TIDMCRWN
Annual Financial Report
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 2011.
This announcement was approved for release by the Board of Directors on 7
October 2011.
This announcement has not been audited.
You will shortly be able to view the Annual Report and Financial Statements for
the year to 30 June 2011 (which have been audited) at: www.albion-ventures.co.uk
by clicking on 'Our Funds' and then Crown Place VCT PLC'. The Annual Report and
Financial Statements for the year to 30 June 2011 will be available as a PDF
document via a link under the 'Investor Centre' in the 'Financial Reports and
Circulars' section. The information contained in the Annual Report and Financial
Statements will include information as required by the Disclosure and
Transparency Rules, including Rule 4.1.
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 more mature or
asset-based investments that can provide a strong income stream combined with a
degree of capital protection. These will be balanced by a lesser proportion of
the portfolio being invested in higher risk companies with greater growth
prospects.
*The 'Company' is Crown Place VCT PLC. The 'Group' is the Company together with
its subsidiaries CP1 VCT PLC and CP2 VCT PLC.
Financial calendar
Annual General Meeting 9 November 2011
Record date for first dividend 4 November 2011
Payment of first dividend 30 November 2011
Announcement of half-yearly results for the six months ended February 2012
31 December 2011
Payment of second dividend subject to Board approval March 2012
Financial highlights
2.15p
Total return to shareholders for the year ended 30 June 2011
2.50p Total tax free dividends per share paid during the year ended 30 June
2011
8.3% Yield on share price (dividend per annum/share price as at 30 June 2011)
33.65p Net asset value per share as at 30 June 2011
1.25p First tax free dividend per share declared for the year to 30 June 2012
+-------------------------------------------------------------------+
| 30 June 2011 30 June 2010 |
| |
| pence per share pence per share |
+-------------------------------------------------------------------+
| Net asset value per share 33.65 33.94 |
| |
| Dividends paid 2.50 2.50 |
| |
| Revenue return per share 1.11 0.68 |
| |
| Capital return per share 1.04 1.52 |
+-------------------------------------------------------------------+
Shareholder returns and shareholder value
Proforma ((i)) Proforma ((i)) Crown Place VCT PLC*
Murray VCT PLC Murray VCT 2 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
2011:
Total dividends paid 10.47 12.32 14.30
Decrease in net asset (6.15) (6.87) (9.75)
value
-------------------------------------------------------
Total shareholder return
from April 2005 to 30
June 2011 4.32 5.45 4.55
-------------------------------------------------------
Shareholder value since
launch:
Total dividends paid to 40.83 43.23 39.23
30 June 2011 ((ii))
Net asset value as at 30 23.95 28.63 33.65
June 2011
-------------------------------------------------------
Total shareholder value 64.78 71.86 72.88
as at 30 June 2011
-------------------------------------------------------
Current dividend
objective:
Pence per share 1.78 2.13 2.50
-------------------------------------------------------
Percentage yield on net 7.4% 7.4% 7.4%
asset value
-------------------------------------------------------
Net asset value total return to shareholders since launch:
+------------------------------------------------------------------------------+
| 30 June 2011|
| (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 during the year ended 30 June 2011 2.50|
| ------------------+
|Total dividends paid to 30 June 2011 39.23|
| |
|Net asset value as at 30 June 2011 33.65|
| ------------------+
|Total net asset value return as at 30 June 2011 72.88|
+------------------------------------------------------------------------------+
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 2011 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 2012, of 1.25 pence per Crown Place VCT PLC share on
30 November 2011 to shareholders on the register as at 4 November 2011.
Chairman's statement
Introduction
I have pleasure in presenting the results for the year ended 30 June 2011. The
Group achieved a positive total return of 2.15 pence per share, broadly similar
to the return for 2009/10. The Company maintained its regular dividend of 2.50
pence per share and continues to benefit from strong cash balances for future
investment and dividend payments.
Results and dividends
As at 30 June 2011, net asset value was GBP25.7 million or 33.65 pence per share
compared to GBP24.4 million or 33.94 pence per share at 30 June 2010. The revenue
return before taxation was GBP812,000 compared to GBP489,000 in the previous year.
During the year to 30 June 2011, the Company paid a dividend of 2.50 pence per
share. The first dividend for the current financial year of 1.25 pence per
share will be paid on 30 November 2011 to shareholders on the register as at 4
November 2011.
