TIDMBNS
Baronsmead VCT 4 plc
Annual report & accounts for the year ended 31 December 2012
The Directors present the Annual Financial Report of the Company for the year
ended 31 December 2012. The full Annual Report and Accounts will shortly be
available via the Company's website at www.baronsmeadvct4.co.uk
Investment Objective
Baronsmead VCT 4 is a tax efficient listed company which aims to achieve
long-term investment returns for private investors.
Investment policy
? To invest primarily in a diverse portfolio of UK growth businesses, whether
unquoted or traded on AIM.
? Investments are made selectively across a range of sectors in companies that
have the potential to grow and enhance their value.
Full details on the Company's published investment policy and risk management
are contained in the Report of the Directors.
Dividend policy
The Board of Baronsmead VCT 4 has the objective to sustain a progressive
dividend policy for shareholders but this depends primarily on the level of
profitable realisations and it cannot be guaranteed. There may be variations in
the amount of dividends paid year on year.
Financial Highlights
+11.6% Net asset value ("NAV") per share increased 11.6 per cent to 104.92p at
31 December 2012, before deduction of the interim dividend.
7.0p Dividends totalled 7.0p for the year to 31 December 2012, including the
proposed final dividend of 4.0p.
7.2% Net annual dividend yield of 7.2 per cent and gross annual yield of 9.6
per cent.
183.5p NAV total return to shareholders for every 100.0p invested at launch.
Chairman's Statement
In the year to 31 December 2012 the Net Asset Value ("NAV") grew by 10.9p per
share (11.6 per cent) before payments of dividends. A final divided of 4p per
share is proposed resulting in a total dividend per share of 7p for the year.
The dividend will be paid predominantly out of profits from successful
realisations over the past three years.
INVESTMENT PERFORMANCE
The growth in the NAV per share over the year has been set out in the table
below.
Pence per
share
NAV as at 1 January 2012 94.01
Valuation uplift (11.61 per cent) 10.91
104.92
Interim dividend paid on 21 September 2012 (3.00)
Proposed final dividend of 4p, payable after shareholder
approval, on 19 April 2013 (4.00)
NAV as at 31 December 2012 assuming final dividend paid 97.92
We are pleased with the consistent performance of the portfolio despite the
poor economic environment since 2008. The valuations of the unquoted and AIM
portfolios increased by 8 and 32 per cent respectively over the year. The
largest gains came from the investments in IDOX and ILS, which increased in
value by GBP2.3 million and GBP2.0 million respectively based on significantly
better trading results. The overall portfolio of 64 companies remains in good
health with 55 demonstrating steady to strong growth.
This strong performance has resulted in a steady flow of successful
realisations which has enabled the Company to maintain a consistent tax free
annual dividend of 7p since 2007. This dividend equates to an annual tax free
dividend yield of 7.23 per cent on the mid share price of 96.88p on 31 December
2012.
Over the past three years the top ten investments, representing 53 per cent of
the portfolio, have generated average annual growth of 17 per cent in sales and
15 per cent in profits. Since Baronsmead VCT 4's investment, the jobs created
by these ten companies have increased by 15 per cent thereby validating the
wider aims of the VCT legislation to assist in generating growth in the UK
economy.
LONGER TERM PERFORMANCE AND BENEFIT OF THE VCT TAX RELIEFS
In order to meet the Company's investment objective, the Directors have sought
to provide shareholders with consistent investment returns over the long term
by investing in a diverse portfolio of established and profitable companies
capable of strong growth.
The NAV total return over ten years has been 182.1p for each 100p invested in
Baronsmead VCT 4 compared with 172.9p for the VCT generalist sector (source:
Association of Investment Companies). Over the same period, cumulative tax free
dividends paid to shareholders, including the proposed final dividend of 4p,
amount to 58p per share. Founder shareholders will have received 59p per share
in dividends on their original net cost of 80p per share in 2002. Dividends are
tax free for qualifying private investors.
FUND RAISING
The Board considered the amount of cash required by the Company for investment
over the next few years as well as the need to maintain sufficient liquidity to
pay dividends and costs and raised funds in February and November 2012.
The Company raised gross proceeds of GBP4.1 million (GBP3.9 million net) in
February 2012 by way of a top up offer and made a further offer for
subscription by way of a prospectus launched in November 2012 which had raised
GBP3.9 million gross proceeds by 21 December 2012. This offer closed on 28
January 2013 on reaching the target of GBP5.0 million (before costs).
SHAREHOLDER CHOICE
Since inception the Board has maintained a policy of buying back its own shares
through the market in order to maintain a mid-share price discount of
approximately 10 per cent to NAV. The number of shares bought back by the
Company has been low at an average of 1.88 per cent of shares in issue. The
shareholder survey carried out in October 2012 confirmed that a significant
majority of shareholders intend to hold their shares for the long term. As a
consequence, the Directors have decided to seek to buy back shares at a 5 per
cent discount to NAV in order to enable those shareholders who wish to sell
their shares to achieve a return closer to net asset value and to improve the
share price valuation for remaining shareholders and so increase the
attractiveness of the Company's shares.
The number of shares bought back over the next 12 months will be kept under
review and the revised policy may be subject to revision. Shares are only
bought back when the Directors believe it is in the best interests of all
shareholders and in consideration of market conditions prevailing at the time.
ANNUAL GENERAL MEETING
I look forward to meeting as many shareholders as possible at our 11th Annual
General Meeting to be held on Tuesday 16 April 2013 at the Plaisterers' Hall,
One London Wall, EC2Y 5JU at 11.00 a.m. This will be followed by presentations
from the Manager and an investee company, after which we will be delighted if
shareholders join us for a light lunch.
OUTLOOK
As anticipated in my interim report the continued scarcity of bank lending in
the UK and concerns regarding the European economy have resulted in uncertainty
and slower growth for the UK economy.
However against this backdrop there has been steady growth across many of the
Baronsmead VCT 4's portfolio companies as evidenced by the 'top ten' investee
companies showing increases in both turnover and profits. In addition the
relatively low levels of debt ensures that our investments are more resilient
if trading conditions continue to be difficult.
We view the year ahead with some caution but remain optimistic that our
portfolio of good quality companies can prosper even in the current tough
environment.
Robert Owen
Chairman
15 February 2013
Manager's Review
Considering the ongoing uncertainty during the period under review in the
national and European economies, the progress made by the Company's investee's
is creditable overall. The portfolio performed very well including significant
gains by a number of quoted shareholdings.
PORTFOLIO REVIEW
Overview
The net assets of GBP66 million were invested as follows:
% of Number of Annual
Asset class NAV NAV investees return %
Unquoted GBP36,971,000 56 24 8
Quoted GBP18,893,000 29 41 32
Cash and near cash GBP10,382,000 15 N/A N/A
During the year in total there were;
? New investments of GBP7.2 million in six new companies and eight follow ons;
? Divestments of GBP2.6 million from six full investments and a partial loan note
realisation.
Each quarter the direction of general trading and profitability of all investee
companies is recorded so that the Board can monitor the overall health and
trajectory of the portfolio. At 31 December 2012, 86 per cent of the 65
companies in the portfolio were progressing steadily or better.
Unquoted Private Equity
The unquoted portfolio has again performed well and there has been a steady
increase in unquoted values of 8 per cent. The unquoted portion of the
portfolio is valued using a consistent process every three months which the
Board oversees and approves. Almost all of the value creation in unquoted
investments has come from operational improvements (revenue and margin growth),
rather than financial leverage. For example, external bank debt within the top
ten investments on average is only 0.7 times earnings, which is very low within
the Private Equity arena.
The sale of TVC to the Economist Group realised GBP1.32 million in March 2012.
Quoted (AIM traded and other listed investments)
There has also been a significant uplift in the quoted portfolio of 32 per cent
partially reflecting a positive re-rating of the small cap sector during 2012.
This recovery has been helpful to the quoted portfolio following several years
of headwinds from a challenging AIM market environment and weak share prices.
The largest contributor to the uplift in the quoted portfolio was IDOX, a
supplier of document management software to the UK local government, and global
engineering sectors. The IDOX share price appreciated by 125 per cent during
the period aided by a combination of good organic growth and accretive
acquisitions which led to successive earnings forecast upgrades.
Over the three years to 31 December 2012, the approach in quoted investments
has been to concentrate on making a smaller number of larger AIM investments
and becoming a more engaged shareholder where possible and appropriate. This
has taken time to implement as only a small minority of AIM companies qualify
for VCT purposes. The average size by value of the AIM investments in the
portfolio in December 2009 was GBP230,000 but this had increased by 100 per cent
to GBP461,000 by December 2012.
Realisations of GBP881,000 came from divesting six AIM-traded companies resulting
in an overall total loss of GBP251,000. 13 per cent of the IDOX holding was sold
at a total profit of GBP475,000. Of the rest, two were sold through trade sales
(Clarity Commerce and Prologic), one through market sales (Real Good Food
Group) and two written off (Adventis and Music Festivals). A number of these
realisations were legacy holdings that were valued below cost and were divested
largely to reduce the tail of older and poorer performing investments as more
favourable market conditions presented the opportunity to do so.
Liquid assets (cash and near cash)
Baronsmead VCT 4 had cash and near cash resources of approximately GBP10 million
at the year-end. This asset class is conservatively managed to take minimal or
no capital risk.
