TIDMCRWN
As required by the UK Listing Authority's Disclosure and Transparency Rules 4.1
and 6.3, Crown Place VCT PLC today makes public its information relating to the
Annual Report and Financial Statements for the year ended 30 June 2010.
This announcement was approved by the Board of Directors on 7 October 2010.
This announcement has not been audited.
Please click on the following link to view the full Annual Report and Financial
Statements (which have been audited) for the year to 30 June 2010. The
information contained in this link includes information as required by the
Disclosure and Transparency Rules, including Rule 4.1.
http://hugin.info/141806/R/1449977/391637.pdf
Alternatively you may view the Annual Report and Financial Statements at:
www.albion-ventures.co.uk by clicking on the 'Our Funds' section.
Investment objectives
The investment objective and policy of the Company is to achieve long term
capital and income growth principally through investment in smaller unquoted
companies in the United Kingdom. In pursuing this policy, the Manager aims to
build a portfolio which concentrates on two complementary investment areas. The
first are lower risk, often asset-based investments that can provide a strong
income stream combined with protection of capital. These will be balanced by a
smaller proportion of the portfolio being invested in higher risk companies with
greater growth prospects.
Financial calendar
Record date for first dividend 29 October 2010
Annual General Meeting 9 November 2010
Payment of first dividend for the year ending 30 June 2011 30 November 2010
Announcement of half-yearly results for the six months ended February 2011
31 December 2010
Payment of second dividend subject to Board approval April 2011
Financial highlights
8.2% Dividend yield on share price as at 30 June 2010
2.2p Total return to shareholders for the year ended 30 June 2010
2.5p Total tax free dividends per share paid during the year ended 30
June 2010
33.9p Net asset value per share as at 30 June 2010
1.25p First tax free dividend per share declared for the year to 30 June
2011
+-------------------------------------------------------------------+
| 30 June 2010 30 June 2009 |
| |
| pence per share pence per share |
| |
| Net asset value per share 33.9 34.2 |
| |
| Dividends paid 2.5 2.5 |
| |
| Revenue return per share 0.7 0.9 |
| |
| Capital return per share 1.5 (5.4) |
+-------------------------------------------------------------------+
Shareholder returns and shareholder value
Proforma ((i)) Proforma ((i)) Crown Place VCT
Murray VCT PLC Murray VCT 2 PLC PLC*
(pence per share) (pence per share) (pence per share)
Shareholder return from
launch to April 2005
(date that Albion
Ventures was appointed
investment manager):
Total dividends paid to 30.36 30.91 24.93
6 April 2005 ((ii))
Decrease in net asset (69.90) (64.50) (56.60)
value
--------------------------------------------------------
Total shareholder return (39.54) (33.59) (31.67)
to 6 April 2005
--------------------------------------------------------
Shareholder return from
April 2005 to 30 June
2010:
Total dividends paid 8.69 10.19 11.80
Decrease in net asset (5.94) (6.62) (9.46)
value
--------------------------------------------------------
Total shareholder return
from April 2005 to 30
June 2010 2.75 3.57 2.34
--------------------------------------------------------
Shareholder value since
launch:
Total dividends paid to 39.05 41.10 36.73
30 June 2010 ((ii))
Net asset value as at 24.16 28.88 33.94
30 June 2010
--------------------------------------------------------
Total shareholder value 63.21 69.98 70.67
as at 30 June 2010
--------------------------------------------------------
Current dividend
objective:
Pence per share 1.78 2.13 2.50
--------------------------------------------------------
Percentage dividend
yield on net asset value 7.4% 7.4% 7.4%
as at 30 June 2010
--------------------------------------------------------
Net asset value total return to shareholders since launch:
+------------------------------------------------------------------------------+
| 30 June 2010|
| (pence per share)|
+------------------------------------------------------------------------------+
|Total dividends paid during the period from launch to 6 24.93|
|April 2005 (prior to change of Manager) |
| |
|Total dividends paid during the year ended 28 February 2006 1.00|
| |
|Total dividends paid during the period ended 30 June 2007 3.30|
| |
|Total dividends paid during the year ended 30 June 2008 2.50|
| |
|Total dividends paid during the year ended 30 June 2009 2.50|
| |
|Total dividends paid during the year ended 30 June 2010 2.50|
| ------------------+
|Total dividends paid to 30 June 2010 36.73|
| |
|Net asset value as at 30 June 2010 33.94|
| ------------------+
|Total net asset value return as at 30 June 2010 70.67|
+------------------------------------------------------------------------------+
Notes
(i) The proforma shareholder returns presented above are based on
the dividends paid to shareholders before the merger and the pro-rata net asset
value per share and pro-rata dividends per share paid to 30 June 2010 since the
merger. This pro-forma is based upon the proportion of shares received by Murray
VCT PLC (now renamed CP1 VCT PLC) and Murray VCT 2 PLC (now renamed CP2 VCT PLC)
shareholders at the time of the merger with Crown Place VCT PLC on 13 January
2006.
(ii) Prior to 6 April 1999, venture capital trusts were able to add
20 per cent. to dividends and figures for the period up until 6 April 1999 are
included at the gross equivalent rate actually paid to shareholders.
* Formerly Murray VCT 3 PLC
In addition to the dividends paid above, the Board has declared a first dividend
for the year ending 30 June 2011, of 1.25 pence per Crown Place VCT PLC share
(to be paid out of revenue profits) on 30 November 2010 to shareholders on the
register as at 29 October 2010.
Chairman's statement
Introduction
I have pleasure in presenting the results for the year ended 30 June 2010.
The year was characterised by significant uncertainty in the business
environment, both in the UK and globally, and, particularly in the first half,
reduced economic activity. Against this background, the Company achieved a
positive total return per share of 2.2 pence with both the quoted and unquoted
portfolios increasing in value during 2009/10. This is an encouraging result
following a difficult year in 2008/09. The Company maintained its regular
dividend of 2.5 pence per share and continues to maintain substantial cash
balances for future investment and for dividend payments.
Results and Dividends
As at 30 June 2010, the net asset value was GBP24.4 million or 33.9 pence per
share compared to GBP24.8 million or 34.2 pence per share as at 30 June 2009. The
revenue return before taxation was GBP489,000, compared to the return in the
previous year of GBP682,000. This decrease was predominantly due to the lower
return on the Company's cash holdings: the previous year also benefited from a
one-off recovery of VAT.
The increase during the year to 30 June 2010 in net asset value with dividends
reinvested was 6.1 per cent., compared to an increase in the FTSE All-Share
index of 21.1 per cent. over the same period. Historically, the net asset value
of the portfolio has been less volatile than the FTSE All-Share index.
It is the Company's stated policy to pay regular and predictable dividends to
investors out of revenue income and realised capital gains. During the year to
30 June 2010, the Company maintained its dividend distribution of 2.5 pence per
share. The first dividend for the current financial year of 1.25 pence per share
(to be paid out of revenue profits) will be paid on 30 November 2010 to
shareholders on the register as at 29 October 2010.
Subject to the longer-term performance of the investment portfolio, the Board
aims to maintain the current annualised dividend distribution of 2.5 pence per
share going forward. The dividend is tax free to investors.
Investment performance and progress
Both the unquoted and the quoted portfolios increased in value during the year,
resulting in a total capital return of GBP1.1 million or 1.5 pence per share. This
is equivalent to a capital return of 4.4 per cent. on opening net assets.
During the year, the Company invested GBP3.2 million in aggregate in five new
investments and fifteen follow-on investments. Further detail on investment
activity is given in the Manager's report.
The Board noted in the interim statement on 11th May 2010 that "discussions to
sell its interest in one of its investee companies are ongoing and if the
investee company is sold it is likely to result in a material uplift in Crown
Place VCT PLC NAV per share but there remains no certainty as to whether any
transaction will complete". These discussions have now ceased and no sale is
foreseen in the short term. This has no impact on Crown Place VCT PLC net asset
value since the valuation of the investee company had not been increased to
reflect the sale discussions. The investee company's trading continues to be
healthy.
The Company sold its holding in RFI Global Services, which generated exit
proceeds of GBP0.6 million on cost of GBP0.4 million before taking into account
possible future deferred consideration, and also part disposed of shares in the
AIM listed Avanti Communications Group Plc, which generated proceeds of GBP0.4
million on cost of GBP0.2 million. In addition, loan stock redemptions to the
value of GBP0.4 million were received during the year.
Overall, the Company benefits from a well diversified portfolio, with a high
proportion of asset-backed investments. A number of the unquoted growth
investments are making good progress to maturity despite the difficult economic
environment.
Risks and uncertainties
The outlook for the UK economy continues to be the key risk affecting your
Company: although current indications are that the worst of the recession is now
over, at the time of writing this report there is continuing uncertainty as to
the impact on the economy of the Coalition Government's impending public
spending cuts. Importantly, your Company remains conservatively financed with no
bank borrowings, and risk is further mitigated through the Company's current
policy for investee companies not to have external bank debt with a chargeable
security ranking ahead of Crown Place VCT PLC. Meanwhile, opportunities within
our target sectors continue to arise at attractive valuations, including the
healthcare sector which continues to be one of our core areas of concentration
going forwards. A more detailed analysis of risks and uncertainties is set out
in note 23 to this announcement.
Cap on Total Expense Ratio ("TER")
In line with market practice, the Board has agreed with the Manager that the
ratio of total normal expenses (excluding corporation tax, any management
performance incentive and exceptional costs) will be limited to 3.5 per cent.
per annum of net assets, with any excess being borne by the Manager through a
reduction in its management fee. For the year to 30 June 2010, the TER was 3.0
per cent.
Discount management and share buy-backs
It remains the Board's policy to buy back shares in the market, subject to the
overall constraint that such purchases are in the Company's interest, including
the maintenance of sufficient resources for investment in existing and new
investee companies and the continued payment of dividends to shareholders. It is
the Board's intention for such buy-backs to be in the region of a 10 to 15 per
cent. discount to net asset value, so far as market conditions and liquidity
permit.
Top up offer
Your Board, in conjunction with the Boards of the other VCTs managed by Albion
Ventures, is planning to launch a top up offer of new Ordinary shares later this
month. In aggregate, the Albion VCTs will be aiming to raise up to GBP15 million,
of which Crown Place VCT's share will be approximately GBP2.25 million, or 15 per
cent. of the total. The proceeds will be used to provide further resources at a
time when a number of attractive investment opportunities are being seen. An
offer document will be sent to shareholders later this month.
Supporting enterprise and growth
Recent research undertaken by the Association of Investment Companies has
demonstrated that VCT investment provides substantial benefits for UK small
businesses and the economy in at least three ways: first, by creating jobs;
second, by providing additional management skill to support growing businesses;
and finally, by being cost-effective, in that the cost to the public purse is
more than offset by the increased tax returns by the growth of VCT-backed
companies. In common with other VCTs, your Board recommends that the new
Government continues to support the VCT sector as one of the best ways to
encourage enterprise and future economic growth.
Outlook and prospects
The outlook for the UK economy remains uncertain. In particular, the full impact
of public sector cuts on the wider economy has not yet been felt. To mitigate
against this, a number of the investee companies in the higher growth element of
the portfolio operate in international markets, and some, such as Masters
Pharmaceuticals Limited and Helveta Limited, in fast growing developing
countries. There is a widely held view that interest rates will remain low in
the short term, which will continue to depress income from deposits. With this
in mind, the Company is looking to expand further its portfolio of asset-based,
income producing investments, where we have seen an improvement in the pipeline
at attractive prices across a broad range of industries, but with particular
emphasis on the healthcare and environmental sectors.
