RNS Number:5708U
Singer & Friedlander AIM VCT PLC
23 January 2004
Singer & Friedlander AIM VCT plc
Performance Summary
Total Net Assets of #5,865,315 (2002: #5,182,513)
Net dividends of nil for the year (2002: #nil)
Dividend return per ordinary share nil (2002: nil)
Total dividends to date: 32.4p
Chairman's Statement
I am pleased to report on the first period for some time for which we have
witnessed a sustained recovery in markets including the Alternative Investment
Market (AIM). During the second half of our year the AIM Index increased by
38.5% and over the year as a whole by 24.2%. Your Net Asset Value (NAV)
appreciated by 24.5% in the second 6 months and by 13.1% for the full year. Our
NAV performance did not match the sharp recovery in the AIM index primarily due
to the heavy exposure to cash and fixed interest investments (32.5%) and to a
lesser extent unquoted investments (5.6%). The portfolio of listed investments
rose by 49.3% during the second half year and by 27.5% over the full year. Our
unquoted portfolio exhibited a steady performance.
The investment climate is much improved since I last reported to you and
confidence in economic recovery has increased. Company results and newsflow have
improved over the last few months adding weight to the argument that conditions
are improving. Markets still remain significantly below their historic highs
and, in particular, and in spite of the recent strong rally, the AIM Index
remains some 74% below the high reached during March 2000. As a result of the
above factors your Board is confident that significant further recovery
potential exists and I hope to be able to report on continued progress over the
next year.
The Trust has complied with the Combined Code during the last financial year but
will not comply with the new recommendations for the current year. This failure
to comply is largely as a result of the small size of the Board, which the
Directors believe is appropriate for a Company of our size and type and is in
keeping with a desire to minimise unnecessary costs. Further details regarding
this subject appear in the Corporate Governance statement. In similar vein the
Board has sought to reduce the costs of the Company and has had success in
achieving reductions in Board costs, audit and monitoring fees and
administration expenses. Much of the benefit of these savings will only be
apparent in the current and future years. Shareholders should also be aware that
due to the enforcement of the expense cap limiting the costs of the fund the
investment manager, Singer & Friedlander, has not received a fee for management
services.
Following his retirement from the Board at the last AGM, I would like to take
this opportunity to thank my predecessor Roger Pedder for his sound advice and
guidance in the formative years of the Trust.
Having received shareholder approval at the last AGM the Trust applied for Court
approval for the ability to repurchase shares for cancellation. This exercise is
designed to improve liquidity in the Company's shares as a service to
shareholders. Court approval was received on the 10th December 2003.
The Directors are not proposing to pay a dividend this year but I would like to
reaffirm the Board's commitment to pay dividends from capital surpluses as and
when these are available. This is becoming a more realistic possibility now that
markets are recovering. Dividends totalling 32.4p have been paid to date.
J. Carrington
Chairman
Manager's Report
It is gratifying at long last to see a recovery in markets during the period.
Our portfolio has benefited from the rising AIM although many shares have not
yet responded to any great degree but we hope and believe that this will occur
over the next reporting period.
Our portfolio now comprises 27 "qualifying investments" which we believe gives a
diversified exposure to most industrial sectors. As the market continues to
recover I would anticipate more activity within the portfolio as we take
advantage of share price advances with appropriate sales and look to reinvest in
new investment opportunities. Over the last year we have taken profits in Aero
Inventory and Connaught whilst retaining significant exposure to these companies
which we continue to think have good prospects. We have used the proceeds to add
to holdings of Maelor and Motion Media whilst also introducing a new investment
in Cardpoint which manages a network of cash machines. All of these recent
additions stand at a profit over cost particularly so in the case of Motion
Media where we acquired the new shares at 3.5p and at our year end they stood at
12p.
In general and in fundamental terms most of our investments have performed in
line with expectations over the last year and several companies have achieved
profitability demonstrating the growing maturity of the Trust's investment
portfolio.
