PRIVATE EQUITY INVESTOR PLCANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 MARCH 2014INVESTMENT OBJECTIVE AND POLICY Investment Objective The objective of the Company has been to provide shareholders with long-term capital growth. The Company is not making investments in new private equity funds but is managing its existing investments with a view to making periodic returns of capital to shareholders. Investment Policy Risk Diversification The Company has invested in and maintains a broad portfolio of US-based venture capital and buyout funds (the "Funds"), managed by a number of different management groups, and focused on various stages of growth so as to obtain exposure to a diversified underlying portfolio of investments primarily in private companies in the technology sector. Through the Funds, the Company has exposure to a diverse portfolio of underlying companies. No New Fund Investments It is the policy of the Company not to make new fund investments. However, the Company will continue to meet existing capital commitments to the Funds and may on occasion support follow-on commitments in existing Funds or affiliated annex funds. No Overcommitment; Ring-fenced Accounts Overcommitment is the practice of making commitments to funds which exceed the cash available for investment. The Company has a policy not to be overcommitted. All amounts required to fund existing capital commitments to the Funds are held in ring-fenced accounts. Distributions Received From the Funds The managers of the Funds invest principally in unlisted technology companies based in the US. After the flotation or sale of their investments, the Funds may distribute cash or securities to the Company. As a result, the Company may from time to time hold listed securities. It is the policy of the Company to sell listed securities received as distributions from the Funds within a short period of time unless the stock price has decreased meaningfully, in which case the Company may hold these securities for a longer period of time until favourable selling conditions exist. The listed securities received as distributions from the Funds typically do not represent a significant part of the Company's overall investments. Liquidity The Company may hold substantial cash balances due to existing capital commitments to the Funds, due to the receipt of cash distributions from the Funds, or due to cash realised upon the sale of listed securities received from the Funds as distributions. These cash balances are principally in open-ended investment funds pending capital call requests from the Funds, or used for corporate purposes or for distribution to shareholders. Return of Capital to Shareholders The Company proposes to make periodic returns of capital to shareholders from the proceeds of distributions received from the Funds. As the timing and amount of distributions from the Funds fluctuates and is not known, the Company cannot predict when a return of capital to shareholders may be made, or the amount. Gearing In normal circumstances the Company does not expect to borrow. The Company's Articles of Association limit borrowing to an amount broadly equal to its capital and reserves. Some investments made by the Funds may be geared but the Company does not review the level of gearing of these underlying investments. Derivatives The Company does not make use of financial derivatives and does not hedge against currency fluctuations. Dividends The Funds provide little income. Income may be generated from liquid funds and the Company may be required to pay dividends to continue to qualify as an Investment Trust. Such dividends are, however, likely to be small and irregular. SUMMARY OF RESULTS AND FINANCIAL HIGHLIGHTS 31 March 31 March 2014 2013 Group Group % change Net assets and shareholders' funds £42,699,000* £51,810,000 (17.6) Net assets per Ordinary Share 228.4p 230.8p (1.0) Net assets and shareholders' funds in $71,186,000 $78,671,000(9.5) US$ Net assets per Ordinary Share in US$ 380.8c 350.4c 8.7 Mid-market price per Ordinary Share 182.5p 183.0p (0.3) Discount to NAV 20.1% 20.7% Net revenue loss after taxation £(781,000) £(1,302,000) Net total loss £(356,000) £(2,140,000) Total loss per Ordinary Share (1.9)p (9.3)p Exchange rate at year end (US$/£) 1.66715 1.51845 9.8 Number of Ordinary Shares in issue 18,694,757 22,452,920 Ongoing charges (Company only)** 1.7% 1.8% Ongoing charges (Group)** 2.0% 2.0% Cumulative cash returned to £61,650,000 £53,000,000 shareholders through tender offers*** * Following the tender offer completed in May 2013when £8.65 million was returned to Shareholders. ** The Company's ongoing charges are calculated according to the Association of Investment Companies("AIC") guidance and as such exclude subsidiary expenses. Group ongoing charges are calculated on the same basis, but include subsidiary expenses. *** A tender offer for £8.5 million took place after the year end on 29 May 2014. This brings the cumulative cash returned to shareholders through tender offers to £70,150,000. CHAIRMAN'S STATEMENT I am pleased to present the results for Private Equity Investor PLC("PEI" or "the Company") for the year ended 31 March 2014. Results The Company's net asset value ("NAV") per share at 31 March 2014was 228.4p, compared with 230.8p a year earlier, a decrease of 1.0%. The NAV per share in dollars went up by 8.7% from 350.4c per share to 380.8c per share, reflecting an increase in the dollar valuation of the Company's Fund investments. However, the favourable effect of this was offset by a weakening of the dollar against sterling from $1.52to $1.67. The Company's share price decreased by 0.3% during the year, from 183.0p to 182.5p. The discount at 31 March 2014was 20.1%, down from 20.7% a year earlier. No dividend is proposed for the period (2013: nil). Tender Offers During the year, on 30 May 2013, the Company completed a tender offer to shareholders of £8.65 million, with 3,758,163 shares being purchased for cancellation at a price of 230.1596p per share. After the year end, on 29 May 2014, the Company completed a further tender offer to shareholders of £8.5 million, with 3,889,249 shares being purchased for cancellation at a price of 218.5455p per share. The Company has now made six Tender Offers since December 2007, returning a total of £70.15 million to shareholders. As a result of all share buybacks and tender offers, there are now 14,805,508 shares in issue. The Company will continue its policy of making tender offers as and when cash resources reach an appropriate level. The Company also retains the right to buy back shares in the market. Distributions and Calls from Fund Investments In the twelve months ended 31 March 2014, the Company received cash and stock distributions from the Funds totalling $13.5 million, compared with $14.0 millionin the twelve months ended 31 March 2013and $14.2 millionin the twelve months ended 31 March 2012. Of the $13.5 millionreceived during the period, cash distributions amounted to $10.4 millionand stock distributions amounted to $3.1 million. The largest distribution received by the Company was a cash distribution of $1.0 millionfrom Oak Investment Partners X, L.P.During the period, Funds called capital from the Company in the amount of $0.7 million(2013: $1.8 million). The majority of the original commitments have been drawn down but an aggregate of $5.3 millionremains outstanding. This is held in ring-fenced accounts in accordance with an obligation given to the Court during the conversion of the Company's Share Premium Account. Portfolio Review The Company's Investments have all been in limited life funds, with initial fund terms that ranged from nine to thirteen years. After the expiration of the initial fund terms, funds typically have or are granted the right to extend their terms by two to three years and some funds seek further extensions. After a fund's initial term and all extensions have expired, the fund will typically enter a winding-down period, which can last several years. During this period the fund will seek to realise its remaining investments and distribute the remaining cash and assets. Once a fund has been fully liquidated, any uncalled commitment to that fund may be released from the ring-fenced account and credited to the Company's operating bank account. At 31 March 2014, of PEI's twenty-three Funds, five were still in their initial fund terms, eight were in the process of winding-down and ten were in term extensions. As at 31 March 2014the Company held Investments, through the Funds, in 322 private and 47 public companies. At that date, 25 portfolio companies, with a value of $23.6 million, accounted for 46% of the Fund's total value. The twelve months under review saw the Initial Public Offerings ("IPOs") of seven underlying portfolio companies (2013: eight). Of these, the most significant to the Company was Twitter, Inc.(NYSE: TWTR), a portfolio company held via the Company's investment in Institutional Venture Partners XII, L.P.("IVP XII"). 31 March 2014, the Company's NAV was materially impacted by 6 November 2013at a price of $26.00per share. At the IPO, certain 8 November 2014, $41.65, representing an uplift of over 60% from its IPO price. On 11 November 2014, the Company issued a press release estimating that the approximate increase to the Company's latest published NAV per share of 219.58p on 7 November 2014was approximately 7.6p per share. On 31 December 2013, $63.65per share, an uplift of over 145% from its IPO price. On 8 January 2014, the Company published its NAV as at 31 December 2013, incorporating the reported NAV of IVP XII at 30 September 2013, which was prior to the 31 March 2014, $46.67, a decline of 27% from its closing price on 31 December 2013. On 7 April 2014, the Company published its NAV as at 31 March 2014as 232.64p per share, which did not include any adjustment for 31 December 2013, incorporating the post-IPO valuation of May 2014, the IPO lock-up restrictions for $31.75per share. The Company has sold all of these shares in a number of trades at prices ranging from $34.40per share to $42.01per share. US Venture Capital Industry Update The state of the IPO and M&A markets in the USAhas a significant influence on the timing and quantum of distributions from the Funds to the Company. The following is a synopsis of US IPO and M&A activity relating to venture capital backed companies during calendar year 2013. Liquidity - Venture-Backed Mergers & Acquisitions In 2013, 390 US venture-backed M&A deals were reported with an aggregate value of $16.9 billion, compared with 489 M&A deals with an aggregate value of $22.7 billionin 2012, according to Thomson Reuters and the National Venture Capital Association("NVCA" )*. This level marks a 20% decrease by number of M&A deals and a 25% decrease by aggregate value compared to 2012. This was the slowest year for venture-backed M&A transactions since 2009. * Thomson Reuters and NVCA press release dated 2 April 2014. Transaction value reflects disclosed values only. Liquidity - Venture Backed IPOs In 2013, 81 venture-backed companies raised a total of $11.1 billionfrom IPOs, compared with 49 venture-backed companies that raised $21.5 billionfrom IPOs in 2012, according to Thomson Reuters and the NVCA **. The 2012 figures include the impact of Facebook's $16 billionIPO. The IPO activity in 2013 represents a 65% increase in the number of completed IPOs but a 48% decline in the amount raised from 2012. ** Thomson Reuters and NVCA press release dated 2 April 2014. Campton Group, Inc.Campton, the Company's wholly-owned subsidiary, provides advice and portfolio monitoring services relating to the Company's investment portfolio. Campton has been restructured to provide a level of service to the Company consistent with the Company's current size and needs. Board