1,754 1,551 1,877 1,690Creditors: amounts falling due within one year (890) (357) Net current assets 987 1,333 Net assets 23,518 23,675 Capital and reserves:Called up share capital 9 3 3Special reserve 23,604 23,623Realised capital reserve (418) (209)Unrealised capital reserve 80 (12)Revenue reserve 249 270 Equity shareholders' funds 23,518 23,675 Net asset value per Ordinary share (pence) 10 94.15p 94.70p Reconciliation of movements in shareholders' funds Called Share Realised Unrealised Revenue Total up share premium Special capital capital reserve capital reserve reserve reserve Note £'000 £'000 £'000 £'000 £'000 £'000 £'000 As at 30 November 2006 3 - 23,623 (209) (12) 270 23,675 Net return after taxation - - - (209) 92 479 362Shares purchased for - - (19) - - - (19)cancellation Dividends paid to equity 7 - - - - - (500) (500)holders As at 30 November 2007 3 - 23,604 (418) 80 249 23,518 As at 4 August 2005 - - - - - - -Net return after taxation - - - (209) (12) 428 207Issue of equity 3 24,998 - - - - 25,001Issue costs of equity - (1,375) - - - - (1,375)Transfer to special reserve - (23,623) 23,623 - - - -Dividends paid to equity 7 - - - - - (158) (158)holders As at 30 November 2006 3 - 23,623 (209) (12) 270 23,675 Cash flow statement Year ended 4 August 2005 to 30 November 2007 30 November 2006 Note £'000 £'000 Operating activities Investment income 808 192Interest received 79 438Investment management fees paid (631) (409)Other cash payments (138) (66) Net cash inflow from operating activities 11 118 155 Return on investments and servicing of financeInterest paid (1) (4) Taxation (29) - Capital expenditure and financial investmentPurchase of qualifying investments (5,770) (4,176)Purchase of non-qualifying investments (16) (18,272)Disposal of qualifying investments 419 380Disposal of non-qualifying investments 6,001 - Net cash inflow/(outflow) from investing activities 634 (22,068) Equity dividends paid (500) (158)Revenue dividends paid Net cash inflow/(outflow) before financing 222 (22,075) FinancingIssue of Ordinary share capital - 23,626Cancellation of shares (19) - Net cash (outflow)/inflow from financing (19) 23,626 Increase in cash 203 1,551 Opening cash balance 1,551 - Closing cash balance 1,754 1,551 Notes to the financial statements for the year ended 30 November 2007 The principal activity of the Company is that of a Venture Capital Trust. It hasbeen approved by HM Revenue & Customs as a Venture Capital Trust under section842AA of the Income Taxes Act 1988. 1. About the Investment Manager Close IHT AIM VCT PLC is managed by Close Investments Limited. Close InvestmentsLimited which is authorised and regulated by the Financial Services Authorityand is a subsidiary of Close Brothers Group plc. 2. Accounting convention The financial statements have been prepared under the historical costconvention, modified by the revaluation of certain investments, in accordancewith applicable United Kingdom law and Accounting Standards, and with theStatement of Recommended Practice "Financial Statements of Investment TrustCompanies" ("SORP") issued by the Association of Investment Trust Companies ("AITC") in January 2003 and revised in December 2005. Accounting policies havebeen applied consistently in current and prior periods. 3. Accounting policies The financial statements are prepared in accordance with United Kingdomapplicable accounting standards. The particular accounting policies aredescribed below: Investments In accordance with Financial Reporting Standard ("FRS") 26 "FinancialInstruments: Measurement", equity investments, units in an authorised UK smallercompany unit trust and debt securities are designated as fair value throughprofit or loss ("FVTPL"). Investments listed on recognised exchanges are valued at the closing bid pricesor last traded price at the end of the accounting period. The total column ofthe Income Statement represents the Company's profit and loss account. Fairvalue movements on equity investments and gains and losses arising on thedisposal of investments are reflected in the capital column of the IncomeStatement in accordance with the AITC's SORP. Investments are recognised as financial assets on legal completion of theinvestment contract and are de-recognised on legal completion of the sale of aninvestment. The Directors are conscious of the fact that because shares are traded on AIM,this does not guarantee their liquidity. The nature of AIM investments and unitsin an authorised UK smaller company unit trust are such that the prices can bevolatile and realisation may not achieve current book value, especially whensuch a sale represents a significant proportion of that company's marketcapital. Nevertheless, on the grounds that the investments are not intended forimmediate realisation, the Directors regard bid prices as the most objective andappropriate method of valuation. Investment income Dividends receivable on quoted equity shares and units from an authorised UKsmaller company unit trust, are taken to revenue on an ex-dividend basis.Returns on listed debt securities are recognised on a time apportionment basisfrom the date of purchase so as to reflect the effective yield on thesecurities. Investment management fees and other expenses All expenses are accounted for on an accruals basis. Expenses are chargedthrough the revenue account except as follows: • expenses which