Changes to the Board of Directors
From October 2010, the Association of Investment Companies Code of Corporate
Governance (to which your Company adheres) regarding the 'independence' of
Directors of a VCT requires that the Chairman of a VCT shall not serve as a
Director of another investment company managed by the same manager. Geoffrey
Vero is Chairman of Albion Development VCT PLC, also managed by Albion Ventures
LLP, and he therefore stepped down from the Board of Crown Place VCT PLC on 27
September 2010. The Board would like to thank Geoffrey for his contribution both
as a Board member and as Chairman of the Audit & Risk Committee over the last
five years and we wish him well for the future.
Following Geoffrey Vero's retirement, Rachel Beagles has been appointed Chairman
of the Audit & Risk Committee.
Sir Andrew Cubie has been a Director of Crown Place VCT and its predecessor
company for twelve years and in accordance with best practice has been subject
to annual re-election. The Combined Code requires that "the Board should ensure
planned and progressive refreshing of the Board", and accordingly Sir Andrew has
agreed to retire from the Board and its subsidiaries at the forthcoming Annual
General Meeting. Sir Andrew has given generously of his time, experience and
expertise over a long period, particularly over the transition to new managers
in 2005, and the Board are grateful to him for his considerable contribution to
your Company.
I am pleased to welcome in his place, Karen Brade who will join the Board and be
proposed for re-election at the forthcoming Annual General Meeting. Karen has
over 20 years of experience in project finance and private equity, including
with the Commonwealth Development Corporation (now known as Actis), where she
held a variety of positions in equity and debt investing, portfolio management,
fund raising and investor development. Karen currently acts as an adviser to
hedge funds, family offices and private equity houses. Further details are set
out on page 10 of the full Annual Report and Financial Statements.
The Board has discussed and agreed that the number of Directors should be
reduced from five to four members.
Patrick Crosthwaite
Chairman
7 October 2010
Manager's report
An analysis by sector of Crown Place VCT PLC's investment portfolio as at 30
June 2010 is shown below. Care has been taken to diversify the portfolio across
a broad number of sectors, with those that are consumer facing, such as pubs,
health and fitness clubs and cinemas, being balanced by other investments in the
business services, healthcare, IT and environmental sectors. In addition, over
50 per cent. of the portfolio is in asset-backed investments. As at 30 June
2010, the portfolio included investments in 51 unquoted and AIM quoted
companies. At the year end, cash and liquid assets amounted to ÂGBP5.5 million or
22% of the Company's net assets.
http://hugin.info/141806/R/1449977/391642.pdf
New investments
The Company invested a total of GBP3.2 million during the year. Of this amount
GBP0.9 million was invested in fifteen existing investee companies and GBP2.3
million in five new companies. The Company invested an aggregate of GBP1.4 million
in Geronimo Inns VCT I Limited and Geronimo Inns VCT II Limited to acquire four
freehold pubs in London. Following a period of refurbishment, the pubs reopened
in the autumn of 2009 and are trading on budget and well ahead of their
performance under the previous owner. In March 2010, the Company invested a
total of GBP0.5 million in Orchard Portman Hospital Limited and Taunton Nursing
Home Limited. These two companies acquired an existing care home on a 8 acre
site in Taunton, Somerset. This will be extended and repositioned as a slow
stream rehabilitation unit for mental health patients. Shortly before the year
end, the Company invested GBP0.4 million in Masters Pharmaceuticals Limited, an
established and profitable distributor of pharmaceutical products, predominantly
to developing countries. The investment will enable the company to expand its
international operations further.
Investment realisations
The Company was pleased to achieve a profitable exit on its investment in RFI
Global Services, despite the difficult economic environment and the reduced
level of acquisition activity. The total consideration received is GBP0.6 million
against cost of GBP0.4 million. In addition, the Company may receive up to a
further GBP0.1 million in deferred consideration if certain performance conditions
are met.
Following the strong performance of the share price of Avanti Communications
Group Plc, the satellite service provider, the Company took the opportunity to
dispose of a third of its holding for an aggregate consideration of GBP0.4 million
against cost of GBP0.2 million. In addition, various investee companies made a
partial repayment of loan stock.
Portfolio review
Overall, the value of the quoted and unquoted portfolio, taking into account
additions and disposals for the year, increased by GBP1.4 million during the
year. Of this amount, GBP0.9 million is attributable to the unquoted portfolio and
GBP0.5 million to the quoted portfolio, where the biggest contributor was Avanti
Communications Group Plc.
In the unquoted portfolio, ELE Advanced Technologies Limited continues to
perform well. The business is profitable and benefiting from its international
base of blue chip customers. Other investee companies in the growth portfolio
performing particularly well include Blackbay Limited, Helveta Limited and
Mirada Medical Limited. House of Dorchester Limited remains profitable, however,
profitability declined during the year and this is reflected in the lower
valuation. Elsewhere in the unquoted portfolio, the previous strong performance
at Chichester Holdings, the drinks distributor, has reversed, leading to a
decline in value, though the business still remains profitable. Rostima Limited
has suffered from delays in delivering contracts, which impacted on the
financial position of the business.
In the asset-backed investment portfolio, the leisure sector investments are
performing in line with expectations, with particularly good trading results
achieved by Geronimo Inns VCT I Limited, Geronimo Inns VCT II Limited, CS
(Brixton) Limited and Tower Bridge Health Clubs Limited. The Crown Hotel in
Harrogate, meanwhile, continues to see an improved performance, with an increase
in interest payable to the VCT.
As indicated in the last annual report, we have increased our focus on the
healthcare and environmental sectors, which offer attractive long term
prospects. Three of the new investments made by the Company operate in the
healthcare sector and since the year end we have made a further investment in
the environmental sector, investing GBP0.4 million in TEG Biogas (Perth) Limited.
The company is developing a waste to energy facility in Perthshire, Scotland,
utilising anaerobic digestion technology. A number of further opportunities in
the renewable energy sector are under review. Since the year end, the Company
has also invested GBP1.6 million in Radnor House School Limited, a new independent
school for biys and girls aged 7-18 located in Twickenham, Greater London.
Following a period of refurbishment, the school will open in September 2011.
The pipeline of future investment opportunities is strong and includes a range
of asset-backed, income generating businesses as well as higher growth
companies.
Albion Ventures LLP
Manager
7 October 2010
Responsibility Statement
In preparing these financial statements for the year to 30 June 2010, the
Directors of the Company, being Patrick Crosthwaite, Rachel Beagles, Karen
Brade, Andrew Cubie and Vikram Lall, confirm that to the best of their
knowledge:
- summary financial information contained in this announcement and the full
Annual Report and Financial Statements for the year ended 30 June 2010 for the
Company has been prepared in accordance with United Kingdom Generally Accepted
Accounting Practice (UK Accounting Standards and applicable law) and give a true
and fair view of the assets, liabilities, financial position and profit and loss
of the Company for the year ended 30 June 2010 as required by DTR 4.1.12.R;
-the Chairman's statement and Manager's report include a fair review of the
information required by DTR 4.2.7R (indication of important events during the
year ended 30 June 2010 and description of principal risks and uncertainties
that the Company faces); and
-the Chairman's statement and Manager's report include a fair review of the
information required by DTR 4.2.8R (disclosure of related parties transactions
and changes therein).
A detailed "Statement of Directors' responsibilities for the preparation of the
Company's financial statements" is contained within the full audited Annual
Report and Financial Statements which is attached to this announcement.
By order of the Board
Patrick Crosthwaite
Chairman
Consolidated statement of comprehensive income
+---------------------------+----+---------------------+-----------------------+
| | | Year ended | Year ended |
+---------------------------+----+---------------------+-----------------------+
| | | 30 June 2010 | 30 June 2009 |
+---------------------------+----+-------+-------+-----+-------+-------+-------+
| | |Revenue|Capital|Total|Revenue|Capital| Total|
+---------------------------+----+-------+-------+-----+-------+-------+-------+
| |Note| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000|
+---------------------------+----+-------+-------+-----+-------+-------+-------+
| | | | | | | | |
|Profits/(losses) on | | | | | | | |
|investments |2 | -| 1,421|1,421| -|(3,869)|(3,869)|
+---------------------------+----+-------+-------+-----+-------+-------+-------+
|Investment income and | | | | | | | |
|deposit interest |3 | 903| -| 903| 988| -| 988|
+---------------------------+----+-------+-------+-----+-------+-------+-------+
|Investment management fees |4 | (108)| (324)|(432)| (118)| (354)| (472)|
+---------------------------+----+-------+-------+-----+-------+-------+-------+
|Recovery of VAT | | -| -| -| 92| 277| 369|
+---------------------------+----+-------+-------+-----+-------+-------+-------+
|Other expenses |5 | (306)| -|(306)| (280)| -| (280)|
+---------------------------+----+-------+-------+-----+-------+-------+-------+
| | | | | | | | |
|Profit/(loss) before | | | | | | | |
|taxation | | 489| 1,097|1,586| 682|(3,946)|(3,264)|
+---------------------------+----+-------+-------+-----+-------+-------+-------+
|Taxation |6 | -| -| -| -| -| -|
+---------------------------+----+-------+-------+-----+-------+-------+-------+
|Profit/(loss) and total | | | | | | | |
|comprehensive income for | | | | | | | |
|the year | | 489| 1,097|1,586| 682|(3,946)|(3,264)|
+---------------------------+----+-------+-------+-----+-------+-------+-------+
|Basic and diluted | | | | | | | |
|return/(loss) per Ordinary | | | | | | | |
|share (pence)* |8 | 0.7| 1.5| 2.2| 0.9| (5.4)| (4.5)|
+---------------------------+----+-------+-------+-----+-------+-------+-------+
* excluding treasury shares
The accompanying notes form an integral part of this announcement.
The total column of this statement represents the Group's statement of
comprehensive income, prepared in accordance with International Financial
Reporting Standards ('IFRS'). The supplementary revenue and capital columns are
prepared under guidance published by the Association of Investment Companies.
All revenue and capital items in the above statement derive from continuing
operations and are wholly attributable to the owners of the parent company.