Changes David Quysner, who has been a Director since 2004, is retiring and will not seek re-election at the 2014 Annual General Meeting ("AGM"). The Board wishes to thank him for his valuable contribution to the Company. He will be replaced as Chairman of the Audit and other Committees by Julian Cazalet. Continuation Vote The Articles of Association provide for shareholders to consider the continuation of the Company as an Investment Trustat the 2014 AGM and at every fifth subsequent AGM thereafter. The alternative to a continuation of the Company would be to seek an immediate sale of the assets or to appoint a liquidator to realise the assets over time. The Board has considered and continues to explore ways to realise the assets through `secondary sales' but the discounts to NAV at which such proposals have so far been priced have been unattractive. The appointment of a liquidator would place the assets at the disposal of someone without deep knowledge and experience of the assets and might result in the loss of investment trust status and the benefit of a quotation for the Company's shares. The Board believes that continuation of the Company as an investment trust is in the best interests of shareholders and will propose a resolution to that effect. The Board further believes that shareholders should be given regular opportunities to decide on the continuing operations of the Company. Therefore, the Board is proposing a resolution to change the Articles of Association to hold a continuation vote annually rather than once every five years. While the Board believes that an annual continuation vote is in the best interests of shareholders, the Board notes that several funds are still in their initial terms, which expire from 2016 to 2018. It may take some time after the expiration of these initial terms for these funds to be fully would down. As a result, the Board believes that an orderly winding down of the Company may take several years. Outlook The Funds and their underlying investments continue to mature. The 1999/2000 vintage Funds are generally in extension or in a winding down phase, whilst the more recent 2006/2007 vintage Funds have mainly completed their initial investment stage and have entered their follow-on investment and realisation phase. The Funds of the 1999/2000 vintage are focused on ways to obtain liquidity for their underlying investments. The timing of realisations by the Funds will, however, continue to depend on factors that include the IPO and M&A environment as well as on more general market and economic conditions, whilst the timing of distributions to the Company will depend on the practices and policies of individual Funds. Given the age profile of the portfolio, we expect that the overall pace of realisations, and hence distributions received by the Company, will slow down but it remains our policy to seek to make periodic returns of capital to shareholders in a cost effective way. PETER DICKSChairman 31 July 2014 PORTFOLIO OF FUNDS Investment portfolio as at 31 March 2014% of % of Total Fair* Fair* net net commitment value value assets assets US$' 000 US$'000 £'000 2014 2013 Unquoted Funds APV Technology Partners III 5,000 208 125 0.3 0.4 Crescendo IV 10,000 1,586 951 2.2 2.2 Dawntreader Fund II 30,000 2,698 1,618 3.9 5.3 Draper Fisher Jurvetson 30,000 8,845 5,306 12.5 12.4 ePlanet Ventures Draper Fisher Jurvetson Fund 2,000 820 492 1.2 1.1 VI Draper Fisher Jurvetson Fund 5,000 3,782 2,269 5.3 4.9 VII Draper Fisher Jurvetson Gotham 3,000 728 437 1.0 0.9 Venture Fund Draper Fisher Jurvetson Gotham 300 31 19 0.1 - Expansion Unit Focus Ventures II 30,000 1,930 1,158 2.7 2.7 Francisco Partners II 5,000 3,441 2,064 4.8 4.7 Institutional Venture Partners 5,000 6,840 4,102 9.6 7.4 XII New Enterprise Associates 9 5,000 822 492 1.2 1.4 New Enterprise Associates 10 10,000 3,225 1,935 4.5 3.8 New Enterprise Associates 12 3,000 2,426 1,455 3.4 3.7 Oak Investment Partners X 10,000 3,999 2,399 5.6 6.4 Sprout Capital IX 3,750 248 149 0.3 0.5 TCV IV 25,000 376 225 0.5 1.3 Vanguard VII 3,000 658 395 0.9 0.9 VantagePoint Venture Partners 5,000 2,598 1,559 3.6 3.5 2006 VantagePoint Venture Partners 10,000 3,139 1,883 4.4 5.0 IV Vector Capital IV 4,000 2,414 1,448 3.4 3.3 Zone Venture Fund II 10,000 506 303 0.7 1.2 Zone Venture Fund II Annex 400 39 23 0.1 0.1 Total Unquoted Funds 214,450 51,359 30,807 72.2 73.1 Open-ended Investment Funds USD BlackRock ICS Institutional USD Liquidity Fund - 2,500 1,499 3.4 3.8 JP Morgan USD Liquidity - 2,600 1,560 3.7 3.6 Premier Distribution FundRBS Global Treasury Funds Plc - 400 240 0.6 1.0 USDMoney Fund Distributing GBP RBS Global Treasury Funds Plc - 9,887 5,930 13.9 16.2 GBPMoney Fund Distributing Total Open-ended Investment - 15,387 9,229 21.6 24.6 Funds Other Investments held directly by the Company Common Stock ChannelAdvisor Corp - 27 16 - - Marketo Inc - 198 119 0.3 - Total Other Investments - 225 135 0.3 - Total Investments 214,450 66,971 40,171 94.1 97.7 Net current assets 4,215 2,528 5.9 2.3 Net assets 71,186 42,699 100.0 100.0 * Of remaining investment. Description of Portfolio Funds Draper Fisher JurvetsonePlanet Ventures, L.P.(Website: www.eplanetventures.com) Fair value to PEI of remaining investment at 31 March 2014: $8,845,000 Draper Fisher JurvetsonePlanet Ventures, L.P.is advised by ePlanet Capital (formerly ePlanet Ventures). Formed in 1999, ePlanet Capital is a global venture capital firm with offices in Asia, Europeand the United States. Examples of sectors in which ePlanet Capital has invested include Internet and e-Commerce, Semi-conductors and Electronics, Wireless and Telecommunications, Healthcare and Medtech, Green Energy and Energy Efficiency. The firm's preferred investment stages are growth capital and expansion stage venture capital, with investment in early stage companies when there are attractive opportunities. Institutional Venture Partners XII, L.P.(Website: www.ivp.com) Fair value to PEI of remaining investment at 31 March 2014: $6,840,000 Institutional Venture Partners("IVP"), located in Menlo Park, California, was founded in 1980 and currently has $4 billionunder management. The firm focuses on later-stage investments in rapidly growing technology and media companies with over $10 millionin revenue. IVP typically invests $10 millionto $100 millionper company in a variety of transaction types, including venture growth investments, industry rollups, recapitalisations, secondaries, spinouts and select public market transactions. IVP concentrates on US-based companies in the Internet/Digital Media, Enterprise IT and Mobile/Communications sectors. Since inception, IVP has invested in over 300 companies, 98 of which have gone public. Oak Investment Partners X, L.P.(Website: www.oakvc.com) Fair value to PEI of remaining investment at 31 March 2014: $3,999,000 Oak Investment Partners("Oak") is a multi-stage venture capital firm with offices in Greenwich( Connecticut), Minneapolis( Minnesota) and Palo Alto( California). Oak focuses on high growth opportunities in the Clean Energy, Financial Services, Technology, Healthcare, Information Technology, Internet and Consumer sectors, and generally invests between $25 millionand $150 millionper company. Over its 35-year history, Oak has achieved a strong track record as a stage-independent investor investing $9 billionin over 500 companies at key points in their lifecycle. Oak has been involved in the formation of companies, funded spinouts of operating divisions and technology assets, and provided growth equity to mid and late-stage private businesses and to public companies through PIPE investments. Draper Fisher Jurvetson Fund VII, L.P.(Website: www.dfj.com) Fair value to PEI of remaining investment at 31 March 2014: $3,782,000Founded in 1985, Draper Fisher Jurvetson("DFJ") has created a global network of affiliated venture funds and has offices located in the United States, Chinaand India. DFJ and its network of funds have over $7 billionin capital commitments and have made more than 400 investments on four continents. DFJ invests primarily in early stage deals, but also invests in expansion-stage deals and occasionally in later-stage deals where the risk/return analysis is favourable. DFJ focuses on technology sectors including IT, Nanotechnology, Life Sciences and Clean Energy. Francisco Partners II, L.P.(Website: www.franciscopartners.com) Fair value to PEI of remaining investment at 31 March 2014: $3,441,000 Francisco Partners("FP") provides transformational capital to technology companies facing strategic or operational inflection points. FP invests across a broad range of technology sectors, including software, Internet, security, healthcare, IT, communications, IT services, semi-conductors and capital equipment. With over $7 billionof capital raised to date and a team of 30 investment professionals worldwide, FP has the flexibility and capacity to pursue investments with transaction values ranging from $50 millionto over $2 billion. FP pursues a variety of investment types, including acquisitions of private companies, divisional buyouts, growth equity investments, public company take privates and sponsored mergers and acquisitions. FP has offices in San Franciscoand London. New Enterprise Associates10, L.P. (Website: www.nea.com) Fair value to PEI of remaining investment at 31 March 2014: $3,225,000Founded in 1977, New Enterprise Associates("NEA") is the world's largest venture capital firm, with more than $14 billionin committed capital across 14 funds. NEA's team of over 65 investment professionals invests across four continents from offices in the US, Indiaand China. NEA invests across three key domains - information technology, healthcare and energy technology - in both early stage and venture growth equity opportunities. Since its founding, NEA has funded more than 650 companies, 190 of which have gone public and more than 310 of which have been successfully merged or acquired. VantagePoint Venture Partners IV, L.P.(Website: www.vpcp.com) Fair value to PEI of remaining investment at 31 March 2014: $3,139,000 VantagePoint Capital Partners("VPCP") has been funding transformative companies since 1996. VPCP currently has over $4 billionof committed capital and has made substantial investments in energy innovation, energy efficiency, information technology, internet and digital media and healthcare companies. VPCP also manage a number of Asian companies through their team based in Beijing, China. VPCP was among the first large investment firms to recognise the opportunity in energy innovation and efficiency and has since committed substantial resources to this field. VPCP has offices in San Bruno, Californiaand Beijing. Dawntreader Fund II, L.P.