Annual Financial Report

RNS Number : 6114S

North Atlantic Smlr Co Inv Tst PLC

21 May 2009

NORTH ATLANTIC SMALLER COMPANIES INVESTMENT TRUST PLC

Audited results extracted from the Annual Financial Report for the year ended 31 January 2009

The figures contained herein have not changed since the Company released the Preliminary Announcement on 11 May 2009.

Financial Highlights

		2009	% change	2008	2007	2006	2005
revenue
Gross income (£'000)		4,285	(17.7)	5,208	3,951	4,052	3,671
Net revenue after tax attributable to Shareholders of
the Parent (£'000)		538	(57.7)	1,272	224	876	23
Basic return per Ordinary Share	- revenue	3.64p	(58.9)	8.86p	1.65p	6.66p	0.18p
	- capital	(372.41)p	(1,669.2)	(21.05)p	229.52p	339.44p	224.16p
assets
Total assets less current liabilities (£'000)		178,120	(25.2)	238,166	250,549	221,122	177,457
Net asset value per 5p Ordinary Share:
Basic		1,204p	(25.3)	1,611p	1,755p	1,597p	1,334p
Diluted		944p	(21.9)	1,209p	1,217p	1,063p	860p

Mid-market price of the 5p Ordinary Shares
at 31 January		618.5p	(39.7)	1,025.0p	1,153.0p	1,022.5p	794.5p

discount to diluted net asset value		34.5%	19.3	15.2%	5.3%	3.8%	7.6%
indices and exchange rates at 31 January
Standard & Poor's 500 Composite Index		825.9	(40.1)	1,378.6	1,438.2	1,280.1	1,181.3
Russell 2000 Index		443.5	(37.8)	713.3	800.3	733.2	624.0
US Dollar/Sterling exchange rate		1.4417	(27.5)	1.9880	1.9574	1.7774	1.8861
Standard & Poor's 500 Composite - Sterling adjusted		568.0	(18.1)	693.4	734.8	720.2	626.3
Russell 2000 - Sterling adjusted		305.1	(15.0)	358.8	408.9	412.5	330.8
FTSE All-Share Index		2,078.9	(30.7)	3,000.1	3,211.8	2,928.6	2,441.2

Chairman's Statement

The year ended 31 January 2009 saw a decline in the diluted net asset value of 21.9% as compared to a fall in the FTSE Small Cap Index of 40.9% and a fall in the Standard & Poor's Composite Index of 18.1%. The fall in the Standard & Poor's Composite Index would have been 40.1% but for the weakness in Sterling.

The revenue account showed a profit after taxation of £538,000 (2008: £1,121,000). Consistent with the Company's long-term policy, the Directors are not recommending the payment of a dividend (2008: nil).

During the year, the Company redeemed 630,000 units of Convertible Unsecured Loan Stock 2013 for cancellation at a discount to net asset value.

A commentary on the quoted and unquoted portfolios can be found in the Investment Managers' Report.

Board Changes

More than ten years have passed since I became Chairman of the Company. I have decided that the Annual General Meeting in June will be my last as Chairman. However, I will remain a Non-Executive Director for the balance of my term- and beyond, if shareholders so choose. We are fortunate that the Hon. Peregrine Moncreiffe, who rejoined the Board in November 2008, has agreed to become Chairman following the Annual General Meeting. Peregrine was first appointed as a Director of the Company in 1993 but resigned in 2006 for personal reasons. We are delighted to welcome him back and announce his re-appointment. Unfortunately Philip Swinstead tendered his resignation as a Director of the Company on 15 January 2009 due to the pressure of his other business commitments. The Board thank Philip for his valuable contribution and services to the Company.

Outlook

It gives me little pleasure to reflect on my comments of last year when I reported in my Statement that 'the subprime crisis is the first of a series of problems which will hit the banking industry, with excessive debt on leveraged buyouts and reckless loans to value on commercial real estate, becoming significant issues…'

These problems have now surfaced with a vengeance with all major economies facing a sharp period of recession with a real risk that it will be both prolonged and deep. The banking system has effectively frozen, consumers are desperately trying to reduce expenditure either to reduce debt or preserve their savings as interest rates fall effectively to zero. A collapse in world trade, which is already evident, will only compound problems and it is most unlikely that equity markets will perform in the current environment.

Fortunately, the Company has substantial cash and other liquid assets amounting to circa £25.5 million and little debt, so appears well placed to benefit from the inevitable opportunities that will arise over the coming twelve months.

Enrique Foster Gittes Chairman
20 May 2009

Investment Managers' report

Quoted Portfolio

The United States portfolio performed extremely well during the year ended 31 January 2009 as a direct result of the takeover of its largest holding, WH Energy Services. The other large holding, Sterling Construction, also performed well, significantly outperforming the indices as investors focused on companies which will benefit from continued infrastructure spending.

Sadly, the United Kingdom portfolio could not avoid the carnage of the UK Small Cap sector despite in many cases, such as Castle Support Services, Communisis and Nationwide Accident, results significantly exceeding market expectations.

As to our major holdings, Ashtead Group was sold before the share price fell a further 50% and Whatman was taken over.

The UK quoted portfolio has no direct exposure to the banking industry and its exposure to housebuilding is limited to MJ Gleeson, a company which has no debt.

Unquoted Portfolio

It was an extremely busy year for the unquoted portfolio. On the positive side, Motherwell Bridge was sold for an £18 million profit and for £4 million above last year's value. Trident Private Equity II performed well, returned capital to the Company and is now fully invested. Worldport was liquidated at above cost and Primesco and Craegmoor were sold.

Against this, it was necessary to write off Crucible and Jaffer at a cost to the Company of approximately £5 million.

It was also necessary to review the value of the Company's property holdings in view of the sharp fall in property values and this cost the Company a further £7.9 million during the year.

The only new unquoted was an investment in AssetCo Abu Dhabi which is described in greater detail later in this report.

Harry Gittes, our Chairman, has decided to step down but has kindly agreed to remain on the Board as a Non-Executive Director. He has been an outstanding Chairman for the past ten years and on behalf of the Board I would like to thank him for all of his hard work.

Christopher H B Mills

Chief Executive & Investment Manager
20 May 2009

Sector analysis of investments at fair value

	United	United
equities, convertible securities & loan stocks as a % of	States	Kingdom	Europe	Total	Total
total portfolio valuation	31.01.09	31.01.09	31.01.09	31.01.09	31.01.08
	%	%	%	%	%
Support Services	1.9	12.0	-	13.9	10.7
General Industrials	-	13.8	-	13.8	12.2
Investment Companies	-	12.6	-	12.6	16.1
Real Estate	-	7.5	4.1	11.6	9.8
Manufacturing	5.4	0.3	-	5.7	0.2
Industrial Engineering	-	5.4	-	5.4	8.9
Technology Hardware & Equipment	1.3	4.0	-	5.3	0.8
Travel & Leisure	-	4.1	-	4.1	5.3
Healthcare, Equipment & Services	0.3	3.1	-	3.4	4.6
Construction & Materials	-	3.0	-	3.0	6.6
Communications	-	2.9	-	2.9	1.6
Transport	-	2.7	-	2.7	-
Aerospace and Defence	2.3	-	-	2.3	-
Oil & Gas	0.9	1.1	-	2.0	3.7
Media	-	1.7	-	1.7	1.4
Food Producers	-	0.7	-	0.7	0.5
General Financial	-	0.2	-	0.2	3.7
Electronic & Electrical Equipment	-	0.1	-	0.1	-
Industrial Transportation	-	-	-	-	4.4
Consumer Cyclical	-	-	-	-	1.4
	12.1	75.2	4.1	91.4	91.9
treasury bills	8.6	-	-	8.6	8.1
total at 31 January 2009	20.7	75.2	4.1	100.0
total at 31 January 2008	23.9	73.7	2.4		100.0

Twenty largest investments

as at 31 January 2009

equities (including convertibles, loan stocks and related financing)		At fair value
		£'000
Castle Support Services PLC	UK Quoted on AIM	13,950
Oryx International Growth Fund Limited *†	UK Listed	11,228
Nationwide Accident Repair Services PLC	UK Quoted on AIM	9,100
Bionostics Holdings Limited	USA Unquoted	8,420
RPC Group PLC	UK Listed	8,400
Hampton Trust Group	UK Unquoted	7,515
Trident Private Equity Fund II LP	Cayman Islands Unquoted	7,138
AssetCo (Abu Dhabi) Limited	Unlisted	6,500
Martley Limited	Jersey Unquoted	5,590
Gleeson (MJ) Group PLC	UK Listed	4,814
ten largest investments		82,655
Avanti Communications Group PLC	UK Unquoted (loan notes)	4,783
Inspired Gaming Group PLC	UK Quoted on AIM	4,576
BBA Aviation Group PLC	UK Listed	4,440
Fayrewood ††	UK Listed	4,392
Orthoplastics Limited	UK Unquoted	4,000
Communisis PLC	UK Listed	3,848
Sterling Construction Inc.	USA Listed	3,721
Glass America	USA Unquoted	3,040
Chrysalis PLC	UK Listed	2,678
Payzone PLC **	European Quoted on AIM	2,533
twenty largest investments		120,666
Aggregate of other investments at fair value		24,202
		144,868

USA Treasury Bills		13,865
total value of investments and associates of the group		158,733

* incorporated in Guernsey.

† Oryx is accounted for in the Group accounts as an Associate under the equity method of accounting. The valuation

shown above is the Group's share of Oryx's net assets. All other investments are valued at fair value.

** incorporated in Republic of Ireland.

†† Fayrewood PLC delisted from AIM on 13 February 2009 and re-registered as a private limited company, Fayrewood Limited on 17 February 2009.

Unlisted investments profile

as at 31 January 2009

	2009
	Fair value
	£'000
Bionostics Holdings Limited (USA) Cost: £6,130,000	8,420
Bionostics is a specialist developer of medical diagnostic products, principally liquid control that are used to test the accuracy of calibrated blood testing devices. The company had a good year in 2008 beating both the previous year and the budget. Despite the difficult economic environment, trading in the current year is again expected to be in line with the budget. The last twelve months have seen an extraordinary increase in the new long-term orders that will increase sales by over 70% over the next three years with the benefits starting around September this year. This will have a marked impact on profitability which should grow even faster than sales. Bionostic's debt is less than 2.5x EBITDA with interest cover of circa 4.0x.
Hampton Trust Group (UK) Cost: £7,515,000	7,515
Hampton had a good year in a very difficult property market. A number of assets were sold above holding cost and a major property in Talbot Gateway, which was vacant at the time of our purchase of the business, is now fully let to quality covenants. A further significant sale is expected above book value within the next few months. The company is conservatively valued with interest cover of nearly 4x and with a debt to asset ratio of approximately 65% despite the fall in the property market. A write down was taken during the year to reflect lower property values.
Trident Private Equity Fund II LP (Cayman Islands) Cost: £1,215,000	7,138
Trident Private Equity Fund II LP ('TPE2') is a £64 million offshore private equity limited partnership. The fund's investment objective is to generate high absolute returns by investing in a portfolio of unquoted investments in small to medium sized companies in the UK. The fund concentrates primarily on leveraged buyouts and similar transactions, including public-to-private and pre IPO investments. At 31 January 2009, 100% of NASCIT's commitment of £10 million, had been drawn down and invested in ten private equity transactions. To date, the Company has received £1,275,000 in distributions from TPE2.
Carried forward	23,073

2009

Fair value

£'000

Brought forward

23,073

AssetCo (Abu Dhabi) Limited Cost: £6,500

6,500

AssetCo is the leading company in the UK providing support services to the UK fire and rescue services. AssetCo Abu Dhabi is a special purpose vehicle set up to exploit AssetCo's potential to gain significant revenues and profits in the Middle East. The investment has a yield of 6% and carries significant warrants to acquire shares in AssetCo in the event the anticipated Middle Eastern contract arises. AssetCo Abu Dhabi has no debt at this time.