Consolidated balance sheet
+-----------------------------------------------+----+------------+------------+
| | | | |
+-----------------------------------------------+----+------------+------------+
| | |30 June 2010|30 June 2009|
+-----------------------------------------------+----+------------+------------+
| |Note| GBP'000| GBP'000|
+-----------------------------------------------+----+------------+------------+
|Non-current assets | | | |
+-----------------------------------------------+----+------------+------------+
|Investments | 9| 19,092| 15,878|
+-----------------------------------------------+----+------------+------------+
| | | | |
+-----------------------------------------------+----+------------+------------+
|Current Assets | | | |
+-----------------------------------------------+----+------------+------------+
|Trade and other receivables | 12| 68| 55|
+-----------------------------------------------+----+------------+------------+
|Current asset investments | 12| -| 2,718|
+-----------------------------------------------+----+------------+------------+
|Cash and cash equivalents | 17| 5,513| 6,472|
+-----------------------------------------------+----+------------+------------+
| | | 5,581| 9,245|
+-----------------------------------------------+----+------------+------------+
| | | | |
+-----------------------------------------------+----+------------+------------+
|Total assets | | 24,673| 25,123|
+-----------------------------------------------+----+------------+------------+
|Current liabilities | | | |
+-----------------------------------------------+----+------------+------------+
|Trade and other payables | 13| (260)| (335)|
+-----------------------------------------------+----+------------+------------+
| | | | |
+-----------------------------------------------+----+------------+------------+
|Net assets | | 24,413| 24,788|
+-----------------------------------------------+----+------------+------------+
| | | | |
+-----------------------------------------------+----+------------+------------+
|Equity attributable to equityholders | | | |
+-----------------------------------------------+----+------------+------------+
|Ordinary share capital | 14| 7,918| 7,965|
+-----------------------------------------------+----+------------+------------+
|Share premium | | 32| 14,438|
+-----------------------------------------------+----+------------+------------+
|Capital redemption reserve | | 972| 902|
+-----------------------------------------------+----+------------+------------+
|Unrealised capital reserve | | (5,966)| (7,616)|
+-----------------------------------------------+----+------------+------------+
|Special reserve | | 46,318| 32,099|
+-----------------------------------------------+----+------------+------------+
|Treasury shares reserve | | (2,849)| (2,849)|
+-----------------------------------------------+----+------------+------------+
|Realised capital reserve | | (23,165)| (21,163)|
+-----------------------------------------------+----+------------+------------+
|Revenue reserve | | 1,153| 1,012|
+-----------------------------------------------+----+------------+------------+
|Total equity shareholders' funds | | 24,413| 24,788|
+-----------------------------------------------+----+------------+------------+
| | | | |
+-----------------------------------------------+----+------------+------------+
|Basic and diluted net asset value per share | | | |
|(pence)* | 16| 33.9| 34.2|
+-----------------------------------------------+----+------------+------------+
* excluding treasury shares
The accompanying notes form an integral part of this announcement.
These Financial Statements were approved by the Board of Directors, and
authorised for issue on 7 October 2010 and were signed on its behalf by
Patrick Crosthwaite
Chairman
Company number: 03495287
Company balance sheet
+-----------------------------------------------+----+------------+------------+
| | | | |
+-----------------------------------------------+----+------------+------------+
| | |30 June 2010|30 June 2009|
+-----------------------------------------------+----+------------+------------+
| |Note| GBP'000| GBP'000|
+-----------------------------------------------+----+------------+------------+
|Fixed assets | | | |
+-----------------------------------------------+----+------------+------------+
|Fixed asset investments | 9| 19,092| 15,878|
+-----------------------------------------------+----+------------+------------+
|Investment in subsidiary undertakings | 11| 15,013| 15,149|
+-----------------------------------------------+----+------------+------------+
| | | 34,105| 31,027|
+-----------------------------------------------+----+------------+------------+
| | | | |
+-----------------------------------------------+----+------------+------------+
|Current Assets | | | |
+-----------------------------------------------+----+------------+------------+
|Trade and other debtors | 12| 68| 55|
+-----------------------------------------------+----+------------+------------+
|Current asset investments | 12| -| 2,718|
+-----------------------------------------------+----+------------+------------+
|Cash at bank and in hand | 17| 5,400| 6,255|
+-----------------------------------------------+----+------------+------------+
| | | 5,468| 9,028|
+-----------------------------------------------+----+------------+------------+
| | | | |
+-----------------------------------------------+----+------------+------------+
|Total assets | | 39,573| 40,055|
+-----------------------------------------------+----+------------+------------+
| | | | |
+-----------------------------------------------+----+------------+------------+
|Creditors: amounts falling due within one year | 13| (15,160)| (15,267)|
+-----------------------------------------------+----+------------+------------+
| | | | |
+-----------------------------------------------+----+------------+------------+
|Net assets | | 24,413| 24,788|
+-----------------------------------------------+----+------------+------------+
| | | | |
+-----------------------------------------------+----+------------+------------+
|Capital and reserves | | | |
+-----------------------------------------------+----+------------+------------+
|Ordinary share capital | 14| 7,918| 7,965|
+-----------------------------------------------+----+------------+------------+
|Share premium | | 32| 14,438|
+-----------------------------------------------+----+------------+------------+
|Capital redemption reserve | | 972| 902|
+-----------------------------------------------+----+------------+------------+
|Unrealised capital reserve | | (6,011)| (7,525)|
+-----------------------------------------------+----+------------+------------+
|Special reserve | | 46,318| 32,099|
+-----------------------------------------------+----+------------+------------+
|Treasury shares reserve | | (2,849)| (2,849)|
+-----------------------------------------------+----+------------+------------+
|Realised capital reserve | | (23,218)| (21,216)|
+-----------------------------------------------+----+------------+------------+
|Revenue reserve | | 1,251| 974|
+-----------------------------------------------+----+------------+------------+
|Shareholders' funds | | 24,413| 24,788|
+-----------------------------------------------+----+------------+------------+
| | | | |
+-----------------------------------------------+----+------------+------------+
|Basic and diluted net asset value per share | | | |
|(pence)* | 16| 33.9| 34.2|
+-----------------------------------------------+----+------------+------------+
* excluding treasury shares
The Company balance sheet has been prepared in accordance with UK GAAP.
The accompanying notes form an integral part of this announcement.
These Financial Statements were approved by the Board of Directors, and
authorised for issue on 7 October 2010 and were signed on its behalf by
Patrick Crosthwaite
Chairman
Company number: 03495287
Consolidated statement of changes in equity
+-------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+
| |Ordinary| | Capital|Unrealised| |Treasury|Realised| | |
| | share| Share|redemption| capital| Special| shares| capital| Revenue| |
| | capital| premium| reserve| reserve*|reserve*|reserve*|reserve*|reserve*| Total|
+-------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+
| | GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000|
+-------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+
|As at 1 July | | | | | | | | | |
|2009 | 7,965| 14,438| 902| (7,616)| 32,099| (2,849)|(21,163)| 1,012| 24,788|
+-------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+
|Total | | | | | | | | | |
|comprehensive| | | | | | | | | |
|income for | | | | | | | | | |
|the year | -| -| -| 761| -| -| 336| 489| 1,586|
+-------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+
|Transfer of | | | | | | | | | |
|previously | | | | | | | | | |
|unrealised | | | | | | | | | |
|losses on | | | | | | | | | |
|sale of | | | | | | | | | |
|investments | -| -| -| 889| -| -| (889)| -| -|
+-------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+
|Dividends | | | | | | | | | |
|paid in year | -| -| -| -| -| -| (1,449)| (362)|(1,811)|
+-------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+
|Purchase of | | | | | | | | | |
|own shares | | | | | | | | | |
|for | | | | | | | | | |
|cancellation | | | | | | | | | |
|(including | | | | | | | | | |
|costs) | (70)| -| 70| -| (205)| -| -| -| (205)|
+-------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+
|Issue of | | | | | | | | | |
|equity (net | | | | | | | | | |
|of costs) | 23| 32| -| -| -| -| -| -| 55|
+-------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+
|Cancellation | | | | | | | | | |
|of share | | | | | | | | | |
|premium | | | | | | | | | |
|account | -|(14,438)| -| -| 14,438| -| -| -| -|
+-------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+
|Costs of | | | | | | | | | |
|cancellation | | | | | | | | | |
|of share | | | | | | | | | |
|premium | | | | | | | | | |
|account | -| -| -| -| (14)| -| -| 14| -|
+-------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+
|As at 30 June| | | | | | | | | |
|2010 | 7,918| 32| 972| (5,966)| 46,318| (2,849)|(23,165)| 1,153| 24,413|
+-------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+
+-------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+
| |Ordinary| | Capital|Unrealised| |Treasury|Realised| | |
| | share| Share|redemption| capital| Special| shares| capital| Revenue| |
| | capital|premium| reserve| reserve*|reserve*|reserve*|reserve*|reserve*| Total|
+-------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+
| | GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000|
+-------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+
|As at 1 July | | | | | | | | | |
|2008 | 8,066| 14,422| 793| (6,645)| 32,421| (2,849)|(17,206)| 1,172| 30,174|
+-------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+
|Total | | | | | | | | | |
|comprehensive| | | | | | | | | |
|(loss)/income| | | | | | | | | |
|for the year | -| -| -| (3,537)| -| -| (410)| 682|(3,264)|
+-------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+
|Transfer of | | | | | | | | | |
|previously | | | | | | | | | |
|unrealised | | | | | | | | | |
|losses on | | | | | | | | | |
|sale of | | | | | -| | | | |
|investments | -| -| -| 2,566| | -| (2,566)| -| -|
+-------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+
|Dividends | | | | | | | | | |
|paid in year | -| -| -| -| -| -| (981)| (842)|(1,823)|
+-------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+
|Purchase of | | | | | | | | | |
|own shares | | | | | | | | | |
|for | | | | | | | | | |
|cancellation | | | | | | | | | |
|(including | | | | | | | | | |
|costs) | (109)| -| 109| -| (321)| -| -| -| (321)|
+-------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+
|Issue of | | | | | | | | | |
|equity (net | | | | | -| | | | |
|of costs) | 8| 16| -| -| | -| -| -| 24|
+-------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+
|As at 30 June| | | | | | | | | |
|2009 | 7,965| 14,438| 902| (7,616)| 32,099| (2,849)|(21,163)| 1,012| 24,788|
+-------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+
* Included within these reserves is an amount of GBP15,491,000 (2009: GBP1,483,000)
which is considered distributable. The Special reserve has been treated as
distributable in determining the amounts available for distribution.
Company reconciliation of movements in Shareholders' funds
+------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+
| |Ordinary| | Capital|Unrealised| |Treasury|Realised| | |
| | share| Share|redemption| capital| Special| shares| capital| Revenue| |
| | capital| premium| reserve| reserve*|reserve*|reserve*|reserve*|reserve*| Total|
+------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+
| | GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000|
+------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+
|As at 1 July| | | | | | | | | |
|2009 | 7,965| 14,438| 902| (7,525)| 32,099| (2,849)|(21,216)| 974| 24,788|
+------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+
|Return for | | | | | | | | | |
|the year | -| -| -| 625| -| -| 336| 625| 1,586|
+------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+
|Transfer of | | | | | | | | | |
|previously | | | | | | | | | |
|unrealised | | | | | | | | | |
|losses on | | | | | | | | | |
|sale of | | | | | -| | | | |
|investments | -| -| -| 889| | -| (889)| -| -|
+------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+
|Dividends | | | | | | | | | |
|paid in year| -| -| -| -| -| -| (1,449)| (362)|(1,811)|
+------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+
|Purchase of | | | | | | | | | |
|own shares | | | | | | | | | |
|for | | | | | | | | | |
|cancellation| | | | | | | | | |
|(including | | | | | | | | | |
|costs) | (70)| -| 70| -| (205)| -| -| -| (205)|
+------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+
|Issue of | | | | | | | | | |
|equity (net | | | | | -| | | | |
|of costs) | 23| 32| -| -| | -| -| -| 55|
+------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+
|Cancellation| | | | | | | | | |
|of share | | | | | | | | | |
|premium | | | | | | | | | |
|account | -|(14,438)| -| -| 14,438| -| -| -| -|
+------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+
|Costs of | | | | | | | | | |
|cancellation| | | | | | | | | |
|of share | | | | | | | | | |
|premium | | | | | | | | | |
|account | -| -| -| -| (14)| -| -| 14| -|
+------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+
|As at 30 | | | | | | | | | |
|June 2010 | 7,918| 32| 972| (6,011)| 46,318| (2,849)|(23,218)| 1,251| 24,413|
+------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+
+------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+
| |Ordinary| | Capital|Unrealised| |Treasury|Realised| | |
| | share| Share|redemption| capital| Special| shares| capital| Revenue| |
| | capital|premium| reserve| reserve*|reserve*|reserve*|reserve*|reserve*| Total|
+------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+
| | GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000|
+------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+
|As at 1 July| | | | | | | | | |
|2008 | 8,066| 14,422| 793| (6,645)| 32,421| (2,849)|(17,206)| 1,172| 30,174|
+------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+
|Return for | | | | | | | | | |
|the year | -| -| -| (3,446)| -| -| (463)| 644|(3,264)|
+------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+
|Transfer of | | | | | | | | | |
|previously | | | | | | | | | |
|unrealised | | | | | | | | | |
|losses on | | | | | | | | | |
|sale of | | | | | -| | | | |
|investments | -| -| -| 2,566| | -| (2,566)| -| -|
+------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+
|Dividends | | | | | | | | | |
|paid in year| -| -| -| -| -| -| (981)| (842)|(1,823)|
+------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+
|Purchase of | | | | | | | | | |
|own shares | | | | | | | | | |
|for | | | | | | | | | |
|cancellation| | | | | | | | | |
|(including | | | | | | | | | |
|costs) | (109)| -| 109| -| (321)| -| -| -| (321)|
+------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+
|Issue of | | | | | | | | | |
|equity (net | | | | | -| | | | |
|of costs) | 8| 16| -| -| | -| -| -| 24|
+------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+
|As at 30 | | | | | | | | | |
|June 2009 | 7,965| 14,438| 902| (7,525)| 32,099| (2,849)|(21,216)| 974| 24,788|
+------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+
* Included within these reserves is an amount of GBP15,491,000 (2009: GBP1,483,000)
which is considered distributable. The Special reserve has been treated as
distributable in determining the amounts available for distribution.
