Aberdeen Growth Opportunities VCT 2 PLC - Aberdeen Asset ...

Key performance indicatorsAt each board meeting, the Directors consider a number ofperformance measures in order to assess the Company’ssuccess in achieving its objectives. The key performanceindicators are:• Net asset value total return• Dividends per shareA historical record of these measures is shown on pages 1and 2.The Board also considers peer group comparativeperformance. The Company has continued its membershipof the Association of Investment Companies (AIC) and itis hoped that the AIC’s monthly performance statisticswill provide a useful standard measure of comparativeperformance in future.Principal risks and uncertaintiesThe principal risks facing the Company relate to itsinvestment activities and include market price, interest rate,liquidity and credit. An explanation of these risks and howthey are managed is contained in Note 18 to the financialstatements on pages 42 to 44. Additional risks faced bythe Company, and the mitigation approach adopted by theBoard, are as follows:(i)(ii)(iii)(iv)investment objective: The Board’s aim is to maximiseabsolute returns to shareholders while managingrisk by ensuring an appropriate diversification ofinvestmentsinvestment policy: inappropriate stock selectionleading to underperformance in absolute and relativeterms is a risk which the Manager mitigates byoperating within investment guidelines and regularlymonitoring performance against the peer groupdiscount volatility: due to lack of liquidity in thesecondary market, venture capital trust shares tend totrade at discounts to net asset values which the Boardseeks to manage by making purchases of shares in themarket from time to time, andregulatory risk: the Company operates in a complexregulatory environment and faces a number of relatedrisks. A breach of section 274 of the Income Tax Act2007 could result in the Company’s being subjectto capital gains tax on the sale of its investments.A breach of the VCT Regulations could result in theloss of VCT status and consequent loss of tax reliefscurrently available to shareholders.Serious breach of other regulations, such as the UKLA Listingrules and the Companies Act 1985, could lead to suspensionfrom the Stock Exchange and reputational damage. Theboard receives quarterly reports from the Manager in orderto monitor compliance with regulations.DirectorsThe Directors who held office during the year are shown onpages 16 and 17 of the Annual Report and their interests inshares of the Company are shown below.In accordance with the Articles of Association, directors mustoffer themselves for re-election at least once every three yearsand so Mr Cormack and Mr Graham-Wood, whose biographiesappear on page 16, retire by rotation at this time and, beingeligible, offer themselves for re-election. Resolutions 4 and 5to this effect will be proposed at the Annual General Meeting.As the next Annual General Meeting will be the first followinghis appointment, Mr Nixon will present himself for electionas a Director. From then on, as a non-independent director,he will offer himself for re-election annually. Mr Nixon isnot independent by virtue of his employment by AberdeenAsset Management PLC. Aberdeen Asset Managers Limited isentitled to receive investment management and secretarialfees as described below.At its meeting in November 2008, the NominationCommittee recommended to the Board that Mr IanCormack, Mr Malcolm Graham-Wood and Mr Bill Nixonshould be nominated for re-election at the Annual GeneralMeeting for the following reasons:• Mr Cormack, who has been a Director since 2004, bringsto the board many years of experience at a senior level inbanking, insurance, financial services and asset management.• Mr Graham-Wood, who has been a Director since 2004,has an in-depth knowledge of broking, stock markets andbringing companies to flotation.• Mr Nixon, who has been an alternate Director since2005, and was appointed a director in August 2008,brings to the Board a wide range of investment skillsand experience and a particular knowledge of the privateequity industryMr M J Gilbert and Mr W R Nixon, who was his alternatethen replaced him as a Director, are employees of AberdeenAsset Management PLC. Aberdeen Asset Managers Limited,a subsidiary of Aberdeen Asset Management PLC, is entitledto receive investment management and secretarial feesas described below. No other contract or arrangementsignificant to the Company’s business and in which any ofthe directors is interested has subsisted during the period.Under Listing rule 15.2.13, which is effective for VCTs from28 September 2010, the Company will not be able to havemore than one Director who is also a Director of anothercompany with the same investment manager. Bill Nixon isthe only such Director, and the Company therefore alreadycomplies with this requirement, and is expected to continueto do so.The Board considers all risks and the measures in place tomanage them and monitors their management twice each year.Aberdeen Growth Opportunities VCT 2 PLC 19