A.N. Banks
Singer & Friedlander Investment Management Limited
Investment Portfolio Summary
AIM Quoted Companies Sector Nature of Cost at Valuation Percentage Percentage
business acquisition at of of company
30th portfolio managed by
September Investment
2003 Manager
# # % %
Access Plus Media & Print related 348,500 129,625 2.21 5.31
photography marketing
services
Aero Inventory Distributors Distribution of 119,153 422,179 7.20 10.44
aircraft
components
Blooms of General retailers Garden centres 517,434 164,943 2.81 8.01
Bressingham
Cardpoint Speciality & other Independent ATM 27,565 41,087 0.70 4.32
finance deployer
Connaught Support services Facilities 150,000 256,875 4.38 0.82
management
Hartford Group Leisure Restaurant and 100,000 65,250 1.11 1.07
entertainment & bar operator
hotel
Intelligent Software & Web solutions 679,230 338,273 5.77 13.01
Environment computer services
Maelor Health Pharmaceutical 200,157 113,292 1.93 1.00
and medical
devices
Myratech.net Software & Solutions 468,000 12,150 0.21 1.27
computer services provider and
web enabler
Pennant Software & Simulation 218,446 20,378 0.35 0.44
International Group computer services training
Protec Support services Security 133,936 240,283 4.10 2.25
equipment &
management
Pubs 'n' Bars Leisure Managed pubs 418,942 386,358 6.59 7.87
entertainment &
hotel
SamedayBooks.co.uk General retailers On-line book 237,501 24,470 0.42 1.84
retailer
Springhealth Leisure Leisure Health & 344,250 51,638 0.88 3.40
entertainment & fitness clubs
hotel
Systems Union Group Software & Financial 292,500 214,875 3.66 0.46
computer services management and
business
software
solutions
Thomson Intermedia Support services Media 299,250 76,950 1.31 1.99
monitoring
company
Transcomm Telecommunication Vehicle 292,932 139,808 2.38 2.50
services tracking and
monitoring
Vianet Group Information Remote 530,285 51,354 0.87 10.40
technology & monitoring of
hardware equipment
Winchester Media & Film developer 219,774 52,121 0.89 1.65
Entertainment photography
Xpertise Support services I.T. training 615,000 112,979 1.93 19.40
company
6,212,855 2,914,888 49.70
All investments are in ordinary shares
Fully Listed Sector Nature of Cost at Valuation at Percentage Percentage of
Companies business acquisition of portfolio company
30th managed by
September Investment
2003 Manager
# # % %
IS Solutions Software & Web/IT management 380,000 22,500 0.38 0.81
computer services
services
Motion Media Information Video 350,375 198,129 3.38 1.03
technology & communication
hardware technology
provider
XKO Group Software & e-Business 300,000 176,250 3.00 0.89
computer solutions
services
1,030,375 396,879 6.76
All investments are in ordinary shares
OFEX Quoted Sector Nature of Cost at Valuation at Percentage Percentage of
Companies business acquisition 30th September of portfolio company managed
by Investment
2003 Manager
# # % %
Aquilo Health Accident 391,550 98,011 1.67 11.34
management
services
391,550 98,011 1.67
All investments are in ordinary shares
Private Companies Sector Nature of Cost at Valuation at Percentage of Percentage of
business acquisition 30th portfolio company
September managed by
2003 Investment
Manager
# # % %
Flexbenefits* Software & Employee 327,000 65,000 1.11 9.78
computer benefits and
services financial
services
Sportsweb Ltd Support Health & 200,000 240,120 4.09 11.36
services leisure
recruitment
Wineworld Beverages World of wine 340,908 25,000 0.43 0.96
leisure
attraction
867,908 330,120 5.63
All investments are in ordinary shares
Fixed Income Sector Nature of Cost at Valuation at Percentage Percentage
Investments and business acquisition 30th of portfolio of company
other September managed by
Non-qualifying 2003 Investment
investments Manager
# # % %
Debentures and
loan stocks
Barclays Bank 6.5%
BDS
2004 357,355 353,185 6.02 0.53
UK Government
loans
Treasury 5% stock 1,388,100 1,413,020 24.09 0.60
2004
Other Non
qualifying
Investments
Aquilo** Health Accident 21,813 4,985 0.08 11.34
management
services