Consolidated cashflow statement
+--------------------------------------------------+----+-----------+----------+
| | | Year ended|Year ended|
| | | 30 June| 30 June|
| | | 2010| 2009|
| |Note| GBP'000| GBP'000|
+--------------------------------------------------+----+-----------+----------+
|Operating activities | | | |
+--------------------------------------------------+----+-----------+----------+
|Investment income received | | 773| 1,231|
+--------------------------------------------------+----+-----------+----------+
|Deposit interest received | | 86| 200|
+--------------------------------------------------+----+-----------+----------+
|Administration fees paid | | (50)| (52)|
+--------------------------------------------------+----+-----------+----------+
|Investment management fees paid | | (522)| (518)|
+--------------------------------------------------+----+-----------+----------+
|Recovery of VAT | | -| 457|
+--------------------------------------------------+----+-----------+----------+
|Other cash payments | | (268)| (257)|
+--------------------------------------------------+----+-----------+----------+
|Cash generated from operations | | 19| 1,061|
+--------------------------------------------------+----+-----------+----------+
| | | | |
+--------------------------------------------------+----+-----------+----------+
|Tax recovered | | -| 52|
+--------------------------------------------------+----+-----------+----------+
|Net cash flows from operating activities | 18| 19| 1,113|
+--------------------------------------------------+----+-----------+----------+
| | | | |
+--------------------------------------------------+----+-----------+----------+
|Cash flows from investing activities | | | |
+--------------------------------------------------+----+-----------+----------+
|Purchase of non-current asset investments | | (3,095)| (1,770)|
+--------------------------------------------------+----+-----------+----------+
|Disposal of non-current asset investments | | 1,264| 55|
+--------------------------------------------------+----+-----------+----------+
|Purchase of current asset investments | | (2,217)| (3,835)|
+--------------------------------------------------+----+-----------+----------+
|Disposal of current asset investments | | 5,017| 3,835|
+--------------------------------------------------+----+-----------+----------+
|Net cash flows from investing activities | | 969| (1,715)|
+--------------------------------------------------+----+-----------+----------+
| | | | |
+--------------------------------------------------+----+-----------+----------+
|Cash flows from financing activities | | | |
+--------------------------------------------------+----+-----------+----------+
|Cost of issue of share capital | | (16)| (5)|
+--------------------------------------------------+----+-----------+----------+
|Equity dividends paid (net of costs of dividend | | | |
|reinvestment scheme) | | (1,739)| (1,794)|
+--------------------------------------------------+----+-----------+----------+
|Purchase of Ordinary shares for cancellation | | (192)| (364)|
+--------------------------------------------------+----+-----------+----------+
|Net cash flows used in financing activities | | (1,947)| (2,163)|
+--------------------------------------------------+----+-----------+----------+
| | | | |
+--------------------------------------------------+----+-----------+----------+
|Decrease in cash and cash equivalents | | (959)| (2,765)|
+--------------------------------------------------+----+-----------+----------+
|Cash and cash equivalents at the start of the year| | 6,472| 9,237|
+--------------------------------------------------+----+-----------+----------+
| | | | |
+--------------------------------------------------+----+-----------+----------+
|Cash and cash equivalents at the end of the year | 17| 5,513| 6,472|
+--------------------------------------------------+----+-----------+----------+
Notes to the Financial Statements
1. Accounting policies
The following policies refer to the Group and the Company except where noted.
References to International Financial Reporting Standards ('IFRS') relate to the
Group Financial Statements and Financial Reporting Standards ('FRS') relate to
the the Company Financial Statements.
Basis of accounting
The Financial Statements have been prepared in accordance with the historical
cost convention, modified to include the revaluation of investments in
accordance with International Financial Reporting Standards ('IFRS') adopted for
use in the European Union (and therefore comply with the Article 4 of the EU IAS
regulation), in the case of the Group, and in accordance with Financial
Reporting Standards ('FRS') in the case of the Company.
Both the Group and the Company Financial Statements also apply the Statement of
Recommended Practice: "Financial Statements of Investment Companies" ('SORP')
issued by the Association of Investment Companies ("AIC") in January 2009, in so
far as this does not conflict with IFRS. The Financial Statements have been
prepared in accordance with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS and FRS. These Financial Statements are presented
in Sterling to the nearest thousand. Accounting policies have been applied
consistently in current and prior periods.
At the date of authorisation of the Financial Statements, the following
International Accounting Standards and interpretations were in issue but not yet
effective:
? IFRS 2 Share-based payments (effective for annual periods beginning on or
after 1 January 2010)
? IFRS 1 First time adoption of IFRS (effective for annual periods beginning on
or after 1 January 2010)
? IAS 32 Financial instruments: presentation (effective for annual periods
beginning on or after 1 February 2010)
? IFRS 9 Financial instruments: Recognition and measurement (effective for
annual periods beginning on or after 1 January 2013)
? IAS 24 Related party disclosures (effective for annual periods beginning on or
after 1 January 2011)
? IFRIC 14 Prepayments of a minimum funding requirement (effective for annual
periods beginning on or after 1 January 2011)
? IFRIC 19 Extinguishing financial liabilities with equity instruments
(effective for annual periods beginning on or after 1 January 2010).
The above International Accounting Standards and interpretations have not been
applied in this Annual Report and Financial Statements and are not expected to
have any future material impact on the financial statements although some
changes will be required to certain disclosures in the Financial Statements.
Basis of consolidation
The Group consolidated Financial Statements incorporate the Financial Statements
of the Company for the year ended 30 June 2010 and the entities controlled by
the Company (its subsidiaries), for the same period. Where necessary,
adjustments are made to the Financial Statements of subsidiaries to bring the
accounting policies into line with those used by the Group. All intra-group
transactions, balances, income and expenses are eliminated on consolidation.
As permitted by Section 408 of the Companies Act 2006, the Company has not
presented its own profit and loss account. The amount of the Company's profit
before tax for the period dealt with in the accounts of the Group is GBP1,586,000
(2009: loss GBP3,264,000).
Segmental reporting
The Directors are of the opinion that the Group and the Company are engaged in a
single operating segment of business, being investment in equity and debt. The
Group and the Company report to the Board which acts as the chief operating
decision maker. The Group invests in smaller companies principally based in the
UK.
Business Combinations
The acquisition of subsidiaries is accounted for using the purchase method in
the Group Financial Statements. The cost of the acquisition is measured at the
aggregate of the fair values, at the date of exchange, of assets given,
liabilities incurred or assumed, and equity instruments issued by the Group in
exchange for control of the subsidiaries, plus any costs directly attributable
to the business combination. The subsidiary's identifiable assets, liabilities
and contingent liabilities that meet the conditions for recognition under IFRS
3 "Business Combinations" are recognised at their fair value at the acquisition
date.
Estimates
The preparation of the Group's and Company's Financial Statements requires
estimates, assumptions and judgements to be made, which affect the reported
results and balances. Actual outcomes may differ from these estimates, with a
consequential impact on the results of future periods. Those estimates and
assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year are
those used to determine the fair value of investments at fair value through the
profit or loss.
The valuation of investments held at fair value through the profit or loss or
measured in assessing any impairment of loan stocks is determined by using
valuation techniques. The Group and the Company use judgements to select a
variety of methods and makes assumptions that are mainly based on market
conditions at each balance sheet date.
Non-current and current asset investments
Quoted and unquoted equity investments
In accordance with IAS 39 'Financial Instruments: Recognition and Measurement',
and FRS 26 'Financial Instruments: Recognition and Measurement', quoted and
unquoted equity investments are designated as fair value through profit or loss
("FVTPL"). Investments listed on recognised exchanges are valued at the closing
bid prices at the end of the accounting period. Unquoted investments' fair value
is determined by the Directors in accordance with the International Private
Equity and Venture Capital Valuation Guidelines (IPEVCV guidelines). The revised
September 2009 guidelines have not had a material impact on the valuation of the
portfolio.
Fair value movements on equity investments and gains and losses arising on the
disposal of investments are reflected in the capital column of the Statement of
comprehensive income in accordance with the AIC SORP. Realised gains or losses
on the sale of investments will be reflected in the realised capital reserve,
and unrealised gains or losses arising from the revaluation of investments will
be reflected in the unrealised capital reserve.
Warrants, convertibles and unquoted equity derived instruments
Warrants, convertibles and unquoted equity derived instruments are only valued
if their exercise or contractual conversion terms would allow them to be
exercised or converted as at the balance sheet date, and if there is additional
value to the Company in exercising or converting as at the balance sheet date.
Otherwise these instruments are held at nil value. The valuation techniques used
are those used for the underlying equity investment.
Unquoted loan stock
Unquoted loan stock is classified as loans and receivables in accordance with
IAS 39 and FRS 26 and carried at amortised cost using the Effective Interest
Rate method less impairment. Movements in the amortised cost relating to
interest income are reflected in the revenue column of the Statement of
comprehensive income, and hence are reflected in the revenue reserve, and
movements in respect of capital provisions are reflected in the capital column
of the Statement of comprehensive income and are reflected in the realised
capital reserve following sale, or in the unrealised capital reserve on
revaluation.
For all unquoted loan stock, fully performing, renegotiated, past due or
impaired, the Board considers that the fair value is equal to or greater than
the security value of these assets. For unquoted loan stock, the amount of the
impairment is the difference between the asset's cost and the present value of
estimated future cash flows, discounted at the effective interest rate. The
future cash flows are estimated based on the fair value of the security held
less estimated selling costs.