Unquoted Investments
During the year GBP5.2 million was invested in six unquoted companies including
three new acquisition companies of which one was used to make the investment in
Impetus Holdings described below. Three new unquoted investments were;
* Happy Days, a children's nursery business, is based in the South West of the
UK. The business has 17 sites already and the investment will help accelerate
growth in new sites. This is a sector that the Manager has invested in before
with a successful investment in Kidsunlimited which was realised in 2008.
* Pho is a group of traditional Vietnamese restaurants based in London. The Pho
sites are informal, fast casual environments, specialising in Vietnam's
national dish of Pho, a tasty and nutritious noodle soup. Pho was awarded 'Best
Emerging Concept' at this year's Retailer of the Year Awards. The first Pho
location opened on St. John Street, Clerkenwell, London, in June 2005 and the
group now has a total of seven sites across London and the South East. The new
investment enables the team to open new sites, but with each site retaining a
unique and independent feel.
* Impetus Holdings is a specialist business consultancy, supplying Sales and
After Sales support services to the automotive industry. The business delivers
a diverse range of programmes and projects for vehicle manufacturers, with much
of their work taking place within Dealerships and National Sales Companies.
Impetus Holdings has achieved strong growth in recent years with revenues
increasing by 50 per cent since 2010. Clients include VW, Land Rover, Audi,
Toyota, BMW, Citroen, Fiat, Ford and Jaguar. Approximately 15 per cent of work
is delivered outside of the UK. The investment by ISIS will support the
business in its continued expansion into new markets, building on the strong
presence established in the UK and further development of new services to
clients.
Top Ten investments
The average investment value of the top ten companies held by Baronsmead VCT 4
is GBP3 million per company. Because these investments are normally held by the
other four Baronsmead VCTs, the total managed by ISIS in each investee is
significantly larger than this, which enables ISIS to dedicate significant
resource to manage each investment and their progress. The top ten investees
employ some 2,800 people, which is an increase of 15 per cent over the last
year. Their turnover and profits had also grown by some 15 per cent annually
for the last three years. In this year's Annual Report, each of the top ten
companies are described in more detail.
Investment Management
ISIS continues to invest in its skills and capacity with over 40 of its total
team of 60 devoted to investment management activities across all its investing
activities. Its focus is on generating strong investment returns from its
portfolio through a mixture of intelligent investment selection and hands on
portfolio management. Its ability to select good investments owes much to its
in depth sector research and specialisation and to its strong origination team
that help the team to generate proprietary deal flow.
Its investments are supported from the outset by an experienced internal value
enhancement team together with a panel of proven Operating Partners that work
exclusively with ISIS to assist management teams to deliver both strategic
development and operational efficiencies. Both have enabled ISIS to build a
strong track record of producing consistent returns from its unquoted
investments.
ISIS has pursued a strategy of sector specialisation over the past fourteen
years and in that time its executives have developed in-depth knowledge of
these sectors and valuable networks of contacts which have enabled it to
capitalise on opportunities that have presented themselves in an ever changing
environment. Its key sectors are:
* Business services
* Financial services
* Consumer markets
* Healthcare & Education
* Technology, Media and Telecommunications
OUTLOOK
A number of commentators believe that the UK economy is unlikely to experience
significant growth in the next decade. At this stage of the recovery, this is
hard to dispute and it is a fair working assumption for investors.
However many of our portfolio companies and their management teams are now more
experienced at handling the economic uncertainties including managing their
growth and operations in a tougher environment than in previous decades. Low
bank borrowings within the portfolio give them robust financial structures.
ISIS is an active investment manager who partners with our investee to help
them to grow revenue and earnings whilst continuing to enhance customer service
and build resilient businesses with good momentum. Our intention is to seek out
the best opportunities where growth is driven by innovation and gaining market
share through differentiation rather than relying on favourable economic
growth. We continue to be confident that good levels of performance can be
maintained despite the ongoing challenging environment.
ISIS EP LLP
Investment Manager
15 February 2013
Table of Investments and Realisations
Investments in the year to 31 December 2012
Book
cost
Company Location Sector Activity (GBP'000)
Unquoted investments
New
Impetus Holdings London Business Automotive consultancy and outsourced service 1,057
Limited Services provider
Consumer Investment London Consumer Company seeking to acquire businesses in the 1,000
Partners Limited Markets consumer markets sector
Riccal Investments London Business Company seeking to acquire businesses in the 1,000
Limited Services business services sector
Pho Holdings Limited London Consumer Restaurant group specialising in Vietnamese 987
Markets street food.
Happy Days Consultancy Newquay Healthcare & Provider of nursery based childcare in Cornwall 833
Limited Education & Plymouth across 16 settings
Follow on
Crew Clothing Holdings London Consumer Multi-channel retailer 360
Limited Markets
Total unquoted 5,237
investments
AIM-traded & listed investments
New
Zattikka plc London TMT* Online games development 316
Follow on
Dods (Group) plc London TMT* Political information & communication 678
Hangar8 plc Oxford Business Business jet management 344
Services
Tangent Communications London Business 215
plc Services Digital direct marketing
Accumli plc Salford TMT* Managed IT security 133
Inspired Energy plc Kirkham Business Energy Consultancy focused on corporate
Services customers 100
Electric Word plc London TMT* Business to business publisher 80
Business
Driver Group plc Rossendale Services Dispute resolution 61
Total AIM-traded & listed
investments 1,927
Total investments in the year 7,164
* Technology, Media & Telecommunications ("TMT")
Realisations in the year to 31 December 2012
31 December Realised
First 2011 profit/(loss) Overall
investment valuation this year multiple
Company date GBP'000 GBP'000 return *
Unquoted realisations
TVC Group Limited Full trade sale Jul 08 1,298 26 ^
MLS Limited Loan repayment Jul 06 417 - 1.00
Total unquoted realisations 1,715 26
AIM-traded & listed realisations
IDOX plc Market sale May 02 356 236 5.04
Real Good Food Company (The) Full market
plc sale Dec 03 101 41 0.42
Prologic plc Full trade sale Jun 04 78 36 0.49
Clarity Commerce Solutions
plc Full trade sale Oct 99 29 3 0.63
Adventis Group plc Written off Jun 04 9 (8) 0.00
Music Festivals plc Written off Jun 11 87 (87) 0.00
Total AIM-traded & listed realisations 660 221
Total realisations in the year 2,375 247|
^ Not disclosed.
| Proceeds of GBP7,000 were also received in respect of Getting Personal Limited,
which had been sold in the year ended 31 December 2011.
Summary Investment Portfolio
Investment Classification at 31 December 2012
By Sector* Percentage
Business Services 31%
Consumer Markets 19%
Financial Services 2%
Healthcare & Education 15%
Technology, Media & Telecommunications ("TMT") 33%
Total Assets* Percentage
Unquoted - loan stock 38%
Unquoted - ordinary & preference shares 18%
AIM & Listed 29%
Listed interest bearing securities 4%
Net current assets 11%
Time Investments Held* Percentage
Less than 1 year 9%
Between 1 and 3 years 26%
Between 3 and 5 years 15%
Greater than 5 years 50%
* As at 31 December 2012 valuation
Ten Largest Investments
The top ten investments by current value at 31 December 2012 illustrate the
diversity and size of investee companies within the portfolio. This financial
information is taken from publicly available information, which has been
audited by the auditors of the investee companies.
1. NEXUS VEHICLE HOLDINGS LIMITED - Leeds
All ISIS EP LLP managed funds
First investment: February 2008
Total cost: GBP9,500,000
Total equity held: 56.00%
Baronsmead VCT 4 only
Cost: GBP2,367,000
Valuation: GBP4,768,000
Valuation basis: Earnings multiple
% of equity held: 12.32%
Year ended 30 September 2011 2010
GBP million GBP million
Revenue 38.3 33.5
EBITA: 4.3 4.0
Net Assets: 1.7 0.8
No of employees: 90 73
(Source: Nexus Vehicle Holdings Limited, Report & Financial Statements 2011).