Aquilo Loan 25,000 25,000 0.43 50.00
Notes**
Aero Inventory Distributors Distribution of 39,840 108,485 1.85 10.44
aircraft
components
Blooms of General Garden center 47,492 41,500 0.71 8.01
Bressingham retailers
Blooms of
Bressingham
Loan Notes** 2,508 1,900 0.03 23.95
Hartford Group** Leisure Restaurant & bar 372,250 34,104 0.58 1.07
entertainment & operator
hotel
2,254,358 1,982,179 33.79
Investments held
at nil valuation
Affinity Internet Software & Internet Service 239,240 - - -
computer Provider
services
ASAP International Support Consultancy, 500,000 - - -
services recruitment &
training
Firmgrowth (ITM Software & Student careers 293,600 - -
Communications) computer directory and
services internet portal
Global Money Speciality & Money transfer 250,000 - - -
Transfer other finance service
Monotub Industries Household goods Washing machine 237,425 - - -
& textiles manufacturer
Old Monk Leisure Managed pubs 150,000 - - -
entertainment &
hotel
Quadranet Software & EPOS and 463,994 - - -
computer reservation
services system provider
for restaurants
Stenoak Associates Construction & Services to the 615,000 - - -
building infrastructure
materials industry
Topnotch Health Leisure Health and 403,406 - - -
Club entertainment & fitness clubs
hotel
Travelstore.com Transport On-line travel 100,000 - - -
company
3,252,665 - - -
Summary Cost at acquisition Valuation at 30th September Percentage of portfolio
2003
# # %
Total Qualifying Portfolio 8,502,688 3,739,898 63.77
Fixed Interest/Non Qualifying 2,254,358 1,982,179 33.79
Portfolio
Investments held at nil valuation 3,252,665 - -
Sub Total 14,009,711 5,722,077 97.56
Net Current Assets 143,238 2.44
Total 14,009,711 5,865,315 100.00
* Changed name from Eurobenefits.
** Qualifying holdings must be first issued to the VCT and not purchased at a
later date in the secondary market. These holdings represent additional
purchases in the secondary market where the Investment Manager has made the
decision to increase the overall holding in these stocks.
Table of largest ten investments by value.
Name of undertaking Percentage of Percentage held Profit/Loss before Retained profit/ Net asset
Portfolio by company tax accumulated loss value
% % #000's #000's #000's
Treasury 5% Stock 24.08 0.02 - - -
2004
Aero Inventory 7.20 1.09 2,815 2,308 18,106
Pubs 'n' Bars 6.59 4.34 1,254 1,820 13,496
Barclays Bank 6.5% 6.02 0.07 - - -
BDS 2004
Intelligent 5.77 2.92 (2,874) (22,103) 96
Environment
Connaught 4.38 0.40 3,126 5,862 29,821
Protec 4.10 1.17 12 (1,593) 7,474
Sportsweb 4.09 6.20 160 (35) 542
Systems Union 3.66 0.22 4,316 14,328 80,924
Motion Media 3.38 0.78 (6,849) (20,105) 6,592
The aggregate value of these top ten holdings is #4,063,297.
All figures are taken from the most recently available audited accounts of the
underlying entity.
* All the above fixed interest investments are AAA rated with the exception of
Barclays 2004, which remains AA2.
Sector analysis Cost at acquisition Valuation at 30th September Percentage of portfolio
2003
# # %
Beverages 340,908 25,000 0.43
Construction & building materials 615,000 - -
Distributors 158,993 530,664 9.05
General retailers 804,935 232,813 3.97
Health 638,520 241,288 4.11
Household goods & textiles 237,425 - -
Information technology & hardware 880,660 290,570 4.95
Leisure entertainment & hotel 1,788,848 537,350 9.16
Media & photography 568,274 181,746 3.10
Software & computer services 3,662,010 849,426 14.48
Speciality & other finance 277,565 - -
Support services 1,898,186 927,207 15.83
Telecommunication services 292,932 139,808 2.38
Transport 100,000 - -
Fixed interest investments 1,745,455 1,766,205 30.10
14,009,711 5,722,077 97.56
Net current assets 143,238 2.44
Total 14,009,711 5,865,315 100.00
Access Plus Access Plus is a Bristol based
provider of print related marketing
services and products. The company
was admitted to AIM in November
1996 and has demonstrated a
consistent record of growth since
that time. The company has recently
completed a merger with AIM listed
competitor Triple Arc.