Floating rate notes
In accordance with IAS 39 and FRS 26, floating rate notes are designated as
FVTPL. Floating rate notes are valued at market bid price at the balance sheet
date. Floating rate notes are classified as current asset investments as they
are investments held for the short term.
Investments are recognised as financial assets on legal completion of the
investment contract and are de-recognised on legal completion of the sale of an
investment.
Dividend income is not recognised as part of the fair value movement of an
investment, but is recognised separately as investment income through the
revenue reserve when a share becomes ex-dividend.
Loan stock accrued interest is recognised in the Balance sheet as part of the
carrying value of the loans and receivables at the end of each reporting period.
It is not the Group or the Company's policy to exercise control or significant
influence over investee companies. Therefore in accordance with the exemptions
under IAS 28 "Investments in associates" and FRS 9 "Associates and joint
ventures", those undertakings in which the Group or Company holds more than 20
per cent. of the equity are not regarded as associated undertakings.
Receivables and payables/debtors and creditors
? Receivables are non-interest bearing and are short term in nature and are
accordingly stated at amortised cost, as reduced by appropriate allowances for
estimated irrecoverable amounts. The Directors consider that the carrying
amount of receivables/debtors is not materially different to their fair value.
? Payables are non-interest bearing and are stated at amortised cost. The
Directors consider that the carrying amount of payables/creditors is not
materially different to their fair value.
Investment income
Quoted and unquoted equity income
Dividend income is included in revenue when the investment is quoted ex-
dividend.
Unquoted loan stock income
Fixed returns on non-equity shares and debt securities are recognised on a time
apportionment basis using an effective interest rate over the life of the
financial instrument. Income which is not capable of being received within a
reasonable period of time is reflected in the capital value of the investment.
Bank interest income
Interest income is recognised on an accruals basis using the rate of interest
agreed with the bank.
Floating rate note income
Floating rate note income is recognised on an accruals basis using the interest
rate applicable to the floating rate note at that time.
Investment management fees, performance incentive fees and other expenses
All expenses have been accounted for on an accruals basis. Expenses are charged
through the revenue column of the Statement of comprehensive income, except for
management fees and performance incentive fees which are allocated in part to
the capital column of the Statement of comprehensive income, to the extent that
these relate to an enhancement in the value of the investments and in line with
the Board's expectation that over the long term 75 per cent. of the Group's
investment returns will be in the form of capital gains.
Issue costs
Issue costs associated with the allotment of share capital have been deducted
from the share premium account.
Taxation
Taxation is applied on a current basis in accordance with IAS 12 and FRS 16
"Income taxes". Taxation associated with capital expenses is applied in
accordance with the SORP. Deferred taxation is provided in full on temporary
differences in accordance with IAS 12 and timing differences in accordance with
FRS 16, that result in an obligation at the balance sheet date to pay more tax
or a right to pay less tax, at a future date, at rates expected to apply when
they crystallise based on current tax rates and law. Timing differences arise
from the inclusion of items of income and expenditure in taxation computations
in periods different from those in which they are included in the Financial
Statements. Temporary differences arise from differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for taxation purposes. Deferred tax assets are recognised to the
extent that it is probable that future taxable profit will be available against
which unused tax losses and credits can be utilised.
Dividends
In accordance with IAS 10 and FRS 21 "Events after the balance sheet date",
dividends are accounted for in the period in which the dividend has been paid or
approved by shareholders.
Reserves
Capital redemption reserve
This reserve accounts for amounts by which the issued share capital is
diminished through the repurchase and cancellation of the Company's own shares.
Unrealised capital reserve
Increases and decreases in the valuation of investments held at the year end,
against cost are included in this reserve.
Special reserve
The cancellation of the share premium account has created a special reserve that
can be used to fund market purchases and subsequent cancellation of own shares,
to cover gross realised losses, and for other distributable purposes.
Treasury shares reserve
This reserve accounts for amounts by which the Company's distributable reserves
are diminished through the repurchase of the Company's own shares for treasury
purposes.
Realised capital reserve
The following are disclosed in this reserve:
· gains and losses compared to cost on the realisation of
investments;
· expenses, together with the related taxation effect, charged in
accordance with the above policies; and
· dividends paid to equity holders.
2. Profits/(losses) on investments
Year ended Year ended
30 June 30 June
2010 2009
GBP'000 GBP'000
=-------------------------------------------------------------------------------
Unrealised gains/(losses) on non-current asset investments
held at fair value through profit or loss account 941 (2,177)
Unrealised impairments on non-current asset investments
held at amortised cost (180) (1,392)
----------------------
Unrealised gains/(losses) on non-current asset investments 761 (3,569)
Unrealised gains on current asset investments held at fair
value through profit or loss account - 32
----------------------
Unrealised gains/(losses) sub total 761 (3,537)
Realised gains/(losses) on non-current asset investments
held at fair value through profit or loss account 552 (332)
Realised gains on non-current asset investments held at
amortised cost 25 -
Realised gains on current asset investments held at fair
value through profit or loss account 83 -
----------------------
Realised gains/(losses) sub total 660 (332)
----------------------
Total 1,421 (3,869)
----------------------
Investments valued on amortised cost basis are unquoted loan stock investments
as described in note 9.
The prior year analysis has been re-presented to reflect a separate transfer
between reserves for accumulated unrealised gains or losses that had taken place
in the previous period relating to investments sold during that year.
3. Investment income and deposit interest
Year ended Year ended
30 June 30 June
2010 2009
GBP'000 GBP'000
=-------------------------------------------------------------------------------
Income recognised on investments held at fair value
through profit or loss
UK dividend income 4 80
Management fees received from equity investments - 2
Floating rate note interest - 116
Bank deposit interest 88 135
----------------------
92 333
Income recognised on investments held at amortised cost
Return on loan stock investments 811 490
Euro commercial paper interest - 165
----------------------
903 988
----------------------
Interest income earned on impaired investments at 30 June 2010 amounted to
GBP315,000 (2009: GBP77,000). These investments are all held at amortised cost.
4. Investment management fees
Year ended 30 June Year ended 30 June
2010 2009
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=--------------------------------------------------------------------
Investment management fee 108 324 432 118 354 472
--------------------------------------------
Further details of the management agreement under which the investment
management fee is paid are given in the Directors' report and enhanced business
review in the full Annual Report and Financial Statements.
5. Profit/(loss) before taxation is stated after charging:
Year ended Year ended
30 June 30 June
2010 2009
GBP'000 GBP'000
=-------------------------------------------------------------------------------
Directors' remuneration 83 83
National insurance and/or VAT on Directors' remuneration 7 7
Auditor's remuneration:
- audit 26 25
- - the auditing of accounts of subsidiaries
of the Company pursuant to legislation 6 6
Other expenses* 184 159
----------------------
306 280
----------------------
Further information regarding Directors' remuneration can be found in the
Directors' remuneration report on page 34 of the full Annual Report and
Financial Statements.
* Other expenses incurred in the year ended 30 June 2010 include GBP15,000 paid as
legal fees for the cancellation of the Company's share premium account and
GBP10,000 paid as legal fees for work done on historic VAT recovery.
6. Taxation
Year ended 30 June Year ended 30 June
2010 2009
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=-----------------------------------------------------------------------------
UK corporation tax (charge)/credit - - - - - -
--------------------------------------------
The tax charge for the year shown in the Statement of comprehensive income is
lower than the standard rate of corporation tax of 28 per cent. (2009: 28 per
cent.). The differences are explained below:
Year ended Year ended
30 June 30 June
2010 2009
GBP'000 GBP'000
=-------------------------------------------------------------------------------
Profit/(loss) on ordinary activities before taxation 1,586 (3,264)
----------------------
Profit/(loss) on ordinary activities multiplied by the 444 (914)
standard rate of corporation tax (28 per cent.)
Effect of (gains)/losses on capital assets not subject to (398) 1,083
taxation
Effect of income not subject to taxation (1) (22)
Utilisation of tax losses (45) (147)
----------------------
- -
----------------------
No provision for deferred tax has been made in the current or prior accounting
period. The Company and Group have not recognised a deferred tax asset of
GBP1,931,000 (2009: GBP1,490,000) in respect of unutilised management expenses and
non-trading deficits as it is not considered sufficiently probable that there
will be taxable profits against which to utilise these expenses in the
foreseeable future. The Group has not recognised a further deferred tax asset of
GBP3,117,000 (2009: GBP3,603,000) in respect of unutilised management expenses and
deficits arising from non-trading relationships which would only be used if its
subsidiaries made significant profits.
7. Dividends
Year ended 30 June Year ended 30 June
2010 2009
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
First dividend paid on 8 August
2008 (1.25 pence per share) - - - 661 257 918
Second dividend paid on 17 April
2009 (1.25 pence per share) - - - 181 724 905
First dividend paid on 6 November
2009 (1.25 pence per share) 181 724 905 - - -
Second dividend paid on 9 April
2010 (1.25 pence per share) 181 725 906 - - -
--------------------------------------------
362 1,449 1,811 842 981 1,823
--------------------------------------------
In addition to the dividends paid above, the Board has declared a first dividend
for the year ending 30 June 2011, of 1.25 pence per Crown Place VCT PLC share
(to be paid out of revenue profits). This will be paid on 30 November 2010 to
shareholders on the register as at 29 October 2010. The total dividend will be
approximately GBP899,000.
8. Basic and diluted return per share
Year ended 30 June Year ended 30 June
2010 2009
Revenue Capital Total Revenue Capital Total
=-------------------------------------------------------------------------------
Return attributable to equity
shares ( GBP'000) 489 1,097 1,586 682 (3,946) (3,264)
Return attributable per Ordinary
share (pence) (basic and diluted) 0.7 1.5 2.2 0.9 (5.4) (4.5)
The return per share has been calculated on 72,321,482 shares (2009:
72,858,300), being the weighted average number of shares in issue for the year,
excluding treasury shares of 7,260,410 (2009: 7,260,410).
There are no convertible instruments, derivatives or contingent share agreements
in issue, and therefore no dilution affecting the return per share. The basic
return per share is therefore the same as the diluted return per share.