(Website: www.dtventures.com) Fair value to PEI of remaining investment at 31 March 2014: $2,698,000Founded in 1998, Dawntreader Venturesis a New York-based early-stage venture capital firm focused on investing in software, Internet and digital media companies. Other Funds in the Company's portfolio are: APV Technology Partners III, Crescendo IV, Draper Fisher Jurvetson Fund VI, Draper Fisher Jurvetson Gotham Venture Fundand Expansion Unit, Focus Ventures II, New Enterprise Associates9, New Enterprise Associates12, Sprout Capital IX, TCV IV, Vanguard VII, VantagePoint Venture Partners2006, Vector Capital IV, Zone Venture Fund IIand Zone Venture Fund II Annex. Summary of Individual Funds Investments: 31 March 2014 Total Vintage Fund PEI called size commitment capital Name US$(m) US$ US$ APV Technology Partners III 1999 109 5,000,000 5,000,000 Crescendo IV 2000 582 10,000,000 10,000,000 Dawntreader Fund II 2000 204 30,000,000 30,000,000 Draper Fisher Jurvetson ePlanet 1999 646 30,000,000 29,550,000 Ventures Draper Fisher Jurvetson Fund VI 1999 379 2,000,000 2,000,000 Draper Fisher Jurvetson Fund VII 2000 643 5,000,000 5,000,000 Draper Fisher Jurvetson Gotham 1999 85 3,000,000 3,000,000 Venture Fund Draper Fisher Jurvetson Gotham 2010 9 300,000 112,200 Expansion Unit Focus Ventures II 2000 410 30,000,000 28,650,000 Francisco Partners II 2006 2,300 5,000,000 4,655,000 Institutional Venture Partners 2007 606 5,000,000 5,000,000 XII New Enterprise Associates 9 1999 880 5,000,000 4,900,000 New Enterprise Associates 10 2000 2,323 10,000,000 9,850,000 New Enterprise Associates 12 2006 2,525 3,000,000 2,955,000 Oak Investment Partners X 2000 1,616 10,000,000 10,000,000 Sprout Capital IX 2000 1,083 3,750,000 3,750,000 TCV IV 2000 1,642 25,000,000 24,400,000 Vanguard VII 2000 210 3,000,000 3,000,000 VantagePoint Venture Partners 2006 1,003 5,000,000 4,500,000 2006 VantagePoint Venture Partners IV 2000 1,399 10,000,000 10,000,000 Vector Capital IV 2007 1,224 4,000,000 2,403,633 Zone Venture Fund II 1999 99 10,000,000 10,000,000 Zone Venture Fund II Annex 2004 4 400,000 400,000 Total Unquoted Funds 214,450,000 209,125,833 Other Statutory Information Company Activities and Status The Group comprises Private Equity Investor PLCand its wholly-owned subsidiary, Campton Group, Inc., a Californiacorporation. Campton acts as investment advisor to the Company. The Company is an investment company as defined under Section 833 of the Companies Act 2006 ("the Companies Act"), and was incorporated and registered in Englandand Waleson 19 January 2000with Company Number 3912487. Its shares are listed on the London Stock Exchangeunder the ticker PEQ. The Company has received written approval from HM Revenue and Customsas an authorised investment trust under Section 1158 of the Corporation Tax Act 2010 ("CTA"). The Company will be treated as an investment trust company for each subsequent accounting period, subject to there being no subsequent serious breaches of the conditions. In the opinion of the Directors, the Company has directed its affairs so as to enable it to continue to qualify for such approval. The Articles of Association provide for shareholders to consider the continuation of the Company as an investment trust at the AGM to be held on 17 September 2014and at every fifth subsequent AGM thereafter. However, a resolution to be proposed at this year's AGM would, if passed, result in the Articles being amended to provide for an annual continuation vote. The Company's shares qualify as investments in Individual Savings Accounts ("ISAs"). Company Objectives, Review and Business Model The principal activity of the Company is to carry on business as an investment trust in accordance with its Investment Objective and Policy. The Company has a portfolio of Funds to which it has made capital commitments, some of which remain to be drawn down. The Company will honour these remaining commitments and expects to continue to receive distributions in cash and in shares from its portfolio of Funds. The Company does not, however, currently intend to enter into any new commitments and expects to continue making periodic returns of capital to shareholders when sufficient monies are received from the Funds. Investment Objective The objective of the Company has been to provide shareholders with long-term capital growth. The Company is not making investments in new private equity funds but is managing its existing investments with a view to making periodic returns of capital to shareholders. Investment Policy The Company has invested in the Funds, which are managed by a number of different management groups, and focused on various stages of growth so as to obtain exposure to a diversified underlying portfolio of investments primarily in private companies in the technology sector. Through the Funds, the Company has exposure to a diverse portfolio of underlying companies. It is the policy of the Company not to make new fund investments. However, the Company will continue to meet existing capital commitments to the Funds and may on occasion support follow-on commitments in existing Funds or affiliated annex funds. Further details of the Investment Policy are provided above. Net Asset Valuation The NAV per Ordinary Share at 31 March 2014was 228.4p (2013: 230.8p). The Funds are stated at Directors' valuation, which is normally based on the valuations provided by the managers of those Funds, which are received by the Company at least quarterly. The valuation methodology normally used by these Funds is that the underlying investments are valued at fair value. In the case of marketable securities, the valuations are typically based on a mark to market basis. In the case of non-listed securities, Funds in the US typically value their portfolios in accordance with the Financial Accounting Standards Board's Statement No.157, which is broadly comparable to the International Private Equity and Venture Capital("IPEVC") guidelines. Results and Dividends The results for the year are set out in the consolidated statement of comprehensive income below. The Directors are not recommending the payment of a dividend for the year ended 31 March 2014. Key Performance Indicators ("KPIs") The Board reviews the performance of the Funds at its meetings by reference to a number of KPIs and receives monthly update reports from the investment advisor. The Board considers that the most relevant KPIs are those that communicate the financial performance and strength of the Company as a whole, being: the NAV performance; discount to NAV; and ongoing charges ratio. The financial performance of the Company is set out below: Year Ended Year Ended 31 March 2014 31 March 2013 Net assets and £42,699,000* £51,810,000 shareholders' funds Net assets per Ordinary 228.4p 230.8p Share Discount to NAV 20.1% 20.7% Ongoing charges (Company 1.7% 1.8% only)** Ongoing charges (Group)** 2.0% 2.0% * Following the tender offer completed in May 2013when £8.65 million was returned to Shareholders. ** Ongoing charges at both the Company and Group level are shown. The Company's ongoing charges are calculated according to the AIC guidance and, as such, exclude subsidiary expenses. Group ongoing charges are calculated on the same basis, but include subsidiary expenses. Ongoing Charges Ratio The Directors maintain an objective to run the Company efficiently and monitor its operational expenses on an ongoing basis. The ongoing charges ratio for the Company for the year ended 31 March 2014was 1.7% (2013: 1.8%) and was 2.0% for the Group (2013: 2.0%). As the Company returns cash to shareholders the percentage of expenses to net assets may increase. Efforts to reduce costs, for example the restructuring of Campton during the year, are, however, being made. The Board is pleased to report that the ratio remained static during the year despite the reduction in overall net assets of the Company following the tender offers. Discount The Directors regularly monitor the level of discount at which the Group's shares are trading. On 31 March 2014the Group's share price stood at a discount of 20.1% to NAV, compared to 20.7% twelve months earlier. The Directors have considered the introduction of a discount protection mechanism, whereby the Company might purchase shares in the market at a stated minimum discount to NAV. Unlike many other investment trusts, however, the Company does not hold readily marketable investments from which such purchases might be funded. Moreover, it has already indicated that it will make periodic tender offers to return the proceeds of distributions from its portfolio to shareholders. In these circumstances, the Directors do not consider that a formal discount protection mechanism is appropriate, however, they continue to seek authority annually to exercise their ability to buy back shares. Principal Risks and Uncertainties and their Mitigation A risk assessment and a review of internal controls are undertaken annually by the Board in the context of the Company's overall investment objective. The review covers the key business, operational, compliance and financial risks facing the Company. Full details of how the Board fulfils this role are shown in the Corporate Governance statement in the full Annual Report. The principal risks and uncertainties identified by the Board are discussed below, together with an outline of how the Board recognises and seeks to control these risks. Mitigation of the principal risks is sought and achieved as far as possible. Further information regarding financial risks is set out in Note 18 to the Financial Statements below. Stock Market Performance Risk The Funds in which the Company is invested typically seek to realise their own investment objectives by selling, recapitalising or floating their investee companies. Consequently a proportion of the Company's underlying investments is in publicly quoted stocks (listed primarily on the NASDAQ Stock Marketand NYSE) - typically as a result of IPOs or as a result of trade sales in which the consideration has been by way of listed equity in the acquirer. When such shareholdings are distributed, it is the Company's normal policy to sell them, ideally close to or above the distribution price, as soon as possible. There may be instances where the Company continues to hold distributed shares, in an effort to obtain a higher price. However, this practice exposes the Company to market risk. The details of the Company's investment portfolio given above show that the Company directly held publicly quoted investments at 31 March 2014with an aggregate value of £135,000, which is 0.3% of the Company's assets. Company and Fund Performance Risk By their nature, investments in new and unlisted companies often present greater risk than those in more established enterprises. In addition, the Funds may make poor investments. The Company has sought to mitigate this risk through the diversification of its investment across a range of Funds (currently 23), which are themselves invested in 369 underlying companies. As PEI's portfolio of Funds matures and winds down, the Company's investment portfolio will experience greater concentration risk. Regulatory Breach Risk Relevant legislation and regulations which apply to the Company include the Companies Act 2006, the CTA and the Listing Rules of the Financial Conduct Authority("FCA"). The Company has noted the recommendations of the UKCorporate Governance Code and the AIC Code of Corporate Governance and the relevant AIC Guide for Investment Companies. Its statement of compliance appears in the full Annual Report. A breach of CTA could result in the Company losing its status as an investment trust company and becoming subject to capital gains tax, whilst a breach of the Listing Rules might result in censure and/or a fine by the FCA. At each Board meeting the status of the Company is considered and discussed, so as to ensure that all regulations are being adhered to by the Company and its service providers. To the knowledge of the Directors there have been no breaches of laws or regulations during the period under review and up to the date of this report. Investment Trust Status The Board also regularly reviews the share register to confirm that the Company is not a close company (as defined in the CTA), however, the Board acknowledges that it has no control over shareholders purchasing shares nor their concentration on the share register. Being a close company would breach the CTA rules and the Company would be likely to lose its investment trust qualification, as further discussed under "Regulatory breach risk" above. The Company monitors the significant shareholder positions on an on-going basis and where the Company receives or is made aware of information from significant shareholders in relation to their shareholdings and voting rights, the Company investigates as appropriate the disclosures that have been made and considers their impact