Investment performance and progress
The key events during the year were the successful sales of Geronimo Inns,
Dexela and Driver Hire. Geronimo Inns, which owns four freehold London pubs,
realised proceeds of GBP1.63 million for the VCT and an income and capital return
of 25 per cent.. Dexela, which provides medical imaging technology, was sold to
Perkin Elmer of the US in June, and the Company will make between two and three
times a return on its investment. In addition, the non-qualifying "legacy"
investment in Driver Hire was sold for proceeds of just under GBP500,000; together
these three investments resulted in an uplift in investment proceeds of GBP824,000
over the valuation at the previous year end. Meanwhile, ELE Advanced
Technologies paid a dividend of GBP286,000 to the VCT, on the back of a strong
trading performance, which in turn led to the increase in the revenue return
detailed under "Results and dividends" above.
Weaker than expected performance was seen at Xceleron and Prime Care, where the
latter has been affected by public spending cuts. Charnwood saw a reduced
valuation of some of its pubs due to lower customer spending. Chichester
Holdings has been affected by a change to the management team. Dysis has been
impacted by delays in US registration that has now been resolved and the
relaunch of a new product design.The share price of Avanti Communications Plc, a
satellite operator and one of the Company's few remaining AIM quoted
investments, has declined due to concerns over the company's ability to achieve
its commercial objectives in a fast changing market. Avanti operates in a
growing market and following the launch of its first satellite in March 2011,
has valuable assets.
These movements have been balanced by unrealised valuations uplifts in ELE
Advanced Technologies Limited and Mirada Medical Limited.
During the year, your Company invested, or committed to invest, a total of GBP5.1
million in eight new investee companies and thirteen existing investee
companies. The two largest of these new investments were a drawdown of up to
GBP1.56 million by Radnor House School, a new private independent day school on a
freehold site on the Thames at Twickenham and second, GBP1.0 million into the
Oakland Care Centre, a freehold care home in Chingford, North London. Other
valuation movements within the investment portfolio are discussed further in the
Manager's report.
Continuation as a venture capital trust
Under the terms of your Company's Articles of Association, at the 2011 Annual
General Meeting and every five years thereafter, members have the opportunity to
confirm that they wish the Company to continue as a venture capital trust.
Otherwise the Board is required to make proposals for the reorganisation,
reconstruction or the orderly liquidation and winding up of the Company and
present these to the members at a general meeting.
Since Albion Ventures LLP (through its predecessor Close Venture Management
Limited) was appointed investment manager of the Company in 2005, the
performance of the Company has been turned around. This has been achieved
through a policy of disposal of underperforming investments and a re-positioning
of the portfolio in line with the strategy approved by shareholders at the time
of the merger in 2006. This strategy concentrates on two complimentary
investment areas. The first are lower risk, often asset-backed investments that
can provide a strong income stream together with an element of capital
protection. These investments have been balanced by a smaller proportion of
investments in higher risk companies with greater growth prospects. In addition,
the total expense ratio has been sharply cut from 4.9 per cent. in 2006 to 2.6
per cent. in 2011 (both excluding non-recurring expenses).
As a result of these measures, the Company has been able to pay a regular annual
dividend income of 2.50 pence per share for the past four years. Based on the
share price as at 30 June 2011, this is a tax free dividend yield of 8.3 per
cent. on the share price (7.4 per cent. based on the net asset value per share
as at 30 June 2011), equivalent to 16.6 per cent. when grossed up for tax at 50
per cent.. Since the appointment of the Manager in April 2005, the Company has
distributed total tax free dividends of 14.30 pence per share and the total
return to shareholders has been positive, despite the difficult economic
conditions of the past three years. This places its performance in the second
quartile of generalist VCTs over that period, as measured by the Association of
Investment Companies.
Those shareholders who have been using their investment in the VCT to defer a
capital gain should note that, on a return of capital, that gain would become
chargeable at the prevailing rate of capital gains tax.
Your Board believes that VCTs have the potential to be highly effective long-
term savings vehicles with strong tax-free dividend streams. Consequently in
view of its track record since the appointment of the Manager and the strong
tax-free dividend stream to shareholders, your Board recommends that
shareholders vote in favour of the Company to continuing as a venture capital
trust for a further five years, as they intend to in respect of their own
shares.