9. Non-current asset investments
30 June 30 June
2010 2009
GBP'000 GBP'000
=---------------------------------------------------------------------
Group and Company
Qualifying unquoted equity and preference shares 6,900 4,826
Qualifying quoted equity 971 885
Qualifying equity derived instruments 98 98
Qualifying unquoted loan stock 10,862 10,054
Non-qualifying equity 10 6
Non-qualifying unquoted loan stock 251 9
--------------------
Total investments 19,092 15,878
--------------------
Qualifying
unquoted Qualifying Non- Non-
equity and Qualifying equity Qualifying qualifying qualifying
preference quoted derived unquoted quoted unquoted
shares equity instruments loan stock equity loan stock Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=----------------------------------------------------------------------------------------
Opening
valuation as 4,826 885 98 10,054 6 9 15,878
at 1 July 2009
Purchases at 1,325 - - 1,843 - 68 3,236
cost
Disposal (343) (389) - (678) - - (1,410)
proceeds
Realised gains 356 196 - 25 - - 577
Debt/equity 78 - - (135) - 57 -
swap
Movement in - - - 50 - - 50
loan stock
accrued income
Unrealised 658 279 - (297) 4 117 761
gains/(losses)
---------------------------------------------------------------------------
Closing
valuation as
at 30 June
2010 6,900 971 98 10,862 10 251 19,092
---------------------------------------------------------------------------
Movement in
loan stock
accrued income
Opening
accumulated - - - 128 - - 128
movement in
loan stock
revenue
accrued income
Interest - - - 38 - - 38
restructuring
Movement in - - - 50 - - 50
loan stock
revenue
accrued income
---------------------------------------------------------------------------
Closing - - - 216 - - 216
accumulated
movement in
loan stock
revenue
accrued income
---------------------------------------------------------------------------
Movement in
unrealised
losses
Opening (4,951) (659) - (1,579) (5) (422) (7,616)
accumulated
unrealised
losses
Interest - - - (38) - - (38)
restructuring
Movement in 658 279 - (297) 4 117 761
unrealised
gains/(losses)
Transfer of 694 (27) - 193 - 29 889
previously
unrealised
losses/(gains)
to realised
reserves on
disposal
---------------------------------------------------------------------------
Closing (3,599) (407) - (1,721) (1) (276) (6,004)
accumulated
unrealised
losses
---------------------------------------------------------------------------
Historic cost
basis
Opening book 9,777 1,545 98 11,505 11 431 23,367
cost
Purchases at 1,325 - - 1,843 - 68 3,236
cost
Debt/equity 78 - - (135) - 57 -
swap
Sales at cost (681) (167) - (845) (1) (29) (1,723)
---------------------------------------------------------------------------
Closing book 10,499 1,378 98 12,368 10 527 24,880
cost
---------------------------------------------------------------------------
Qualifying
unquoted Qualifying Non- Non-
equity and Qualifying equity Qualifying qualifying qualifying
preference quoted derived unquoted quoted unquoted
shares equity instruments loan stock equity loan stock Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=----------------------------------------------------------------------------------------
Opening
valuation as 6,094 1,108 98 10,798 7 106 18,211
at 1 July 2008
Purchases at 1,111 - - 865 - - 1,976
cost
Disposal (10) - - (46) - - (56)
proceeds
Realised (332) - - - - - (332)
losses
Movement in - - - (352) - - (352)
loan stock
accrued income
Unrealised (2,037) (223) - (1,211) (1) (97) (3,569)
losses
---------------------------------------------------------------------------
Closing
valuation as
at 30 June
2009 4,826 885 98 10,054 6 9 15,878
---------------------------------------------------------------------------
Movement in
loan stock
accrued income
Opening
accumulated - - - 480 - - 480
movement in
loan stock
revenue
accrued income
Movement in - - - (352) - - (352)
loan stock
revenue
accrued income
---------------------------------------------------------------------------
Closing - - - 128 - - 128
accumulated
movement in
loan stock
revenue
accrued income
---------------------------------------------------------------------------
Movement in
unrealised
losses
Opening (4,720) (436) - (1,128) (4) (325) (6,613)
accumulated
unrealised
losses
Movement in (2,037) (223) - (1,211) (1) (97) (3,569)
unrealised
losses
Transfer of 1,806 - - 760 - - 2,566
previously
unrealised
losses/(gains)
to realised
reserves on
disposal
---------------------------------------------------------------------------
Closing (4,951) (659) - (1,579) (5) (422) (7,616)
accumulated
unrealised
losses
---------------------------------------------------------------------------
Historic cost
basis
Opening book 10,813 1,545 98 11,447 11 431 24,345
cost
Purchases at 1,111 - - 865 - - 1,976
cost
Sales at cost (2,147) - - (807) - - (2,954)
---------------------------------------------------------------------------
Closing book 9,777 1,545 98 11,505 11 431 23,367
cost
---------------------------------------------------------------------------
Equity and preference share investments held at fair value through profit or
loss total GBP7,979,000 (2009: GBP5,815,000). Investments held at amortised cost
total GBP11,113,000 (2009: GBP10,063,000). There has been no re-designation of non-
current asset investments during the year.
In September 2009, Crown Place VCT PLC exchanged its shareholdings in Welland
Inns VCT Limited (formerly Clear Pub Company VCT Limited), Novello Pub Limited
and The Charnwood Pub Company VCT (Hotels) Limited for a shareholding in
Charnwood Pub Company Limited. The reorganisation resulted in the pubs being
managed by a single management team.
Disposal proceeds of GBP1,264,000 included in the cash flow statement differ from
the disposal proceeds of GBP1,410,000 shown in the note above, due to deferred
consideration of GBP47,000 in respect of RFI Global Services Limited and
consideration of GBP51,000 from Red-M Group Limited and GBP47,000 from Vibrant
Energy Surveys Limited which was not received as cash.
The following disposals, repayments and permanent diminution in value took place
in the year:
Opening carrying value
as at
Net consideration Cost 1 July 2009
Name of company GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Avanti Communications Group PLC 389 167 194
Booth Dispensers Limited 80 227 52
Driver Hire Investment Group - 29 1
Limited
GB Pub Company VCT Limited 45 45 45
Green Energy Property Services - 47 -
Group Limited
House of Dorchester Limited 122 122 122
Red-M Group Limited 49 295 49
RFI Global Services Limited 625 378 186
River Bourne Health Club 10 106 17
Limited
The Dunedin Pub Company VCT 120 120 120
Limited
Vibrant Energy Surveys Limited 51 267 51
-------------------------------------------------
1,491 1,803 837
-------------------------------------------------
Fixed asset investment class valuation methodologies
Quoted equity investments (both qualifying and non-qualifying) are valued at
market bid price as at the balance sheet date.
Unquoted loan stock investments are valued on an amortised cost basis. Loan
stocks with a fixed interest rate total GBP10,953,000 (2009: GBP9,677,000). Loan
stocks with a floating rate of interest total GBP160,000 (2009: GBP386,000).
The Directors believe that the carrying value of loan stock valued using
amortised cost is not materially different to fair value.
The Company does not hold any assets as the result of the enforcement of
security during the year, and believes that the carrying values for both
impaired and past due assets are covered by the value of security held for these
loan stock investments.
The amended IFRS 7 'Financial Instruments: Disclosures' requires the Company to
disclose the valuation methods applied to its investments measured at fair value
through profit or loss in a fair value hierarchy according to the following
definitions:
Fair value hierarchy Definition of valuation method
=-------------------------------------------------------------------------------
Level 1 Unadjusted quoted (bid) prices applied
Level 2 Inputs to valuation are from observable sources and are
directly or indirectly derived from prices
Level 3 Inputs to valuations are not based on observable market
data
Quoted AIM investments are valued according to Level 1 valuation methods.
Unquoted equity and preference share investments are all valued according to
Level 3 valuation methods.
The unquoted equity and preference share investments and equity derived
instruments held at fair value through profit or loss (level 3) had the
following movements in the year to 30 June 2010:
GBP'000
=-----------------------------------------------
Opening balance as at 1 July 2009 4,924
Additions 1,325
Disposal proceeds (343)
Realised gains 356
Debt/equity swap 78
Unrealised gains on equity investments 658
--------
Closing balance as at 30 June 2010 6,998
--------
Unquoted equity investments and warrants and convertibles are valued in
accordance with the IPEVCV guidelines as follows:
30 June 30 June
2010 2009
Valuation methodology GBP'000 GBP'000
=-----------------------------------------------------------------------
Cost (reviewed for impairment) 845 500
Net asset value supported by third party valuation 1,722 920
Recent investment price 1,643 993
Earnings multiple 2,788 2,511
--------------------
6,998 4,924
--------------------
The unquoted equity instruments had the following movements between investment
methodologies between 30 June 2009 and 30 June 2010:
Value as at
Change in valuation methodology 30 June 2010
(2009 to 2010) GBP'000 Explanatory note
=-------------------------------------------------------------------------------
Recent investment price to cost
(reviewed for impairment) 225 Company not generating earnings
Recent investment price to
earnings multiple 49 Company generating earnings
Earnings multiple to net asset
value supported by third party Independent valuation recently
valuation 15 undertaken
Cost to recent investment price 146 Most recent price
The valuation method used will be the most appropriate valuation methodology for
an investment within its market, with regard to the financial health of the
investment and the September 2009 IPEVCV Guidelines. The Directors believe that,
within these parameters, there are no other possible methods of valuation which
would be reasonable as at 30 June 2010.
IFRS 7 requires the Directors to consider the impact of changing one or more of
the inputs used as part of the valuation process to reasonable possible
alternative assumptions. The valuation methodology applied to 60 per cent. of
the equity investments (by valuation) are based on third party independent
evidence, recent investment price and cost. The Directors believe that changes
to reasonable possible alternative input assumptions for the valuation of the
portfolio could result in an increase in the valuation of the equity investments
by GBP1,059,000 or a decrease in the valuation of equity investments by GBP577,000.
10. Significant interests
The principal activity of the Group is to select and hold a portfolio of
investments in unquoted securities. Although the Company, through the Manager,
will, in some cases, be represented on the board of the investee company, it
will not take a controlling interest or become involved in the management. The
size and structure of the companies with unquoted securities may result in
certain holdings in the portfolio representing a participating interest without
there being any partnership, joint venture or management consortium agreement.
The Company has interests of greater than 20 per cent. of the nominal value of
any class of the allotted shares in the investee companies as at 30 June 2010 as
described below:
Company Country of Principal activity % class and % total
incorporation share type voting
rights
=-------------------------------------------------------------------------------
Booth Dispensers Great Britain Manufacturer of 100.0% A 22.8%
Limited vending machine Ordinary
components and beer
pump coolers
ELE Advanced Great Britain Manufacturer of 74.3% B 48.3%
Technologies precision Ordinary
Limited engineering
components for the
industrial gas
turbine, aerospace
and automotive
markets
House of Great Britain Chocolate 33.2% B 23.3%
Dorchester manufacturer Ordinary
Limited
Tuscan Energy Great Britain In administration 42.5% C None
Group Limited* Ordinary
GW 665 Limited* Great Britain No trading activity 37.0% B 37.0%
Ordinary
* Carried at nil as at 30 June 2010.
The investments listed above are held as part of an investment portfolio, and
their value to the Company is as part of a portfolio of investments. Therefore
these investments are not considered to be associated undertakings as permitted
by IAS 28 and FRS 9.
11. Investments in subsidiary undertakings
30 June 2010
CP1 VCT PLC CP2 VCT PLC Total
GBP'000 GBP'000 GBP'000
=-----------------------------------------------------------------------
Carrying value as at 1 July 2009 6,636 8,513 15,149
Movement in subsidiary net assets (64) (72) (136)
-------------------------------------
6,572 8,441 15,013
-------------------------------------
30 June 2009
CP1 VCT PLC CP2 VCT PLC Total
GBP'000 GBP'000 GBP'000
=-----------------------------------------------------------------------
Carrying value as at 1 July 2008 6,585 8,474 15,059
Movement in subsidiary net assets 51 39 90
-------------------------------------
6,636 8,513 15,149
-------------------------------------
The subsidiary companies currently hold cash and intercompany balances.