are incidental to the acquisition of an investment are included within the cost of the investment; • expenses which are incidental to the disposal of an investment are deducted from the disposal proceeds of the investment; and • expenses are allocated between capital and revenue where a connection with maintenance or enhancement of the value of the investments held can be demonstrated. In respect of the Investment Manager's fee, 75 per cent has been allocated to the realised capital reserve and 25 per cent to revenue in the Income Statement. Performance incentive In the event that a performance fee crystallises, the fee will be allocatedbetween revenue and realised capital reserves (net of corporation tax) basedupon the proportion to which the calculation of the fee in attributable torevenue and capital returns. Debtor and creditors Debtors are non-interest bearing, are short term in nature and are accordinglystated at their nominal value as reduced by appropriate allowances for estimatedirrecoverable amounts. The Directors consider that the carrying amount ofdebtors approximates to their fair value. Creditors are non-interest bearing and are stated at their nominal value. TheDirectors consider that the carrying amount of creditors approximates their fairvalue. Taxation Taxation is applied on a current basis in accordance with FRS 16 "Current Tax",and is based on the profit before taxation for the year. Taxation associatedwith capitalised expenses is applied in accordance with the SORP. In accordancewith FRS 19 "Deferred Tax", deferred taxation is provided in full on timingdifferences that result in an obligation at the balance sheet date to pay moretax or a right to pay less tax, at a future date, at rates expected to applywhen they crystallise based on current tax rates and law. Timing differencesarise from the inclusion of items of income and expenditure in taxationcomputations in periods different from those in which they are included in thefinancial statements. Deferred tax assets are recognised to the extent that itis regarded as more likely than not that they will be recovered. The specific nature of taxation of venture capital trusts means that it isunlikely that any deferred tax will arise. The Directors have considered therequirements of FRS 19 and do not believe that any provision should be made. Reserves The realised capital reserve contains gains and losses on the realisation ofinvestments, capital dividends paid to shareholders and investment managementfees allocated to the capital reserve and taxation thereon. The unrealisedcapital reserve contains increases and decreases in the valuation of investmentsheld at the period end. The special reserve is distributable and is primarilyused for the cancellation of the Company's share capital. The capital redemptionreserve accounts for amounts by which the issued share capital is diminishedthrough the repurchase of the Company's own shares. 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 dividend ispaid or approved by shareholders at an annual general meeting. 4. Gains on investments at fair value Year ended 4 August 2005 to 30 November 2007 30 November 2006 £'000 £'000 Realised gains on disposals 138 68Unrealised appreciation/(depreciation) 92 (12) Total 230 56 5. Investment income Year ended 4 August 2005 to 30 November 2007 30 November 2006 £'000 £'000 Dividend income 25 1Floating Rate Note interest 685 284Bank deposit interest 92 451Management fee rebate 56 24 Total 858 760 All of the Company's income is derived from operations based in the UnitedKingdom. 6. Tax charge/(credit) on ordinary activities Year ended 30 November 2007 4 August 2005 to 30 November 2006 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 UK corporation tax 97 (85) 12 95 (65) 30 Approved Venture Capital Trusts are exempt from taxation on investment gainsmade. The tax assessed for the period is lower than the standard rate of corporationtax in the UK of 30 per cent as it is subject to the smaller companies tax rateof 19 per cent to 31 March 2007 and 20 per cent from 1 April 2007 (2006: 19 percent). The actual tax charge for the current and previous year is below thesmaller companies rate for the reasons set out in the following reconciliation: Year ended 30 November 2007 4 August 2005 to 30 November 2006 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Return on ordinary 576 (202) 374 523 (286) 237activities before taxation UK corporation tax at 20% 115 (40) 75 99 (54) 45(2006: 19%) Factors affecting thecharge:Non-taxable income (18) - (18) (4) - (4)Non-taxable gains on - (45) (45) - (11) (11)investments Total 97 (85) 12 95 (65) 30 No provision for deferred tax has been made in the current or prior accountingperiod. 7. Dividends Year ended 4 August 2005 to 30 November 2007 30 November 2006 £'000 £'000 Dividends of 2.00 pence per share (2006:1.40 pence) 500 158 In addition to the above dividends paid March and August 2007, the Board hasdeclared a dividend of 1.00 pence per A and B Ordinary share to be paid on 22April 2008 to shareholders on the register as at 25 March 2008. 