Risks and uncertainties
We remain cautious over the short and medium term prospects of the UK and global
economies in view of the currency and debt constraints which are increasingly
becoming apparent. Nevertheless, we believe that many of the sectors in which
we operate are resilient, and that the investee companies which we support, are
positioned to grow despite these broader uncertainties. In addition, it remains
our general policy that investee companies have no external bank borrowings.
Therefore, as the investment portfolio continues to mature, the prospects on
the whole look positive.
Other risks and uncertainties are detailed in note 22 to this announcement.
Details of post balance sheet events and related party transactions are set out
in notes 19 and 21 to this announcement.
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 for shareholders. It
is the Board's intention for such buy-backs to be in the region of a 10-15per
cent. discount to net asset value, so far as market conditions and liquidity
permit.
Albion VCTs Linked Top Up Offers
During the year, a total of GBP1.67 million was raised by your Company as part of
the GBP12 million Albion VCTs Linked Top Up Offer carried out by seven of the VCTs
managed by Albion Ventures. A further top-up offer is planned for later on this
year and details are expected to be sent to shareholders in November.
Recovery of VAT
On 24th July 2008, HMRC issued a Business Briefing which permitted the recovery
of historic VAT that had been charged on management fees and which made these
fees exempt from VAT with effect from 1 October 2008. As disclosed in the report
for the year to June 2009, your Board has already received a refund of VAT, and
interest thereon, from Albion Ventures LLP in respect of the period October
2005 to October 2008, and no VAT has been charged on management fees with effect
from 1st October 2008. Any moneys recoverable for earlier periods are due from
the former manager, Murray Johnstone Limited, and no account has been taken in
respect of these. Your Board continues in its endeavours with the former manager
to recover VAT where possible for the period prior to October 2005.
Board changes
In accordance with best practice which requires that 'a Board should ensure
planned and progressive refreshing of the Board' your Board initiated a
programme of changes in 2010. Geoffrey Vero and Sir Andrew Cubie retired
as Directors and Karen Brade was appointed. As a continuing part of this process
Vikram Lall has indicated to the Board that he wishes to retire as a Director of
the Company as soon as a suitable replacement is appointed.
Vikram became a Director of Crown Place VCT PLC in January 2006, following the
merger with Murray VCT PLC and Murray VCT 2 PLC. He had been a director of
Murray VCT and Murray VCT 2 since their incorporation.
The Board wishes to thank Vikram for his significant input and valuable
contribution to the Board and to the Company and its predecessor companies over
many years.
The Board will shortly be starting a process to appoint a new Director
Outlook and prospects
As already mentioned, the outlook for the UK and the global economies remains
uncertain. Nevertheless, a number of our companies operate in sectors that
should prove to be more resilient over the medium term in the event of continued
economic upheaval. These include the healthcare and environmental sectors,
which are an increasing area for investment by your VCT. In addition, the great
majority of investments are structured to be cash generative and to provide
further support for your Company's dividend policy.
Patrick Crosthwaite
Chairman
7 October 2011
Manager's report
Investment portfolio
An analysis by sector of Crown Place VCT's investment portfolio as at 30 June
2011 is shown below. This demonstrates continuing concentration on achieving an
increasingly balanced portfolio, with a reduction in investments in the pub
sector matched by an increase in both healthcare and the environmental sectors.
In addition, over 62 per cent. of the portfolio by value is in asset- backed
investments. As at 30 June 2011, the portfolio comprised investments in 55
quoted and unquoted companies.
Please see the end of this announcement for the PDF of the sector split of the
portfolio by valuation as at 30 June 2011.
Source: Albion Ventures LLP
New investments
The Company invested and committed a total of GBP5.1 million in new investee
companies during the year. The two largest of these were in a new independent
school and in a specialist care home. In addition, some GBP568,000 was invested
in four renewable energy companies, including a new anaerobic digestion power
station powered by methane from waste food, based in Perth, Scotland. We also
invested GBP1,100,000 in thirteen existing investee companies to support growth.
Portfolio review
In addition to the investment realisations of our holdings in Geronimo Inns,
Dexela and Driver Hire, strong performance was seen in ELE Advanced
Technologies, where further improvement was seen in the company's engineering
services in the UK and Slovakia, while Mirada Medical also saw continued growth.