2. CABLECOM NETWORKING HOLDINGS LIMITED - Clevedon
All ISIS EP LLP managed funds
First investment: May 2007
Total cost: GBP5,600,000
Total equity held: 48.00%
Baronsmead VCT 4 only
Cost: GBP1,381,000
Valuation: GBP4,328,000
Valuation basis: Earnings Multiple
% of equity held: 10.56%
Year ended 30 September 2011 2010
GBP million GBP million
Revenue: 12.2 8.2
EBITA: 1.4 0.9
Net Assets: 0.3 0.5
No of employees 61 52
(Source:CableCom Networking Holdings Limited, Report and Financial Statements
30 September 2011)
3. IDOX PLC - London
All ISIS EP LLP managed funds
First investment: May 2002
Total cost: GBP2,460,000
Total equity held: 7.51%
Baronsmead VCT 4 only
Cost: GBP620,000
Valuation: GBP3,744,000
Valuation basis: Traded
% of equity held: 1.99%
Year ended 31 October 2011 2010
GBP million GBP million
Reserve: 38.6 31.3
EBITA: 9.5 7.5
Net Assets: 34.4 31.0
No of employees 363 332
(Source: IDOX plc, Directors' Report and Financial Statements 31 October 2011)
4. INDEPENDENT LIVING SERVICES (ILS) LIMITED - Aberdeen
All ISIS EP LLP managed funds
First investment: September 2005
Total cost: GBP5,829,000
Total equity held: 65.68%
Baronsmead VCT 4 only
Cost: GBP1,599,000
Valuation: GBP3,322,000
Valuation basis: Earnings Multiple
% of equity held: 15.60%
Year ended 30 September 2011 2010
GBP million GBP million
Revenue: 20.1 17.2
EBITA: 0.4 0.1
Net Liabilities: (1.9) (0.7)
No of employees: 1,468 1,254
(Source: ILS Group Limited, Annual Report for the year ended 30 September
2011)
5. CREW CLOTHING HOLDINGS LIMITED - London
All ISIS EP LLP managed funds
First investment: November 2006
Total cost: GBP5,395,000
Total equity held: 25.51%
Baronsmead VCT 4 only
Cost: GBP1,344,000
Valuation: GBP3,020,000
Valuation basis: Earnings Multiple
% of equity held: 6.08%
Year ended 30 October 2011 2010
GBP million GBP million
Revenue: 40.7 34.6
EBITA: 3.3 2.7
Net Assets: 5.7 3.8
No. of employees 311 284
(Source: Crew Clothing Holdings Limited, Report and Financial Statements 30
October 2011)
6. KAFÉVEND HOLDINGS LIMITED - Crawley
All ISIS EP LLP managed funds
First investment: October 2005
Total cost: GBP5,024,000
Total equity held: 66.50%
Baronsmead VCT 4 only
Cost: GBP1,252,000
Valuation: GBP2,956,000
Valuation basis: Earnings Multiple
% of equity held: 15.79%
Year ended 30 September 2011 2010
GBP million GBP million
Revenue: 18.4 15.6
EBITA: 1.9 2.0
Net Assets: 1.5 1.2
No. of employees: 105 95
(Source: Kafévend Holdings Limited, Directors' Report and Financial Statements
30 September 2011)
7. CSC (WORLD) LIMITED - Pudsey, Leeds
All ISIS EP LLP managed funds
First investment: January 2008
Total cost: GBP6,450,000
Total equity held: 40.03%
Baronsmead VCT 4 only
Cost: GBP1,607,000
Valuation: GBP2,410,000
Valuation basis: Earnings Multiple
% of equity held: 8.81%
Year ended 31 March 2012 2011
GBP million GBP million
Revenue: 7.9 7.3
EBITA: 2.4 2.3
Net Liabilities: (2.0) (1.3)
No. of employees: 59 58
(Source: Cobco 867 Limited, Financial Statements 31 March 2012)
8. VALLDATA GROUP LIMITED - Melksham
All ISIS EP LLP managed funds
First investment: January 2011
Total cost: GBP6,475,000
Total equity held: 39.84%
Baronsmead VCT 4 only
Cost: GBP1,617,000
Valuation: GBP1,754,000
Valuation basis: Earnings Multiple
% of equity held: 8.76%
Year ended 31 March 2012 2011
GBP million GBP million
Revenue: 7.1 6.3
EBITA: 0.8 0.9
Net Assets: 0.8 0.6
No. of employees: 137 126
(Source: Valldata Services Limited, Directors Report and Financial Statements
31 March 2012)
9. FISHER OUTDOOR LEISURE HOLDINGS LIMITED - St Albans
All ISIS EP LLP managed funds
First investment: June 2006
Total cost: GBP5,700,000
Total equity held: 44.00%
Baronsmead VCT 4 only
Cost: GBP1,423,000
Valuation: GBP1,656,000
Valuation basis: Earnings Multiple
% of equity held: 10.45%
Year ended 31 July 2011² 2010¹
GBP million GBP million
Sales: 43.6 26.5
EBITA: 2.7 2.3
Net Assets: 1.2 1.4
No. of employees: 110 96
(Source: Fisher Outdoor Leisure Holdings Limited, Directors Report and
Financial Statements 31 July 2011)
¹ 12 month period ended 31 January 2010
² 18 month period ended 31 July 2011. The Company changed its year end from 31
January to 31 July.
10. INSPIRED THINKING GROUP LIMITED - Birmingham
All ISIS EP LLP managed funds
First investment: May 2010
Total cost: GBP3,200,000
Total equity held: 22.50%
Baronsmead VCT 4 only
Cost: GBP796,000
Valuation: GBP1,571,000
Valuation basis: Earnings Multiple
% of equity held: 4.95%
Year ended 31 August 2011 2010
GBP million GBP million
Sales: 21.5 12.9
EBITA: 1.4 1.0
Net Assets: 0.8 0.9
No. of employees: 117 96
(Source: Inspired Thinking Group Holdings, Report of the Directors and
Consolidated Financial Statements for year ended 31 August 2011)
Extract from the Report of the Directors
The Chairman's Statement and the Corporate Governance statement in the Annual
report and accounts form part of the Report of the Directors.
Results and Dividends
The Directors present the Eleventh Report and audited financial statements of
the Company for the year ended 31 December 2012.
Ordinary Shares GBP'000
Profit on ordinary activities after taxation 6,606
Interim dividend of 3.0p per ordinary share
paid on 21 September 2012 (1,856)
Total dividends for the year (1,856)
Subject to approval at the forthcoming Annual General Meeting the final
proposed dividend in respect of the year ended 31 December 2012 of 4.0p per
ordinary share will be paid on 19 April 2013 to shareholders recorded on the
register on 8 March 2013.
Principal Activity and Status
The Company is registered as a Public Limited Company (Registration Number
04313537) under the Companies Act 2006. The Directors have managed and intend
to continue to manage the Company's affairs in such a manner so as to comply
with Section 274 of the Income Tax Act 2007 which grants approval as a Venture
Capital Trust ("VCT"). A review of the Company's business during the period is
contained in the Chairman's Statement and Manager's Review.
Business Review
The Business Review has been prepared in accordance with the requirements of
Section 417 of the Companies Act 2006 and best practice.
The purpose of this review is to provide shareholders with a summary setting
out the business objectives of the Company, the Board's strategy to achieve
those objectives, the risks faced, the regulatory environment and the key
performance indicators (KPIs) used to measure performance.
Strategy for achieving objectives
Baronsmead VCT 4 plc is a company listed on the London Stock Exchange's main
market for listed securities.
Investment objective
Baronsmead VCT 4 plc is a tax efficient listed company which aims to achieve
long-term investment returns for private investors.
Investment policy
The Company's investment policy is to invest primarily in a diverse portfolio
of UK growth businesses, whether unquoted or traded on AIM.
Investments are made selectively across a range of sectors in companies that
have the potential to grow and enhance their value.
Investment securities
The Company invests in a range of securities including, but not limited to,
ordinary and preference shares, loan stock, convertible securities, and
fixed-interest securities, as well as cash. Unquoted investments are usually
structured as a combination of ordinary shares and loan stock, while AIM
investments are primarily held in ordinary shares. Pending investment in
unquoted and AIM traded securities, cash is held in interest bearing accounts,
UK gilts or government securities and may be invested in interest bearing money
market open ended investment companies.
UK companies
Investments are primarily made in companies which are substantially based in
the UK, although many of these investees may have some trade overseas.
VCT regulation
The investment policy is designed to ensure that the Company continues to
qualify and is approved as a VCT by HM Revenue and Customs. Amongst other
conditions, the Company may not invest more than 15 per cent. by value of its
investments calculated in accordance with Section 278 of the Income Tax Act
2007 (as amended) ("VCT Value") in a single company or group of companies and
must have at least 70 per cent. of its investments by VCT Value throughout the
period in shares and securities comprised in qualifying holdings. At least 70
per cent. by VCT Value of qualifying holdings must be in "eligible shares",
which are ordinary shares which have no preferential rights to assets on a
winding up and no rights to be redeemed, but may have certain preferential
rights to dividends. For funds raised before 6 April 2011, at least 30 per
cent. by VCT Value of qualifying holdings must be in "eligible shares" which
are ordinary shares which do not carry any rights to be redeemed or
preferential rights to dividends or to assets on a winding up. At least 10 per
cent. of each qualifying investment must be in "eligible shares".
The companies in which investments are made must have no more than GBP15 million
of gross assets at the time of investment to be classed as a VCT qualifying
holding.
Asset mix
The Company aims to be at least 90 per cent invested in growth businesses,
subject always to the quality of investment opportunities and the timing of
realisations. Any uninvested funds are held in cash and interest bearing
securities. It is intended that at least 75 per cent of funds raised by the
Company will be invested in VCT qualifying investments.
Risk diversification and maximum exposures
Risk is spread by investing in a number of different businesses within
different qualifying industry sectors using a mixture of securities. Generally
no more than GBP2.5 million, at cost, is invested in the same company. The
maximum the Company will invest in a single company (including a collective
investment vehicle) is 15 per cent. of its investments by VCT value. The value
of an individual investment is expected to increase over time as a result of
trading progress and a continuous assessment is made of its suitability for
sale.
Investment style
Investments are selected in the expectation that the application of private
equity disciplines, including an active management style for unquoted
companies, will enhance value and enable profits to be realised from planned
exits.
Co-investment scheme
The Company aims to invest in larger, more mature unquoted and AIM companies
and to achieve this it invests alongside the other Baronsmead VCTs. Currently
ISIS EP LLP ("the Manager") and its executive members and certain staff are
mandated to invest in unquoteds alongside the Company on terms which align the
interests of shareholders ad the Manager.