8. Basic and diluted return/(loss) per A and B Ordinary share Year ended 30 November 2007 4 August 2005 to 30 November 2006 Revenue Capital Total Revenue Capital Total (pence) (pence) (pence) (pence) (pence) (pence) Basic pence per Ordinary share 1.91 (0.47) 1.44 1.86 (0.96) 0.90 Revenue return per share is based on the net profit on ordinary activities aftertaxation of £479,000 (2006: £428,000) in respect of 25,053,501 (2006:23,046,946) being the weighted average number of A and B Ordinary shares inissue during the year. Capital return per A and B Ordinary share is based on the net capital loss onordinary activities after taxation for the year of £117,000 (2006: £221,000) inrespect of the same weighted average number of shares in issue as stated above. There are no dilutive elements and hence the basic return per share is the sameas the diluted return per share. A Ordinary shares and B Ordinary shares currently rank pari passu fordistribution and net asset value purposes, hence the return per share iscalculated on the number of both A and B shares issued. 9. Called up share capital 30 November 2007 30 November 2006Authorised275,000,000 A Ordinary shares of 0.01p each 27 27275,000,000 B Ordinary shares of 0.01p each 27 27Allotted, called up and fully paid £'000 £'000 7,299,461 (2006: 7,319,861) A Ordinary shares of 0.01p 1 1each17,680,650 (2006: 17,680,650) B Ordinary shares of 0.01p 2 2eachTotal 3 3 All classes of shares rank pari passu as to rights to attend and vote at anygeneral meeting of the Company, and to receive dividends. The capital and assets of the Company shall on a winding up be divided amongstthe holders of each class of share pro rata according to their shareholding. On 23 February 2007 the Company purchased for cancellation 20,400 A Ordinaryshares at a cost of £18,360. This represented 0.28 per cent of the A ordinaryshares. 10. Net asset value per Ordinary share Basic net asset value per share is based on net assets attributable to A and BOrdinary shareholders of £23,518,203 (2006: £23,675,116) and on 24,980,111(2006: 25,000,511) A and B Ordinary shares in issue at the year end. 11. Reconciliation of cash inflow from operating activities Year ended 4 August 2005 to 30 November 2007 30 November 2006 £'000 £'000 Return on ordinary activities before finance costs and 374 241taxationNet capital return before finance costs and taxation 202 286Investment management fees charged to capital (432) (342)Decrease/(increase) in operating debtors 16 (139)(Decrease)/increase in operating creditors (42) 109Net cash inflow from operating activities 118 155 12. Related party transactions Close Investments Limited, as Investment Manager of the Company is considered tobe a related party by virtue of its management contract with the Company. Duringthe year, services of a total value of £576,000 (2006: £456,000) were purchasedby the Company from Close Investments Limited. At the financial year end, theamount due to Close Investments Limited disclosed under creditors was nil (2006:£47,000), the amount due from Close Investments Limited disclosed under debtorswas £8,000 (2006: nil). As at 30 November 2007, the Company held 3,412,432 units in Close SpecialSituations Fund, an authorised unit trust managed by Close Investments Limited.The Company received a rebate of £56,000 (2006: £24,000)on the management feescharged by Close Special Situations Fund in the year under review. The CloseSpecial Situations Fund held an investment in Tenon Group PLC, a company ofwhich Andrew Raynor is Chief Executive Director. Buybacks of shares for cancellation during the year were transacted throughWinterflood Securities Limited, a subsidiary of Close Brothers Group plc, theultimate parent company of the Investment Manager, Close Investments Limited. Atotal of 20,400 (2006: nil) A ordinary shares were purchased at a price of 90pence per share. 13. Post balance sheet events The following investments have been completed since 30 November 2007: • Invested £750,000 in Research Now plc; • Invested £600,000 in Ritchey plc and • Invested £375,000 in Lombard Medical Technologies plc The following investments have disposed of since 30 November 2007: • Abbey National Treasury Floating Rate Note 22/09/08 for proceeds of £2,997,000 and • BBI Holdings plc for proceeds of £434,000 On 8 February 2008, it was announced that Hatpin plc had been temporarilysuspended from AIM. 14. Financial Information The information set out in this announcement does not constitute the Company'sstatutory accounts within the terms of Section 240 of the Companies Act 1985 forthe year ended 30 November 2007 and 30 November 2006, but is derived from thosestatutory accounts. Statutory accounts for the year ended 30 November 2006 havebeen delivered to the Registrar of Companies and those for the year ended 30November 2007 will be delivered following the Company's Annual General Meeting.The auditors reported on those accounts; their report was unqualified and didnot contain a statement under Section 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. 15. Publication The full Report and Financial Statements is being sent to shareholders andcopies will be made available electronically at www.closeventures.co.uk. Thefull Report and Financial Statements will also be made available to the publicat the registered office of the Company, Companies House and via the FSA viewingfacility. For further information, please contact: Andrew Buchanan / Freda Isingoma Karen WaggClose Investments Limited Polhill CommunicationsTel: 020 7426 4139 Tel: 0207 655 0540 This information is provided by RNS The company news service from the London Stock Exchange