Martley Limited (Jersey) Cost: £5,086.000

5,590

Martley Limited is a Jersey registered property company. Through its Luxembourg subsidiary companies, it invests in commercial property in Europe. The company part owns five properties within a Luxembourg based office park constructed in 2003. The gross lettable area totals approximately 21,500 square feet. The properties are fully let to tenants including several blue chip international companies. Since the investment was made, substantial amounts of debt have been repaid, rates have risen and the fund is now returning money to investors. However, a small write down was taken in the year to reflect general market conditions.

Avanti Communications Group plc (UK) Cost: £4,751,000

4,783

Avanti Communications supplies fixed satellite communications services to business institutional and residential customers in the UK, Europe and the Middle East including broadband and data connectivity through satellite capacity leased from third parties. It announced its half-yearly results for the six months ended 31 December 2008 on 2 February 2009 and stated that turnover had increased 28% to £3.2 million although an operating loss of £1.0 million was reported. The company has made excellent progress in contracting with wholesale partners in Europe and has won several regional government projects whereby government funds the cost of installing a fixed number of rural customers. The launch of the HYLAS satellite is now expected in the last quarter of 2009.

Carried forward

39,946

	2009
	Fair value
	£'000
Brought forward	39,946
Orthoplastics (UK) Cost: £849,000	4,000
Orthoplastics is one of only two companies in the world which manufactures premium-grade Ultra High Molecular Weight Polyethylene to the orthopaedics industry. In addition, it manufactures components for orthopaedic devices. The company, which has approximately 48% of the world market, had an outstanding year in the period to 31 March 2009, with EBITDA rising by over 150%. New capital was put into the business to significantly increase manufacturing capacity which will be available in December 2009. Significant orders for new components have also been received so the company is expecting a further substantial increase in profits in the year ending 31 March 2010. The company is in the process of acquiring a complementary business in orthopaedic metal components which will largely be funded with equity (£3 million from your Company). Proforma debt will be circa 0.5x EBITDA post completion. Orthoplastics is valued at approximately 6x EBITDA March 2009 results and approximately 3.5x projected 2010.
Glass America (USA) Cost: £2,360,000	3,040
Glass America is a consolidator of automotive glass repair companies in the United States. Last year it suffered from higher petrol prices which reduced the amount of driving in the summer months. However, the company finished its fourth quarter well and the year as a whole was only moderately below budget. So far results in 2009 have been extremely good and is it therefore expected that the current year will be a record. Debt in the business is approximately 1.5x last year's EBITDA and perhaps as little as 1x 2009 expected results.
Telos Corporation (USA) Cost: £1,365,000	2,079
Telos is a provider of IT solutions to the US Federal Government, the military, the intelligence community and commercial enterprises. The company has continued to perform strongly and has virtually no debt. It is expected that part of our investment in the preference shares will be redeemed this year. The company intends to sell itself as and when market conditions improve.
Carried forward	49,065

	2009
	Fair value
	£'000
Brought forward	49,065
Forefront Group (UK) Cost: £1,762,000	1,762
Forefront is a specialist civil engineering business focusing primarily on the gas supply industry. The company undertakes gas mains replacement and repair and the laying of new mains and is one of only three UK companies with the necessary equipment and trained operatives to undertake the inhibition of gas flow whilst 'in situ' gas mains are replaced or repaired. Forefront has a dominant position in eastern Greater London. Performance in 2008 was disappointing but we expect a major recovery in the current year which should lead to a liquidity event within the next eighteen months.
Crendon Industrial (UK) Cost: £3,291,000	1,694
The Crendon Industrial Park is a 30 acre site currently providing 230,545 square feet of modern and refurbished industrial and office premises. There are around 100 businesses located within the estate and occupancy levels are close to 100%. In addition to the present accommodation on the site, there is also a development area of 10.66 acres with outline planning approval for a further 80,000 square feet of industrial and office accommodation. It was necessary to write down the valuation during the year to reflect lower property values but we expect to regain our cost basis over the next three years.
Merchant Properties Unit Trust (UK) Cost: £2,717,000	1,137
The Merchant Properties Unit Trust is a portfolio of 30 Travis Perkins trade counter units purchased for £32.5m and simultaneously let back to Travis Perkins on 25-year leases with fixed uplifts at 3% p.a., reflecting an initial yield of 6%. The shares were written down during the year reflecting the weakness in the property market.
Kiln Lane, Immingham (UK) Cost: £1,000,000	750
This is a 53,000 square feet industrial unit on an 18.1 acre site at the Kiln Lane Industrial Estate. The property is let on two leases to Paragon Automotive Limited, expiring in 2010. The investment was written down during the year to reflect adverse property market conditions. The Company owns 88% of Kiln Lane, but the Board has chosen not to consolidate on the grounds of non-materiality.
Carried forward	54,408

	2009
	Fair value
	£'000
Brought forward	54,408
Darby Browallia LLP (UK) Cost: £546,000	546
Darby Browallia purchased Darby Glass Limited, the UK's largest independent supplier of insulating glass units and street furniture to both the commercial and domestic marketplace. It has sold off operations and returned capital to the Company. It is expected that the balance of the assets will be sold over the next few months yielding a good profit above the current valuation.
Ramen Holdings Limited (UK) Cost: £418,000	200
Ramen is the holding company for Wagamama restaurants, which continues to grow and perform well. At the end of 2008 there were 65 restaurants open in the UK, as well as 26 sites open under franchise outside the UK. However, in view of falling valuations across the restaurant industry, it was necessary to write down the valuation in the year.
Other unlisted investments	5,649

Total value of unlisted investments at fair value*	60,803

* Includes unlisted loan notes in these companies with a total value of £5,783,000.

Unlisted investments profile (aim quoted)

as at 31 January 2009

	2009
	Fair value
	£'000
Castle Support Services PLC Cost: £4,326,000	13,950
Castle Support Services announced its results for the year ended 30 June 2008 on 13 October 2008 (which included the first full year's trading for DM Technical Services Limited (DMTS) and reported that revenue for the year had increased by approximately 11% to £116.3 million, whilst operating profit (before pension settlement and profit on disposals) had significantly improved by approximately 21% to £15.4 million. These results demonstrate the strong market position held by DMTS in the provision of specialist inspection, repair and maintenance services for generators, motors and ancillary rotating equipment. In January 2008, the company completed a strategic move into the Middle East region through the acquisition of a 50% shareholding in a Dubai-based company. The company continues to experience encouraging levels of activity and expects to make further progress during the course of the next year.
Nationwide Accident Repair Services PLC Cost: £2,582,000	9,100
Nationwide provides automotive crash repair and accident administration services to the UK insurance industry. With a national network of accident repair centres located across England, Scotland and Wales employing over 2,200 people, it is the largest dedicated provider of accident repair services in the UK. The company announced its half-yearly results for the six months ended 30 June 2008 on 9 September 2008 and reported that revenue was up 16% to £88.3 million and profits before tax had increased by 14% to £3.9 million. The company expects that the strength of its contract base and additional capacity leaves it well positioned for growth.
Inspired Gaming Group PLC Cost: £15,998,000	4,576
Inspired Gaming Group is the leading player worldwide in the Open Server-Based Gaming (Open SBG™) market and is also the leading provider of analogue and Open SBG™ machines in the UK for the leisure and gaming markets. The group provides Open SBG™ software systems and Open SBG™ digital and networked terminals in 10 countries. The group's customer base includes bars, casinos, bingo halls, licensed betting offices, holiday parks and other out of home leisure venues. Key customers include the major gaming companies such as Gala Coral Group, William Hill, Betfred, Bourne Leisure and Stanleybet. On 31 October 2008, the company announced that since the sale of the loss-making Pubs Division and the completion of a £40 million fund raising via the issue of Convertible Unsecured Preference Shares in July 2008, trading across the group had been encouraging. The group is currently in discussions with various parties regarding offers received for certain of its divisions and for the group as a whole.
Carried forward	27,626

	2009
	Bid value
	£'000
Brought forward	27,626
Georgica PLC Cost: £9,200,000	1,988
Georgica is the UK's largest operator of ten pin bowling alleys and operates under the Tenpin brand name. The company announced it had rejected several approaches to take over the business and ended talks with potential bidders, stating that offers had been received but, due to both a difficult banking market and deteriorating trading conditions, none of these had resulted in an acceptable offer. Exit from this company will be pushed back to later in the year with an acceptable offer being made. Georgica is well funded and profitable and we believe the fall is overdone and the company represents very compelling value. On 10 March 2009, the company announced its proposal to establish Georgica as a wholly-owned subsidiary of a new-co, Essenden PLC, by means of a scheme of arrangement under which Georgica shareholders will receive new ordinary shares in Essenden and loan notes in exchange for their existing ordinary shares in Georgica. The scheme was approved by shareholders on 20 April 2009.
AssetCo PLC (UK) Cost: £1,393,000	531
AssetCo is the pioneering provider of integrated support services, vehicles and equipment to UK and overseas emergency services and homeland security organisations. It is at the forefront of providing support for the emergency services and has pioneered the development of the UK's most extensive range of integrated support services. AssetCo has established the UK's only Integrated Vehicle and Equipment Solution Centre and the UK's first dedicated Swift Water and Flood Rescue Centre. It has also established dedicated centres for Technology and Communications and Technical Rescue Training. Earlier in the year, AssetCo raised £15 million through the issue of preference shares by AssetCo (Abu Dhabi) Limited, a wholly owned subsidiary of AssetCo plc, to support its activities in the Middle East with the intention of securing long term integrated support service contracts.
Payzone PLC (formerly Cardpoint PLC) Cost: £5,893,000	311
Payzone was formed from the merger of Cardpoint and Alphyra in December 2007. The merged entity is a European market leader in payment systems, mobile-phone top up cards and ATMs, operating in several different countries including the UK. Payzone has a particularly strong presence in Germany and a key benefit of the merger will be the upside to be gained from the roll-out of Cardpoint's ATM product in that market as well as an estimated €6.5m of cost synergies. In addition, the combined companies have a strong position in a number of Eastern European markets such as Romania, Greece and Poland, including important contacts with local government agencies that should be an important source of revenue going forward.

Other AIM quoted investments	5,090

Total value of AIM quoted investments at bid value	35,546

Extract from the Group Report of Directors

for the year ended 31 January 2009

	The Directors present their Report (incorporating the Business Review) and the financial statements for the year ended 31 January 2009.
results and dividends	The total net deficit after taxation for the financial year ended 31 January 2009 amounted to £54,532,000 (2008: total net deficit £1,579,000). The Board do not propose a final dividend (2008: nil).
investment policy	1. The maximum investment limit is 15% of the Company’s investments in any one company at the time of the investment.
.	2.Gearing is limited to a maximum of 30% of net assets.
.	3The Company invests on both sides of the Atlantic, with the weighting varying from time to time.
	4.The Company will invest in unquoted securities as and when opportunities arise.
investment approach	The Company invests in a diversified range of companies, both quoted and unquoted, on both sides of the Atlantic in accordance with the above Investment Policy.
	Christopher Mills, the Joint Investment Manager, is responsible for the construction of the portfolio and details of the principal investments are set out above. The top twenty largest investments are listed above
.	When analysing a potential investment, the Managers will employ a number of valuation techniques depending on their relevance to the particular investment. The primary objective when deciding on a potential investment is the sustainability and growth of long term cash flow.
	In respect of the unquoted portfolio, regular contact is maintained with the management of prospective and existing investments as well as rigorous financial and business analysis of these companies. It is recognised that different types of business perform better than others depending on economic cycles and market conditions and this is reflected within the range of investments in the portfolio.
	The Company’s activities have not changed in the year ended 31 January 2009 and the Directors anticipate that the Company will continue to operate on the same basis during the current financial year.
financial instruments	The financial instruments employed by the Company primarily comprise equity and loan stock investments, although it does hold cash and liquid resources and various items such as debtors and creditors that arise directly from its operations. Further details of the Company’s risk management objectives and policies relating to the use of financial instruments can be found in Note 18.
business review	At 31 January 2009, the diluted net asset value (NAV) per share was 944p (31 January 2008: 1,209p), a decrease of 21.92% during the year, compared to a fall of 18.08% during the year in the Standard & Poor’s 500 Composite Index (Sterling adjusted). As stated in the Investment Managers’ Report, the US quoted portfolio performed extremely well during the year as a direct result of the takeover of its largest holding.
	A review of the performance of the Company’s business during the year (as required by section 417 of the Companies Act 2006) is included in the Chairman’s Statement and Investment Manager Report incorporated into this Report by reference.
	The Company has no employees and accordingly this business review does not contain any information regarding employees. As an investment trust, the Board do not believe that the Company’s business has an impact on the environment and has not put into place any policies regarding social and community issues. The Board does not believe that this will change in the near future but, if it were to do so, they would immediately review these matters.
key performance	Directors regard the following as the key indicators pertaining to the Company’s
indicators	performance:
	(i) net asset value per ordinary share
	(ii) total return per ordinary share
	(iii) performance against benchmark