so as to ascertain whether or not there is any impact on the Company's close company status for the relevant financial period. Alternative Investment Fund Managers' Directive("AIFMD") AIFMD was conceived by European Unionlegislators to address a perceived regulatory gap to protect investors and is intended to provide a harmonised regulatory and supervisory framework throughout the European Unionfor regulating Alternative Investment Funds. AIFMD was implemented by the UKon 22 July 2013, and existing companies had until 22 July 2014to register their manager and comply with the Directive. The Board has been appointed as the Alternative Investment FundManager of the Company. Fund Term Risk When a venture capital or buyout firm reaches the end of its term (including extensions), the fund manager typically engages in an orderly winding-down of the Fund. During this winding down period, which can last several years, the manager of the Fund attempts to exit the remaining investments while maximising value for the Fund's investors. There is a risk, however, that a Fund in wind-down may realise proceeds on the sale of investments at less than reported fair value. If this happens, it could adversely impact the value of interests in the Fund held by investors. In addition, a Fund in wind-down will incur expenses (and possibly management fees) during this period, which could also adversely impact the value of investors' interests in the Fund. Eight of the Company's 23 Funds are in the process of winding-down and ten are in term extensions. Valuation Risk The Directors are, to a significant extent, reliant on the accuracy and timeliness of the financial information provided to them by the General Partnersof the Funds in which the Company has invested. The Company receives valuations on a quarterly basis and there can be a time delay in the valuations being reported to the Company and reflected in its NAV. The valuation of investments held in the Funds is undertaken by the General Partner on a quarterly basis, in some cases reviewed on at least an annual basis by the Fund's Advisory Committee of investors and reviewed by the Funds' Auditors. Annual accounts and quarterly reports are reviewed by PEI and discussed by the Board. Market Operation Risk The Company is reliant on the efficient operation of markets to provide an exit route from investments held within the Funds. Exits are typically achieved through trade sales, recapitalisations or the sale of stocks following an IPO of an underlying company. In periods of uncertain markets, exits can be delayed and the Company may see a decrease in distributions received. Exchange Rate Risk The majority of the Company's assets are held in US dollar denominated securities and, since the Company's shares are quoted in sterling, shareholders are exposed to currency fluctuations between these currencies. It is not the Company's policy to hedge against currency fluctuations. Future Outlook The Company's portfolio of Funds has delivered periodic cash and stock distributions to the Company, and this is expected to continue. As the underlying portfolio matures, it is expected that the pace and amount of distributions from the Funds will slow. The timing and level of distributions will also depend on the state of capital markets as well as economic and other factors. It is the Company's stated policy not to make new fund investments, however, the Company will continue to meet existing capital commitments to the Funds and may on occasion support follow-on commitments in existing Funds or affiliated annex funds. Campton Group, Inc. Campton, the Company's wholly-owned subsidiary, provides the Company with advice and portfolio monitoring services relating to the Company's investment portfolio. During the year, the Company injected capital into Campton. Subsequently in a separate transaction, Campton repaid all of the outstanding principal and interest due under its debt obligations to the Company. As a result of these transactions, Campton no longer has any outstanding debt to the Company. Campton's operations have been restructured to provide a level of service to the Company consistent with the Company's current size and needs. Employees, Environmental, Human Rights and Community Issues The Company has one employee, the office manager of its Londonoffice, and Campton has one employee based in San Francisco. The Board is composed entirely of non-executive Directors. The Company was fully aware of each General Partner's investment policy at the time it committed to each new Fund. Limited Partners such as the Company, however, are not consulted on individual investments made by the General Partner in their particular funds. In light of this, the Company attempts to conform to best practice on environmental and other social responsibility issues. The Company itself has no environmental, human rights, or community policies. In carrying out its activities and in relationships with suppliers, the Company aims to conduct itself responsibly, ethically and fairly. Stewardship The Company has noted the principles of the UKStewardship Code. As a result of its investment objectives it does not often hold stocks directly other than for short periods and therefore does not normally have opportunities to vote at general meetings. In conjunction with its investment adviser, Campton, the Company maintains an open dialogue with the Funds and participates in any investor actions when it has the right to do so. Contractual Arrangements Essential to the Business of the Company Other than the Company Secretarial and Administrative Agreement described above, there are no contractual arrangements that are considered essential to the business of the Company. Gender Diversity The Board of Directors of the Company comprised four male directors during and at the end of the year to 31 March 2014. Appointments to the Board are made according to a person's existing knowledge and expertise taking into account the Company's strategic priorities. The Company has one female and one male employee. On behalf of the Board PETER DICKS Chairman 31 July 2014 EXTRACTS FROM THE DIRECTORS' REPORT Capital Structure In May 2008, shareholders approved the cancellation of the Company's Share Premium Account which, following the necessary court approval obtained on 29 October 2008, permitted the creation of a special distribution reserve. This enabled the Company to make further returns of capital to shareholders. Since that time, the Company has made five tender offers, returning a total of £61.65 million to shareholders and has made selected open market purchases of its shares. On 29 May 2014, the Company made a further tender offer of £8.5 million, bringing the total returned to £70.15 million. No further shares were purchased during the year. No shares were held in, or issued from Treasury during the year. At the year-end, the Company had an issued share capital of 18,694,757 Ordinary Shares of 0.01p each. Following the sixth tender offer, of £8.5 million completed on 29 May 2014, and at the date of this report, the Company has an issued share capital of 14,805,508 Ordinary Shares of 0.01p each. Each share is entitled to one vote on a poll at general meetings. Going Concern The Company's Articles of Association currently require a continuation vote to be proposed at this year's AGM and at every fifth AGM thereafter. A resolution to be proposed at this year's AGM would, if passed, result in the Articles being amended to provide for an annual continuation vote. In the event that any continuation vote is not passed, the Directors shall be required to bring forward proposals for the voluntary liquidation, unitisation or other reorganisation or reconstruction of the Company. The Directors have considered the application of the Statement of Recommended Practice for Financial Statements of Investment Trust Companiesand Venture Capital Trusts, which states that, even if an investment company is approaching a wind-up and shareholders have yet to vote on the issue and provided that the board has not concluded that there is no realistic alternative to winding up the company, it will usually be more appropriate for the financial statements to be prepared on a going (rather than non-going) concern basis. In assessing the Company's ability to continue as a going concern, the Directors have had regard to the Company's Investment Objective and Policy and they have reviewed the principal risks and uncertainties facing the Company (as stated in the Strategic Report above) together with the Company's commitments and contingent liabilities (note 17 below) and the Company's cash and readily realisable investments required to meet its investment obligations and expenditure. In addition, the Directors have considered the Company's investment performance and the ongoing interest of investors in the continuation of the Company, including feedback from conversations with shareholders. Based on their assessment and considerations, the Directors have concluded that they should continue to prepare the financial statements on a going concern basis and the financial statements have been prepared accordingly. STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS The Directors are responsible for preparing the Annual Report and the Group and Company financial statements in accordance with applicable United Kingdomlaw and those International Financial Reporting Standards ("IFRS") adopted by the European Union. Under Company law, the Directors must not approve the Group and Company financial statements unless they are satisfied that they present fairly the financial position, financial performance and cash flows of the Group for that period. In preparing the Group and Company financial statements, the Directors are required to: select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently; present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group's and Company's financial position and financial performance; state that the Group and Company have complied with International Financial Reporting Standards subject to any material departures disclosed and explained in the financial statements; make judgements and estimates that are reasonable and prudent; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Group's and Company's transactions and disclose with reasonable accuracy, at any time, the financial position of the Group and Company and enable them to ensure that the Group and Company financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulations. The Directors are also responsible for ensuring that the Strategic Report and Directors' Report is prepared in accordance with Company Law in the United Kingdomand that the Annual Report includes information required by the Listing Rules of the Financial Conduct Authority. They are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. The work carried out by the Auditor does not include consideration of the maintenance and integrity of the website and accordingly, the Auditor accepts no responsibility for any changes that have occurred to the financial statements when they are presented on the website. Visitors to the website need to be aware that legislation in the United Kingdomgoverning the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. The Directors confirm that, to the best of their knowledge: the financial statements, which have been prepared in accordance with UKGenerally Accepted Accounting Practice, give a true and fair view of the assets, liabilities, financial position and net return of the Company; the Strategic Report and the Directors' Report include a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties it faces; and the Annual Report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's performance, business model and strategy. For and on behalf of the Board PETER DICKS Chairman 31 July 2014 NON-STATUTORY ACCOUNTS The financial information set out below does not constitute the Company's statutory accounts for the year ended 31 March 2014and the year ended 31 March 2013but is derived from those accounts. Statutory accounts for 2013 have been delivered to the Registrar of Companies, and those for 2014 will be delivered in due course. The Auditor has reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report and (ii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The text of the Auditor's report can be found in the Company's full Annual Report and Accounts at www.peiplc.com. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 March 2014Year ended 31 March 2014 Year ended 31 March 2013 Revenue Capital Revenue Capital return return Total return return Total Notes £'000 £'000 £'000 £'000 £'000 £'000 Gains/(losses) 9 - 659 659 - (730) (730) on investments at fair value through profit and loss Exchange 9 - (141) (141) - 14 14 (losses)/gains on other items - 518 518 - 716 716 Operating income Investment 12 - 12 19 - 19 income Other operating 3 - 3 6 - 6 income Total operating 2 15 - 15 25 - 25 income Operating expenses Administrative 3 (796) (104) (900) (1,327) (122) (1,449) expenses Operating (781) 414 (367) (1,302) (838) (2,140) (loss)/return (Loss)/return (781) 414 (367) (1,302) (838) (2,140) before tax Tax 5 - - - - - - (Loss)/return (781) 414 (356) (1,302) (838) (2,140) after taxation Other comprehensive income - exchange - (34) (34) - 21 21 differences on translation of foreign operations Total (781) 380 (401) (1,302) (817) (2,119) comprehensive income for the year Attributable to: Equity holders (781) 380 (401) (1,302) (817) (2,119) of the parent (Loss)/earnings per share Basic 8 (4.0)p 2.1p (1.9)p (5.7)p (3.6)p (9.3)p The total column of this statement represents the Group's Statement of Comprehensive Income, prepared in accordance with IFRS. The revenue return and capital return columns are both prepared under guidance published by the AIC. All items in the above statement derive from continuing operations. The Parent Companyhas elected to take the exemption in Section 408 of the Companies Act 2006, not to present the Parent Company's Statement of Comprehensive Income. The notes form part of these financial statements. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31 March 2014Capital Currency Share Special redemption Capital translation Retained capital reserve reserve reserve reserve earnings Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 Year ended 31 March 2014 As at 1 April 2 52,772 3 4,127 36 (5,130) 51,810 2013 Total - - - 414 (34) (781) (401) comprehensive income for the year Tender offer - (8,650) - - - - (8,650) Tender offer - (60) - - - - (60) expenses As at 31 March 2 44,062 3 4,541 2 (5,911) 42,699 2014 Year ended 31 March 2013 As at 1 April 3 63,849 2 4,965 15 (3,828) 65,006 2012 Total - - - (838) 21 (1,302) (2,119) comprehensive income for the year Tender offer (1) (11,000) 1 - - - (11,000) Tender offer - (77) - - - - (77) expenses As at 31 March 2 52,772 3 4,127 36 (5,130) 51,810 2013 The notes form part of these financial statements. COMPANY STATEMENT OF CHANGES IN EQUITY for the year ended 31 March 2014Capital Share Special redemption Capital Retained capital reserve reserve reserve earnings Total £'000 £'000 £'000 £'000 £'000 £'000 Year ended 31 March 2014 As at 1 April 2013 2 52,772 3 4,168 (5,135) 51,810 Total comprehensive - - - 321 (722) (401) income for the year Tender offer - (8,650) - - - (8,650) Tender offer - (60) - - - (60) expenses As at 31 March 2014 2 44,062 3 4,489 (5,857) 42,699 Year ended 31 March 2013 As at 1 April 2012 3 63,849 2 4,960 (3,282) 65,532 Total comprehensive - - - (792) (1,853) (2,645) income for the year Tender offer (1) (11,000) 1 - - (11,000) Tender offer - (77) - - - (77) expenses As at 31 March 2013 2 52,772 3 4,168 (5,135) 51,810 The notes form part of these financial statements. CONSOLIDATED BALANCE SHEET as at 31 March 2014 31 March 31 March 2014 2013 Notes £'000 £'000 Non-current assets Investments at fair value through profit 9 40,171 50,618 or loss Property, plant and equipment - 4 Current assets Trade and other receivables 11 404 23 Cash and cash equivalents 15 2,212 1,532 2,616 1,555 Total assets 42,787 52,177 Current liabilities Trade and other payables 12 88 367 Net assets 42,699 51,810 Capital and reserves Share capital 13 2 2 Special reserve 14 44,062 52,772 Capital redemption reserve 14 3 3 Capital reserve 14 4,541 4,127 Currency translation reserve 14 2 36 Retained earnings 14 (5,911) (5,130) Shareholders' funds 42,699 51,810 Total equity 42,699 51,810 Net asset value per Ordinary Share 16 228.4p 230.8p The Group's financial statements were approved by the Board of Directors on 31 July 2014and were signed on its behalf by: PETER DICKSChairman Company Registered Number: 3912487 The notes form part of these financial statements. COMPANY BALANCE SHEET as at 31 March 2014 31 March 31 March 2014 2013 Notes £'000 £'000 Non-current assets Investments at fair value through profit 9 40,171 50,618 or loss Investment in subsidiary 10 65 423 Current assets Trade and other receivables 11 395 17 Cash and cash equivalents 15 2,147 1,109 2,542 1,126 Total assets 42,778 52,167 Current liabilities Trade and other payables 12 79 357 Net assets 42,699 51,810 Capital and reserves Share capital 13 2 2 Special reserve 14 44,062 52,772 Capital redemption reserve 14 3 3 Capital reserve 14 4,489 4,168 Retained earnings 14 (5,857) (5,135) Shareholders' funds 42,699 51,810 Total equity 42,699 51,810 Net asset value per Ordinary Share 16 228.4p 230.8p The Company's financial statements were approved by the Board of Directors on 31 July 2014and were signed on its behalf by: PETER DICKSChairman The notes form part of these financial statements. CONSOLIDATED CASH FLOW STATEMENT for the year ended 31 March 2014Year ended Year ended 31 March 2014 31 March 2013 Notes £'000 £'000 Cash flows from operating activities Consolidated net return before tax (367) (2,140) Adjustments to reconcile net loss before tax to net cash flows from operating activities: (Gains)/losses on investments (659) 730 Exchange losses/(gains) 128 (13) Costs related to tender offer 104 122 (Decrease)/increase in trade and (277) 238 other payables (Increase)/decrease in trade and (7) 52 other receivables Purchase of investments (5,781) (14,719) Sale of investments 9,981 18,719 Cash distributions 6,534 7,059 Net cash flows generated from 9,656 10,048 operating activities Financing Ordinary Shares purchased in tender (8,710) (11,077) offer Costs related to tender offer (104) (122) Net cash used in financing activities (8,814) (11,199) Net increase/(decrease) in cash and 842 (1,151) cash equivalents Cash and cash equivalents at 1,532 2,650 beginning of year Effect of foreign exchange rates on (162) 33 cash and cash equivalents Cash and cash equivalents at end of 15 2,212 1,532 year The notes form part of these financial statements. COMPANY CASH FLOW STATEMENT for the year ended 31 March 2014Year ended Year ended 31 March 2014 31 March 2013 Notes £'000 £'000 Cash flows from operating activities Company net loss before tax (401) (2,645) Adjustments to reconcile net loss before tax to net cash flows from operating activities: (Gains)/losses on investments (659) 730 Exchange losses/(gains) 221 (44) Costs related to tender offer 104 122 Impairment of Campton 284 236 Receipt of written down receivable 401 - (Decrease)/increase in trade and (278) 286 other payables (Increase)/decrease in trade and (5) 376 other receivables Purchase of investments (5,781) (14,719) Sale of investments 9,981 18,719 Cash distributions 6,534 7,059 Net cash flows generated from 10,401 (10,120) operating activities Investing activities Investment in subsidiary (1,019) (32) Redemption of loan notes 598 - Net cash used in investing activities (421) (32) Financing Ordinary Shares purchased in tender (8,710) (11,077) offer Costs related to tender offer (104) (122) Net cash used in financing activities (8,814) (11,199) Net increase/(decrease) in cash and 1,166 (1,111) cash equivalents Cash and cash equivalents at 1,109 2,208 beginning of year Effect of foreign exchange rates on (128) 12 cash and cash equivalents Cash and cash equivalents at end of 15 2,147 1,109 year The notes below form part of these financial statements. NOTES TO THE FINANCIAL STATEMENTS at 31 March 2014 1. ACCOUNTING POLICIES Accounting Convention Private Equity Investor PLCis a company incorporated in Great Britainand registered in Englandand Walesunder the Companies Act 2006. The consolidated financial statements for the Group for the year ended 31 March 2014comprised the results of the Company and its wholly-owned subsidiary, Campton Group, Inc, a Californiacorporation (together referred to as the "Group"). For further details see Basis of Consolidation below. The Company is registered as a public limited company and is an investment company as defined by section 833 of the Companies Act 2006. Campton Group, Inc.is a private equity fund-of-funds advisory business based in California. Basis of Accounting The consolidated annual financial statements of the Group have been prepared under International Financial Reporting Standards ("IFRS"), which comprise standards and interpretations approved by the International Accounting Standards Board("IASB"). The annual financial statements of the Company have been prepared in accordance with IFRS as adopted by the European Union, and as applied in accordance with the provisions of the Companies Act 2006. The financial statements have also been prepared in accordance with the Statement of Recommended Practice ("SORP") (issued January 2009) for Investment Trust Companiesand Venture Capital Trusts except to any extent that it conflicts with IFRS. The accounting policies that follow set out those policies which apply in preparing the financial statements for the year ended 31 March 2014. There are no differences between the accounting policies applied to the Group and the Company. The Group and Companyfinancial statements are presented in Sterling and all values are rounded to the nearest thousand pounds (£'000) except when indicated otherwise. Basis of Consolidation The consolidated financial statements incorporate the financial statements of the Company and its wholly-owned subsidiary Campton Group, Inc, a Californiacorporation ("Campton"). All profits and losses of Campton are attributable to the Company. The financial statements of Campton are prepared for the same reporting year as the Parent Company, using consistent accounting policies. All intercompany balances and transactions, including unrealised profits arising from them, are eliminated. Segmental Reporting The Directors are of the opinion that the Group is engaged in a single segment of business, being investment business. Accordingly, a segmental reporting note is not presented. The results of Campton are immaterial for segmental reporting purposes. Income Recognition Dividends receivable on quoted equity shares and debt securities are included in the financial statements when the investments concerned are quoted `ex-dividend'. Dividends receivable on equity shares where no ex-dividend date is quoted are brought into account when the Group's right to receive payment is established. The fixed return on a debt security is recognised on a time apportionment basis so as to reflect the effective yield on the debt security. Interest receivable is included on an accruals basis. Expenses All expenses are accounted for on an accruals basis and are charged through the revenue column of the Statement of Comprehensive Income, except for expenses which are incidental to the sale or purchase of an investment or related to tender offers, which are charged