Aquilo (formerly Accidentcare) Aquilo has been formed from the
merger of Ecom Group and
Accidentcare. Accidentcare provides
a wide range of motor accident
management related services to
individuals via brokers, affinity
groups and insurers. It also
provides outsource claims
management services to insurers and
corporates. Ecom specialises in
providing smart IT solutions to the
financial services sector. Its
services include academic research
and development, consultancy,
project management and systems
design/build.
Aero Inventory Aero Inventory is primarily engaged
in procurement and inventory
management for the aerospace
industry. The company has
consistently won new business since
its admission to AIM and has
recently signed a contract with SR
Technic. Results to June 2003
showed profits up 74% and a
dividend increase of 23%. The
aerospace industry continues to
focus on costs and improving
efficiency, which should lead to a
continuation of new business wins.
Blooms of Bressingham Following the disposal of its
smaller sites Blooms now operates 7
retail garden centres. It also has
one greenfield site awaiting
development. Blooms is active in
the development of new plant
varieties, having won a total of 24
gold medals at Chelsea. The company
received a bid approach earlier
this year although acceptable terms
could not be negotiated.
Cardpoint Cardpoint is an independent owner
and operator of over 1700 ATMs in
the UK. The company makes a modest
charge for cash withdrawals with
the customer's permission. The
group is a member of LINK and its
machines are located in areas not
typically served by the banks.
Connaught Connaught is a facilities
management group providing a range
of services to the owners and
occupiers of property across
mainland UK. The services include
maintenance, fit-out, refurbishment
and cleaning. In addition,
following last year's acquisition
of GasForce it is the UK's largest
industrial and commercial gas
appliance maintenance specialist.
The company's order book has
continued to grow over the last
year.
Flexbenefits (formerly Eurobenefits) Flexbenefits has developed a system
for the management, delivery and
communication of employee benefits
and financial services information
in the UK and Europe. These
services enable employers to reduce
costs and improve employee
communication and understanding.
Following the sale of UK rights to
the product to Aegon the company
has carried out a share buyback,
which should enhance shareholder
value going forward. The shares are
valued on the basis of a discount
to guaranteed future revenues.
Hartford Group Hartford operates a portfolio of
restaurants and style-led bars
within London and the Home
Counties. The acquisition of
competitor Jamies Bars which had 17
London based properties has enabled
the company to move into
profitability following the
elimination of duplicated overhead
and other economies of scale.
Intelligent Environments Intelligent Environments is a
leading provider of integrated
e-finance products for the payment
card and retail investment markets
and has an excellent list of 'blue
chip' clients. Market conditions
have recently begun to improve and
the company reported its first
profit with its last results.
IS Solutions IS Solutions deliver web services
and projects and IT facilities
management services. The company
has a 'blue chip' customer base
including Marks & Spencer, Toshiba,
the NHS and the London Stock
Exchange. The markets in which the
company operates have continued to
be difficult during the last year
although some improvement is
expected next year. The company
continues to be debt free and cash
generative.
Maelor Maelor is a medical company
developing healthcare products in
niche areas, utilising novel
technology that will improve
infusion of fluids and off-patent
medicines. The company also
produces medical products and
devices with innovative delivery
systems thereby offering
significant advantages over current
products. The company is beginning
to see the development of
substantial revenues as its
products come to markets in the UK
and overseas.
Motion Media Motion Media is a world leader in
the design and development of
visual communications technology
and products, providing innovative
and practical solutions for
business, healthcare, security and
the home. The company provides a
full range of affordable,
easy-to-use products with
outstanding video and audio
quality. The company hopes to
announce significant orders for its
new products in the coming year.
Myratech.net Myratech is now focussed on the
established market of IT products
and services and is a Sage software
value added re-seller (VAR).
Current trading remains difficult
but the company has further reduced
costs and believes profitability
and cash generation are achievable.
Pennant International Group Pennant designs, develops,
produces, installs and supports
simulation and training products
for specialist engineering
applications. The principal markets
for its products are in the defence
and aerospace industries. The
company recently announced a return
to profits and enjoys a significant
and growing order book.