.	The performance of the Company’s share price is measured against the Standard & Poor’s 500 Composite Index and the Russell 2000 Index, the Company’s benchmarks
future prospects	The Directors believe that the year ending January 2010 will see further progress, especially from the unquoted portfolio, which continues to offer the potential for further significant appreciation.
risk profile	The Company’s risk profile is set out in note 18 to the financial statements. The principal risks to the Company and its Shareholders are investment risk, market price risk and foreign currency risk.
directors’ responsibility statement
for the year ended 31 January 2009

responsibility statement	(i) To the best of our knowledge and belief the financial statements for the year ended
required by disclosure	31 January 2009, prepared in accordance with the International Financial Reporting
and transparency rule	Standards adopted by the European Union (“IFRS”), give a true and fair view of the
DTR) 4.1.12.	assets, liabilities, financial position and loss of the Company and Group;

	(ii)The Group Report of the Directors includes a fair review of the development and performance of the business and the position of the Company and Group together with a description of the principal risks and uncertainties that they face.
	For and on behalf of the Board of North Atlantic Smaller Companies Investment Trust PLC

                                                 Enrique Foster Gittes
          Chairman
          20 May 2009

Consolidated income statement

for the year ended 31 January

			2009			2009
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
investments
(Losses)/gains on investments	10	-	(54,325)	(54,325)	-	3,300	3,300
Exchange differences	10	-	7,042	7,042	-	(540)	(540)

net investment results		-	(47,283)	(47,283)	-	2,760	2,760

income	2	4,285	-	4,285	5,208	-	5,208

expenses
Investment management fee	3	(2,475)	(110)	(2,585)	(2,512)	(1,237)	(3,749)
Other expenses	4	(733)	-	(733)	(954)	-	(954)
Share based remuneration	5	(50)	-	(50)	(255)	-	(255)
Interest payable and similar charges	6	(487)	-	(487)	(366)	-	(366)

total expenses		(3,745)	(110)	(3,855)	(4,087)	(1,237)	(5,324)

Share of net return of associate	10	-	(7,677)	(7,677)	-	(4,223)	(4,223)
profit before taxation		540	(55,070)	(54,530)	1,121	(2,700)	(1,579)

Taxation	7	(2)	-	(2)	-	-	-

transfer to reserves		538	(55,070)	(54,532)	1,121	(2,700)	(1,579)

attributable to:
Equity holders of the parent		538	(55,070)	(54,532)	1,272	(3,021)	(1,749)
Minority interest	8	-	-	-	(151)	321	170

		538	(55,070)	(54,532)	1,121	(2,700)	(1,579)

return per ordinary share:
Basic	9			(368.77)p			(12.19)p
Diluted	9			(284.47)p			(8.73)p

The total column of this statement represents the Group's income statement, prepared in accordance with IFRS. The supplementary revenue return and capital return columns are both prepared under guidance published by the Association of Investment Companies ('AIC').

All items in the above statement derive from continuing operations.

Consolidated statement of changes in equity

for the year ended 31 January

group	Share	CULS	Share options	Share premium	Capital reserve -	Capital reserve -	Revenue		Minority
	capital	reserve	reserve	account	realised	unrealised	reserve	Total	interest	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
2009
31 January 2008	739	34	1,341	629	180,033	58,128	(2,930)	237,974	-	237,974

Total recognised income and expenses for the year	-	-	-	-	24,924	(79,994)	538	(54,532)	-	(54,532)

Total recognised income and expenses for the year	-	-	-	-	24,924	(79,994)	538	(54,532)	-	(54,532)
Share Options expense	-	-	90	-	-	-	-	90	-	90
Exercise of Management Options	-	-	(83)	-	-	-	-	(83)	-	(83)
Premium paid on repurchase of CULS	-	-	-	-	(5,325)	-	-	(5,325)	-	(5,325)
Arising on conversion of CULS	1	(5)	-	-	-	-	-	(4)	-	(4)

31-January 2009	740	29	1,348	629	199,632	(21,866)	(2,392)	178,120	-	178,120

	Share	CULS	Share options	Share premium	Capital reserve -	Capital reserve -	Revenue		Minority
	capital	reserve	reserve	account	realised	unrealised	reserve	Total	interest	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
2008
31-January 2007	689	43	1,086	629	183,887	60,476	(4,908)	241,902	7,740	249,642

Total recognised income and expenses for the year	-	-	-	-	4,802	(7,823)	1,272	(1,749)	170	(1,579)

Total recognised income and expenses for the year	-	-	-	-	4,802	(7,823)	1,272	(1,749)	170	(1,579)
Share Options expense	-	-	255	-	-	-	-	255	-	255
Arising on deconsolidation of AOT	-	-	-	-	(6,181)	5,475	706	-	(7,910)	(7,910)
Premium paid on repurchase of CULS	-	-	-	-	(2,475)	-	-	(2,475)	-	(2,475)
Arising on conversion of CULS	50	(9)	-	-	-	-	-	41	-	41

31-January 2008	739	34	1,341	629	180,033	58,128	(2,930)	237,974	-	237,974

Company statement of changes in equity

for the year ended 31 January

			Share	Share	Capital	Capital
company	Share	CULS	options	premium	reserve -	reserve -	Revenue
	capital	reserve	reserve	account	realised	unrealised	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
2009
31 January 2008	739	34	1,341	629	178,340	59,443	(2,552)	237,974

Total recognised income and expenses for the year	-	-	-	-	25,038	(80,108)	538	(54,532)

Total recognised income and expenses for the year	-	-	-	-	25,038	(80,108)	538	(54,532)
Share Options expense	-	-	90	-	-	-	-	90
Exercise of Management Options	-	-	(83)	-	-	-	-	(83)
Premium paid on repurchase of CULS	-	-	-	-	(5,325)	-	-	(5,325)
Arising on conversion of CULS	1	(5)	-	-	-	-	-	(4)


31January 2009	740	29	1,348	629	198,053	(20,665)	(2,014)	178,120

			Share	Share	Capital	Capital
	Share	CULS	options	premium	reserve -	reserve -	Reserve
	capital	reserve	reserve	account	realised	unrealised	revenue	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
2008
31 January 2007	689	43	1,086	629	176,056	67,461	(4,061)	241,903

Total recognised income and expenses for the year	-	-	-	-	4,759	(8,018)	1,509	(1,750)

Total recognised income and expenses for the year	-	-	-	-	4,759	(8,018)	1,509	(1,750)
Share Options expense	-	-	255	-	-	-	-	255
Premium paid on repurchase of CULS	-	-	-	-	(2,475)	-	-	(2,475)
Arising on conversion of CULS	50	(9)	-	-	-	-	-	41

31 January 2008	739	34	1,341	629	178,340	59,443	(2,552)	237,974

Consolidated and company balance sheets

as at 31 January

		Group	Group	Company	Company
		2009	2008	2009	2008
	Notes	£'000	£'000	£'000	£'000
non current assets
Investments at fair value through profit or loss	10	147,505	231,820	158,733	250,748
Investments accounted for using the equity method	10	11,228	18,928	-	-

		158,733	250,748	158,733	250,748
current assets
Investments held for trading in Subsidiary Companies		-	308	-	-
Trade and other receivables	11	3,989	4,169	4,005	4,477
Cash and cash equivalents		25,514	8,504	25,498	8,504

		29,503	12,981	29,503	12,981

total assets		188,236	263,729	188,236	263,729

current liabilities
Bank loans and overdrafts	12	(7,874)	(9,356)	(7,874)	(9,356)
Investments held for trading - derivatives	10	(838)	(612)	(838)	(612)
Trade and other payables	13	(1,240)	(15,595)	(1,240)	(15,595)

		(9,952)	(25,563)	(9,952)	(25,563)

total assets less current liabilities		178,284	238,166	178,284	238,166

non current liabilities
CULS	14	(164)	(192)	(164)	(192)

		(164)	(192)	(164)	(192)

total liabilities		(10,116)	(25,755)	(10,116)	(25,755)

net assets		178,120	237,974	178,120	237,974

Consolidated and company balance sheets

as at 31 January

		Group	Group	Company	Company
		2009	2008	2009	2008
	Notes	£'000	£'000	£'000	£'000
represented by:
Share capital	15	740	739	740	739
Equity component of CULS		29	34	29	34
Share options reserve		1,348	1,341	1,348	1,341
Share premium account		629	629	629	629
Capital reserve - realised		199,632	180,033	198,053	178,340
Capital reserve - unrealised		(21,866)	58,128	(20,665)	59,443
Revenue reserve		(2,392)	(2,930)	(2,014)	(2,552)

total equity attributable to equity holders of the parent
		178,120	237,974	178,120	237,974

net asset value per ordinary share:
Basic	9	1,204p	1,611p
Diluted	9	944p	1,209p

These financial statements were approved by the Board of Directors on 20 May 2009 and
signed on its behalf by Enrique Foster Gittes, Chairman

Consolidated cash flow statement

for the year ended 31 January

	Notes	2009	2008
group		£'000	£'000
cash flows from operating activities
Investment income received		3,202	4,147
Bank deposit interest received		376	690
Other income		100	78
Sale of investments by dealing Subsidiary		-	(220)
Investment Manager's fees paid		(3,626)	(3,772)
Other cash payments		(466)	(705)

cash (expended)/received from operations	16	(414)	218
Bank interest paid		(457)	(282)
CULS interest paid		(19)	(23)

net cash outflow from operating activities		(890)	(87)

cash flows from investing activities
Purchases of investments		(153,593)	(171,086)
Sales of investments		172,624	167,098

net cash inflow/(outflow) from investing activities		19,031	(3,988)

cash flows from financing activities
Repayment of fixed term borrowings		(2,777)	(554)
Increase in fixed term borrowings		-	7,113
Repurchase of CULS for cancellation		(5,357)	(2,485)
Management Options exercised		(83)	-

net cash (outflow)/inflow from financing activities		(8,217)	4,074

increase/(decrease) in cash and cash equivalents for the year		9,924	(1)

cash and cash equivalents at the start of the year		8,504	9,497
Arising on deconsolidation of AOT		-	(1,091)
Revaluation of foreign currency balances		7,086	99

cash and cash equivalents at the end of the year	17	25,514	8,504

Company cash flow statement

for the year ended 31 January

	Note	2009	2008
company		£'000	£'000
cash flows from operating activities
Investment income received		3,202	4,147
Bank deposit interest received		223	595
Other income		8	78
Investment Manager's fees paid		(3,626)	(3,777)
Other cash payments		(467)	(693)

cash (expended)/received from operations	16	(660)	350
Bank interest paid		(457)	(282)
CULS interest paid		(19)	(23)

net cash (outflow)/inflow from operating activities		(1,136)	45

cash flows from investing activities
Purchases of investments		(153,593)	(165,368)
Sales of investments		172,624	163,148

net cash inflow/(outflow) from investing activities		19,031	(2,220)

cash flows from financing activities
Repayment of fixed term borrowings		(2,777)	(554)
Increase in fixed term borrowings		-	7,113
Repurchase of CULS for cancellation		(5,357)	(2,485)
Management Options exercised		(83)	-
Short-term loans net repaid by subsidiary		230	5,971

net cash (outflow)/inflow from financing activities		(7,987)	10,045

increase in cash and cash equivalents for the year		9,908	7,870

cash and cash equivalents at the start of the year		8,504	542
Revaluation of foreign currency balances		7,086	92

cash and cash equivalents at the end of the year	17	25,498	8,504

The financial statements have been prepared in accordance with the accounting policies on
pages 44 to 49 of the Annual Report.