Both CP1 VCT PLC and CP2 VCT PLC are wholly owned by Crown Place VCT PLC as
follows:
30 June 2010 30 June 2009
CP1 VCT PLC CP2 VCT PLC CP1 VCT PLC CP2 VCT PLC
Nominal value of shares held GBP6,382,746 GBP8,219,350 GBP6,382,746 GBP8,219,350
Percentage of authorised share 57.8% 59.8% 57.8% 59.8%
capital in issue
Percentage of total voting 100% 100% 100% 100%
rights held
12. Current assets include the following:
30 June 2010 30 June 2009
Group Company Group Company
GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Trade and other receivables/debtors 68 68 55 55
----------------------------
Nationwide Building Society floating rate note 7
July 2009 - - 2,718 2,718
----------------------------
13. Trade and other payables/creditors
30 June 2010 30 June 2009
Group Company Group Company
GBP'000 GBP'000 GBP'000 GBP'000
=---------------------------------------------------------------------------
Amounts falling due within one year:
Amounts due to subsidiary undertakings - 14,940 - 14,968
Trade creditors 161 161 39 39
Accruals 99 59 296 260
------------------------------------
260 15,160 335 15,267
------------------------------------
14. Called up share capital
30 June 30 June
2010 2009
GBP'000 GBP'000
=---------------------------------------------------------------------------
Authorised
140,000,000 Ordinary shares of 10p each (2009: 140,000,000) 14,000 14,000
----------------
Allotted, called up and fully paid
79,177,624 Ordinary shares of 10p each (2009: 79,657,180) 7,918 7,965
----------------
Allotted, called up and fully paid excluding treasury shares
71,917,214 Ordinary shares of 10p each (2009: 72,396,770) 7,192 7,240
----------------
The Company repurchased for cancellation 697,446 (2009: 1,091,300) Ordinary
shares during the year at a total cost of GBP205,000 (2009: GBP321,000) representing
0.9 per cent. of the shares in issue as at 1 July 2009. The shares purchased for
cancellation were funded from the Special reserve. The total number of shares
held in treasury as at 30 June 2010 was 7,260,410 (2009: 7,260,410).
Under the terms of the Dividend Reinvestment Scheme Circular dated 26 February
2009, the following Ordinary shares of nominal value 10 pence were allotted
during the year:
Opening
Issue market price
Aggregate price per per share on
Number of nominal value share Consideration allotment
Allotment shares of shares pence per received pence per
date allotted GBP'000 share GBP'000 share
=-------------------------------------------------------------------------------
6 November 106,946 11 32.95 35 25.00
2009
9 April 2010 110,944 12 32.93 37 30.00
15. Cancellation of share premium account
Shareholders approved the cancellation of the Company's share premium account by
way of special resolution at a General Meeting on 1 September 2009. The share
premium account amounting to GBP14,438,000 was subsequently cancelled on 16
September 2009 by order of the High Court and the Notice regarding the
cancellation was registered at Companies House on 18 September 2009. The purpose
of this cancellation was to increase the special reserve available for
distribution as dividends, or for making market purchases or for any other
distributable purpose under the Companies Act 2006.
16. Basic and diluted net asset value per Ordinary share
The Group and Company net asset value attributable to the Ordinary shares at the
year end was as follows:
30 June 30 June
2010 2009
=---------------------------------------------------------------------------
Net asset value per share attributable (pence) 33.9 34.2
--------------------
The net asset value per share at the year end is calculated in accordance with
the Articles of Association and is based upon total shares in issue less
treasury shares, of 71,917,214 shares (2009: 72,396,770) as at 30 June 2010.
There are no convertible instruments, derivatives or contingent share agreements
in issue. The Company's policy is to sell treasury shares at a price greater
than the purchase price hence the net asset value per share on a diluted basis
would be equal to or greater than the basic net asset value per share, depending
on the actual price achieved for selling the treasury shares.
17. Cash and cash equivalents/cash at bank and in hand
30 June 2010 30 June 2009
Group Company Group Company
GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------
Cash at bank 5,513 5,400 6,472 6,255
------------------------------------
18. Reconciliation of revenue return on ordinary activities before taxation to
net cash inflow from operating activities
Year ended Year ended
30 June 30 June
2010 2009
GBP'000 GBP'000
=-------------------------------------------------------------------------------
Revenue return before tax 489 682
Capitalised expenses (324) (354)
Recovery of VAT charged to capital - 277
(Increase)/decrease in accrued amortised loan stock
interest (50) 352
Decrease in receivables 7 139
(Decrease)/increase in payables (103) 17
--------------------------
Net cash inflow from operating activities 19 1,113
--------------------------
19. Capital and financial instruments risk management
The following policies are with reference to both the Company and the Group
except where the 'Company' is used below.
The Group's maximum permitted gearing is GBP23,514,000 (2009: GBP23,883,000) and as
at 30 June 2010, the Group's gearing was nil (2009: nil). The Group's policy on
gearing is described in more detail on page 22 of the Directors' report and
enhanced business review in the full Annual Report and Financial Statements.
The Group's capital comprises Ordinary shares as described in note 14. The
Company is permitted to buy back its own shares for cancellation or treasury
purposes, and this is described in more detail on page 23 of the Directors'
report and enhanced business review in the full Annual Report and Financial
Statements. As noted above, the share premium account was cancelled during the
year to increase the distributable special reserve.
The Group's financial instruments comprise equity and loan stock investments in
unquoted companies, equity in AIM quoted companies, cash balances, short term
debtors and creditors which arise from its operations. The main purpose of these
financial instruments is to generate revenue and capital appreciation for the
Group's operations. The Group has no gearing or other financial liabilities
apart from short term creditors. The Group does not use any derivatives for the
management of its balance sheet.
The principal risks arising from the Group's operations are:
· Investment (or market) risk (which comprises investment price and
cash flow interest rate risk);
· credit risk; and
· liquidity risk.
The Board regularly reviews and agrees policies for managing each of these
risks. There have been no changes in the nature of the risks that the Group has
faced during the past year, and apart from where noted below, there have been no
changes in the objectives, policies or processes for managing risks during the
past year. The key risks are summarised as follows:
Investment risk
As a venture capital trust, it is the Group's specific nature to evaluate and
control the investment risk of its portfolio in unquoted and in quoted
companies, details of which are shown on page 13 of the full Annual Report and
Financial Statements. Investment risk is the exposure of the Group to the
revaluation and devaluation of investments. The main driver of investment risk
is the operational and financial performance of the investee companies and the
dynamics of market quoted comparators. The Manager receives management accounts
from investee companies, and members of the investment management team often sit
on the boards of unquoted investee companies; this enables the close
identification, monitoring and management of investment risk.
The Manager and the Board formally reviews investment risk (which includes
market price risk), both at the time of initial investment and at quarterly
Board meetings.
The Board monitors the prices at which sales of investments are made to ensure
that profits to the Group are maximised, and that valuations of investments
retained within the portfolio appear sufficiently prudent and realistic compared
to prices being achieved in the market for sales of unquoted investments.
The maximum investment risk as at the balance sheet date is the value of the
non-current and current asset investment portfolio which is GBP19,092,000 (2009:
GBP18,596,000). Non-current and current asset investments form 78 per cent. of the
net asset value as at 30 June 2010 (2009: 75 per cent.).
More details regarding the classification of non-current and current asset
investments are shown in notes 9 and 12.
Investment price risk
Investment price risk is the risk that the fair value of future investment cash
flows will fluctuate due to factors specific to an investment instrument or to a
market in similar instruments. To mitigate the investment price risk for the
Group as a whole, the strategy of the Group is to invest in a broad spread of
industries with approximately two-thirds of the unquoted investments comprising
debt securities, which, owing to the structure of their yield and the fact that
they are usually secured, have a lower level of price volatility than equity.
Details of the industries in which investments have been made are contained in
the Portfolio of investments section on page 13 and in the Manager's report
within the full Annual report and Financial Statements.
The valuation method used will be the most appropriate valuation methodology for
an investment within its market, with regard to the financial health of the
investment and the September 2009 IPEVCV Guidelines.
As required under IFRS 7 and FRS 29, the Board is required to illustrate by way
of a sensitivity analysis, the degree of exposure to market risk. The Board
considers that the value of the non-current and current asset investment
portfolio is sensitive to a 10 per cent. change based on the current economic
climate. The impact of a 10 per cent. change has been selected as this is
considered reasonable given the current level of volatility observed both on a
historical basis and future expectations.
The sensitivity of a 10 per cent. (2009: 10 per cent.) increase or decrease in
the valuation of the non-current and current asset investments (keeping all
other variables constant) would increase or decrease the net asset value and
return for the year by GBP1,909,000 (2009: GBP1,860,000).
Cash flow interest rate risk
It is the Group's policy to accept a degree of interest rate risk on its
financial assets through the effect of interest rate changes. On the basis of
the Group's analysis, it is considered that further falls in interest rates
would not have a significant impact.
The weighted average interest rate applied to the Group's fixed rate assets
during the year was approximately 6.3 per cent. (2009: 4.5 per cent.). The
weighted average period to maturity for the fixed rate assets is approximately
2.7 years (2009: 2.2 years).
Credit risk
Credit risk is the risk that the counterparty to a financial instrument will
fail to discharge an obligation or commitment that it has entered into with the
Group. The Group is exposed to credit risk through its debtors, investment in
unquoted loan stock, and through the holding of floating rate notes and cash on
deposit with banks.
The Manager evaluates credit risk on loan stock, floating rate note instruments
and other similar instruments prior to investment, and as part of its ongoing
monitoring of investments. In doing this, it takes into account the extent and
quality of any security held. Typically loan stock instruments have a first
fixed charge or a fixed and floating charge over the assets of the investee
company in order to mitigate the gross credit risk. The Manager receives
management accounts from investee companies, and members of the investment
management team often sit on the boards of unquoted investee companies; this
enables the close identification, monitoring and management of investment-
specific credit risk.
Bank deposits and floating rate notes are held with banks which have a Moody's
credit rating of at least 'A'. The Group has an informal policy of limiting
counterparty banking and floating rate note exposure to a maximum of 20 per
cent. of net asset value for any one counterparty.
The Manager and the Board formally review credit risk (including receivables)
and other risks, both at the time of initial investment and at quarterly Board
meetings.
The Group's total gross credit risk at 30 June 2010 was limited to GBP11,113,000
(2009: GBP10,063,000) of unquoted loan stock instruments, GBP5,513,000 (2009:
GBP6,472,000) cash deposits with banks and GBPnil (2009: GBP2,718,000) floating rate
notes.
As at the balance sheet date, the cash held by the Group is held with the Royal
Bank of Scotland plc, Lloyds Banking Group plc, HSBC plc, Scottish Widows Bank
plc and Standard Life Bank plc. Credit risk on floating rate note and cash
transactions is mitigated by transacting with counterparties that are regulated
entities subject to prudential supervision, with high credit ratings assigned by
international credit-rating agencies.
Liquidity risk
Liquid assets are held as cash on current account, cash on deposit or short term
money market account and as floating rate notes. Under the terms of its
Articles, the Group has the ability to borrow up to the amount of its adjusted
capital and reserves of the latest published audited consolidated balance sheet,
which amounts to GBP23,514,000 (2009: GBP23,883,000) as at 30 June 2010.
The Group has no committed borrowing facilities as at 30 June 2010 (2009: nil)
and had cash balances of GBP5,513,000 (2009: GBP6,472,000) (Company GBP5,400,000;
2009: GBP6,255,000) together with GBPnil (2009: GBP2,718,000) invested in floating
rate notes. The main cash outflows are for new investments, dividends and share
buy backs, which are within the control of the Group. The Manager formally
reviews the cash requirements of the Group on a monthly basis, and the Board on
a quarterly basis, as part of its review of management accounts and forecasts.
All of the Group's financial liabilities are short term in nature and total
GBP260,000 (2009: GBP335,000) for the year to 30 June 2010 (Company: 30 June 2010;
GBP15,160,000: 30 June 2009: GBP15,267,000). An amount of GBP14,940,000 (2009:
GBP14,968,000) which is included within the Company creditor relates to
intercompany balances and is not considered to carry liquidity risk.