Against this, slower than hoped for progress at the newly-opened Stanwell Hotel
outside Heathrow resulted in a reduction in its third party professional
valuation, and weaker than expected performance was seen at Xceleron and Prime
Care, where the latter has been affected by public spending cuts. Charnwood saw
a reduced valuation of some of its pubs due to lower customer spending and
Chichester Holdings has been affected by a change to the management team. Dysis
has been impacted by delays in US registration that have now been resolved with
the relaunch of a new product design.
The pipeline for new investments remains strong, with continued concentration on
building up our presence in the healthcare and environmental sectors. We are
also concentrating on improving the cash generation of our investments in order
to further support the Company's dividend target.
Albion Ventures LLP
Manager
7 October 2011
Responsibility Statement
In preparing these financial statements for the year to 30 June 2011, the
Directors of the Company, being Patrick Crosthwaite, Rachel Beagles, Karen Brade
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 2011 for the
Group has been prepared in accordance with International Financial Reporting
Standards, and 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 Group and the Company for the year
ended 30 June 2011 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 2011 and description of principal risks and uncertainties
that the Group and 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
Group and the Company's financial statements" is contained within the full
audited Annual Report and Financial Statements.
By order of the Board
Patrick Crosthwaite
Chairman
7 October 2011
Consolidated statement of comprehensive income
+-----------------------------+----+---------------------+---------------------+
| | | Year ended | Year ended |
+-----------------------------+----+---------------------+---------------------+
| | | 30 June 2011 | 30 June 2010 |
+-----------------------------+----+-------+-------+-----+-------+-------+-----+
| | |Revenue|Capital|Total|Revenue|Capital|Total|
+-----------------------------+----+-------+-------+-----+-------+-------+-----+
| |Note| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000| GBP'000|
+-----------------------------+----+-------+-------+-----+-------+-------+-----+
| | | | | | | | |
|Profits on investments |2 | -| 1,089|1,089| -| 1,421|1,421|
| | | | | | | | |
|Investment income and deposit| | | | | | | |
|interest |3 | 1,157| -|1,157| 903| -| 903|
| | | | | | | | |
|Investment management fees |4 | (109)| (327)|(436)| (108)| (324)|(432)|
| | | | | | | | |
|Other expenses |5 | (236)| -|(236)| (306)| -|(306)|
| | +-------+-------+-----+-------+-------+-----+
| | | | | | | | |
|Profit before taxation | | 812| 762|1,574| 489| 1,097|1,586|
| | | | | | | | |
|Taxation |6 | -| -| -| -| -| -|
| | +-------+-------+-----+-------+-------+-----+
|Profit and total | | | | | | | |
|comprehensive income for the | | | | | | | |
|year | | 812| 762|1,574| 489| 1,097|1,586|
| | +-------+-------+-----+-------+-------+-----+
|Basic and diluted return per | | | | | | | |
|Ordinary share (pence)* |8 | 1.11| 1.04| 2.15| 0.68| 1.52| 2.20|
+-----------------------------+----+-------+-------+-----+-------+-------+-----+
* excluding treasury shares
The accompanying notes form an integral part of these Financial Statements.
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 2011|30 June 2010|
| | | |
| Note| GBP'000| GBP'000|
+----------------------------------------------------+------------+------------+
|Non-current assets | | |
| | | |
|Investments 9| 21,172| 19,092|
| | | |
| | | |
| | | |
|Current assets | | |
| | | |
|Trade and other receivables less than one year 12| 102| 68|
| | | |
|Cash and cash equivalents 16| 4,550| 5,513|
| +------------+------------+
| | 4,652| 5,581|
| +------------+------------+
| | | |
| | | |
|Total assets | 25,824| 24,673|
| | | |
|Current liabilities | | |
| | | |
|Trade and other payables 13| (243)| (260)|
| | | |
| | | |
| | | |
|Non-current assets | | |
| | | |
|Trade and other receivables greater than one | | |
|year 12| 80| -|
| | | |
| | | |
| +------------+------------+
|Net assets | 25,661| 24,413|
| +------------+------------+
| | | |
| | | |
|Equity attributable to equityholders | | |
| | | |
|Ordinary share capital 14| 8,350| 7,918|
| | | |
|Share premium | 1,259| 32|
| | | |
|Capital redemption reserve | 1,058| 972|
| | | |
|Unrealised capital reserve | (4,712)| (5,966)|
| | | |
|Special reserve | -| 46,318|
| | | |
|Treasury shares reserve | (2,849)| (2,849)|
| | | |
|Realised capital reserve | 2,460| (23,165)|
| | | |
|Revenue reserve | 20,095| 1,153|
| +------------+------------+
|Total equity shareholders' funds | 25,661| 24,413|
| +------------+------------+
| | | |
| | | |
|Basic and diluted net asset value per share | | |
|(pence)* 15| 33.65| 33.94|
+----------------------------------------------------+------------+------------+
* excluding treasury shares
The accompanying notes form an integral part of these Financial Statements.