The notes below form part of these financial statements.

Notes to the financial statements

1 accounting policies

North Atlantic Smaller Companies Investment Trust plc (NASCIT) is a Company incorporated in Great Britain and registered in England and Wales under the Companies Acts 1948 to 1967. The consolidated Annual Report for the Group for the year ended 31 January 2009 comprises the results of the Company and its Subsidiary - Consolidated Venture Finance Limited (together referred to as the 'Group').

Standards that have been adopted during the previous year

IFRS 7 Financial Instrument: Disclosures
IAS 1 (amendment) Presentation of Financial Statements.

New standards and interpretations not applied

At the date of authorisation of these financial statements, the following standards and interpretations have not been applied in these financial statements since they were in issue but not yet effective:

International Accounting Standards (IAS/IFRS)		Effective date
IAS 1 (revised)	Presentation of Financial Statements Comprehensive revision including requiring a statement of comprehensive income

		01 January09
IFRS 8	Operating Segments	01 January09
IAS 23	Borrowing Costs (revised March 2007)	01 January09
IAS 27	Consolidated financial Statements (revised)	01 July 09
IFRS 2	Share based payment: vesting conditions	01 January 2009
International Financial Reporting Interpretations Committee (IFRIC)
IFRIC 13	Customer Loyalty Programmes	01 July 2008
IFRIC 16	Hedges of a Net Investment in a foreign operation	01October 2008
IFRIC 17	Distribution of Non Cash Assets to Owners	01July 2009
IFRIC 18	Transfers of Assets to Customers	01July 2009

The Directors have chosen not to early adopt these standards and interpretations as they do not anticipate that they would have a material impact on the Group's financial statements in the period of initial application.

(a) basis of pre

a) basis of preparation/statement of compliance

The consolidated annual financial statements of the Group and the annual financial statements of the Company have been prepared in conformity with International Financial Reporting Standards ('IFRS'), which comprise standards and interpretations approved by the International Accounting Standards Board and International Financial Accounting Standards and Standing Interpretation Committee, interpretations approved by the International Accounting Standards Committee that remain in effect and to the extent they have been adopted by the European Union. They have also been prepared in accordance with applicable requirements of England and Wales company law and reflect the following policies which have been adopted and applied consistently. The financial statements have also been prepared in accordance with the Statement of Recommended Practice ('SORP') for investment trust companies, except to any extent where it conflicts with IFRS.

(b) convention

The financial statements are presented in Sterling rounded to the nearest thousand. The financial statements have been prepared on a going concern basis under the historical cost convention, except for the measurement at fair value of investments and derivatives designated at fair value through profit or loss.

The Group financial statements consolidate the financial statements of the Company and its wholly owned Subsidiary undertaking, Consolidated Venture Finance Limited, drawn up to 31 January 2009 and the results of its majority owned subsidiary, American Opportunity Trust PLC up to 22 February 2007.

Except as shown in (e) below, in accordance with IAS 28 (Investments in Associates), investments where the Company holds, directly or indirectly, more than 20% or more of the voting power of the investee, or otherwise has significant influence, are not accounted for as associates. Instead they are accounted for in the same way as other investments designated as at fair value through profit or loss.

In accordance with the exemptions given by s230 of the Companies Act 1985, the Company has not presented its own Income Statement. The amount of the Company's loss for the financial year dealt with in the accounts of the Group is £54,532,000 (2008: £1,750,000).

(d) segmental reporting

The Directors are of the opinion that the Group is engaged in a single segment of business, being investment business. The Group invests in smaller companies principally based in countries bordering the North Atlantic Ocean.

(e) oryx

NASCIT is in position to exercise significant influence, but not control or joint control, through participation in the financial and operating policy decisions of Oryx. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over these policies.

The results and assets and liabilities of Oryx are incorporated in the consolidated accounts using the equity method of accounting. Oryx is carried in the consolidated balance sheet at cost as adjusted by post-acquisition changes in the Group's share of the net assets of Oryx.

(f) investments

All non current investments held by the Group, other than the investment in Oryx, are designated at 'fair value through profit or loss' on initial acquisition. Investments are initially recognised at fair value, being the value of the consideration given.

The Company's business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth. This portfolio of financial assets is managed and its performance evaluated on a fair value basis, in accordance with a documented investment strategy and information about the portfolio is provided internally on that basis to the Company's Board of Directors and other key management personnel.

After initial recognition, investments are measured at fair value, with unrealised gains and losses on investments recognised in the Income Statement and (apart from those on current asset investments) allocated to capital. Realised gains and losses on investments sold are calculated as the difference between sales proceeds and cost.

Investments are included in the Balance Sheet on the following basis:

(i) quoted at market value on a recognised stock exchange

Securities quoted on recognised stock exchanges are valued at the market bid price and exchange rates ruling at the balance sheet date. With the exception of AIM quoted sets stocks, which are valued using latest trade price, which is equivalent to the fair value.

Unexpired traded put and call options are held in current liabilities as investments held for trading - derivatives and are revalued to the prevailing fair value at the balance sheet date.

(ii) unlisted at market value

Treasury Bills are valued at fair value having been adjusted for movements in exchange rates between the dates of purchase and the year-end. Accrued income arising from them is included in debtors.

(iii) unquoted at directors' estimate of fair value

Unquoted investments, including the subsidiary, are valued in accordance with the International Private Equity and Venture Capital Association (IPEVCA) guidelines. Their valuation incorporates all factors that market participants would consider in setting a price. The primary valuation techniques employed to value the unquoted investments are earnings multiples, recent transactions and the net asset basis. Valuations in local currency are translated into Sterling at the exchange rate ruling on the balance sheet date.

Included within the income statement as at 31 January 2009, is a loss of £27,133,000 relative to the movement in the fair value of the unlisted investments valued using assumption techniques.

(iv) current asset investments

Investments held by the Subsidiary undertakings are classified as 'held for trading' and are valued at fair value in accordance with the policies set out in 1(f)(i) and 1(f)(iii) above for quoted and unquoted holdings respectively.

Profits or losses on investments 'held for trading' are taken to revenue.

(g) options

Where put and call option transactions are entered into for investment purposes, the premiums received are taken to the Income Statement and included as capital and the gains or losses arising on their revaluations are recognised in the Income Statement and included as capital likewise.

Premiums received are transferred to the Capital Reserve - realised and gains or losses on revaluation are taken to the Capital Reserve - unrealised. Where an option transaction is in profit at the year-end, the premium received on any open option is spread over the life of that option.

(h) foreign currency

The currency of the primary economic environment in which the Group operates (the functional currency) is pounds Sterling (Sterling), which is also the presentational currency of the Group. Transactions involving currencies other than Sterling are recorded at the exchange rate ruling on the transaction date. At each balance sheet date, monetary items and non-monetary assets and liabilities that are fair valued, which are denominated in foreign currencies, are retranslated at the closing rates of exchange.

Exchange differences arise on settlement of monetary items and from retranslating at the balance sheet date:

• investments and other financial instruments measured at fair value through profit or loss; and

• other monetary items

are included in the Income Statement and allocated as capital if they are of a capital nature, or as revenue if they
are of a revenue nature.

Exchange differences allocated as capital are included in the transfer to Capital Reserve - realised or Capital Reserve - unrealised as appropriate.

(i) trade date accounting

All 'regular way' purchases and sales of financial assets are recognised on the 'trade date' i.e. the day that the entity commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of the asset within a time frame generally established by regulation or convention in the market place.

(j) income

Dividends receivable on quoted equity shares are taken into account on the ex-dividend date. Where no ex-dividend date is quoted, they are brought into account when the Group's right to receive payment is established. Other investment income and interest receivable are included in the financial statements on an accruals basis. Dividends received from UK registered companies are accounted for net of imputed tax credits.

(k) expenses

All expenses are accounted for on an accruals basis and are allocated wholly to revenue with the exception of Performance Fees which are allocated wholly to capital, as the fee is payable by reference to the capital performance of the Group and transaction costs which are allocated to capital.

(l) share based payments

In accordance with IFRS 2: Share Based Payments, an expense is recognised in the financial statements relating to the value of share options awarded under the 2002 Executive Share Option Scheme to the Chief Executive and employees of North Atlantic Value LLP.

The accounting charge is based on the fair value of each grant, measured at the grant date and is spread over the vesting period. The deemed expense is transferred to the Share Options Reserve.

(m) cash and cash equivalents

Cash in hand and at banks and short-term deposits which are held to maturity are carried at cost. Cash and cash equivalents are defined as cash in hand, demand deposits and short-term, highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value. Bank overdrafts that are repayable on demand, which form an integral part of the Group's cash management, are included as a component of cash and cash equivalents for the purpose of the Cash Flow Statement.

(n) bank loans and borrowings

All bank loans and borrowings are initially recognised at cost, being the fair value of the consideration received, less issue costs where applicable. After initial recognition, all interest bearing loans and borrowings are subsequently measured at amortised cost. Any difference between cost and redemption value has been recognised in the Income Statement over the period of the borrowings on an effective interest rate basis.

(o) convertible unsecured loan stock (culs) 2013

Under IFRS, the CULS are deemed to comprise of an equity element and a debt element, rather than just being treated as debt. The equity element was identified when the CULS were issued and reduces as the CULS are either converted or bought back. A CULS Reserve has been created to recognise the equity component.

(p) taxation

Tax on the profit or loss for the year comprises current and deferred tax. Corporation tax is recognised in the Income Statement except to the extent that it relates to items recognised directly in Equity, in which case it is recognised in Equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date and any adjustment to tax payable in respect of previous years. The tax effect of different items of expenditure is allocated between revenue and capital on the same basis as the particular item to which it relates, using the Company's effective rate of tax, as applied to those items allocated to revenue, for the accounting period.

Deferred tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax basis of assets and liabilities and their carrying amount for financial reporting purposes. Deferred tax liabilities are measured at the tax rates that are expected to apply to the period when the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

(q) share capital and reserves

Share Capital represents the nominal value of equity shares.

Equity component of CULS represents the equity component of convertible unsecured loan stock issued.

Share Options Reserve represents the expense of share based payments. The fair value of Share Options is measured at grant date and spread over the vesting period. The deemed expense is transferred to the Share Options Reserve.

Share Premium Account represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue.

Capital Reserve - realised represents capital and exchange gains and losses on the disposal of investments and realisation of foreign currency transactions. In addition, performance fee costs are allocated to the Capital Reserve - realised.

Capital Reserve - unrealised represents capital and exchange gains and losses on the revaluation of investments and foreign currency assets and liabilities held at the balance sheet date.

Revenue Reserve represents retained profits from the income derived from holding investment assets less the costs associated with running the Company.