In view of this, the Board considers that the Group is subject to low liquidity
risk.
The carrying value of loan stock investments held at amortised cost at 30 June
2010 is analysed by the expected maturity dates as follows:
Past due Impaired
Fully performing loan stock loan stock* loan stock Total
Redemption date GBP'000 GBP'000 GBP'000 GBP'000
=---------------------------------------------------------------------------
Less than one year 385 - 219 604
1-2 years 1,679 - 1,002 2,681
2-3 years 345 1,081 2,541 3,967
3-5 years 1,823 627 1,284 3,734
More than 5 years - - 127 127
----------------------------------------------------------
Total 4,232 1,708 5,173 11,113
----------------------------------------------------------
The carrying value of loan stock investments held at amortised cost at 30 June
2009 is analysed by the expected maturity dates as follows:
Past due Impaired
Fully performing loan stock loan stock* loan stock Total
Redemption date GBP'000 GBP'000 GBP'000 GBP'000
=---------------------------------------------------------------------------
Less than one year 246 - 196 442
1-2 years 1,123 343 2,274 3,740
2-3 years 1,414 226 1,558 3,198
3-5 years 639 1,210 825 2,674
More than 5 years - - 9 9
----------------------------------------------------------
Total 3,422 1,779 4,862 10,063
----------------------------------------------------------
*Of the loan stock categorised as past due, 76 per cent. (2009: 84 per cent.) is
in respect of loan stocks where interest arrangements have been temporarily
changed through discussions with the Manager, but under the contractual
agreement GBP141,000 of loan stock interest would have been between one and twelve
months past due. The balance relates to GBP4,000 of loan stock interest which is
between one and four months past due.
The cost, impairment and carrying value of impaired loan stocks held at
amortised cost at 30 June 2010 and 30 June 2009 are as follows:
30 June 2010 30 June 2009
Cost Impairment Carrying value Cost Impairment Carrying value
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Impaired loan 6,875 (1,702) 5,173 6,947 (2,085) 4,862
stock
----------------------------------------------------------------
Impaired loan stock instruments have a first fixed charge or a fixed and
floating charge over the assets of the investee company and the Board estimate
that the security value approximates to the carrying value.
Fair values of financial assets and financial liabilities
All the Group's financial assets and liabilities as at 30 June 2010 are stated
at fair value as determined by the Directors, with the exception of loans and
receivables included within investments, which are carried at amortised cost, in
accordance with IAS 39. In the opinion of the Directors, the amortised cost of
loan stock is not materially different to the fair value of the loan stock.
There are no financial liabilities other than short term trade and other
payables. The Group's financial liabilities are all non-interest bearing. It is
the Directors' opinion that the book value of the financial liabilities is not
materially different to the fair value and all are payable within one year, and
that the Group is subject to low financial risk as a result of having nil
gearing and positive cash balances.
The Group's financial assets and liabilities as at 30 June 2010, all denominated
in pounds sterling, consist of the following:
30 June 2010 30 June 2009
Fixed Floating Non- Fixed Floating Non-
rate rate interest Total rate rate interest Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Floating
rate notes - - - - - 2,718 - 2,718
Unquoted
loan stock 10,953 160 - 11,113 9,677 386 - 10,063
Unquoted
equity - - 6,998 6,998 - - 4,924 4,924
Quoted
equity - - 981 981 - - 891 891
Receivables - - 68 68 - - 55 55
Current
liabilities - - (260) (260) - - (335) (335)
Cash - 5,513 - 5,513 - 6,472 - 6,472
--------------------------------------------------------------------
Net assets 10,953 5,673 7,787 24,413 9,677 9,576 5,535 24,788
--------------------------------------------------------------------
The Company's financial assets and liabilities as at 30 June 2010, all
denominated in pounds sterling, consist of the following:
30 June 2010 30 June 2009
Fixed Floating Non- Fixed Floating Non-
rate rate interest Total rate rate interest Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=----------------------------------------------------------------------------------
Floating
rate notes - - - - - 2,718 - 2,718
Unquoted
loan stock 10,953 160 - 11,113 9,677 386 - 10,063
Unquoted
equity - - 22,011 22,011 - - 20,073 20,073
Quoted
equity - - 981 981 - - 891 891
Receivables - - 68 68 - - 55 55
Current
liabilities (14,940) - (220) (15,160) (14,968) - (299) (15,267)
Cash - 5,400 - 5,400 - 6,255 - 6,255
------------------------------------------------------------------------
Net assets (3,987) 5,560 22,840 24,413 (5,291) 9,359 20,720 24,788
------------------------------------------------------------------------
20. Post balance sheet events
Since 30 June 2010 the Company has completed the following material
transactions:
· July and August 2010: Investment in Rostima Limited of GBP62,000
· July 2010: Investment in TEG Biogas (Perth) Limited of GBP109,000
· July 2010: Disposal of Green Energy Property Services Group
Limited for deferred consideration of up to GBP38,000
· August 2010: Investment in Xceleron Limited of GBP31,000
· September 2010: Investment in Radnor House School Limited of
GBP1,564,000
The Company has a commitment to invest a further GBP243,000 in TEG Biogas (Perth)
Limited.
21. Contingencies and guarantees
There are no contingencies or guarantees of the Group or Company as at 30 June
2010 (2009: nil).
22. Related party transactions
The Manager, Albion Ventures LLP, could be considered to be a related party by
virtue of the fact that it is party to a management agreement with the Company
(details disclosed on page 25 of the full Annual Report and Financial
Statements). During the year, services of a total value of GBP482,000 (2009:
GBP522,000) were purchased by the Company from Albion Ventures LLP; this includes
GBP432,000 investment management fee and GBP50,000 administration fee. At the
financial year end, the amount due to Albion Ventures LLP disclosed as accruals
and deferred income was GBP118,000 (2009: GBP208,000).
Albion Ventures LLP holds 1,256 Ordinary shares as a result of fractional
entitlements arising on the merger of Crown Place VCT PLC, CP1 VCT PLC and CP2
VCT PLC on 13 January 2006.
23. Principal risks and uncertainties
In addition to the current economic risks outlined in the Chairman's statement,
the Board considers that the Company faces the following major risks and
uncertainties:
1. Investment risk
This is the risk of investment in poor quality assets which reduces the capital
and income returns to shareholders, and negatively impacts on the Group's
reputation. By nature, smaller unquoted businesses, such as those that qualify
for venture capital trust purposes, are more fragile than larger, long
established businesses.
To reduce this risk, the Board places reliance upon the skills and expertise of
the Manager and its strong track record for investing in this segment of the
market. The Company's policy is to lower investment risk by investing part of
the portfolio in asset-backed businesses and taking a first charge over the
relevant assets. In addition, the Manager operates a formal and structured
investment process, which includes an Investment Committee, comprising
investment professionals from the Manager and at least one external investment
professional. The Manager also invites comments from all non-executive Directors
on investments discussed at the Investment Committee meetings. Investments are
actively and regularly monitored by the Manager (investment managers normally
sit on investee company boards) and the Board receives detailed reports on each
investment as part of the Manager's report at quarterly board meetings.
2. Venture Capital Trust approval risk
The Company's current approval as a venture capital trust allows investors to
take advantage of tax reliefs on initial investment and ongoing tax free capital
gains and dividend income. Failure to meet the qualifying requirements could
result in investors losing the tax relief on initial investment and loss of tax
relief on any tax-free income or capital gains received. In addition, failure to
meet the qualifying requirements could result in a loss of listing of the
shares.
To reduce this risk, the Board has appointed the Manager, who has a team with
significant experience in venture capital trust management, used to operating
within the requirements of the venture capital trust legislation. In addition,
to provide further formal reassurance, the Board has appointed
PricewaterhouseCoopers LLP as its taxation advisors. PricewaterhouseCoopers LLP
report quarterly to the Board to independently confirm compliance with the
venture capital trust legislation, to highlight areas of risk and to inform on
changes in legislation.
3. Compliance risk
The Company is listed on The London Stock Exchange and is required to comply
with the rules of the UK Listing Authority, as well as with the Companies Act,
Accounting Standards and other legislation. Failure to comply with these
regulations could result in a delisting of the Company's shares, or other
penalties under the Companies Act or from financial reporting oversight bodies.
Board members and the Manager have experience of operating at senior levels
within quoted businesses. In addition, the Board and the Manager receive regular
updates on new regulation from its auditors, lawyers and other professional
bodies.
4. Internal control risk
Failures in key controls, within the Board or within the Manager's business,
could put assets of the Company at risk or result in reduced or inaccurate
information being passed to the Board or to shareholders.
The Audit and Risk Committee meets with the Manager's internal auditors,
Littlejohn LLP, at least once a year, receiving a report regarding the last
formal internal audit performed on the Manager, and providing the opportunity
for the Audit and Risk Committee to ask specific and detailed questions. During
the year, the Board has met with the Partner of Littlejohn LLP internal audit to
discuss the most recent Internal Audit Report completed on the Manager. The
Manager has a comprehensive business continuity plan in place in the event that
operational continuity is threatened. Further details regarding the Board's
management and review of the Group's internal controls through the
implementation of the Turnbull guidance are detailed on page 31 of the full
Annual Report and Financial Statements.
Measures are in place to mitigate information risk in order to ensure the
integrity, availability and confidentiality of information used within the
business.
5. Reliance upon third parties risk
The Company is reliant upon the services of Albion Ventures LLP for the
provision of investment management and administrative functions. There are
provisions within the management agreement for the change of Manager under
certain circumstances (for more detail, see the management agreement paragraph
on page 25 of the full Annual Report and Financial Statements). In addition, the
Manager has demonstrated to the Board that there is no undue reliance placed
upon any one individual within Albion Ventures LLP.
6. Financial risks
By its nature, as a venture capital trust, the Company is exposed to investment
risk (which comprises investment price risk and cash flow interest rate risk),
credit risk and liquidity risk. The Company's policies for managing these risks
and its financial instruments are outlined in full in note 19.
All of the Group's income and expenditure is denominated in sterling and hence
the Group has no foreign currency risk. The Group is financed through equity and
does not have any borrowings. The Group does not use derivative financial
instruments.
24. Other information
The information set out in this announcement does not constitute the Company's
statutory accounts within the terms of section 434 of the Companies Act 2006 for
the periods ended 30 June 2010 and 30 June 2009, and is derived from
the statutory accounts for those financial years, which have been, or in the
case of the accounts for the year ended 30 June 2010, which will be, delivered
to the Registrar of Companies. The Auditors reported on those accounts; their
reports were unqualified and did not contain a statement under s498 (2) or (3)
of the Companies Act 2006.
The Company's Annual General Meeting will be held at The City of London Club,
19 Old Broad Street, London, EC2N 1DS on 9 November 2010 at 12 noon.
25. Publication
The full audited Annual Report and Financial Statements are being sent to
shareholders and copies will be made available to the public at the registered
office of the Company, Companies House, the National Storage Mechanism and also
electronically at www.albion-ventures.co.uk under the 'Our Funds' section.
[HUG#1449977]
Annual Financial Report:
http://hugin.info/141806/R/1449977/391637.pdf
Pie chart:
http://hugin.info/141806/R/1449977/391642.pdf
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Crown Place VCT PLC via Thomson Reuters ONE
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