These Financial Statements were approved by the Board of Directors, and
authorised for issue on 7 October 2011 and were signed on its behalf by
Patrick Crosthwaite
Chairman
Company number: 03495287
Company balance sheet
+----------------------------------------------------+------------+------------+
| | | |
| | | |
| |30 June 2011|30 June 2010|
| | | |
| Note| GBP'000| GBP'000|
+----------------------------------------------------+------------+------------+
|Fixed assets | | |
| | | |
|Fixed asset investments 9| 21,172| 19,092|
| | | |
|Investment in subsidiary undertakings 11| 16,444| 15,013|
| +------------+------------+
| | 37,616| 34,105|
| | | |
| | | |
| | | |
|Current Assets | | |
| | | |
|Trade and other debtors less than one year 12| 102| 68|
| | | |
|Cash and cash equivalents 16| 4,257| 5,400|
| +------------+------------+
| | 4,359| 5,468|
| +------------+------------+
| | | |
| | | |
|Total assets | 41,975| 39,573|
| | | |
| | | |
| | | |
|Creditors: amounts falling due within one year 13| (16,394)| (15,160)|
| | | |
| | | |
| | | |
|Non-current assets | | |
| | | |
|Trade and other debtors greater than one year 12| 80| -|
| | | |
| | | |
| +------------+------------+
|Net assets | 25,661| 24,413|
| +------------+------------+
| | | |
| | | |
|Capital and reserves | | |
| | | |
|Ordinary share capital 14| 8,350| 7,918|
| | | |
|Share premium | 1,259| 32|
| | | |
|Capital redemption reserve | 1,058| 972|
| | | |
|Unrealised capital reserve | (3,325)| (6,011)|
| | | |
|Special reserve | -| 46,318|
| | | |
|Treasury shares reserve | (2,849)| (2,849)|
| | | |
|Realised capital reserve | 2,407| (23,218)|
| | | |
|Revenue reserve | 18,761| 1,251|
| +------------+------------+
|Shareholders' funds | 25,661| 24,413|
| +------------+------------+
| | | |
| | | |
|Basic and diluted net asset value per share | | |
|(pence)* 15| 33.65| 33.94|
+----------------------------------------------------+------------+------------+
* excluding treasury shares
The Company balance sheet has been prepared in accordance with UK GAAP.
The accompanying notes form an integral part of these Financial Statements.
These Financial Statements were approved by the Board of Directors, and
authorised for issue on 7 October 2011 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 | | | | | | | | | |
|2010 | 7,918| 32| 972| (5,966)| 46,318| (2,849)|(23,165)| 1,153| 24,413|
| | | | | | | | | | |
|Profit and | | | | | | | | | |
|total | | | | | | | | | |
|comprehensive| | | | | | | | | |
|income for | | | | | | | | | |
|the year | -| -| -| 218| -| -| 544| 812| 1,574|
| | | | | | | | | | |
|Transfer of | | | | | | | | | |
|previously | | | | | | | | | |
|unrealised | | | | | | | | | |
|losses on | | | | | | | | | |
|sale of | | | | | | | | | |
|investments | -| -| -| 1,036| -| -| (1,036)| -| -|
| | | | | | | | | | |
|Dividends | | | | | | | | | |
|paid in year | -| -| -| | -| -| -| (1,819)|(1,819)|
| | | | | | | | | | |
|Purchase of | | | | | | | | | |
|own shares | | | | | | | | | |
|for | | | | | | | | | |
|cancellation | | | | | | | | | |
|(including | | | | | | | | | |
|costs) | (86)| -| 86| -| (252)| -| --| -| (252)|
| | | | | | | | | | |
|Issue of | | | | | | | | | |
|equity (net | | | | | | | | | |
|of costs) | 518| 1,227| -| -| -| -| -| -| 1,745|
| | | | | | | | | | |
|Transfer from| | | | | | | | | |
|special | | | | | | | | | |
|reserve to | | | | | | | | | |
|revenue | | | | | | | | | |
|reserve | -| -| -| -|(19,949)| -| -| 19,949| -|
| | | | | | | | | | |
|Transfer from| | | | | | | | | |
|special | | | | | | | | | |
|reserve to | | | | | | | | | |
|realised | | | | | | | | | |
|capital | | | | | | | | | |
|reserve | -| -| -| -|(26,117)| -| 26,117| -| -|
+-------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+
|As at 30 June| | | | | | | | | |
|2011 | 8,350| 1,259| 1,058| (4,712)| -| (2,849)| 2,460| 20,095| 25,661|
+-------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+
+-------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+
| |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|
| | | | | | | | | | |
|Profit and | | | | | | | | | |
|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|
+-------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+
* Included within these reserves is an amount of GBP14,994,000 (2010: GBP15,491,000)
which is considered distributable. The special reserve has been treated as
distributable in determining the amounts available for distribution.