Borrowing powersThe Company's Articles permit borrowing to give a degree of investment
flexibility. The Company's policy is to use borrowing for short-term liquidity
purposes only. The Company's borrowings are restricted to 25 per cent of the
value of the gross assets of the Company. As at 31 December 2012 the Company
had no borrowings (2011: nil).
Management
The Board has delegated the management of the investment portfolio to the
Manager. The Manager also provides or procures the provision of company
secretarial, accounting, administrative and custodian services to the Company.
The Manager has adopted a 'top-down, sector-driven' approach to identifying and
evaluating potential investment opportunities, by assessing a forward view of
firstly the business environment, then the sector and finally the specific
potential investment opportunity. Based on its research, the Manager has
selected a number of sectors that it believes will offer attractive growth
prospects and investment opportunities. Diversification is also achieved by
spreading investments across different asset classes and making investments for
a variety of different periods.
The Manager's Review provides a review of the investment portfolio and of
market conditions during the year.
Principal risks, risk management and regulatory environment
The Board believes that the principal risks faced by the Company are:
- Economic risk - events such as an economic recession and movement in interest
rates could affect smaller companies' valuations.
- Loss of approval as a Venture Capital Trust - the Company must comply with
Section 274 of the Income Tax Act 2007 which allows it to be exempted from
capital gains tax on investment gains. Any breach of these rules may lead to
the Company losing its approval as a VCT, qualifying shareholders who have not
held their shares for the designated holding period having to repay the income
tax relief they obtained and future dividends paid by the Company becoming
subject to tax. The Company would also lose its exemption from corporation tax
on capital gains.
- Investment and strategic - inappropriate strategy, poor asset allocation or
consistent weak stock selection might lead to under performance and poor
returns to shareholders. Therefore the Company's investment strategy is
periodically reviewed by the Board which considers at each meeting the
performance of the investment portfolio.
- Regulatory - the Company is required to comply with the Companies Act 2006,
the rules of the UK Listing Authority and United Kingdom Accounting Standards.
Breach of any of these might lead to suspension of the Company's Stock Exchange
listing, financial penalties or a qualified audit report.
- Reputational - inadequate or failed controls might result in breaches of
regulations or loss of shareholder trust.
- Operational - failure of the Manager's and administrator's accounting systems
or disruption to its business might lead to an inability to provide accurate
reporting and monitoring.
- Financial - the Board has identified the Company's principal financial risks
which are set out in the notes to the Financial Statements below. Inadequate
controls might lead to misappropriation of assets. Inappropriate accounting
policies might lead to misreporting or breaches of regulations.
- Market Risk - Investment in AIM-traded and unquoted companies, by its nature,
involves a higher degree of risk than investment in companies traded on the
main market. In particular, smaller companies often have limited product lines,
markets or financial resources and may be dependent for their management on a
smaller number of key individuals. In addition, the market for stock in smaller
companies is often less liquid than that for stock in larger companies,
bringing with it potential difficulties in acquiring, valuing and disposing of
such stock.
- Liquidity Risk - The Company's investments may be difficult to realise. The
fact that a share is traded on AIM does not guarantee its liquidity. The spread
between the buying and selling price of such shares may be wide and thus the
price used for valuation may not be achievable.
- Competitive Risk - Retention of key personnel is vital to the success of the
Company. Appropriate incentives are in place to ensure retention of such
personnel.
The Board seeks to mitigate the internal risks by setting policy, regular
review of performance, enforcement of contractual obligations and monitoring
progress and compliance. In the mitigation and management of these risks, the
Board applies rigorously the principles detailed in the FRC's "Internal
Control: Guidance to Directors". Details of the Company's internal controls are
contained in the Corporate Governance section of the Annual Report.
Performance and key performance indicators (KPIs)
The Board expects the Manager to deliver a performance which meets the
objective of achieving long-term investment returns, including tax free
dividends.
A review of the Company's performance during the financial year, the position
of the Company at the year end and the outlook for the coming year is contained
within the Chairman's Statement above.
The Board assesses the performance of the Manager in meeting the Company's
objective against the primary KPIs highlighted in Annual Report.
Issue and Buy-Back of Shares
As a result of an offer for subscription launched on 20 February 2012, the
Company allotted 4,118,232 new ordinary shares at a price of 100.4p per share
representing 6.01 per cent of the Company's issued share capital, with an
aggregate nominal value of GBP411,823.20 raising GBP4,135,000 of new funds (before
expenses). The terms of issue were set out in the offer document dated 12
January 2012 and the offer price was set on 20 February 2012.
On 20 November 2012 the Company announced an offer for subscription for new
ordinary shares of 10p each to raise up to GBP5 million. As a result, on 24
December 2012 the Company allotted 3,669,585 new ordinary shares representing
5.08 per cent of the Company's issued share capital, with an aggregate nominal
value of GBP366,958.50, raising GBP3,945,105 of new funds (before expenses). The
Company's offer for subscription became fully subscribed on 28 January 2013 and
a further allotment of shares is expected to take place on or around 11 March
2013 following the announcement of the Company's net asset value as at 28
February 2013.
During the year the Company bought back 1,061,537 ordinary shares of 10p each
to be held in Treasury, representing an aggregate cost of GBP952,000. Shares held
in Treasury will not be sold at a discount wider than the discount prevailing
at the time the shares were initially bought back by the Company.
As at 31 December 2012, the Company held 7,190,130 ordinary shares in Treasury,
representing 9.96 per cent of the Company's issued ordinary share capital.
Directors
In accordance with the independence provisions of the Listing Rules (LR), and
in particular 15.2.12A, the Company should have a majority of the Board who are
not also Directors of another company managed by the Manager. All Directors are
independent of the Manager and therefore the Board fully complies with this
obligation
Board succession
The Board confirms that following performance evaluations, the performance of
each of the Directors seeking re-election continues to be effective, strongly
independent and demonstrates commitment to the role, and believes that it is
therefore in the best interest of shareholders that each of these Directors be
re-elected.
The Directors who held office during the year, and their beneficial interests
in the ordinary shares of the Company, were:
31 December 2012 31 December 2011
Ordinary 10p shares Ordinary 10p shares
Robert Owen 115,703 115,703
Ian Kirkpatrick 11,699 11,314
Alan Pedder CBE 110,271 70,499
Robin Williams 9,627 -
Total shares held 247,300 197,516
Other than disclosed in the table above, there have been no changes in the
holdings of the Directors between 31 December 2012 and 15 February 2013.
No Director has a service contract with the Company.
As explained in more detail under the Corporate Governance Review in the Annual
Report and in accordance with the provisions of the AIC Code of Corporate
Governance, the Board has agreed that Directors who have held office for more
than nine years will retire annually. Accordingly, Mr Robert Owen and Mr Alan
Pedder will retire at the forthcoming Annual General Meeting of the Company
and, being eligible, offer themselves for re-election. Mr Ian Kirkpatrick will
not stand for re-election and will retire at the AGM.
In addition to those directors who have held office for more than nine years,
and in accordance with the Company's Articles of Association, one third of the
Directors who are subject to retirement by rotation, shall retire from office
at the Annual General Meeting. As a result, Mr Robin Williams will retire at
the forthcoming AGM and, being eligible, offers himself for re-election.
All the Directors are members of the Audit, Nomination, Management Engagement
and Remuneration, and Valuation Committees.
The Directors who held office at the date of approval of this Directors' Report
confirm that, so far as they are each aware, there is no relevant audit
information of which the Company's auditors are unaware; and each Director has
taken all the steps that they ought to have taken as a Director to make
themselves aware of any relevant audit information and to establish that the
Company's auditors are aware of that information.
Companies Act 2006 Disclosures
In accordance with Schedule 7 of the Large and Medium Size Companies and Groups
(Accounts and Reports) Regulations 2008 the Directors disclose the following
information:
- the Company's capital structure and voting rights are summarised in note 11,
and there are no restrictions on voting rights nor any agreement between
holders of securities that result in restrictions on the transfer of securities
or on voting rights;
- there exist no securities carrying special rights with regard to the control
of the Company;
- the rules concerning the appointment and replacement of Directors, amendment
of the Articles of Association and powers to issue or buy back the Company's
shares are contained in the Articles of Association of the Company and the
Companies Act 2006;
- there exist no agreements to which the Company is party that may affect its
control following a takeover bid; and
there exist no agreements between the Company and its Directors providing for
compensation for loss of office that may occur because of a takeover bid;
The Board recognises the requirement under Section 417(5) of the Act to detail
information about environmental matters (including the impact of the Company's
business on the environment), any Company employees and social and community
issues; including information about any policies it has in relation to these
matters and effectiveness of these policies. As the Company has no employees or
policies in these matters, this requirement does not apply.
Directors Professional Development
When a new director is appointed he or she is offered an induction programme
that is arranged by the Manager. Directors are also provided on a regular basis
with key information on the Company's policies, regulatory and statutory
requirements and internal controls. Changes affecting directors'
responsibilities are advised to the Board as they arise. Directors also
regularly participate in industry seminars.
Directors' Indemnity
Directors' and officers' liability insurance cover is in place in respect of
the Directors. The Company's Articles of Association provide, subject to the
provisions of UK legislation, an indemnity for Directors in respect of costs
which they may incur relating to the defence of any proceedings brought against
them arising out of their positions as Directors, in which they are acquitted
or judgement is given in their favour by the Court.
Save for such indemnity provisions in the Company's Articles of Association and
in the Directors' letters of appointment, there are no qualifying third party
indemnity provisions.