Protec The group's activities incorporate
SDA which designs, supplies,
installs and maintains integrated
security systems. Additionally
Security Support Services (SSS)
specialises in the provision of
facilities management services and
Falcon develops bespoke security
products and surveillance systems.
The company has recently received
an investment from a major property
investor which it is anticipated
will result in Protec being able to
invest in attractive PFI projects
using its security expertise.
Pubs 'n' Bars Pubs 'n' Bars is a chain of
community style pubs primarily in
the London area but also with
several units in the West Country.
The company has over 60 pubs most
of which are managed although some
are tenanted. The management's
strategy and skill lies in adding
value with the development of
unutilised space through the
introduction of food, accommodation
and improvement of operational
management. Recent trading has been
satisfactory compared to many of
their peers and plans to take on
the management of another pub chain
are being discussed.
Samedaybooks.co.uk Samedaybooks has a combined
internet and High Street approach
to retailing books. Interim results
to March 2003 showed good growth in
turnover and profit. The company is
optimistic about the outcome for
the full year but continues to
consider its strategic options.
Sportsweb Ltd Sportsweb is a specialist
recruitment consultancy to the
fitness and leisure industries. The
company has an established
traditional recruitment business
and has extended this to the
internet. Sportsweb has several
major clients who are actively
using the website to successfully
recruit staff achieving significant
benefits over traditional methods.
The company is trading profitably
and will seek a listing or trade
sale in due course. The shares are
valued at the same level as the
last funding round carried out in
March 2001 but with reference to
budgeted profitability compared to
a peer group for its current
financial year.
Springhealth Leisure Springhealth is a health and
fitness club operator, which owns
14 clubs in the UK. The management
team's strategy is to maximise
performance from its existing clubs
and taking the opportunity to
reduce debt with the sale of
certain non-core clubs if
opportunities arise. The last set
of results saw an improvement in
operating results.
Systems Union Group Systems Union is a leading
international financial management
and business software solutions
provider which owns the SunSystems
and Pegasus brands. The company has
undergone considerable change since
flotation on AIM in 1999. The group
continues to generate healthy
cashflows and profitability and is
in a position to pay a dividend
this year.
Thomson Intermedia Thomson provides media monitoring
services, accessed by or delivered
to subscribers via the internet. By
superseding paper based information
systems with its proprietary
software and delivery over the web,
Thomson enables subscribers to
enjoy more up-to-date and timely
information than traditional
methods allow. The customer can
also analyse, search and manipulate
the data provided and as such it is
far more useful. Recent interim
results showed further strong
growth in turnover and orders and a
close to break even position. The
company expects to be profitable in
the second half and beyond.
Transcomm Transcomm is a wireless data
network business and owns the
Mobitex network. Interim results to
June 2003 showed a continuation of
earnings growth together with
further cash generation and the
elimination of debt. The company
recently announced a takeover
approach which the Board is
considering.
Vianet Group Vianet is a provider of
telemetry-based solutions for
maintaining and supplying automatic
vending machines. The company
offers the machine operators and
brand owners a data management
service to improve machine usage
and profitability. The product has
been trialled by several customers
and rollouts are ongoing, the
company has recently entered into
an agreement with Alcatel who will
market the product significantly
aiding credibility.
Winchester Entertainment Winchester has been building and
exploiting an international
portfolio of commercial
entertainment based intellectual
properties. The company now focuses
on feature film production and UK
film distribution. The company has
suffered from the downturn in the
industry and is currently in
discussions with a similar business
regarding a merger.
Wineworld London plc Wineworld has created a visitor
attraction dedicated to the world
of wine. The operation called
Vinopolis City of Wine is based in
Southwark on the South Bank of the
Thames. The attraction consists of
an audio/visual tour of the world's
wine regions together with wine
tasting halls. In addition the
company earns revenues from its
restaurants, wine bars and retail
facilities as well as corporate
hospitality. The company is now
generating cash from operations and
expects to be profitable this year.
The shares are valued at the level
of the last funding round carried
out in July 2002 supported by a
reference to the company's
estimated current net asset value.
XKO Group XKO offers an end to end IT service
to mid-range corporates and SMEs.