through the capital column of the Statement of Comprehensive Income. Investments at Fair Value through Profit or Loss Investments where a purchase or sale is under a contract whose terms require delivery within the timeframe established by the market concerned are recognised and derecognised on the trade date. All investments held by the Company are designated upon initial recognition as held at fair value through profit or loss. Investments are measured at fair value, with unrealised gains and losses on investments and impairment of investments recognised in the Statement of Comprehensive Income and allocated to capital. Realised gains and losses on investments sold are calculated as the difference between sales proceeds and cost. The Funds are stated at Directors' valuation, which is normally based on valuations provided by the managers of those funds which, are received by the Company at least quarterly. The valuation methodology used by these Funds is that the underlying investments are valued at fair value in accordance with Financial Accounting Standard 157 ("FAS 157") which is broadly comparable to International Private Equity and Venture Capital(IPEVC) guidelines. For investments actively traded in organised financial markets, fair value is generally determined by reference to Stock Exchangequoted market bid prices at the close of business on the Balance Sheet date, without any deduction for transaction costs necessary to realise the asset. Capital distributions received from investments are accounted for on a reducing cost basis. Cash and stock distributions received are first applied to reducing the base cost of an investment. A realised gain will be recognised only when the cost has been reduced to nil. Judgements and Estimates The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported in the financial statements. However, the nature of estimation means that actual outcomes could differ from those estimates. The Directors consider the available observable inputs when making these judgements. The Group primarily invests in private equity via limited partnerships or other fund structures. Such vehicles are typically unquoted and in turn invest in unquoted securities. The Group's investment portfolio is recognised in the Balance Sheet at fair value, in accordance with IPEV Valuation Guidelines and IFRS. Fair value is based on the Company's share of the Net Asset Value of the Fund, as determined by the general partner of such funds. Updated Net Asset Values are received for each Fund on a quarterly basis. The Net Asset Value of a Fund is calculated after determining the fair value of a Fund's investment in any investee companies. Adjustments to Net asset value may be considered, for example, where: There has been significant elapsed time between the Net Asset Value calculation date and the Company's Balance Sheet date. There have been material movements in quoted prices between the Net Asset Value calculation date and the Company's Balance Sheet date. The Company has agreed a sale of its holding in a fund interest at a price other than Net Asset Value Net Asset Value is not derived from the fair value of underlying portfolio companies. The valuations of publicly traded securities held by these Funds are also affected by discounts, estimated for any legal or contractual restrictions on sale. Foreign currency translation The functional and presentational currency of the Company is Sterling. Transactions in currencies other than Sterling are recorded at the rates of exchange prevailing on the dates of the transactions. At each Balance Sheet date, monetary assets and liabilities that are denominated in foreign currencies are re-translated at the rates prevailing on the Balance Sheet date. Gains and losses arising on re-translation are included in the Statement of Comprehensive Income and are allocated either to revenue or capital, as appropriate. The assets and liabilities of foreign operations are translated into sterling at the rate of exchange ruling at the Balance Sheet date. Income and expenses derived from foreign operations have been translated at the rates of exchange prevailing on the date of transaction. The resulting exchange differences are recognised in Other Comprehensive Income and shown in the Currency Translation Reserve. On disposal of a foreign investment, the cumulative amount recognised in Other Comprehensive Income relating to that particular foreign operation is recycled through the Income Statement. Investments in Subsidiary The investment in Campton is stated in the Company's Balance Sheet at cost less a provision for impairment. Impairment is recognised when the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the higher of the asset's fair value less cost of disposal and its value in use. The Company bases the recoverable amount of Campton on the fair value less cost of disposal. The Directors consider that the best estimate of fair value of Campton is its net assets attributable to the Group and the cost of disposal is considered to be negligible. Taxation Deferred tax is recognised in respect of all temporary differences at the Balance Sheet date where transactions or events have occurred that result in an obligation to pay more, or the right to pay less tax in the future. This is subject to deferred tax assets being recognised only if it is considered more likely than not that there will be suitable profits from which the future reversal of the temporary differences can be deducted. Current tax is expected tax payable on the taxable income for the period, using tax rules at the Balance Sheet date and any adjustment to tax payable in respect of previous years. The tax effect of different items of income/gain and expenditure/loss is allocated between revenue and capital on the same basis as the particular item to which it relates, using the marginal method. Dividends Payable to Shareholders Dividends to shareholders are recognised as a liability in the period in which they have been declared and paid. Any final dividend proposed by the Board is not declared until approved by the shareholders at the Annual General Meeting following the year end. Cash and Cash Equivalents Cash and cash equivalents in the statement of financial position comprise cash in hand and short-term deposits in banks that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, with original maturities of three months or less. Leases Leases where the lessor retains substantially all the risks and benefits of ownership of the assets are classified as operating leases. Operating lease payments are recognised as an expense in the Statement of Comprehensive Income on a straight-line basis over the lease term. New Standards and Interpretations Not Applied The IASB have issued the following relevant standards and interpretations which are not effective for the year ended 31 March 2014and have not been applied in preparing these financial statements. New/Revised International Financial Reporting Issued Effective Date Standards IFRS 7 Financial Instruments: December 2011 1 January 2015 Disclosures - Amendments (or otherwise requiring disclosures about when IFRS 9 is the initial application of first applied) IFRS 9 IFRS 9 Financial Instruments - November 2009 1 January 2018 Classification and (mandatory measurement of financial application assets date amended November 2013) IFRS 9 Financial Instruments - October 2010 1 January 2017 Accounting for financial (mandatory liabilities and application derecognition date amended November 2013) IFRS 10 Consolidated Financial May 2011 1 January 2014 Statements IFRS 11 Joint Arrangements May 2011 1 January 2014 IFRS 12 Disclosure of Interests in May 2011 1 January 2014 Other Entities IAS 32 Financial Instruments: December 2011 1 January 2014 Presentation - Amendments to application guidance on the offsetting of financial assets and financial liabilities The Group applies, for the first time, IFRS 13 Fair Value Measurements. IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value if required or permitted. The application of IFRS 13 has not materially impacted the fair value measurements carried out by the Group. The Directors do not anticipate that the initial adoption of the above standards will have a material impact in the period of initial application. 2. OPERATING INCOME 2014 2013 Group Group £'000 £'000 Income from investments: Interest from open-ended investment funds 12 19 Other income: Deposit interest 3 6 Total operating income 15 25 Total income comprises: Interest 15 25 3. OPERATING EXPENSES 2014 2013 Revenue Capital Revenue Capital return return Total return return Total £'000 £'000 £'000 £'000 £'000 £'000 Secretarial services 113 - 113 109 - 109 Investment advisor employee (42) - (42) 265 - 265 retention fee* Auditor's remuneration for: - audit 29 - 29 28 - 28 - other services** - 11 11 - 12 12 Directors' remuneration 100 - 100 95 - 95 Other expenses: 18 - 18 58 - 58 - fundraising services - legal and professional fees 80 - 80 35 - 35 - office expenditure 39 - 39 63 - 63 - rent and rates 32 - 32 32 - 32 - staff costs (see note 4) 234 - 234 445 - 445 - subscriptions 19 - 19 19 - 19 - travel 24 - 24 66 - 66 - health insurance 11 - 11 16 - 16 - tender offer expenses - 93 93 - 110 110 - other expenses 139 - 139 96 - 96 796 104 900 1,327 122 1,449 * A provision for £265,000 ( $402,000) was included as at 31 March 2013in relation to employee retention agreements within Campton, which are guaranteed by the Company. All amounts due under the agreements have been paid. ** Relating to the tender offer. Stamp duty and commission have been charged against the special reserve. 4. STAFF COSTS 2014 2013 Group Group £'000 £'000 Salaries and other payments 213 424 Social security costs 21 21 234 445 With the exception of the Directors, whose remuneration is shown in the Directors' Remuneration Report in the full Annual Report, the Group employed four members of staff during the year (2013: four members of staff). As at 31 March 2014, the Group employed two members of staff. 5. TAXATION ON ORDINARY ACTIVITIES 2014 2013 Revenue Capital Total Revenue Capital Total Return Return Return Return £'000 £'000 £'000 £'000 £'000 £'000 UK corporation tax - - - - - - at 23% (2013: 24%) The Group is subject to corporation tax at 23% (2013: 24%). As at 31 March 2014the total taxation charge in the Group's revenue account is lower than the standard rate of corporation tax in the UK(23%). The differences are explained below: 2014 2013 Revenue Capital Revenue Capital return return Total return return Total £'000 £'000 £'000 £'000 £'000 £'000 Net return (781) 414 (367) (1,302) (838) (2,140) before finance costs and taxation Theoretical tax (180) 95 (85) (313) (201) (514) at UK corporation tax rate of 23% (2013: 24%) Effects of: - expenses 3 24 27 - 29 29 disallowed for taxation purposes - losses in 79 - 79 29 - 29 Campton not carried forward as excess management expenses - (gains)/losses - (119) (119) - 172 172 on investments and exchange losses/(gains) on capital items - excess 98 - 98 284 - 284 management expenses - - - - - - At 31 March 2014, the Group had no unprovided deferred tax liabilities (2013: £nil). At that date, based on current estimates and including the accumulation of net allowable management expenses deriving from its partnership interests in its Funds, the Group had surplus management expenses of approximately £19,754,000 (2013: £18,918,000 which have not been recognised as a deferred tax asset. The unrecognised tax asset is £3,951,000 (2013: £4,540,000). This is because the Group is not expected to generate sufficient taxable income in future periods in excess of the available deductible expenses and accordingly, the Group is unlikely to be able to reduce future tax liabilities through the use of existing surplus expenses. Due to the Group's status as an investment trust, and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Group has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments. 