2 income

	2009	2008
	£'000	£'000
income from investments
UK dividend income	2,066	2,316
Unfranked investment income
- dividends	30	10
- dividends reinvested	-	228
- interest	1,031	1,609
- interest reinvested	804	477

	3,931	4,640

other income
Interest receivable	378	694
Dealing losses of Subsidiary	(125)	(204)
Warranty fee for investee company	-	15
Indemnity fee for investee company	5	1
Sundry income	96	62

	354	568

Total income	4,285	5,208

	2009	2008
	£'000	£'000
total income comprises
Dividends	2,096	2,554
Interest	2,213	2,780
Other income	(24)	(126)

	4,285	5,208

	2009	2008
	£'000	£'000
income from investments
Listed UK	2,066	2,316
Listed overseas	-	3
Unlisted	1,865	2,321

	3,931	4,640

3 investment management fee

(i)    Pursuant to the Secondment Services Agreement, described in the Group Report of the
        Directors on page 20 of the Annual Report and the Directors' Remuneration Report on page 30 of the
        Annual Report, Growth Financial Services Limited ('GFS') provides the services of Mr Mills as Chief
        Executive of the Company, who is responsible for day-to-day investment decisions. Mr Mills is the sole
        shareholder and a director of GFS. GFS is entitled to receive part of the investment management and
        related fees payable to GFS and North Atlantic Value LLP as may be agreed between them from time to
        time.

(ii)   Pursuant to the terms of the Management, Administration and Custody Agreement, described on
        page 20 of the Group Report of the Directors in the Annual Report, North Atlantic Value LLP is entitled
        to receive a fee (the Annual Fee) in respect of each financial period equal to the difference between (a) 1%
        of Shareholders' Funds (as defined) on 31 January each year and (b) the amount payable to GFS referred
        to in note 3(i) above. This fee is payable quarterly in advance.

As set out in note 19, no formal arrangements exist to avoid double charging on investments managed or
advised by North Atlantic Value LLP.

(iii)   The Performance Fee, calculated annually to 31 January, is only payable if the investment portfolio
         outperforms the Sterling adjusted Standard & Poors' 500 Composite Index and is limited to a maximum
         payment of 0.5% of Shareholders' Funds. The Performance Fee arrangements payable to GFS have been
         in place since 1984 when they were approved by Shareholders.

(iv) In addition to the management fees disclosed in note 3(ii) above, North Atlantic Value LLP is also paid the
following:

- an activity fee of £225 per transaction as reimbursement of custodian and related transaction costs
incurred on the Company's behalf (see note 4).

- an investment management related fee of £100,000 per annum (see note 4).

The amounts payable in the year in respect of investment management are as follows:

		2009			2008
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Annual fee	2,475	-	2,475	2,454	-	2,454
Performance Fee	-	110	110	-	1,197	1,197
Irrecoverable VAT thereon	-	-	-	58	40	98

	2,475	110	2,585	2,512	1,237	3,749

At 31 January 2009, £124,000 was payable to the Joint Manager in respect of outstanding management fees (2008: £122,000 plus VAT). No amounts were payable to GFS in respect of any Performance Fee (2008: £1,197,000 plus VAT).

The irrecoverable VAT charged during the previous year ended 31 January 2008 has been affected as a consequence of the HMRC ruling (as referred to in note 21). The Company was charged VAT on fees for the quarters to 30 April, 31 July and 31 October 2007, but no VAT was charged for the quarter to 31 January 2008.

4 other expenses

	2009	2008
	£'000	£'000
Auditors' remuneration (see below)	41	45
Directors' fees	123	109
Investment management related fee (see note 3)	100	100
Activity fees (see note 3)	54	75
AOT Liquidation costs	-	350
Other expenses	415	275

	733	954

	2009	2008
Auditors' remuneration	£'000	£'000
Fees payable to the Company's Auditor for the audit of the financial statements	36	28
Fees payable to the Company's Auditor and its associates for other services:

- Audit of the financial statements of the
Company's Subsidiaries pursuant to legislation	1	1
- Other services relating to taxation	4	13
- All other services	-	3

	41	45

Fees payable to the Company's Auditor, Grant Thornton UK LLP and its associates for non-audit services to the Company itself are not disclosed in the individual financial statements of the Company because the Company's Group financial statements are required by the Companies (Disclosure of Auditor Remuneration) Regulations 2005, regulation 5 (1), to disclose such fees on a consolidated basis.

5 share based remuneration

		2009			2008
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Charge for year per IFRS 2 (see note 1(l))	90	-	90	255	-	255
Cost of repurchasing management options (see below)	43	-	43	-	-	-
Exercised options	-83	-	-83	-	-	-

	50	-	50	255	-	255

A list of the Options in issue are shown below;

No. of options	Year of		Excercised / cancelled	Grant of options during		No. of Options
at 1 February 2008	grant	Price	during the year	the year	Price	at 31 January 2009
100,000	2000	677.57p	-	-	-	100,000
355,000	2002	645.54p	-	-	-	355,000
237,500	2003	663.80p	(12,500)	-	-	225,000
337,500	2005	875.60p	-	-	-	337,500

Further details of Options are disclosed in note 15.

During the year the 12,500 Management Options were repurchased and cancelled. The £43,000 charge represents the cost of repurchasing these Options.

6 interest payable and similar charges

	2009	2008
	£'000	£'000
On bank loans and overdrafts	468	343
Interest on CULS	19	23

	487	366

7 taxation on ordinary activities

	2009	2008
	£'000	£'000
Overseas taxation	2	-

	2	-

The current taxation charge for the year is different from the standard rate of corporation tax in the UK 28.33% (2008: 30%). The differences are explained below.

	2009	2008
	Total	Total
	£'000	£'000
Total return on ordinary activities before taxation	(54,530)	(1,579)

Theoretical tax at UK Corporation tax rate of 28.33% (2008: 30%)	(15,450)	(473)

Effects of:
Non taxable capital return	15,602	439
UK dividends which are not taxable	(585)	(695)
Increase in tax losses, disallowable expenses
and offshore income gains	433	729
Overseas tax which is not recoverable	2	-

Actual current tax charge	2	-

Factors that may affect future tax charges:

The Group has tax losses of £17,015,000 (2008: £15,377,000) that are available to offset future taxable revenue. A deferred tax asset has not been recognised in respect of those losses which will be recoverable only to the extent that the Group has sufficient future taxable revenue.

Of the Group tax losses shown above, the Parent Company has tax losses of £17,015,000 (2008: £15,377,000) that are available to offset future taxable revenue. A deferred tax asset has not been recognised in respect of those losses, which will be recoverable only to the extent that the Company has sufficient future taxable revenue.

The Company carries out its activities as an investment trust and the intention is to continue meeting the conditions required to obtain approval in the foreseeable future. Therefore, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.

8 minority interest

On 23 February 2007 American Opportunity Trust PLC (AOT) merged with Oryx International Growth Fund Limited (Oryx) by way of a Scheme of Arrangement under Section 425 of the Companies Act 1985. Under the Scheme of Arrangement, Oryx acquired AOT and is the continuing company. All the assets and liabilities of AOT were transferred to it. Under the terms of the scheme, AOT shareholders received 322 New Oryx ordinary shares for every 1,000 AOT shares, and thus the Company received 3,254,741 New Oryx ordinary shares. No cash consideration was received. As a result of the merger, the Company held 21.72% of the total voting rights in Oryx.

In the Company's accounts, as a result of the merger, the value of the Company's investment in AOT at close of 22 February 2007 was transferred to the investment in Oryx at nil gain or loss.

There were no minority interest movements during the year ended 31 January 2009.

9 return per ordinary share and net asset value per ordinary share

Consolidated return per Ordinary Share:

		Revenue			Capital			Total
	*Net return	Ordinary	Per Share	*Net return	Ordinary	Per Share	*Net return	Ordinary	Per Share
	£'000	Shares	pence	£'000	Shares	pence	£'000	Shares	pence
2009
Basic return per Share	538	14,787,546	3.64	(55,070)	14,787,546	(372.41)	(54,532)	14,787,546	(368.77)
Option conversion**	-	201,023		-	201,023		-	201,023
CULS***	21	4,173,720		-	4,173,720		21	4,173,720

Diluted return per Share	559	19,162,289	2.92	(55,070)	19,162,289	(287.39)	(54,511)	19,162,289	(284.47)

		Revenue			Capital			Total
	*Net return	Ordinary	Per Share	*Net return	Ordinary	Per Share	*Net return	Ordinary	Per Share
	£'000	Shares	pence	£'000	Shares	pence	£'000	Shares	pence
2008
Basic return per Share	1,272	14,350,263	8.86	(3,021)	14,350,263	(21.05)	(1,749)	14,350,263	(12.19)
Option conversion**	-	377,878		-	377,878		-	377,878
CULS***	25	5,019,049		-	5,019,049		25	5,019,049

Diluted return per Share	1,297	19,747,190	6.57	(3,021)	19,747,190	(15.30)	(1,724)	19,747,190	(8.73)

Basic return per Ordinary Share has been calculated using the weighted average number of Ordinary Shares in issue during the year.

* Net return on ordinary activities attributable to Ordinary Shareholders.
** Excess of the total number of potential Shares on Option conversion over the number that could be issued at average market price, as calculated in accordance with IAS 33: Earnings per Share.
*** CULS assumed converted as average share price during the year was greater than the conversion price. CULS are anti-dilutive whenever its interest saved (net of tax and other changes in income or expense) per Ordinary share obtainable on conversion exceeds basic return per share.

Consolidated net asset value per Ordinary Share:

The consolidated net asset value per Ordinary Share calculated in accordance with the Articles of Association is as follows:

	Net asset value per Share
	2009	2008
Ordinary Shares - Basic	1,204p	1,611p
- Diluted	944p	1,209p

The basic net asset value per Ordinary Share is based on net assets of £178,120,000 (2008: £237,974,000) and on 14,795,548 Ordinary Shares (2008: 14,775,208) being the number of Ordinary Shares in issue at the year end.

The diluted net asset value per Ordinary Share is calculated on the assumption that the outstanding 2013 CULS are fully converted at par and that all 1,017,500 (2008: 1,030,000) Share Options were exercised at the prevailing exercise prices, giving a total of 19,679,552 issued Ordinary Shares (2007: 20,322,052).

10 investments

a. Investments at fair value through profit or loss

	Group	Group	Company	Company
	2009	2008	2009	2008
	£'000	£'000	£'000	£'000
Quoted at fair value:
United Kingdom	65,967	103,173	77,195	122,101
Overseas	6,870	13,982	6,870	13,982

Total quoted investments	72,837	117,155	84,065	136,083
Treasury bills at fair value	13,865	20,336	13,865	20,336
Unlisted at fair value	60,803	94,329	60,803	94,329

Total investments at fair value	147,505	231,820	158,733	250,748

	Listed	AIM	Unlisted	Loan	Treasury
	equities	quoted	equities	stocks	Bills	Total
group	£'000	£'000	£'000	£'000	£'000	£'000
analysis of investment portfolio movements
Opening bookcost as at 1 February 2008	59,371	33,109	54,173	14,244	19,863	180,760
Opening unrealised appreciation/(depreciation)	529	24,146	26,780	(868)	473	51,060

opening valuation as at 1 February 2008	59,900	57,255	80,953	13,376	20,336	231,820

Movements in year:
Transfers	-	-	-	-	-	-
Purchases at cost	32,040	15,833	14,111	14,366	71,799	148,149
Sales - proceeds	(39,233)	(821)	(36,847)	(20,748)	(79,172)	(176,821)
- realised gains/(losses) on sales	9,269	301	11,680	(348)	2,071	22,973
(Decrease)/increase in unrealised appreciation/(depreciation)
	(24,685)	(37,022)	(16,077)	337	(1,169)	(78,616)

closing valuation as at 31 January 2009	37,291	35,546	53,820	6,983	13,865	147,505

Closing bookcost as at 31 January 2009	61,447	48,422	43,117	7,514	14,561	175,061
Closing unrealised (depreciation)/appreciation	(24,156)	(12,876)	10,703	(531)	(696)	(27,556)

	37,291	35,546	53,820	6,983	13,865	147,505

company
analysis of investment portfolio movements
Opening bookcost as at 1 February 2008	69,866	33,109	54,240	14,244	19,863	191,322
Opening unrealised appreciation/(depreciation)	8,962	24,146	26,713	(868)	473	59,426

opening valuation as at 1 February 2008	78,828	57,255	80,953	13,376	20,336	250,748