Conflicts of Interest
The Directors have declared any conflicts or potential conflict of interest to
the Board of Directors which has the authority to approve such situations. The
Company Secretary maintains the Register of Directors' Conflicts of Interests
which is reviewed quarterly by the Board and when changes are notified. Any new
conflicts are notified promptly to the Board and Company Secretary. Directors
who have conflicts of interest will not take part in any discussions which
relate to any of their conflicts.
Whistleblowing
The Board has considered the UK Corporate Governance Code's recommendations in
respect of arrangements by which staff of the Manager or the Secretary of the
Company may, in confidence, raise concerns about possible improprieties in
matters of financial reporting or other matters. It has concluded that adequate
arrangements are in place for the proportionate and independent investigation
of such matters and, where necessary, for appropriate follow-up action to be
taken.
Management
ISIS EP LLP manages the investments for the Company. The liquid assets within
the portfolio (being cash, interest bearing securities, gilts and other assets,
which are not categorised as venture capital investments for the purpose of the
FSA's rules) have been managed by FPPE LLP. This is a limited liability
partnership, which is authorised and regulated by the FSA and which has the
same controlling members as the Manager. The Manager has continued to act as
the Manager of the Company and as the Investment Manager of the Company's
illiquid assets (being all AIM-traded and other venture capital investments).
The Manager also provides or procures the provision of accounting, company
secretarial, administrative and custodian services to the Company. The
management agreement may be terminated at any date by either party giving
twelve months' notice of termination. Under the management agreement, the
Manager receives a fee of 2.5 per cent per annum of the net assets of the
Company. In addition, the Manager receives an annual accounting and
secretarial fee that was initially fixed at GBP44,724 in 2006 and is revised
annually to reflect the movement in RPI plus a variable fee of 0.125 per cent
of the net assets of the Company which exceed GBP5 million.
This fee is capped at GBP100,000 per annum (and revised annually to reflect the
movement in RPI).
Annual running costs are capped at 3.5 per cent of the average net assets of
the Company during the period (excluding any performance fee payable to the
Manager and irrecoverable VAT), any excess being refunded by the Manager by way
of an adjustment to its management fee.
It is the Board's opinion that the continuing appointment of ISIS EP LLP on the
terms agreed is in the best interests of shareholders as a whole.
Co-investment Scheme
The co-investment scheme was introduced in November 2004. Members of the
Manager's investment team invest their own capital into a proportion of the
ordinary shares of each and every unquoted investment made by the Baronsmead
VCTs. The shares held by the members of the Co-investment Scheme in any
portfolio company can only be sold at the same time as the investment held by
the Baronsmead VCTs is sold. In addition, any prior ranking financial
instruments, such as loan stock, held by the Baronsmead VCTs have to be repaid
in full together with the agreed priority annual return before any gain accrues
to the ordinary shares. This ensures that the Baronsmead VCTs achieve a good
priority return before profits accrue to the co-investment scheme.
The Board is keen to ensure that the Manager continues to have one of the best
investment teams in the VCT and private equity market place and considers the
scheme to be essential in order to attract, retain and incentivise the best
talent. The scheme is in line with current market practice in the private
equity industry and the Board believes that it aligns the interests of the
Manager with those of the Baronsmead VCTs since executives have to invest their
own capital in every unquoted transaction and cannot decide selectively in
which investments to participate. In addition the co-investment only delivers a
return after each VCT has realised a priority return built into the structure.
The executives participating in the co-investment scheme subscribe jointly for
a proportion (currently 12 per cent) of the ordinary shares available to the
Baronsmead VCTs in each unquoted investment. The level of participation was
increased from 5 per cent in 2007 when the Manager's performance fee was
reduced from 20 per cent to its current level of 10 per cent.
Since the formation of the scheme in 2004, 52 executives have invested a total
of GBP696k in 32 companies. At 31 December 2012 nine of these investments have
been realised generating proceeds of GBP81m for the Baronsmead VCTs and GBP4.7m for
the co-investment scheme. For Baronsmead VCT 4 the average money multiple on
these nine realisations was 2.3 times cost. Had the co-investment shares been
held instead by the Baronsmead VCTs that money multiple would have been 2.4
times cost. Over the period of eight years (based upon the current number of
shares in issue) this equates to approximately 1.8p a share.
Performance Incentive
A performance fee will not be payable to the Manager until the total net return
on net proceeds of the ordinary share offers exceeds 8 per cent per annum
(simple) on net funds raised.
To the extent that the Total Return exceeds this threshold, a performance fee
(plus VAT) will be paid to the Manager of 10 per cent of the excess.
No performance fee is payable for the year to 31 December 2012 (2011:GBPnil).
ISIS Equity Partners - Advisory Fees
During the year to 31 December 2012, ISIS EP LLP received net income of GBP96,550
(2011: GBP71,250) in connection with advisory fees and incurred abort fees of
GBP59,382 (2011: GBP15,246) with respect to investments attributable to Baronsmead
VCT 4.
VCT Status Adviser
The Company has retained PricewaterhouseCoopers LLP ('PwC') as their VCT Tax
Status Advisers to advise it on compliance with VCT requirements. PwC review
new investment opportunities, as appropriate, and review regularly the
investment portfolio of the Company. PwC work closely with the Manager but
report directly to the Board.
Creditor Payment Policy
The Company's payment policy is to settle investment transactions in accordance
with market practice and to ensure settlement of supplier invoices in
accordance with stated terms.
At 31 December 2012 there were no outstanding supplier invoices (2011: none).
Environment
The Company seeks to conduct its affairs responsibly and environmental factors
are, where appropriate, taken into consideration with regard to investment
decisions.
Substantial Interests
As at 31 December 2012 and since 31 December to the date of this report, the
Company was not aware of any beneficial interest exceeding 3 per cent of the
issued share capital.
Going Concern
After making enquires, and bearing in mind the nature of the Company's business
and assets, the Directors consider that the Company has adequate resources to
continue in operational existence for the foreseeable future. In arriving at
this conclusion the Directors have considered the liquidity of the Company and
its ability to meet obligations as they fall due for a period of at least
twelve months from the date that these financial statements were approved. As
at 31 December 2012 the Company held cash balances and investments in Interest
Bearing Securities with a combined value of GBP6,743,000. Cash flow projections
have been reviewed and show that the Company has sufficient funds to meet both
its contracted expenditure and its discretionary cash outflows in the form of
the share buy back programme and dividend policy. The Company has no external
loan finance in place and therefore is not exposed to any gearing covenants.
By Order of the Board,
ISIS EP LLP
Secretary
100 Wood Street
London EC2V 7AN
15 February 2013
The full Annual Report contains the following statements regarding
responsibility for the Annual Report and financial statements (references in
the following statements are to pages in the Annual Report).
Statement of Directors' Responsibilities
Statement of Directors' Responsibilities in respect of the Annual Report and
the Financial Statements.
The Directors are responsible for preparing the Annual Report and the financial
statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law they have elected to prepare the financial
statements in accordance with UK Accounting Standards and applicable law (UK
Generally Accepted Accounting Practice).
Under company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Company and of the profit or loss of the Company for that
period.
In preparing these financial statements, the Directors are required to:
? select suitable accounting policies and then apply them consistently;
? make judgments and estimates that are reasonable and prudent;
? state whether applicable UK Accounting Standards have been followed, 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 adequate accounting records that are
sufficient to show and explain the Company's transaction and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the Companies
Act 2006. They have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Company and to prevent
and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for
preparing a Directors' Report, Directors' Remuneration Report and Corporate
Governance Statement that complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Responsibility statement of the Directors in respect of the annual financial
report
We confirm that to the best of our knowledge:
? the financial statements, prepared in accordance with the applicable set of
accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company; and
? the Report of the Directors includes a fair review of the development and
performance of the business and the position of the issuer together with a
description of the principal risks and uncertainties that they face.
On behalf of the Board,
Robert Owen
Chairman
15 February 2013
NON-STATUTORY ACCOUNTS
The financial information set out below does not constitute the Company's
statutory accounts for the years ended 31 December 2012 and 2011 but is derived
from those accounts. Statutory accounts for 2011 have been delivered to the
Registrar of Companies, and those for 2012 will be delivered in due course. The
Auditors have reported on those accounts; their report was (i) unqualified,
(ii) did not include a reference to any matters to which the Auditors drew
attention by way of emphasis without qualifying their report and (iii) did not
contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The
text of the Auditors' report can be found in the Company's full Annual Report
and Accounts at www.baronsmeadvct4.co.uk
Income Statement
For the year ended 31 December 2012
2012 2011
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Unrealised gains on
investments 8 - 7,150 7,150 - 1,508 1,508
Realised gains on
investments 8 - 254 254 - 1,817 1,817
Income 2 1,132 - 1,132 1,885 - 1,885
Investment management fee 3 (385) (1,155) (1,540) (362) (1,086) (1,448)
Other expenses 4 (390) - (390) (369) - (369)
Profit on ordinary
activities before
taxation 357 6,249 6,606 1,154 2,239 3,393
Taxation on ordinary
activities 5 (30) 30 - (243) 243 -
Profit on ordinary
activities after taxation 327 6,279 6,606 911 2,482 3,393
Return per ordinary
share:
Basic 7 0.53p 10.22p 10.75p 1.55p 4.23p 5.78p
The 'Total' column of this statement is the profit and loss account of the
Company.
