HERALD INVESTMENT TRUST plc ANNUAL REPORT ...

NOTES TO THE FINANCIAL STATEMENTS continued
12. Creditors
2010 2009
£’000 £’000
Amounts falling due within one year:
Purchases for subsequent settlement 1,750 2,552
Bank loans 50,000 50,000
Swap interest 382 389
Other creditors and accruals 583 466
52,715 53,407
None of the above creditors are financial liabilities designated at fair value through profit or loss. Included in other
creditors and accruals is £399,000 (2009 – £286,000) in respect of the investment management fee.
The Company has a £50 million multi-currency variable rate loan facility with The Royal Bank of Scotland plc, which
comprises two £25 million tranches expiring on 31 May 2011 and 2013.
At 31 December 2010, there were outstanding drawings of £50 million (2009 – £50 million). Interest on the loans
is payable in quarterly instalments in January, April, July and October. The estimated repayment value of the loan
at 31 December 2010 was £50 million. The indicative costs of repaying the loan as at 31 December 2010 were not
material in the context of the above figures.
The interest on the £50 million facility has been fixed for the long term through a 30 year interest rate swap but
may vary on periodic renewals of the debt facility to the extent that the mark up over LIBOR charged by a lending
bank varies. The fair value of the interest rate swap contract at 31 December 2010 was an estimated liability of
£9 million (2009 – £6 million) which was based on the marked to market value.
The main covenant relating to the loan is:
Total borrowings shall not exceed 25% of the Company’s Gross Assets adjusted by deducting:
(i) the market value of any unlisted investments (excluding AIM);
(ii) the amount by which the market value of any single investment represents more than 7.5% of the
Company’s gross assets; and
(iii) the amount by which the aggregate market value of the ten largest investments exceeds 45% of
gross assets.
13. Derivative financial instruments
2010 2009
Notional Fair Fair Fair Notional Fair Fair Fair
contract value value value contract value value value
amount assets liabilities balance amount assets liabilities balance
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Total derivative
assets/(liabilities)
held for trading 50,000 49,370 (58,307) (8,937) 50,000 34,211 (40,509) (6,298)
14. Called-up share capital
2010 2009
Allotted, called-up and fully paid:
Ordinary shares of 25p: Number 79,913,283 81,053,283
£’000 19,978 20,263
At the Annual General Meeting in April 2010, Shareholders granted the Company authority to purchase shares in the
market up to 12,115,409 Ordinary shares (equivalent to 14.99% of its issued share capital at that date). In the year
to 31 December 2010, a total of 1,140,000 (2009 – 2,354,840) Ordinary shares with a nominal value of £285,000
(2009 – £588,710) were bought back at a total cost of £4,433,000 (2009 – £6,037,000). At 31 December 2010 the
Company had authority to buy back a further 11,205,409 Ordinary shares. Under the provisions of the Company’s
Articles share buy-backs are funded from the capital reserve.
HERALD INVESTMENT TRUST plc 45