The group has an increasing
installed base of systems producing
recurring revenues. In spite of
difficult market conditions the
company has grown in a profitable
and cash generative manner. Several
strategic and earnings enhancing
acquisitions have been made and the
recent final dividend was increased
by 40%.
Xpertise Group Xpertise is a leader in providing
accredited technical IT training to
business customers from centres in
the North West, the North East, the
Midlands and London. The company
has suffered along with its
competitors from poor market
conditions but following the
acquisition of Power Education
earlier this year further
consolidation is likely which
should enable the company to be
profitable next year.
Financial Statements
Profit and Loss Account Notes Year Ended Year Ended
30th September 30th September
2003 2002
# #
Revenue received on investments 2 137,199 156,445
Administrative expenses:
Investment management fees 3 - (72,993)
Other expenses 4 (196,248) (213,181)
(196,248) (286,174)
Net expense (59,049) (129,729)
Income from fixed asset investments
Gains on disposal of investments 8 57,997 141,285
(Loss)/profit on ordinary activities before taxation (1,052) 11,556
Tax on ordinary activities 6 - 8,048
(Loss)/profit on ordinary activities after taxation (1,052) 19,604
Dividends - Revenue - -
- Capital - -
(Sustained loss)/retained profit (1,052) 19,604
Transfer to capital reserve 13 (57,997) (86,540)
Sustained loss for the financial year (59,049) (66,936)
Basic and Diluted earnings per share 7 (0.01)p 0.12p
Statement of Total Recognised Gains and Losses Year Ended Year Ended
30th September 30th September
2003 2002
# #
(Loss)/profit for the year (1,052) 19,604
Unrealised gains/(losses) on revaluation of investments 8 683,854 (3,013,484)
Total recognised gains/(losses) during the year 682,802 (2,993,880)
Total recognised gain/(loss) per share 4.14p (18.16)p
Note of Historical Cost Profits and Losses Year Ended Year Ended
30th September 30th September
2003 2002
# #
(Loss)/profit for the year (1,052) 11,556
Add: realisation of unrealised gains in previous years 13 131,176 5,887
Historical cost profit before taxation 130,124 17,443
Historical cost profit retained after taxation and dividends 130,124 25,491
All returns are derived from continuing operations.
Balance Sheet
Notes As at As at
30th September 30th September
2003 2002
# #
Fixed Assets
Investments 8 5,722,077 5,152,769
Current Assets
Debtors 9 56,781 55,858
Cash at bank and in hand 16 146,866 40,400
203,647 96,258
Creditors: amounts falling due within one year 10 (60,409) (66,514)
Net current assets 143,238 29,744
Net assets 5,865,315 5,182,513
Capital and reserves
Called-up share capital 12 824,500 824,500
Share premium account 13 14,544,974 14,544,974
Special reserve 13 - 296,026
Capital reserve - realised 13 (1,256,523) (1,445,696)
Capital reserve - unrealised 13 (8,287,634) (8,840,312)
Revenue reserve 13 39,998 (196,979)
Equity shareholders' funds 17 5,865,315 5,182,513
Net asset value per ordinary share 14 35.57p 31.43p
Cash Flow Statement
Notes 2003 2002
# #
Operating activities
Investment income received 133,336 160,077
Deposit interest received 4,206 4,197
Other income received 2,500 362
Investment management fees paid (21,100) (104,723)
Other expenses paid (185,019) (241,018)
Net cash outflow 15 (66,077) (181,105)
Taxation
UK corporation tax received - 106,080
Net cash inflow - 106,080
Capital expenditure and financial investment
Purchase of investments 8 (132,829) (671,795)
Disposals of investments 8 305,372 718,328
Net cash inflow 172,543 46,533
Net cash inflow/(outflow) before liquid resources 106,466 (28,492)
Management of liquid resources
Movement in money market 16 (92,321) 25,429
Increase/(Decrease) in cash 16 14,145 (3,063)
Notes to the Financial Statements
1 Accounting policies
A summary of the principal accounting policies, all of which have been
applied consistently throughout the period, is set out below (2002: same).
a. Investment Company Status
In order to enable the Company to make a capital distribution, the
Company has revoked its Investment Company status and is accordingly
unable to take advantage of the accounting exemptions that the status
permits. The results of the Company set out on pages 24 to 26 have
been prepared in accordance with Schedule IV of the Companies Act
1985. Reference to revenue and capital in the notes to these financial
statements reflect the basis upon which taxation is calculated and the
treatment applied in determining the amount available for revenue
dividend distribution.