All revenue and capital items in this statement derive from continuing
operations.
No operations were acquired or discontinued in the year.
There are no recognised gains and losses other than those disclosed in the
Income Statement, therefore a separate statement of total recognised gains and
losses has not been prepared.
Reconciliation of Movements in Shareholders' Funds
For the year ended 31 December 2012
2012 2011
Notes GBP'000 GBP'000
Opening shareholders' funds 54,786 58,704
Profit for the year 6,606 3,393
Gross proceeds of share issues 11/12 8,080 -
Purchase and sale of shares for Treasury 12 (952) (850)
Expenses of share issue and buybacks 12 (418) (6)
Dividends paid 6 (1,856) (6,455)
Closing shareholders' funds 66,246 54,786
Balance Sheet
As at 31 December 2012
2012 2011
Notes GBP'000 GBP'000
Fixed assets
Investments 8 58,763 52,124
Current assets
Debtors 9 4,236 562
Cash at bank 1,344 2,528
Cash on deposit 2,500 -
8,080 3,090
Creditors (amounts falling due within one year) 10 (597) 428
Net current assets 7,483 2,662
Net assets 66,246 54,786
Capital and reserves
Called-up share capital 11 7,219 6,440
Share premium account 12 28,078 21,190
Capital redemption reserve 12 8,622 8,622
Revaluation reserve 12 11,660 4,103
Capital reserve 12 10,324 14,415
Revenue reserve 12 343 16
Equity shareholders' funds 66,246 54,786
Net asset value per share
- Basic 13 101.92p 94.01p
- Treasury 13 101.41p 93.08p
The financial statements were approved by the Board of Directors on 15 February
2013 and were signed on its behalf by:
Robert Owen (Chairman)
Cash Flow Statement
For the year ended 31 December 2012
2012 2011
Notes GBP'000 GBP'000
Operating activities
Investment income received 1,276 1,706
Deposit interest received 12 8
Other income received - 62
Investment management fees (1,490) (1,472)
Other cash payments (382) (409)
Net cash outflow from operating activities 15 (584) (105)
Capital expenditure and financial investment
Purchases of investments (70,018) (127,474)
Disposals of investments 70,813 135,962
Net cash inflow from capital expenditure and financial
investment 795 8,488
Dividends
Equity dividends paid (1,856) (6,455)
Net cash (outflow)/inflow before financing (1,645) 1,928
Financing
Gross proceeds of share issues 4,135 -
Purchase of shares for Treasury (952) (851)
Expenses of shares issue and buybacks (222) (5)
Net cash inflow/(outflow) from financing 2,961 (856)
Increase in cash 1,316 1,072
Reconciliation of net cash flow to movement in net
cash
Increase in cash 1,316 1,072
Opening cash at bank and on deposit 2,528 1,456
Closing cash at bank and on deposit 14 3,844 2,528
Notes to the Accounts
1. Accounting polices
(a) Basis of accounting
These financial statements have been prepared under UK Generally Accepted
Accounting Practice ("UK GAAP") and in accordance with the Statement of
Recommended Practice ("SORP") for investment trust companies and venture
capital trusts issued by the Association of Investment Companies ("AIC") in
January 2009, and on the assumption that the Company maintains VCT status.
The Company is no longer an investment company as defined by Section 833 of the
Companies Act 2006, as investment company status was revoked on 15 December
2004 in order to permit the distribution of capital profits.
The principle accounting policies adopted are set out below.
Presentation of the Income Statement
In order to better reflect the activities of a VCT and in accordance with the
SORP, supplementary information which analyses the income statement between
items of a revenue and capital nature has been presented alongside the income
statement.
Profit/(loss) on ordinary activities after taxation is the measure the
Directors believe appropriate in assessing the Company's compliance with
certain requirements set out in Section 274 of the Income Tax Act 2007.
(b) Valuation of investments
Purchases or sales of investments are recognised at the date of transaction.
Investments are valued at fair value. For AIM traded and listed securities this
is either bid price or the last traded price, depending on the convention of
the exchange on which the investment is traded.
In respect of unquoted investments, these are fair valued by the Directors
using methodology which is consistent with the International Private Equity and
Venture Capital Valuation ("IPEV") guidelines. This means investments are
valued using an earnings multiple, which has a discount or premium applied
which adjusts for points of difference to appropriate stock market or
comparable transaction multiples. Alternative methods of valuation will include
application of an arm's length third party valuation, a provision on cost or a
net asset value basis.
Gains and losses arising from changes in the fair value of the investments are
included in the Income Statement for the period as a capital item. Transaction
costs on acquisition are included within the initial recognition and the profit
or loss on disposal is calculated net of transaction costs on disposal.
(c) Income
Interest income on loan stock and dividends on preference shares are accrued on
a daily basis. Provision is made against this income where recovery is
doubtful. Where the terms of unquoted loan stocks only require interest or a
redemption premium to be paid on redemption, the interest and redemption
premium is recognised as income once redemption is reasonably certain. Until
such date interest is accrued daily and included within the valuation of the
investment.
Income from fixed interest securities and deposit interest is included on an
effective interest rate basis.
Dividends on quoted shares are recognised as income on the date that the
related investments are marked ex dividend and where no dividend date is
quoted, when the Company's right to receive payment is established.
(d) Expenses
All expenses are recorded on an accruals basis.
(e) Revenue/capital
The revenue column of the Income Statement includes all income and expenses.
The capital column accounts for the realised and unrealised profit and loss on
investments and the proportion of management fee charged to capital.
(f) Issue costs
Issue costs are deducted from the share premium account.
(g) Deferred taxation
Deferred taxation 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, or the right to pay less, tax
in 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 reversal of the underlying
timing differences can be deducted. Timing differences are differences arising
between the Company's taxable profits and its results as stated in the
financial statements which are capable of reversal in one or more subsequent
periods.
(h) Capital reserves
(i) Capital Reserve
Gains and losses on realisation of investments of a capital nature are dealt
with in this reserve. Purchase of the Company's own shares to be either held in
Treasury or cancelled are also funded from this reserve. 75 per cent of
management fees are allocated to the capital reserve in accordance with the
Board's expected split between long term income and capital returns.
(ii) Revaluation Reserve
Changes in fair value of unrealised investments, are dealt with in this
reserve.
2. Income
2012 2011
GBP'000 GBP'000
Income from investments|
UK franked 232 222
UK unfranked 812 1,218
UK Unfranked - reinvested 30 -
Redemption premium 45 374
1,119 1,814
Other income+
Deposit interest 13 9
Other income - 62
Total income 1,132 1,885
Total income comprises:
Dividends 232 223
Interest 900 1,662
1,132 1,885
Income from investments:
AIM-traded & listed securities 248 270
Unquoted securities 871 1,544
1,119 1,814
| All investments have been designated fair value through profit or loss on
initial recognition, therefore all investment income arises on investments at
fair value through profit or loss.
+ Other income on financial assets not designated fair value through profit or
loss.
3. Investment management fee
2012 2011
GBP'000 GBP'000
Investment management fee 1,540 1,448
Performance fee - -
1,540 1,448
For the purposes of the revenue and capital columns in the Income Statement,
the management fee has been allocated 25 per cent to revenue and 75 per cent to
capital, in line with the Board's expected long-term return in the form of
income and capital gains respectively from the Company's investment portfolio.
The management agreement may be terminated by either party giving 12 months
notice of termination. The Manager, ISIS EP LLP, receives a fee of 2.5 per cent
per annum of the net assets of the Company, calculated and payable on a
quarterly basis.
The Manager is entitled to a performance fee when the total return on net
proceeds of the ordinary share offers exceeds 8 per cent per annum (on a simple
basis) on net funds raised. To the extent that the Total Return exceeds this
threshold, a performance fee (plus VAT) will be paid to the Manager for 10 per
cent of the excess. The performance fee payable in any one year will be capped
at 5 per cent of Shareholders' funds at the end of the calculation period. No
performance fee is payable for the year ended 31 December 2012.
ISIS EP LLP receives an annual accounting and secretarial fee initially fixed
at GBP44,724 (and revised annually to reflect the movement in RPI), plus a
variable fee of 0.125 per cent of the net assets of the Company which exceed
GBP5 million. The fee is capped at GBP100,000 (per annum), revised annually to reflect
the movement in RPI. It is chargeable 100 per cent to revenue.
Amounts payable to the Manager at the year end are disclosed in note 10.
4. Other expenses
2012 2011
GBP'000 GBP'000
Directors' fees 79 70
Secretarial and accounting fees 122 119
Remuneration of the auditors and their associates:
- audit 21 22
- other services supplied pursuant to legislation (interim 5 5
review)
- other services supplied relating to taxation 7 9
Trail Commission - (1)
Other 156 145
390 369
The Chairman received GBP24,500 per annum (2011: GBP22,000). Each of the other
Directors received GBP18,000 per annum (2011: GBP16,000).
Charges for other services provided by the auditors in the year ended 31
December 2012 were in relation to the interim review and tax compliance work
(including iXBRL). The Directors consider the auditors were best placed to
provide these services. The Audit Committee reviews the nature and extent of
non-audit services to ensure that independence is maintained.
5. Tax on ordinary activities
5a. Analysis of charge for the year
2012 2011
GBP'000 GBP'000
UK corporation tax - -
The Income Statement shows the tax charge allocated between revenue and
capital.