The special reserve allows the Company, amongst other things, to facilitate the
payment of dividends earlier than would otherwise have been possible as
transfers can be made from this reserve to the realised capital reserve to
offset gross losses on disposal of investments and to the revenue reserve.
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| | | | | | | | | |
|2010 | 7,918| 32| 972| (6,011)| 46,318| (2,849)|(23,218)| 1,251| 24,413|
| | | | | | | | | | |
|Return for | | | | | | | | | |
|the year | -| -| -| 1,650| -| -| 544| (620)| 1,574|
| | | | | | | | | | |
|Transfer of | | | | | | | | | |
|previously | | | | | | | | | |
|unrealised | | | | | | | | | |
|losses on | | | | | | | | | |
|sale of | | | | | | | | | |
|investments | -| -| -| 1,036| -| -| (1,036)| -| -|
| | | | | | | | | | |
|Dividends | | | | | | | | | |
|paid in year| -| -| -| -| -| -| -| (1,819)|(1,819)|
| | | | | | | | | | |
|Purchase of | | | | | | | | | |
|own shares | | | | | | | | | |
|for | | | | | | | | | |
|cancellation| | | | | | | | | |
|(including | | | | | | | | | |
|costs) | (86)| -| 86| -| (252)| -| -| -| (252)|
| | | | | | | | | | |
|Issue of | | | | | | | | | |
|equity (net | | | | | | | | | |
|of costs) | 518| 1,227| -| -| -| -| -| -| 1,745|
| | | | | | | | | | |
|Transfer | | | | | | | | | |
|from special| | | | | | | | | |
|reserve to | | | | | | | | | |
|revenue | | | | | | | | | |
|reserve | -| -| -| -|(19,949)| -| -| 19,949| -|
| | | | | | | | | | |
|Transfer | | | | | | | | | |
|from special| | | | | | | | | |
|reserve to | | | | | | | | | |
|realised | | | | | | | | | |
|capital | | | | | | | | | |
|reserve | -| -| -| -|(26,117)| -| 26,117| -| -|
+------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+
|As at 30 | | | | | | | | | |
|June 2011 | 8,350| 1,259| 1,058| (3,325)| -| (2,849)| 2,407| 18,761| 25,661|
+------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+
+------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+
| |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|
+------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+
* Included within these reserves is an amount of GBP14,994,000 (2010: GBP15,491,000)
which is considered distributable. The special reserve has been treated as
distributable in determining the amounts available for distribution.
The special reserve allows the Company, amongst other things, to facilitate the
payment of dividends earlier than would otherwise have been possible as
transfers can be made from this reserve to the realised capital reserve to
offset gross losses on disposal of investments and to the revenue reserve.