6. DIVIDENDS No distribution is proposed for the year ended 31 March 2014. 7. PROFIT OF PARENT COMPANY As permitted by Section 408 of the Companies Act 2006, the Statement of Comprehensive Income of the Company is not presented as part of these financial statements. The consolidated net loss after taxation for the financial year includes a loss of £401,000 (2013: a loss of £2,645,000) which is dealt with in the financial statements of the Company. 8. RETURN PER ORDINARY SHARE 2014 2013 Revenue Capital Revenue Capital return return Total return return Total pence pence Pence pence pence pence Return per (4.0)p 2.1p (1.9)p (5.7)p (3.6)p (9.3)p Ordinary Share Revenue return per Ordinary Share is based on the net loss on ordinary activities after taxation of £781,000 (2013: net loss of £1,302,000), and on 19,302,241 (2013: 23,039,045) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the year. Capital return per Ordinary Share is based on the net capital gain for the year of £414,000 (2013: net loss of £838,000), and on 19,302,241 (2013: 23,039,045) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the year. Total return per Ordinary Share is based on the net loss for the year of £367,000 (2013: net loss of £2,140,000), and on 19,302,241 (2013: 23,039,045) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the year. 9. INVESTMENTS 2014 2013 £'000 £'000 Group and Company a) Investment portfolio summary USA Listed investments - common stock 135 - Unlisted Funds 30,807 37,896 Other investments - open-ended Investment Funds 9,229 12,722 40,171 50,618 A full listing of the investment portfolio is provided above. Quoted open-ended Listed investment Unlisted equities funds Funds Total £'000 £'000 £'000 £'000 b) Analysis of investment portfolio movements Opening book cost - 12,002 39,606 51,608 Opening unrealised - 720 (1,710) (990) appreciation/ (depreciation) Opening valuation - 12,722 37,896 50,618 Movement in the year: Purchases at cost - 5,404 - 5,404 Calls from Funds at cost - - 377 377 Sales - proceeds (1,791) (8,562) - (10,353) - realised gains on sales 1,031 80 - 1,111 Book cost adjustments from capital distributions - cash distributions - - (6,534) (6,534) - cash distributions - - 2,239 2,239 realised gains - stock distributions 780 - (780) - Unrealised appreciation/ 115 (415) (2,391) (2,691) (depreciation) Closing valuation 135 9,229 30,807 40,171 Closing book cost 19 8,924 34,908 43,851 Closing unrealised 116 305 (4,101) (3,680) appreciation/ (depreciation) 135 9,229 30,807 40,171 The Company is required to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels: Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1). Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2). Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3). The level in the fair value hierarchy, within which the fair value measurement is categorised, is determined on the basis of the lowest level input that is significant to the fair value of the investment. The Company considers observable data for investments actively traded in organised financial markets, with fair value determined by reference to Stock Exchangequoted market bid prices at the close of business on the Balance Sheet date, without adjustment for transaction costs necessary to realise the asset. The following table analyses within the fair value hierarchy the Company's financial assets and liabilities (by class) measured at fair value at 31 March 2014. Financial instruments at fair value through profit and loss Company Level 1 Level 2 Level 3 Total £'000 £'000 £'000 £'000 Open-ended Investment Funds 9,229 - - 9,229 Listed equities 135 - - 135 Unlisted Funds - - 30,807 30,807 9,364 - 30,807 40,171 Financial instruments that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within level 2. As level 2 investments include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are based on available market information. Investments classified within level 3 have significant unobservable inputs. Level 3 instruments held by the Company are private equity Funds. As observable prices are not available for these securities, the Company has used valuation techniques to derive the fair value. In respect of unquoted instruments, or where the market for a financial instrument is not active, Funds based in the United Statestypically value portfolios in accordance with FAS 157, which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. FAS 157 is broadly comparable to IPEVC guidelines. The following table presents the movement in level 3 instruments for the period ended 31 March 2014by class of financial instrument. Group Unlisted Funds £'000 Opening balance 37,896 Calls from Funds 377 Distributions by Funds (4,295) Transfers from level 3 to level 1* (780) Total losses for the year included in the Statement of (2,391) Comprehensive Income Closing balance 30,807 * Following flotation of an investee company, shares in such a company may be directly distributed to PEI. The book cost associated to these shares is transferred out of level 3 investments and transferred to level 1. It is the Company's normal policy to sell these shares within a short period of time unless the stock price has decreased meaningfully, in which case the Company may hold these securities for a longer period of time until favourable selling conditions exist. Significant unobservable inputs for level 3 valuations As previously discussed, fair value for each Fund is based on the Company's share of the net asset value of the Fund, as determined by the general partner of such Fund. It is not the Company's practice or policy to revalue investments held within the Funds. The range of net asset values for the 10 largest Funds, which have an aggregate valuation of 79.8% of the Unlisted Funds portfolio, can be seen in the table below. Top 10 Largest Portfolio Funds As of 31 March Total net asset value net asset value % of net assets 2014 commitment US$'000 £'000 2014 US$'000 Draper Fisher 30,000 8,845 5,306 12.5 Jurvetson ePlanet Ventures Institutional 5,000 6,840 4,102 9.6 Venture Partners XII Oak Investment 10,000 3,999 2,399 5.6 Partners X Draper Fisher 5,000 3,782 2,269 5.3 Jurvetson Fund VII Francisco 5,000 3,441 2,064 4.8 Partners II New Enterprise 10,000 3,225 1,935 4.5 Associates 10 VantagePoint 10,000 3,139 1,883 4.4 Venture Partners IV Dawntreader Fund 30,000 2,698 1,618 3.9 II VantagePoint 5,000 2,598 1,559 3.6 Venture Partners 2006 New Enterprise 3,000 2,426 1,455 3.4 Associates 12 Largest 10 24,590 unlisted funds It is recognised that the valuations of these Funds are sensitive to movements in the values of the underlying investee companies. The 10 largest underlying investee companies of the Funds include both quoted and unquoted companies and represented 29.2% of the value of the total Fund portfolio. At 31 March 2014, 40.2% of aggregate value of the 10 largest underlying portfolio companies was derived from quoted prices and 59.8% represented unquoted valuations. For unquoted investments, significant judgement is applied when calculating fair value. For the purpose of sensitivity analysis, a 10% adjustment to those unquoted companies that are in the 10 largest underlying companies would result in a 3.1% movement in the value of the Company's total net assets. 2014 2013 £'000 £'000 c) Analysis of capital gains and losses Gains/(losses) on sales 1,111 (1,234) (Increase)/decrease in investment holding (2,691) 2,614 losses Gains on unlisted Funds realisations 2,239 897 Losses on book cost write offs - (3,007) Gains/(losses) on investments 659 (730) Realised exchange (losses)/gains on sales (13) 2 Exchange (losses)/gains on revaluing (128) 12 currency accounts Exchange (losses)/gains on capital items (141) 14 d) Significant holdings The Company owns 15% and 10% of the total value of the called capital of the Funds in Dawntreader Fund IIand Zone Ventures Fund II respectively. e) Transaction costs During the year the Company incurred no transaction costs (2013: £nil) in relation to purchases of investments and £9,000 (2013: £7,000) in relation to sales of investments. These amounts are included within gains and losses on investments at fair value within the Statement of Comprehensive Income. 10. INVESTMENT IN SUBSIDIARY 2014 2013 Company Company £'000 £'000 Investment in Campton, opening 423 595 balance Investment in year 1,019 - Repayment of inter company debt (1,094) - Drawdowns - 32 Foreign currency movements 1 32 Impairment (284) (236) 65 423 During the year, the Company subscribed £1.019 million of additional capital into Campton. Subsequently, Campton repaid all of the outstanding principal and interest due under its debt obligations to the Company. As a result of the restructuring, Campton no longer has any outstanding debt to the Company. 11. TRADE AND OTHER RECEIVABLES 2014 2013 Group Company Group Company £'000 £'000 £'000 £'000 Sales for future 372 372 - - settlement Prepayments and other 30 21 19 13 debtors Accrued income 2 2 4 4 404 395 23 17 12. TRADE AND OTHER PAYABLES 2014 2013 Group Company Group Company £'000 £'000 £'000 £'000 Other payables 88 79 102 92 Employee retention fee - - 265 265 provision 88 79 367 357 13. SHARE CAPITAL 2014 2013 £'000 £'000 Allotted, called up and fully paid: 18,694,757 (2013: 22,452,920) 2 2 Ordinary Shares of 0.01p each 14. RESERVES Capital reserve Capital Capital investment Currency Special redemption reserve holding translation Retained reserve reserve realised losses reserve earnings £'000 £'000 £'000 £'000 £'000 £'000 Group At 1 April 52,772 3 5,593 (1,466) 36 (5,130) 2013 Gains on sale - - 1,111 - - - of investments Gains on - - 2,239 - - - unlisted funds realisations Holding - - - (2,691) - - losses on investments Exchange - - (13) (128) - - losses Exchange - - - - (34) - losses on retranslation of net assets of subsidiary Shares (8,710) - (104) - - - purchased for cancellation Net loss for - - - - - (781) the year At 31 March 44,062 3 8,826 (4,285) 2 (5,911) 2014 Capital reserve Capital Capital investment Special redemption reserve holding Retained reserve reserve realised losses earnings £'000 £'000 £'000 £'000 £'000 Company At 1 April 2013 52,772 3 5,593 (1,425) (5,135) Gains on sale - - 1,111 - - of investments Gains on - - 2,239 - - unlisted funds realisations Holding losses - - - (2,691) - on investments Exchange losses - - (107) (127) - Shares (8,710) - (104) - - purchased for cancellation Net loss for - - - - (722) the year As at 31 March 44,062 3 8,732 (4,243) (5,857) 2014 15. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN CASH AND CASH EQUIVALENTS 2014 2013 Group Company Group Company £'000 £'000 £'000 £'000 Increase/(decrease) in cash 842 1,166 (1,151) (1,111) in the year Effect of foreign exchange (162) (128) 33 12 rate movements Movement in cash and cash 680 1,038 (1,118) (1,099) equivalents Cash and cash equivalents 1,532 1,109 2,650 2,208 at beginning of the year Cash and cash equivalents 2,212 2,147 1,532 1,109 at end of the year Cash and cash equivalents are comprised as follows: 2014 2013 Group Company Group Company £'000 £'000 £'000 £'000 Cash in hand at bank 2,212 2,147 1,532 1,109 16. NET ASSET VALUE PER ORDINARY SHARE The Group net asset value per Ordinary Share is based on net assets of £42,699,000 (2013: £51,810,000) and on 18,694,757 (2013: 22,452,920) Ordinary Shares, being the number of shares in issue at the year end. 17. COMMITMENTS AND CONTINGENT LIABILITIES At 31 March 2014, there were financial commitments outstanding of £3.2 million ( $5.3 million) (2013: £3.9 million) ( $5.9million)) in respect of outstanding call commitments to Funds. 