Movement in year:
Transfers	-	-	-	-	-	-
Purchases at cost	32,040	15,833	14,111	14,366	71,799	148,149
Sales - proceeds	(39,256)	(821)	(36,847)	(20,748)	(79,172)	(176,844)
- realised gains/(losses) on sales	9,278	301	11,680	(348)	2,071	22,982
(Decrease)/increase in unrealised appreciation/(depreciation)
	(32,371)	(37,022)	(16,077)	337	(1,169)	(86,302)

closing valuation as at 31 January 2009	48,519	35,546	53,820	6,983	13,865	158,733

Closing bookcost as at 31 January 2009	71,928	48,422	43,184	7,514	14,561	185,609
Closing unrealised (depreciation)/appreciation	(23,409)	(12,876)	10,636	(531)	(696)	(26,876)

	48,519	35,546	53,820	6,983	13,865	158,733

	Listed	AIM	Unlisted	Loan	Treasury
	equities	quoted	equities	stocks	Bills	Total
group	£'000	£'000	£'000	£'000	£'000	£'000
analysis of investment portfolio movements
Opening bookcost as at 1 February 2007	55,192	28,534	52,517	12,322	16,949	165,514
Opening unrealised appreciation/(depreciation)	24,373	21,038	16,422	(1,889)	186	60,130
opening valuation as at 1 February 2007	79,565	49,572	68,939	10,433	17,135	225,644

Movements in year:
Transfers	2,712	2,456	115	(5,283)	-	-
Purchases at cost	38,562	8,773	25,499	11,430	98,046	182,310
Sales - proceeds	(25,482)	(6,987)	(23,447)	(4,166)	(90,689)	(150,771)
- realised gains/(losses) on sales	6,375	1,096	(511)	(59)	(957)	5,944
Transfer to equity accounted investments
- bookcost	(11,285)	-	-	-	-	(11,285)
- unrealised appreciation	(12,721)	-	-	-	-	(12,721)
On deconsolidation of AOT
- bookcost	(6,703)	(763)	-	-	(3,486)	(10,952)
- unrealised appreciation/(depreciation)	5,959	(87)	-	-	-	5,872
(Decrease)/increase in unrealised
appreciation/(depreciation)	(17,082)	3,195	10,358	1,021	287	(2,221)
closing valuation as at 31 January 2008	59,900	57,255	80,953	13,376	20,336	231,820
Closing bookcost as at 31 January 2008	59,371	33,109	54,173	14,244	19,863	180,760
Closing unrealised appreciation/(depreciation)	529	24,146	26,780	(868)	473	51,060
	59,900	57,255	80,953	13,376	20,336	231,820


company
analysis of investment portfolio movements
Opening bookcost as at 1 February 2007	47,968	27,771	52,560	12,322	16,949	157,570
Opening unrealised appreciation/(depreciation)	30,770	20,976	16,379	(1,889)	186	66,422
opening valuation as at 1 February 2007	78,738	48,747	68,939	10,433	17,135	223,992

Movement in year:
Transfers	2,712	2,456	115	(5,283)	-	-
Purchases at cost	38,543	8,773	25,524	11,430	94,559	178,829
Sales - proceeds	(25,719)	(6,987)	(23,447)	(4,166)	(90,689)	(151,008)
- realised gains/(losses) on sales	6,362	1,096	(512)	(59)	(956)	5,931
(Decrease)/increase in unrealised
appreciation/(depreciation)	(21,808)	3,170	10,334	1,021	287	(6,996)
closing valuation as at 31 January 2008	78,828	57,255	80,953	13,376	20,336	250,748
Closing bookcost as at 31 January 2008	69,866	33,109	54,240	14,244	19,863	191,322
Closing unrealised appreciation/(depreciation)	8,962	24,146	26,713	(868)	473	59,426
	78,828	57,255	80,953	13,376	20,336	250,748

	2009	2008
analysis of capital gains and losses	£'000	£'000
Realised gains on sales	22,973	5,944
Appreciation dealt with last year	-	(1,906)

	22,973	4,038
Additional unrealised depreciation	(78,616)	(315)

	(55,643)	3,723
Net premiums on sale of options held for trading	1,504	141
Movement in valuation of unexpired put options	(78)	(587)
Losses on loan repayment	(79)	(13)
Movement in valuation of escrow	(29)	36

(losses)/gains on investments	(54,325)	3,300

Realised gains on sales	9	65
Unrealised depreciation	(7,686)	(4,288)

losses on equity accounted investments	(7,677)	(4,223)


	2009	2008
	£'000	£'000
Realised exchange gains/(losses) on capital items	670	(67)
Realised exchange losses on escrow	(43)	-
Unrealised exchange gains/(losses) on capital items and currency	6,415	(473)

exchange differences	7,042	(540)

	2009	2008
	£'000	£'000
portfolio analysis
Equity shares	101,336	182,215
Convertible preference securities	25,321	15,893
Fixed interest securities	6,983	13,376
Treasury Bills	13,865	20,336

	147,505	231,820

b. Subsidiary undertaking

At 31 January 2009 the Company has the following Subsidiary:

                                                                                                                                                %
Subsidiary                                                                 Principal                                   equity                                  Country of
                                                                                     activity                                          held                               registration

Consolidated Venture Finance Limited* Security trading 100.00% England and Wales

This Subsidiary was active during the year.

* Directly held by the Company at a cost of less than £1,000.

c. Associates

As a result of the merger of AOT and Oryx in 2007, in the Group accounts Oryx is recognised as an Associate and the results of that Company have been accounted for in the Group accounts as an Associate under the equity method of accounting and valued using the latest Net Asset Value of that Company.

At 31 January 2009, the Company held 7,106,200 Ordinary shares representing 29.5% of the total voting rights in Oryx.

The carrying value of the investment in associate in the Consolidated Balance Sheet using the equity method is as follows:

	2009	2008
	£'000	£'000
Opening cost of share of Oryx	10,495	11,285
Opening unrealised appreciation	8,433	12,721

Opening valuation of share of Oryx
at 1 February 2008	18,928	24,006

Sales - proceeds	(23)	(855)
- realised gains on sales	9	65

Decrease in unrealised appreciation	(7,686)	(4,288)

Closing valuation at 31 January 2009	11,228	18,928

The following financial information for Oryx has been extracted from its unaudited interim results for the six months ended 30 September 2008:

	£'000

Net assets	51,799
Net loss for the period	(10,192)

Oryx is traded on the London Stock Exchange. The value at bid price at 31 January 2009 was £7,462,000, based on the holding of 7,106,200 Ordinary shares priced at 105.00p per share.

d. Significant holdings

At the year-end, the Group and Company held 20% or over of the aggregate nominal value of voting equity of the following companies, all of which are incorporated and registered in England and Wales, unless stated:

		31January	31January
		2009	2008
		%	%
Forefront Group	- Ordinary Shares	21.4	21.4
Castle Support Services PLC	- Ordinary Shares	24.6	24.6
Hampton Trust Group	- units	72.0	72.0
Jaffer Holdings Corporation (USA)	- Common Stock	n/a	33.0
Jarvis Porter Group PLC	- Ordinary Shares	n/a	27.6
Motherwell Bridge Limited	- Ordinary Shares	n/a	33.3
Nationwide Accident Repair Services PLC	- Ordinary Shares	23.2	23.2
Bionostics PLC	- Ordinary Shares	21.8	37.2
Orthoplastics Ltd	- Ordinary Shares	40.0	40.0
Oryx International Growth Fund Limited (incorporated in Guernsey)	- Ordinary Shares	29.5	28.7
Worldport CommunicationsInc. (USA)	- Common Stock	n/a	45.9
Darby Browallia LLP	- Ordinary Shares	42.5	n/a

e. Investments held for trading - derivatives

	Group	Group	Company	Company
	2009	2008	2009	2008
	£'000	£'000	£'000	£'000
Valuation of unexpired put options	(690)	(612)	(690)	(612)
Unrealised loss on unexpired put options	(148)	-	(148)	-

	(838)	(612)	(838)	(612)

f. Investments deposited as collateral

Where US Treasury Bills or investments are required in accordance with United States SEC regulations to be deposited with brokers as cover for option transactions, these may be held to the order of these brokers until the relevant option positions are closed. At 31 January 2009, US Treasury Bills with a market value of £13,865,000 were deposited with brokers (2008: £3,264,000).

g. Transaction costs

During the year, the Group incurred total transaction costs of £264,000 (2008: £101,000)
comprising £240,000 (2008: £56,000) and £24,000 (2008: £45,000) on purchases and sales of investments respectively. These amounts are included in gains on investments as disclosed in the Consolidated Income Statement.

11 trade and other receivables

	Group	Group	Company	Company
	2009	2008	2009	2008
	£'000	£'000	£'000	£'000
Amounts owed by Subsidiary	-	-	679	789
Accrued income	429	486	429	486
Other debtors	3,560	3,683	2,897	3,202

	3,989	4,169	4,005	4,477

12 bank loans and overdrafts: falling due in less than one year

	Group	Group	Company	Company
	2009	2008	2009	2008
	£'000	£'000	£'000	£'000
Canadian $2 million term bank loan 13/02/09	1,119	998	1,119	998
Euro €7.6 million term bank loan 26/02/09	6,755	5,958	6,755	5,958
Sterling £2.4 million term bank loan	-	2,400	-	2,400

	7,874	9,356	7,874	9,356

During the year repayments totalling Sterling £2.4m were made.

The euro loan of €7.6m was due for repayment on 26 February 2009, at which point it was rolled until 12 May 2009.

The Canadian loan of $2.4m was due for repayment on 13 February 2009, at which point it was rolled until 6 May 2009.

13 trade and other payables

	Group	Group	Company	Company
	2009	2008	2009	2008
	£'000	£'000	£'000	£'000
Amounts received in advance	-	5,000	-	5,000
Amounts due to brokers	895	8,883	895	8,883
Other creditors and accruals	345	1,712	345	1,712

	1,240	15,595	1,240	15,595

14 debenture loan - convertible unsecured loan stock (CULS) 2013

	2009	2009	2008	2008
	No units	£'000	No units	£'000
group and company
Balance at beginning of year	4,516,844	192	5,711,107	243
Converted during the year	(20,340)	(1)	(994,263)	(41)
Bought back in year	(630,000)	(27)	(200,000)	(10)

Balance at end of year	3,866,504	164	4,516,844	192

Following the introduction of IFRS, the CULS are deemed to include an equity component as well as debt. As explained in note 1.(o), an adjustment is made to the book value of these CULS, accordingly and this is transferred to a CULS Reserve.

The CULS were issued in units of 5p. The CULS units are redeemable at par on 31 May 2013, unless previously redeemed, purchased by the Company or converted at the option of the holder.

During the year ended 31 January 2009, 20,340 (2008: 994,263) CULS units were converted into Ordinary Shares of 5p each at the rate of one 5p Ordinary Share for every unit of 5p.

Also during the year ended 31 January 2009, 630,000 (2008: 200,000) CULS units were purchased for cancellation at an average rate of 850p per unit (2008: 1,242p).

The remaining CULS units are convertible into Ordinary Shares of 5p each at the rate of one 5p Ordinary Share for every unit of 5p one month after despatch of the audited accounts in each of the years 2008 to 2013 inclusive. Interest at the rate of 0.5p gross per 5p unit per annum is payable on 31 January each year.

15 share capital

	2009	2009	2008	2008
	Number	£'000	Number	£'000
- authorised:
As 31 January:
Ordinary Shares of 5p	27,000,000	1,350	27,000,000	1,350

- issued and fully paid:
Ordinary Shares of 5p:
Balance at beginning of year	14,775,208	739	13,780,945	689
Conversion of CULS	20,340	1	994,263	50

Balance at end of year	14,795,548	740	14,775,208	739

During the year, 20,340 (2008: 994,263) CULS units were converted into Ordinary Shares of 5p as detailed in note 14.