5b. Factors affecting tax charge for the year
The tax charge for the year is lower than the standard rate of corporation tax
in the UK for a company. The differences are explained below:
2012 2011
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Profit on ordinary
activities before tax 357 6,249 6,606 1,154 2,239 3,393
Corporation tax at rate of
24.5% (2011: 26.5%) 87 1,531 1,618 306 593 899
Effect of:
Non-taxable dividend income (57) - (57) (59) - (59)
Non-taxable gains on - (1,814) (1,814)
investments - (881) (881)
Marginal tax relief - - - (4) 4 -
Losses carried forward/ - 253 253 - 41 41
(utilised)
Tax charge/ (credit) for the
year (note 5a) 30 (30) - 243 ` (243) -
At 31 December 2012 the Company had surplus management expenses of GBP2,016,000
(2011: GBP923,000) which have not been recognised as a deferred tax asset. This
is because the Company is not expected to generate taxable income in a future
period in excess of the deductible expenses of that future period and,
accordingly, the Company is unlikely to be able to reduce future tax
liabilities through the use of existing surplus expenses. Due to the Company's
status as a VCT, and the intention to continue meeting the conditions required
to obtain approval in the foreseeable future, the Company has not provided
deferred tax on any capital gains and losses arising on the revaluation or
disposal of investments.
6. Dividends
2012 2011
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Amounts recognised as
distributions to shareholders
for the year ended to 31
December 2012
- interim dividend for the
year ended 31 December 2012
of 3.0p per share - 1,856 1,856
For the year ended 31
December 2011
- first interim dividend for
the year ended 31 December
2011 of 3.0p per share - - - 380 1,375 1,755
- second interim dividend of
the year ended 31 December
2011 of 4.0p per share - - - 524 1,806 2,330
For the year ended 31
December 2010
- final dividend for the year
ended 31 December 2010 of
4.0p per share - - - 326 2,044 2,370
- 1,856 1,856 1,230 5,225 6,455
7. Returns per share
The 10.75p return per ordinary share (2011: 5.78p) is based on the net profit
from ordinary activities after tax of GBP6,606,000 (2011: GBP3,393,000) and on
61,474,340 (2011: 58,693,578) ordinary shares, being the weighted average
number of shares in circulation during the year.
8. Investments
All investments are designated fair value through profit or loss at initial
recognition, therefore all gains and losses arise on investments designated at
fair value through profit or loss.
Financial Reporting Standard 29 'Financial Instruments: Disclosures' (the
Standard) requires an analysis of investments valued at fair value based on the
reliability and significance of the information used to measure their fair
value. The level is determined by the lowest (that is the least reliable or
independently observable) level of input that is significant to the fair value
measurement for the individual investment in its entirety as follows:
? Level 1 - investments whose prices are quoted in an active market.
? Level 2 - investments whose fair value is based directly on observable
current market prices or indirectly being derived from market prices.
? Level 3 - investments whose fair value is determined using a valuation
technique based on assumptions that are not supported by observable current
market prices or based on observable market data.
2012 2011
GBP'000 GBP'000
Level 1
Listed interest bearing securities 2,899 8,199
Investments traded on AIM 18,001 12,548
Investments listed on LSE 892 704
21,792 21,451
Level 2 -
Level 3
Unquoted investments 36,971 30,673
58,763 52,124
2012 2011
GBP'000 GBP'000
Equity shares 30,673 23,030
Preference shares 78 -
Loan notes 25,113 20,895
Fixed income securities 2,899 8,199
58,763 52,124
Level 1 Level 3
Interest Listed
Bearing Traded On
Securities on AIM LSE Unquoted Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening book cost 8,199 14,731 1,203 23,888 48,021
Opening unrealised - (2,813) (499) 6,785 4,103
(depreciation)/appreciation
Opening valuation 8,199 12,548 704 30,673 52,124
Movements in the year:
Purchases at cost 62,884 1,927 - 5,237 70,048
Sales - Proceeds (68,184) (881) - (1,748) (70,813)
- Realised gains on sales - 221 - 33 254
Unrealised (losses)/gains
realised during the year - (472) - 65 (407)
Increase in unrealised - 4,658 188 2,711 7,557
appreciation
Closing valuation 2,899 18,001 892 36,971 58,763
Closing book cost 2,899 15,526 1,203 27,475 47,103
Closing unrealised appreciation/ - 2,475 (311) 9,496 11,660
(depreciation)
2,899 18,001 892 36,971 58,763
During the year the Company incurred brokerage costs on purchases of GBP1,542
(2011: GBP1,835) and brokerage costs on sales of GBP1,987 (2011: GBP937) in respect
of ordinary shareholder interests.
The gains and losses included in the above table have all been recognised in
the Income Statement.
The Standard requires disclosure, by class of financial instruments, if the
effect of changing one or more inputs to reasonably possible alternative
assumptions would result in a significant change to the fair value measurement.
The information used in determination of the fair value of Level 3 investments
is chosen with reference to the specific underlying circumstances and position
of the investee company. The portfolio has been reviewed and both downside and
upside reasonable possible alternatives have been identified and applied to the
valuation of each of the unquoted investments. Applying the downside
alternatives the value of the unquoted investments would be GBP2.5 million or 6.8
per cent lower. Using the upside alternative the value would be increased by
GBP2.6 million or 7.0 per cent.
9. Debtors
2012 2011
GBP'000 GBP'000
Prepayments and accrued income 374 562
Amounts due from fundraising 3,862 -
4,236 562
10. Creditors (amounts falling due within one year)
2012 2011
GBP'000 GBP'000
Management, secretarial & accounting fees due to the manager 423 373
Fundraising costs 113 -
Other creditors 61 55
597 428
11. Called-up share capital
Allotted, called-up and fully paid:
Ordinary shares GBP'000
64,402,829 ordinary shares of 10p each listed at 31 December 2011 6,440
7,787,817 ordinary shares of 10p each issued during the year 779
72,190,646 ordinary shares of 10p each listed at 31 December 2012 7,219
6,128,593 ordinary shares of 10p each held in Treasury at 31 December (613)
2011
1,061,537 ordinary shares of 10p each repurchased during the year and (106)
held in Treasury
7,190,130 ordinary shares of 10p each held in Treasury at 31 December (719)
2012
65,000,516 ordinary shares of 10p each in circulation at 31 December 6,500
2012
The capital of the Company is managed in accordance with its investment policy,
in pursuit of its investment objectives, both of which are detailed in the
Report of the Directors.
Treasury shares
The Companies (Acquisition of Own Shares) (Treasury Shares) Regulations 2003
came into force on 1 December 2003 and allowed the Company to hold shares
acquired by way of market purchase as Treasury shares, rather than having to
cancel them. Shareholders have previously approved a resolution permitting the
Company to issue shares from Treasury at a discount to the prevailing NAV if
the Board considers it in the best interests of the Company to do so. However,
Treasury shares will not be sold at a discount wider than the discount
prevailing at the time the shares were initially bought back by the Company. It
is the Board's intention only to use the mechanism of re-issuing Treasury
shares when demand for the Company's shares is greater than the supply
available in the market place. Such issues would be captured under the terms of
the Prospectus Directive and subject to the annual cap of 2.5 million Euros on
funds raised before requiring a full prospectus, although they would not be
considered by HM Revenue & Customs to be new shares entitling the purchaser to
initial income tax relief, and therefore shares are unlikely to be issued from
Treasury in the same year as a "top up" offer for subscription.
The Company does not have any externally imposed capital requirements.
Where shares are bought back but not cancelled the share capital remains
unchanged. The NAV is calculated by using the number of shares in issue less
those bought back and held in Treasury.
12. Reserves
Capital
Share redemption Capital Revaluation Revenue
premium reserve reserve Reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 December 2011 21,190 8,622 14,415 4,103 16
Premium on issue ordinary shares 7,301 - - - -
Purchase and sale of shares for - - (952) - -
Treasury
Expenses of share issue &
buybacks (413) - (5) - -
Reallocation of prior year
unrealised losses - - (407) 407 -
Realised gain on disposal of
investments* - - 254 - -
Net increase in value of
investments* - - - 7,150 -
Management fee capitalised* - - (1,155) - -
Taxation relief from capital
expenses* - - 30 - -
Revenue return on ordinary
activities after taxation* - - - - 327
Dividends paid in the year - - (1,856) - -
At 31 December 2012 28,078 8,622 10,324 11,660 343
At 31 December 2012, reserves distributable by way of dividend amounted to
GBP10,667,000 (2011: GBP11,749,000), comprising the capital reserve, revenue reserve
and the net unrealised loss on those investments whose prices are quoted in an
active market and deemed readily realisable.
* The total of these items is GBP6,606,000 which agrees to the total profit on
ordinary activities.
13. Net asset value per share
The net asset value per share and the net asset values attributable to the
ordinary shares at the year end are calculated in accordance with their
entitlements in the Articles of Association and were:
Net asset value per Net asset value
Number of shares share attributable attributable
2012 2011 2012 2011 2012 2011
number number pence pence GBP'000 GBP'000
Ordinary shares (basic) 65,000,516 58,274,236 101.92 94.01 66,246 54,786
Ordinary shares 72,190,646 64,402,829 101.41 93.08 73,212 59,949
(Treasury)
Basic net asset value per share is based on net assets at the year end, and on
65,000,516 (2011: 58,274,236) ordinary shares, being the respective number of
shares in circulation at the year end.