b. Basis of accounting
The financial statements have been prepared under the historical cost
convention, modified to include the revaluation of fixed asset
investments, and in accordance with applicable Accounting Standards in
the United Kingdom.
c. Investments
Listed investments and investments traded on AIM and OFEX are stated
at middle market prices as at close of business on 30th September
2003. The directors are conscious of the fact that because shares are
traded on AIM and OFEX this does not guarantee their liquidity. The
nature of AIM and OFEX investments is that the prices can be volatile
and realisation may not achieve current book value, especially when
such shares represent a significant proportion of the company's market
capital. Nevertheless, on the grounds that the investments are not
intended for immediate realisation, they regard mid-market price as
the most objective and appropriate method of valuation. Unquoted
investments are stated at the Directors' valuation. Investments in
unquoted companies are valued in accordance with the British Venture
Capital Association ("BVCA") guidelines, where appropriate. New BVCA
guidelines came into effect from 1 August 2003 and these have been
adopted in the current year accounts.
Where the trading in the securities of an investee company is
suspended, the investment is valued at the Board's estimate of its net
realisable value.
d. Revenue
Dividends receivable on quoted equity shares are brought into account
on the ex-dividend date. Dividends receivable on unquoted equity
shares are brought into account when the Company's rights to receive
payment is established and there is no reasonable doubt that payment
will be received. Fixed returns on non-equity shares and debt
securities are recognised on a time apportionment basis so as to
reflect the effective yield, provided there is no reasonable doubt
that payment will be received in due course.
e. Expenses
All expenses are accounted on an accruals basis. Expenses are charged
through 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 on an investment.
* expenses are charged to capital reserve - realised, where a
connection with the maintenance or enhancement of the value of
the investments can be demonstrated. In this respect the
investment management fee has been allocated 75% to capital
reserve and 25% to revenue account, 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.
f 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. Timing differences
are differences between the Company's taxable profits and its results
as stated in the financial statements.
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 the 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.
Any tax relief obtained in respect of management fees allocated to
capital is reflected in the "Capital reserve - realised" and a
corresponding amount is charged against revenue. The tax relief is the
amount by which the corporation tax payable is reduced as a result of
these capital expenses.
Deferred tax assets are recognised where it is more likely than not
there will be sufficient profits to recover against.
g Capital Reserve
Realised
The following are accounted for in this reserve:
* Gains and losses on realisation of investments;
* Expenses and finance costs, together with the related tax effect
to this reserve in accordance with the policies; and
* Realised gains and losses on transactions undertaken to hedge an
exposure of a capital nature.
Unrealised
The following are accounted for in this reserve:
* Increases and decreases in the valuation of investments held at
the period end;
* Unrealised gains and losses on transactions undertaken to hedge
an exposure of a capital nature
2 Dividend
The Directors are not proposing to pay a dividend for the year ended 30th
September 2003 (2002: #nil).
3 Earnings per share
Basic earnings per ordinary share is based on the loss on ordinary
activities after taxation of #1,052 (2002: profit #19,604) divided by
16,490,000 (2002: 16,490,000) being the weighted average number of ordinary
shares in issue during the year
There is no difference between basic earnings per share and diluted
earnings per share due to no dilutive shares in issue.
4 Annual General Meeting
The Annual General Meeting of the Company will be held at 21 New Street,
Bishopsgate, London EC2M 4HR on Tuesday 2nd March 2004 at 11.30 am.
5 Statutory Report and Accounts
The financial information set out above does not constitute the Company's
statutory accounts for the year ended 30th September 2003. Statutory
accounts for 2003 will be finalised on the basis of the financial
information presented by the Directors in this preliminary announcement and
will be delivered to the Registrar of Companies following the Company's
Annual General Meeting.
The Company will be circulating the full Report and Accounts to
shareholders shortly and copies will be available from the Registered
Office of the Company, 21 New Street, Bishopsgate, London EC2M 4HR.
This information is provided by RNS
The company news service from the London Stock Exchange
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