There are contingent rights to subscribe for Ordinary Shares of 5p each pursuant to:

(i) 1994 Executive Share Option Scheme: 100,000 Ordinary Shares at 677.57p per share exercisable at any time between 30 October 2003 and 30 October 2010; and

(ii) 2002 Executive Share Option Scheme: (a) 355,000 Ordinary Shares at 645.54p per share exercisable at any time between 6 December 2005 and 6 December 2012; (b) 237,500 options were granted at 663.80p exercisable at any time between 25 September 2006 and 25 September 2013; (c) 337,500 Ordinary Shares at 875.60p per share exercisable at any time between 9 June 2008 and 9 June 2015.

The exercise of Options under the 2002 Executive Share Option Scheme is subject to certain performance criteria as detailed in the Director's Remuneration Report on page 31 of the Annual Report. At the date of this report, both the criteria for the 355,000 Options exercisable at 645.54p per Share and for the 237,500 Options exercisable at 663.80p per Share had been met.

These Options totalling 1,017,500 (2008: 1,030,000), include those granted to the Chief Executive, details of which are given on page 31 in the Directors' Remuneration Report of the Annual Report. The balance of the Options have been granted to investment management employees of the Joint Manager.

16 reconciliation of total return from ordinary activities before finance costs and taxation to cash (expended)/received from operations

	Group	Group	Company	Company
	2009	2008	2009	2008
	£'000	£'000	£'000	£'000

Total return from ordinary activities before finance costs and taxation	(54,043)	(1,213)	(54,043)	(1,385)
Losses/(gains) on investments	47,283	(2,760)	54,960	2,023
Share based remuneration	90	255	90	255
Share of net return of associate	7,677	4,223	-	-
Reverse provision for Subsidiary	-	-	(120)	85
Dividends and interest reinvested	(804)	(705)	(804)	(705)
Decrease in debtors and accrued income	636	70	636	140
Changes relating to investments of dealing Subsidiary	126	(15)	-	-
(Decrease)/increase in creditors and accruals	(1,377)	363	(1,377)	(63)
Tax on investment income	(2)	-	(2)	-

Cash (expended)/received from operations	(414)	218	(660)	350

17 analysis of net cash


	At 01 February 2008	Cash flow	Exchange movement	At 31January 2009
	£'000	£'000	£'000	£'000
Group
Cash and cash equivalents	8,504	9,924	7,086	25,514

Company
Cash and cash equivalents	8,504	9,908	7,086	25,498

18 financial instruments and risk profile

An explanation of the Group's financial risk management objectives, policies and strategy can be found in the Group Report of the Directors on pages 16 to 22 of the Annual Report.

The Group's financial instruments comprise its investment portfolio, cash balances, derivatives contracts, borrowing facilities, loan stock and trade receivables and trade payables that arise directly from its operations. Note 1 sets out the accounting policies, including criteria for recognition and the basis for measurement, applied to significant financial instruments excluding cash at bank and bank loans which are carried at fair value. Note 1 also includes the basis on which income and expenses arising from financial assets and liabilities are recognised.

To support its investment in unquoted companies, the Group may periodically agree to guarantee all or part of the borrowings of investee companies. Provision is made for any costs that may be incurred when the Directors consider it likely that the guarantee will crystallise.

The main risks arising from the Group's financial instruments are:

(i) market price risk, including currency risk, interest rate risk and other price risk;

(ii) liquidity risk; and

(iii) credit risk

The Company Secretary in close cooperation with the Board of Directors and the Joint Managers, coordinates the Group's risk management. The policies for managing each of these risks are summarised below and have been applied throughout the year.

(i) market price risk

The fair value or future cash flows of a financial instrument held by the Group may fluctuate because of changes in market prices. This market risk comprises currency risk, interest rate risk and other price risk. The Board of Directors reviews and agrees policies for managing these risks, which policies have remained substantially unchanged from those applying in the year ended 31 January 2008. The Joint Managers assess the exposure to market risk when making each investment decision and monitors the overall level of market risk on the whole of the investment portfolio on an ongoing basis.

The Company own written put options, therefore there is a cap on the extent of any gains, but there is no cap on the extent of any losses.

If the value of the put options was higher by 10%, then this would have decreased the net assets by £69,000 (2008: £61,000) If the value of the put options was lower by 10%, then this would have increased the net assets by £69,000 (2008: £61,000)

currency risk

The functional and presentational currency of the Group is Sterling and, therefore, the Group's principal exposure to foreign currency risk comprises investments priced in other currencies, principally US Dollars. The Joint Managers monitor the Group's exposure to foreign currencies on a daily basis and reports to the Board on a regular basis. The Joint Managers measure the risk to the Group of the foreign currency exposure by considering the effect on the net asset value and income of a movement in the rates of exchange to which the Group's assets, liabilities, income and expenses are exposed.

Foreign currency borrowings and forward currency contracts are used to limit the Group's exposure to anticipated future changes in exchange rates which might otherwise adversely affect the value of the portfolio of investments. Where appropriate, they are used also to achieve the portfolio characteristics that assist the Group in meeting its investment objectives. These borrowings and contracts are limited to currencies and amounts commensurate with the asset exposure to those currencies. At 31 January 2009, the Group had no open forward currency contracts (2008: one).

Income denominated in foreign currencies is converted to Sterling on receipt. The Group does not use financial instruments to mitigate the currency exposure in the period between the time that income is included in the financial statements and its receipt.

The Group's financial assets comprise equity investments, fixed interest securities, derivatives, trade receivables and cash balances.

The Group finances its investment activities through the Group's Ordinary Share Capital, Reserves, derivatives and borrowings. The Group's financial liabilities comprise its multi-currency loan facility, bank overdraft, CULS, derivatives and trade payables.

At 31 January 2009, the currency cash flow profile of those financial assets and liabilities

was:

group and company

	US Dollar	Canadian Dollar	Euro
	£'000	£'000	£'000
Non current investments at fair value through profit or loss	34,611	-	5,590
Trade and other receivables	1,897	1,551	-
Cash and cash equivalents	24,812	1	-
Multi-currency loan facility	-	(1,119)	(6,755)
Trade and other payables	-	(20)	(63)
Put options on investments	(838)	-	-

Total net foreign currency exposure	60,482	413	(1,228)

At 31 January 2008, the currency cash flow profile of those financial assets and liabilities was:

group and company

	Canadian
	US Dollar	Dollar	Euro
	£'000	£'000	£'000
Non current investments at fair value through profit or loss	62,244	-	5,958
Trade and other receivables	1,694	1,377	-
Cash and cash equivalents	1,059	1	1
Multi-currency loan facility	-	(998)	(5,958)
Trade and other payables	(5)	(5)	(32)
Put options on investments	(612)	-	-

Total net foreign currency exposure	64,380	375	(31)

Sensitivity analysis is based on the Group's monetary foreign currency financial instruments held at each balance sheet date and takes account of forward currency contracts that offset the effects of changes in currency exchange rates.

If Sterling had weakened against the US Dollar by 10%, this would have increased the net assets by £6,720,000 (2008: £7,153,000).

If Sterling had strengthened against the US Dollar by 10%, this would have decreased the net assets by £5,498,000 (2008: decrease of £5,853,000).

In the opinion of the Directors, the above sensitivity analyses are not representative of the year as a whole, since the level of exposure changes frequently as part of the currency risk management process used to meet the Group's objectives.

interest rate risk

Interest rate movements may affect;

• the fair value of the investments in fixed interest rate securities (including unquoted loans);

• the level of income receivable on cash deposits;

• the fair value of the Company's issued CULS; and

• the interest payable on the Group's variable rate borrowings.

• the loan guarantee, and any amounts payable should the guarantee be called upon.

The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment decisions and borrowing under the multi-currency loan facility.

The Board reviews on a regular basis the values of the fixed interest rate securities and the unquoted loans to companies in which private equity investment is made.

The Group finances part of its activities through borrowings at levels approved and monitored by the Board.

Derivative contracts are not used to hedge against the exposure to interest rate risk.

At 31 January 2009 the Company has investments with exposure to variable rate interest rate risk totalling £6,983,000 (2008: £16,619,000) and investments with exposure to floating rate interest rate risk totalling £13,865,000 (2008: £20,336,000).

The Company also has borrowings with exposure to fixed rate interest rate risk totalling £7,874,000 (2008: £9,356,000).

loans and borrowings

	Effective		31 January	31January
group and company	interest rate	Maturity	2009	2008
			£'000	£'000
current
Bank overdraft	7.00%	On demand	-	-
Term loan - Canadian $2 million (2008: $2 million)	5.37%	13 February 2009	1,119	998
Term loan - Euro €7.6 million (2008: €8 million)	4.85%	26 February 2009	6,755	5,958
Term loan - Sterling nil (2008: £2.4 million)	6.58%	-	-	2,400

non current
CULS	5.00%	31 May 2013	164	192
			8,038	9,548

Maturity dates of financial liabilities

		31January	31January
group and company	Maturity	2009	2008
		£'000	£'000
principal amounts payable on maturity:
Term loan - Canadian $2 million (2008: $2 million)	13 February 09	1,119	998
Term loan - Euro €7.6 million (2008: €8 million)	26 February 09	6,755	5,958
Term loan - Sterling nil (2008: £2.4 million)	-	-	2,400
CULS	31 May 2013	164	192

Interest payable on maturity:
Term loan - Canadian $2 million (2008: $2 million)	13 February 09	20	5
Term loan - Euro €7.6 million (2008: €8 million)	26 February 09	63	32
Term loan - Sterling nil (2008: £2.4 million)	-	-	35
CULS*	31 May 2013	84	120

*Gross amounts payable, split annually for each payment anniversary of 31 January, based on the outstanding principal at year end, over the remaining term as at 31 January 2009 of 4.33 years (2008: 5.33 years). Assumes no further redemptions.

CULS

The Convertible Loan Stock 2013 ('CULS') were issued in units of 5p each. The units are redeemable at par on 31 May 2013, unless previously redeemed, purchased by the Company, or converted at the option of the holder.

During the year ended 31 January 2009, 20,340 (2008: 994,263) units of CULS were converted into Ordinary Shares of 5p each at the rate of one 5p Ordinary Share for every unit of 5p. Also during the year ended 31 January 2009, the Company purchased 630,000 (2008: 200,000) units of CULS for cancellation at a total cost of £5,330,000 (2008: £2,485,000).

The CULS units are convertible into Ordinary Shares of 5p each at a rate of one Ordinary Share for every 5p unit, one month after despatch of the audited accounts in each of the years 2008 to 2013 inclusive.

Interest is payable to holders of the CULS at a rate of 0.5p gross per 5p unit per annum on 31 January each year.

The amount included in the table above of £164,000 (2008: £192,000) is the fair value of the financial liability element of the CULS as of its date of issue, as adjusted for the effective rate of interest, less interest paid to the unit holders and less the amount of CULS that has been purchased for cancellation or converted into Ordinary Shares.

term bank loans

As at 31 January 2009, the Company had a multi-currency loan Revolving Credit Facility of up to £9 million (which expires on 31 July 2009). All loan drawdowns are repayable in full on maturity, unless rolled over for a further agreed period.

Interest is payable on the loans on a quarterly basis and the rate is fixed for the duration of
the drawdown.

Both the interest due and the principal are payable in the relevant currency of the drawdown.

Further information on the financial liabilities is given in note 12 (multi-currency loan facility and bank overdraft) and note 14 (CULS).

Sensitivity analysis is based on the Group's and Company's monetary financial instruments held at each balance sheet date with all other variables held constant.

If interest rates rose by 100 basis points this would increase net assets by £176,000 (2008: decrease by £9,000).

If interest rates fell by 100 basis points this would decrease net assets by £176,000 (2008: increase by £9,000).

In the opinion of the Directors, the above sensitivity analyses are not representative of the year as a whole, since the level of exposure changes frequently as borrowings are drawn down and repaid during the year.

other price risk

Other price risks (i.e. changes in market prices other than those arising from currency risk or interest rate risk) may affect the value of the quoted and unquoted investments.