The Treasury net asset value per share as at 31 December 2012, included
ordinary shares held in Treasury valued at the mid share price of 96.88p at 31
December 2012 (31 December 2011: 84.25p).
14. Analysis of changes in cash
2012 2011
GBP'000 GBP'000
Beginning of year 2,528 1,456
Net cash inflow 1,316 1,072
As at 31 December 2012 3,844 2,528
15. Reconciliation of profit on ordinary activities before taxation to net cash
outflow from operating activities
2012 2011
GBP'000 GBP'000
Profit on ordinary activities before taxation 6,606 3,393
Gains on investments (7,404) (3,325)
Decrease/(increase) in debtors 188 (115)
Increase/(decrease) in creditors 56 (58)
Income reinvested (30) -
Net cash outflow from operating activities (584) (105)
16. Contingencies, guarantees and financial commitments
There were no contingencies, guarantees or financial commitments of the Company
as at 31 December 2012 (31 December 2011: nil)
17. Significant interests
There are no interests of 20 per cent or more of any class of share capital.
Further information on the significant interests is disclosed in the Annual
report.
18. Financial instruments
The Company's financial instruments comprise equity and fixed interest
investments, cash balances and liquid resources including debtors and
creditors. The Company holds financial assets in accordance with its investment
policy to invest in a diverse portfolio of UK growth businesses, whether
unquoted or traded on AIM.
Fixed asset investments (see above) are valued at fair value. For quoted
securities this is either bid price or the last traded price, depending on the
convention of the exchange on which the investment is quoted. In respect of
unquoted investments, these are fair valued by the Directors (using rules
consistent with the International Private Equity and Venture Capital Valuation
Guidelines).
The fair value of all other financial assets and liabilities is represented by
their carrying value in the Balance Sheet.
The Company's investing activities expose it to various types of risk that are
associated with financial instruments and markets in which it invests. The most
important types of financial risk to which the Company is exposed are market
risk, credit risk and liquidity risk.
The nature and extent of the financial instruments outstanding at the balance
sheet date and the risk management policies employed by the Company are
discussed below.
19. Market risk
Market risk embodies the potential for both loss and gains and includes
interest rate risk and price risk.
The Company's strategy on the management of investment risk is driven by the
Company's investment objective as outlined above.
The management of market risk is part of the investment management process and
is typical of private equity investment. The portfolio is managed in accordance
with policies and procedures in place as described in more detail in the Report
of the Directors in the Annual Report, with an awareness of the effects of
adverse price movements through detailed and continuing analysis, with an
objective of maximising overall returns to shareholders. Investments in
unquoted stocks and AIM listed companies, by their nature, involve a higher
degree of risk than investments in the main market. Some of that risk can be
mitigated by diversifying the portfolio across business sectors and asset
classes. The Company's overall market positions are monitored by the Board on a
quarterly basis.
Details of the Company's investment portfolio at the balance sheet date are
disclosed in the schedule of investments set out above. An analysis of
investments between debt and equity instruments is disclosed in note 8.
32 per cent (2011: 25 per cent) of the Company's investments are listed on the
London Stock Exchange or traded on AIM. A 5 per cent increase in stock prices
as at 31 December 2012 would have increased the net assets attributable to the
Company's shareholders and the total profit for the year by GBP945,000 (2011: GBP
663,000); an equal change in the opposite direction would have decreased the
net assets attributable to the Company's shareholders and the total profit for
the year by an equal amount.
63 per cent (2011: 59 per cent) of the Company's investments are in unquoted
companies held at fair value. Valuation methodology includes the application of
earning multiples derived from either listed companies with similar
characteristics or recent comparable transactions. Therefore the value of the
unquoted element of the portfolio may also be indirectly affected by price
movements on the listed exchanges. A 5 per cent increase in the valuations of
unquoted investments at 31 December 2012 would have increased the net assets
attributable to the Company's shareholders and the total profit for the year by
GBP1,849,000 (2011: GBP1,534,000); an equal change in the opposite direction would
have decreased the net assets attributable to the Company's shareholders and
the total profit for the year by an equal amount.
20. Interest rate risk
At 31 December 2012 GBP2,899,000 (2011: GBP8,199,000) fixed rate securities were
held by the Company. As a result, the Company is subject to exposure to fair
value interest rate risk due to fluctuations in the prevailing levels of market
interest rates. However the effect of these interest rate changes is not
materially significant.
At 31 December 2012 GBP25,113,000 (2011: GBP20,895,000) fixed rate loan notes were
held by the Company. The weighted average coupon rate for the loan note
securities is 9.38 per cent as at 31 December 2012 (2011: 9.34 per cent). Due
to complexity of the instruments and uncertainty surrounding timing of
redemption the weighted average time for which the rate is fixed has not been
calculated.
The table below summarises weighted average effective interest rates for the
fixed interest-bearing financial instruments:
2012 2011
Weighted Weighted
Total Weighted average Total Weighted average
fixed average time for fixed average time for
rate interest which rate rate interest which rate
portfolio rate is fixed portfolio rate is fixed
GBP'000 % days GBP'000 % days
Fixed rate
Financial assets 2,899 0.12 21 8,199 0.21 3
Floating rate
When the Company retains cash balances, the majority of cash is ordinarily held
on interest bearing deposit accounts and, where appropriate, within interest
bearing securities. The benchmark rate which determines the interest payments
received on interest bearing cash balances is the bank base rate which was 0.5
per cent as at 31 December 2012 (2011: 0.5 per cent).
2012 2011
GBP'000 GBP'000
Floating rate
Cash at bank 1,344 2,528
Cash on deposit 2,500 -
3,844 2,528
21. Credit risk
Credit risk is the risk that a counterparty to a financial instrument will fail
to discharge an obligation or commitment that it has entered into with the
Company. The Investment Manager has in place a monitoring procedure in respect
of counterparty risk which is reviewed on an ongoing basis. The carrying
amounts (value) of financial assets best represents the maximum credit risk
exposure at the balance sheet date.
At the reporting date, the Company's financial assets exposed to credit risk
amounted to the following:
2012 2011
GBP'000 GBP'000
Investments in fixed rate instruments 2,899 8,199
Cash at bank 1,344 2,528
Cash on deposit 2,500 -
Interest, dividends and other receivables 4,236 562
10,979 11,289
Credit risk arising on unquoted loan notes is considered in conjunction with
the associated equity investment in the portfolio company.
Credit risk arising on fixed interest instruments is mitigated by investing in
UK Government Stock.
Credit risk on unquoted loan stock held within unlisted investments is
considered to be part of market risk as disclosed in note 19.
Credit risk on fixed interest investments in unlisted companies is managed as
part of the Company's main investment management procedures.
Credit risk arising on transactions with brokers relates to transactions
awaiting settlement. Risk relating to unsettled transactions is considered to
be small due to the short settlement period involved and the high credit
quality of the brokers used.
All the assets of the Company which are traded on a recognised exchange are
held by JP Morgan Chase ("JPM"), the Company's custodian. The Board monitors
the Company's risk by reviewing the custodian's internal control reports as
described in the Corporate Governance section of the Annual Report.
The cash held by the Company is held by JPM and Lloyds TSB. The Board monitors
the Company's risk by reviewing regularly the internal control reports of these
banks. Should the credit quality or the financial position of either bank
deteriorate significantly the Investment Manager will seek to move the cash
holdings to another bank.
There were no significant concentrations of credit risk to counterparties at 31
December 2012 or 31 December 2011. No individual investment exceeded 7.2 per
cent of the net assets attributable to the Company's shareholders at 31
December 2012 (2011: 10.3 per cent).
22. Liquidity risk
The Company's financial instruments include investments in unquoted companies
which are not traded in an organised public market and AIM-traded equity
investments which generally may be illiquid. As a result, the Company may not
be able to liquidate quickly some of its investments in these instruments at an
amount close to their fair value in order to meet its liquidity requirements,
or to respond to specific events such as deterioration in the creditworthiness
of any particular issuer.
The Company's liquidity risk is managed on an ongoing basis by the Investment
Manager in accordance with policies and procedures in place as described in the
Report of the Directors. The Company's overall liquidity risks are monitored on
a quarterly basis by the Board.
The Company maintains sufficient investments in cash and readily realisable
interest bearing securities to pay accounts payable and accrued expenses. At 31
December 2012 these investments were valued at GBP6,743,000 (2011: GBP10,727,000).
23. Related parties
Related party transactions include Management, Secretarial, Accounting and
Performance fees payable to the Manager, ISIS EP LLP, as disclosed above, and
fees paid to the Directors as disclosed above. In addition, the Manager
operates a Co-Investment Scheme, detailed in the Report of the Directors in the
Annual Report, whereby employees of the Manager are entitled to participate in
certain unquoted investments alongside the Company.
24. Post balance sheet event
On 20 November 2012 the Company launched an offer for subscription to raise up
to GBP5 million. This offer became fully subscribed on 28 January 2013.
National Storage Mechanism
A copy of the Annual Report and Financial Statements will be submitted shortly
to the National Storage Mechanism ("NSM") and will be available for inspection
at the NSM, which is situated at: www.morningstar.co.uk/uk/nsm
Annual General Meeting
The Company's Annual General Meeting will be held on 16 April 2013 at 11.00 am
at the Plaisterers' Hall, One London Wall, London, EC2Y 5JU.
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on this announcement (or any other website) is
incorporated into, or forms part of, this announcement.
END
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