18. ANALYSIS OF FINANCIAL ASSETS AND LIABILITIES As detailed above, the investment objective of the Company has been to provide shareholders with long-term capital growth. The Company is generally not making investments in new private equity funds but is managing its existing investments with a view to making periodic returns of capital to shareholders. The Company's and Group's financial instruments comprise securities and other investments and bank deposits which are held to achieve its investment objective, as well as debtors and creditors that arise from its operations, for example sales and purchases of securities awaiting settlement and debtors for accrued income. The principal risks the Company and Group face through the holding of financial instruments are: liquidity/marketability risk, i.e. the risk that the Company or Group has difficulty in realising assets or otherwise raising funds to meet commitments associated with financial instruments; interest rate risk; credit risk; market price risk, i.e. movements in the value of investment holdings causedby factors other than interest rate or currency movement; and foreign currency risk. As required by IFRS 7: Financial Instruments: Disclosure and Presentation ("IFRS 7") an analysis of financial assets and liabilities, which identifies the risk to the Company of holding such items, is given below. Financial Assets Full analysis of the Company's investment portfolio is given above. The method of valuing the fixed asset investments is discussed in the accounting policies of the Company in Note 1. Cash and debtors arising from the operations of the Company as at 31 March 2014amounted to £2,147,000 (2013: £1,109,000) and £395,000 (2013: £17,000) respectively. Cash and debtors arising from operations of the Group as at 31 March 2014amounted to £2,212,000 (2013: £1,532,000) and £404,000 (2013: £23,000) respectively. There were no material differences between the fair values of cash and debtors as at 31 March 2014and 31 March 2013and the values attributable to those investments within the financial statements. Maturity analysis The Company does not have any liabilities maturing in more than one year. The Company believes that most of its Fund investments will mature in more than one year. Liquidity risk The nature of the Company's investment policy of investing in specialist US Funds means that a large proportion of the securities which it owns are less readily marketable than, for example, `blue-chip' UKequities. The Company currently has outstanding commitments of $5,324,000(£3,193,000) (2013: $5,916,000(£3,896,000)) to the Funds, which will be financed through cash and easily liquidated assets, which are currently held in ring-fenced accounts. The Board manages liquidity risk by regularly reviewing its easily liquidated assets, which mainly comprise open-ended investment funds. Commitments to such fund investments are reviewed and approved by the Board. In order to reduce risk, research and due diligence work is performed before any commitment is made to such a fund manager. Interest rate risk The Company's revenue will be affected by changes in prevailing interest rates since a large portion of its income ordinarily derives from money market funds and bank interest. The Company's objective is to achieve capital returns from its investments and, as such, the main exposure to interest rate risk is indirect, through its impact on the valuation of the private equity funds, although it is not possible to quantify such effects. Interest rates are one of the key determinants of economic growth. At a more specific level, interest rates and credit spreads also have an important role in the ability of private equity funds to secure profitable deals, as some transactions are partly financed by debt. The effect of interest rate changes on the valuation of investments and debt forms part of valuation risk, which is considered separately. At 31 March 2014, the Company held investments in AAA-rated money market funds valued at £9,229,000 (2013: £12,722,000), earning cash dividends at market rates. The money market funds are redeemable on less than 24 hours notice. Other floating rate financial assets comprised cash at bank. As at 31 March 2014, the average interest rate profile of the Company's financial assets was as follows: Non Non Fixed Floating interest Fixed Floating interest rate rate bearing rate rate bearing Group Group Group Company Company Company £'000 £'000 £'000 £'000 £'000 £'000 Open-ended - 9,229 - - 9,229 - investment funds Quoted - - 135 - - 135 equities Unlisted - - 30,807 - - 30,807 funds Cash - 2,212* - - 2,147* - Other current - - 384** - - 375** assets - 11,441 31,326 - 11,376 31,317 As at 31 March 2013, the average interest rate profile of the Company's financial assets was as follows: Non Non Fixed Floating interest Fixed Floating interest rate rate bearing rate rate bearing Group Group Group Company Company Company £'000 £'000 £'000 £'000 £'000 £'000 Open-ended - 12,722 - - 12,722 - investment funds Quoted - - - - - - equities Unlisted - - 37,896 - - 37,896 funds Cash - 1,532* - - 1,109* - Other current - - 10** - - 10** assets - 14,254 37,906 - 13,831 37,906 * Exposure to floating interest rate risk is based on an adjusted LondonInterbank Offered Rate ("LIBOR"). ** Other current assets exclude prepayments which under IFRS7 are not classified as financial assets. The Board manages interest rate risk by placing cash deposits in short-term maturity investments such as money-market funds, but do not consider that the Company or Group has material exposure to interest rate risk. Credit risk The Directors do not consider that the Company or Group has significant exposure to credit risk. The Board monitors the financial risks affecting the Company and Group on a regular basis. The Directors receive financial information on a regular basis which is used to identify and monitor risk. The Company is exposed to credit risk in the following areas: Failure by counterparties to return cash deposits Cash deposits (money market funds and cash at bank) are placed with counterparties with a minimum credit rating of AA or equivalent. In addition, a range of counterparties is used to further diversify the risk. Failure by counterparties to deliver cash or securities through trading activities Transactions in listed securities are settled against delivery using approved brokers. The risk of default is considered minimal. The maximum exposure to credit risk at 31 March 2014is £11,813,000 (2013: £14,490,000). Market price risk Private equity investments are not immediately sensitive to market movements. However, over the medium/long term, the valuation multiples applied to private equity will be affected by significant changes in the listed equity markets. The Company's portfolio consists of US dollar investments, which are affected by movements in the Sterling/dollar exchange rate (refer to foreign currency risk below). At 31 March 2014, a 10% movement in the valuation of the Group's aggregate investments designated as fair value through profit or loss, would result in a 9.4% (£4,017,000) change in NAV. The Portfolio of Funds above provides information in respect of the investments. The method of valuing the investments is discussed in the accounting policies in note 1. Foreign currency risk The Company is exposed to currency risk directly since the majority of its assets and liabilities are denominated in US dollars and their sterling value can be significantly affected by movements in foreign exchange rates. The Company does not, nor does it intend to, hedge against foreign currency movements affecting the value of its investments. The Company settles its transactions from its bank accounts at an agreed rate of exchange on the date on which any bargain was made. For the year ended 31 March 2014, realised exchange gains of £285,000 (2013: loss of £1,642,000) and unrealised losses relating to currency of £128,000 (2013: gains of £12,000), have been taken to the capital reserve. Details of the foreign currency exposure are detailed in the table below. At 31 March 2014Other Other Investment current Investment current portfolio Cash assets portfolio Cash assets Group Group Group Company Company Company £'000 £'000 £'000 £'000 £'000 £'000 USA 34,241 1,733 381 34,241 1,668 372 UK 5,930 479 3 5,930 479 3 40,171 2,212 384 40,171 2,147 375 At 31 March 2013 Investment Cash Other Investment Cash Other portfolio current portfolio current assets assets Group Group Group Company Company Company £'000 £'000 £'000 £'000 £'000 £'000 USA 42,243 1,447 6 42,243 1,024 6 UK 8,375 85 4 8,375 85 4 50,618 1,532 10 50,618 1,109 10 If the Sterling/Dollar exchange rate had reduced by 10% from the rate at 31 March 2014, it would have had the effect, with all other variables held constant, of increasing the equity shareholders' funds by £4,031,000 (2013: £4,854,000). If there had been an increase in the Sterling/Dollar exchange rate of 10%, it would have had the effect of decreasing the equity shareholders' funds by £3,298,000 (2013: £3,972,000). The calculations are based on the investments held at fair value through profit or loss and the exchange rate of 1.66715 US$:£ as at 31 March 2014and these may not be representative of the year as a whole. Financial Liabilities The Company finances its operations primarily through equity and retained revenue although trade creditors and accruals arise from its operations. At 31 March 2014and 31 March 2013, all financial liabilities were due within one year. Other financial liabilities amounted to £79,000 (2013: £92,000) resulting from operating activities. There were no borrowing facilities either drawn or undrawn at any time during the year. Managing Capital The Group's equity is analysed into its various components in notes 13 and 14. The Company manages its investments so as to maximise the return to shareholders while maintaining a capital base to allow the Company to operate effectively. Strong realisations from the investment portfolio in recent years have facilitated the return of capital to shareholders. This has been achieved through the buy back of shares through tender offers. The Group's capital requirement is reviewed regularly by the Board of the Company. 19. RELATED PARTY TRANSACTIONS During the year, Peter Dicks, Chairman of the Company, rented office space from the Company for a consideration of £10,000, which has been accounted for against the rent expense of (2013: £4,400). In the year ended 31 March 2014, total fees and expenses of £225,000 (2013: £576,000) were paid to Campton by the Company. During the year, the Company injected capital into Campton. Subsequently in a separate transaction, Campton repaid all of the outstanding principal and interest due under its debt obligations to the Company. As a result of these transactions, Campton no longer has any outstanding debt to the Company. Campton's operations have been restructured to provide a level of service to the Company consistent with the Company's current size and needs. The remuneration of the Directors, who are the key management personnel of the Company and their interest in the Ordinary Shares of the Company is set out in the Directors' Remuneration Report in the full Annual Report. ANNUAL GENERAL MEETING The Company's Annual General Meeting will be held on 17 September 2014at 10.00amat the offices of the SGH Martineau, One America Square, Crosswall, London, EC3N 2SG. The notice of this meeting can be found in the Annual Report and financial statements at www.peiplc.com. National Storage Mechanism A copy of the Annual Report and Financial Statements will be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at www.morningstar.co.uk/uk/NSM 31 July 2014END Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on this announcement (or any other website) is incorporated into, or forms part of, this announcement.