The Group's exposure to price risk comprises mainly movements in the value of the Group's investments. It should be noted that the prices of options tend to be more volatile than the prices of the underlying securities. As at the year-end, the spread of the Group's investment portfolio analysed by sector was as set out earlier.

The Board of Directors manages the market price risks inherent in the investment portfolios by ensuring full and timely access to relevant investment information from the Joint Manager. The Board meets regularly and at each meeting reviews investment performance. The Board monitors the Joint Managers compliance with the Company's objectives and is directly responsible for investment strategy and asset allocation.

When appropriate, derivative contracts are used to hedge against the exposure to price risk.

The Group's exposure to other changes in market prices at 31 January 2009 on its quoted and unquoted investments and options on investments was as follows:

	Group	Company	Group	Company
	2009	2009	2008	2008
	£'000	£'000	£'000	£'000
Financial assets at fair value through profit or loss
- Non current investments at fair value through profit or loss	147,505	158,733	231,820	250,748
Financial assets at fair value through profit or loss and held for trading
- Current asset investments	-	-	308	308
Current liabilities
- Put options on investments	(838)	(838)	(612)	(612)

The following table illustrates the sensitivity of the profit after taxation and net assets to an increase or decrease of 10% in the fair values of the Group's equities. This level of change is considered to be reasonably possible based on observation of current market conditions. The sensitivity analysis is based on the Group's equities and equity exposure through options at each balance sheet date, with all other variables held constant.

	2009		2008
	Increase in	Decrease in	Increase in	Decrease in
	fair value	fair value	fair value	fair value
	£'000	£'000	£'000	£'000
Increase/(decrease) net assets	14,751	(14,751)	23,182	(23,182)

(ii) liquidity risk

This is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities.

Liquidity risk is not significant as the Group invests in equities and other investments that are readily realisable. The Group had a multi-currency loan facility of £9.0 million and an overdraft facility of US$15.6 million as at 31 January 2009. Details of contractual maturities of the financial liabilities together with contractual amounts of interest payable are shown earlier in his note.

(iii) credit risk

The Group does not have any significant exposure to credit risk arising from any one individual party. Credit risk is spread across a number of counterparties, each having an immaterial effect on the Group's cash flows, should a default happen. The Company assesses the credit worthiness of its debtors from time to time to ensure they are neither past due or impaired.

The maximum exposure of the financial assets to credit risk at the Balance sheet date was as follows:

	2009	2009	2008	2008
	Group	Company	Group	Company
	£'000	£'000	£'000	£'000
Financial assets neither past due or impaired
Fixed income securities	6,983	6,983	13,376	13,376
Preference shares	25,321	25,321	15,893	15,893
Treasury Bills	13,865	13,865	20,336	20,336
Accrued income and other debtors	3,957	3,294	3,401	2,920

	50,126	49,463	53,006	52,525

The maximum credit exposure of financial assets represents the carrying amount.
There are no financial assets that are past due or impaired.

Commitments giving rise to credit risk

The Company has a guarantee in place, pursuant to an agreement dated 7 August 2007, for an Orthoplastics loan from Allied Irish Banks, which has an outstanding balance of £1.3 million at 31 January 2009, with the view to being re-financed in May 2009, at which point the guarantee will be removed.

fair value of financial assets and financial liabilities
The fair value for each class of financial assets and liabilities, compared with the corresponding amount in the balance sheet were as follows (trade receivables and trade payables, are excluded from the comparison, as their carrying amounts are a reasonable approximation of their fair value).

		31January 09		31 January 08
		Balance		Balance
	Fair value	sheet value	Fair value	sheet value
financial assets	£'000	£'000	£'000	£'000
Financial assets at fair value through profit or loss
- Non current assets	147,505	147,505	231,820	231,820
Financial assets at fair value through profit or loss and held for trading
- Current asset investments	-	-	308	308
Loans and receivables
- Cash and cash equivalents	25,514	25,514	8,504	8,504
	173,019	173,019	240,632	240,632


		31January 09		31 January 08
		Balance		Balance
	Fair value	sheet value	Fair value	sheet value
financial liabilities	£'000	£'000	£'000	£'000
Financial assets at fair value through profit or loss and held for trading
- Put options on investments	(838)	(838)	(612)	(612)
Other financial liabilities
- Multi-currency loan	(7,874)	(7,874)	(9,356)	(9,356)
- CULS	(25,036)	(164)	(45,259)	(192)
	(33,748)	(8,876)	(55,227)	(10,160)

fair values are derived as follows:

- Where assets and liabilities are denominated in a foreign currency, they are converted into Sterling using year-end rates of exchange.
- Financial assets (non current and held for trading) - as set out in the accounting policies in note 1.
- Cash and cash equivalents, bank overdraft and multi-currency loan - at face value of the account.
- The Company's CULS - at the offer price at which they are quoted on the London Stock
Exchange.

capital management policies and procedures

The Company's capital management objectives are:

- to ensure that the Company will be able to continue as a going concern, and
- to maximise the income and capital return to its equity Shareholders through an appropriate balance of equity capital and debt. The policy is that gearing should not exceed 30% of net assets.

The Company's capital at 31 January comprises:

	2009	2008
	£'000	£'000
Debt
Borrowings under the multi-currency loan facility	7,874	9,356
CULS	164	192
Equity
Equity share capital	740	739
Retained earnings and other reserves	177,380	237,235
	185,158	247,522
Debt as a % of net assets	4.5%	4.0%

The Board, with the assistance of the Joint Managers monitor and reviews the broad structure of the Company's capital on an ongoing basis. This review includes:
- the planned level of gearing, which takes account of the Joint Managers' views on the market;
- the need to buy back equity Shares for cancellation, which takes account of the difference between the net asset value per share and the Share price (i.e. the level of share price discount or premium);
- the need for new issues of equity Shares; and
- the extent to which revenue in excess of that which is required to be distributed should be retained.

The Company's objectives, policies and processes for managing capital are unchanged from the preceding accounting period.

The Company is subject to several externally imposed capital requirements, including:
- the bank borrowings under the multi-currency loan facility are not to exceed 35% of the adjusted net asset value and the minimum adjusted net asset value is £135m.

These requirements are unchanged since last year, and the Company has complied with them.

19 related party transactions

The Joint Manager, North Atlantic Value LLP, is regarded as a related party of the Company and acts as Investment Manager or Investment Adviser of the following companies in which the Company has an investment and from which companies the Joint Manager receives fees or other incentives for its services. The amounts payable to the Joint Manager are disclosed in note 3. The relationships between the Company, its Directors and the Joint Managers are disclosed in the Group Report of the Directors on pages 16 to 23 of the Annual Report.

The relevant companies and the annual fees receivable as derived from the last audited accounts are:

	Services	Fees
Oryx International Growth Fund Limited	Investment Advisory	£537,000
Trident Private Equity LP	Investment Advisory	$24,274
Worldport Communications Inc.	Investment Management	£nil
Trident Private Equity II LP	Investment Advisory	£457,592

J O Hambro Capital Management Limited (the Corporate Company Secretary) is a Designated Member of North Atlantic Value LLP.

Christopher Mills is Chief Investment Officer and a member of North Atlantic Value LLP. He is also a substantial shareholder of J O Hambro Capital Management Group Limited (one of the two Designated Members of North Atlantic Value LLP) and the holding company of the Corporate Company Secretary.

disclosure of interests

Christopher Mills, the Chief Executive and Investment Manager is also a director of Oryx International Growth Fund Limited ('Oryx').

North Atlantic Value LLP is investment manager to Oryx and investment adviser to Trident Private Equity LP and Trident Private Equity II LP and receives fees from them.

Christopher Mills is also a director of the following companies in which the Company has an investment or may have had in the year and/or from which he may receive fees or hold options or shares: Castle Support Services plc, Catalyst Media Group plc, Sunlink Health Systems Inc, Crucible Equity Limited, Bionostics Limited, Hampton Trust Group, GEI Group Limited, Izodia PLC, Jarvis Porter Group PLC, Mid-States PLC, Paramount Restaurants Limited, Second London American Trust PLC (in members' voluntary liquidation), Prime Focus London PLC, Trident North Atlantic Fund, Oryx International Growth Fund Limited, Worldport Communications, Inc, Glass America, Inc, Sterling Construction, Inc, Progeny, Inc, Inspired Gaming Group PLC, Cross Border Limited and MJ Gleeson PLC,. Employees of the Joint Manager may hold options over shares in investee companies. A total of £63,799 in directors fees from these companies was received by Christopher Mills during the year under review.

No formal arrangements exist to avoid double charging on investments held by the Company which are also managed or advised by Christopher Mills (Chief Executive) and/or the Joint Manager. Members and private clients of the Joint Manager (excluding Christopher Mills and the Chairman) hold 82,050 shares in the Company (2008: 84,050).

Members and employees of the Joint Manager, and institutional and private clients of the Joint Manager, North Atlantic Value LLP may co-invest in the same investments as the Company.

The Hon. P D Moncreiffe is a director of Crendon Industrial in which the Company has an interest.

From time to time Directors may co-invest in the same investments as the Company.

Oliver Grace was a director of Second London American Trust Plc (in members' voluntary liquidation) and Oliver Grace and his associates hold 21,238,447 shares in Second London American Trust Plc (in members' voluntary liquidation).

transaction with other companies in the group.

At 31 January 2009 amounts due from the wholly owned subsidiary Consolidated Venture Finance Limited (CVF) were £679,000 (2008: £789,000).

20 commitments and contingent liabilities

(i)    At the year-end, there were no unexpired call options (2008: none), giving the holder at any time prior to
       expiry, the right to purchase investments from the Group at the stated exercise price. As set out in note 1
       (g), the premiums received for writing such options and the     movements in valuation of call options
        unexpired at the balance sheet date are recognised in the Capital reserve. The maximum potential liability
        to which the Group was exposed at the balance sheet date, in respect of call options, totalled £nil (2007:
        £nil).

(ii)   At the year-end, there was one unexpired put option (2008: one), giving the holders at any time prior to
        expiry, the right to require the Group to purchase investments at the stated exercise price. As set out in
        note 1(g), the premiums received for writing such options and the movements in valuation of put options
        unexpired at the balance sheet date are recognised in the Capital reserve. At 31 January 2009, changes in
        the put option valuations showed a net loss of £183,000 (2008: £587,000 loss). The maximum potential
        liability to which the Group was     exposed at the balance sheet date, in respect of put options, totalled
        £2,081,000 (2008: £2,259,000).

iii)    In May 2009, the Company is planning to invest a total of £2.9 million in Orthoproducts (new holding
        company for Orthoplastics) to fund the acquisition of LPE Medical Limited. The investment is split £2
        million in new equity and £0.9 million in loan notes paying 10% p.a. on a semi-annual basis. The loan
        notes are expected to be refinanced out shortly after this, to enable the funds to be back within the
        Company within the next 3-6 months.

iv)    The Company has a guarantee in place pursuant to an agreement dated 7 August 2007 for
        an Orthoplastics loan from Allied Irish Bank 'AIB', which has an outstanding balance of £1.3 million. This
        loan is shortly due to be refinanced internally within AIB, at which point the guarantee is expected to be
        removed as part of this internal refinancing.

v) The Company has also committed to invest £25 million in Trident Private Equity Fund III over the
forthcoming months.

vi)   The Company has made a £4 million investment in Norcliffe Investments Limited with a supporting
       guarantee of circa £20 million. GNE's principal asset is circa £35 million of cash. The offer for GNE by
       Norcliffe Investments Limited has now been accepted by over 80% of the shareholders and the supporting
       guarantee will be eliminated by a loan from GNE to Norcliffe which should be completed no later than the
       middle of May 2009.

21 post balance sheet events

Since 31 January 2009, the Company has determined that a refund of approximately £450,000 of VAT may be available to the Company as a result of changes to the VAT regulations applicable to investment management fees whereby HMRC has accepted that management fees charged to UK investments trusts should be exempt from VAT.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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