Consolidated cashflow statement
+-------------------------------------------------------+-----------+----------+
| | Year ended|Year ended|
| | 30 June| 30 June|
| | 2011| 2010|
| Note| GBP'000| GBP'000|
+-------------------------------------------------------+-----------+----------+
|Operating activities | | |
| | | |
|Investment income received | 945| 773|
| | | |
|Deposit interest received | 56| 86|
| | | |
|Dividend income received | 287| -|
| | | |
|Administration fees paid | -| (50)|
| | | |
|Investment management fees paid | (431)| (522)|
| | | |
|Other cash payments | (256)| (268)|
| +-----------+----------+
|Cash generated from operations | 601| 19|
| | | |
| | | |
| | | |
|Tax recovered | -| -|
| +-----------+----------+
|Net cash flows from operating activities 17| 601| 19|
| +-----------+----------+
| | | |
| | | |
|Cash flows from investing activities | | |
| | | |
|Purchase of non-current asset investments | (4,126)| (3,095)|
| | | |
|Disposal of non-current asset investments | 2,898| 1,264|
| | | |
|Purchase of current asset investments | -| (2,217)|
| | | |
|Disposal of current asset investments | -| 5,017|
| +-----------+----------+
|Net cash flows from investing activities | (1,228)| 969|
| +-----------+----------+
| | | |
| | | |
|Cash flows from financing activities | | |
| | | |
|Issue of share capital (net of issue costs) | 1,671| -|
| | | |
|Cost of issue of share capital | -| (16)|
| | | |
|Equity dividends paid (net of costs of dividend | | |
|reinvestment scheme) | (1,743)| (1,739)|
| | | |
|Purchase of Ordinary shares for cancellation | (264)| (192)|
| +-----------+----------+
|Net cash flows used in financing activities | (336)| (1,947)|
| +-----------+----------+
| | | |
| | | |
|Decrease in cash and cash equivalents | (963)| (959)|
| | | |
|Cash and cash equivalents at the start of the year | 5,513| 6,472|
| | | |
| | | |
| +-----------+----------+
|Cash and cash equivalents at the end of the year 16| 4,550| 5,513|
+-------------------------------------------------------+-----------+----------+
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 UK GAAP relate to the Company Financial
Statements.
Basis of accounting
The Financial Statements have been prepared in accordance with International
Financial Reporting Standards ('IFRS') adopted for use in the European Union
(and therefore comply with Article 4 of the EU IAS regulation), in the case of
the Group, and in accordance with UK GAAP 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 and Venture
Capital Trusts" ('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 UK GAAP.
These Financial Statements are presented in Sterling to the nearest thousand.
Accounting policies have been applied consistently in current and prior periods.
At the balance sheet date, the following International Accounting Standards and
interpretations were in issue but not yet effective:
* IFRS 7 Financial instruments: Disclosure (effective for annual periods
beginning on or after 1 July 2011)
* 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)
* IFRS 10 Consolidated Financial Statements (effective for annual periods
beginning on or after 1 January 2013)
* IFRS 11 Joint Arrangements (effective for annual periods beginning on or
after 1 January 2013)
* IFRS 12 Disclosure of Interest in Other Entities (effective for annual
periods beginning on or after 1 January 2013)
* IFRS 13 Fair Value Measurement (effective for annual periods beginning on or
after 1 January 2013)
* IFRIC 14 Prepayments of a minimum funding requirement (effective for annual
periods beginning on or after 1 January 2011)
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 material impact on the financial statements although some changes may
be required to the format of the Financial Statements and disclosures.
Basis of consolidation
The Group consolidated Financial Statements incorporate the Financial Statements
of the Company for the year ended 30 June 2011 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 year dealt with in the accounts of the Group is GBP1,574,000
(2010: GBP1,586,000).
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 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 asset investments
Quoted and unquoted equity investments, debt issued at a discount, and
convertible bonds
In accordance with IAS 39 'Financial Instruments: Recognition and Measurement',
and FRS 26 'Financial Instruments: Recognition and Measurement', quoted and
unquoted equity, debt issued at a discount and convertible bonds 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).
Desk top reviews are carried out by independent RICS qualified surveyors by
updating previously prepared full valuations for current trading and market
indices. Full valuations are prepared by similarly qualified surveyors but in
full compliance with the RICS Red Book.
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 and unquoted equity derived instruments
Warrants and unquoted equity derived instruments are only valued if their
exercise or contractual terms would allow them to be exercised 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 (excluding debt issued at a discount and convertible bonds)
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.
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.
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.
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 the maintenance or 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 "Income taxes"
and FRS 16 "Current tax". Taxation associated with capital expenses is applied
in accordance with the SORP. Deferred taxation is provided in full on temporary
differences and timing differences, 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 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
Share premium reserve
This reserve accounts for the difference between the price paid for the
Company's shares and the nominal value of those shares, less issue costs and
transfers to the special reserve.
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 on investments
Year ended Year ended
30 June 30 June
2011 2010
GBP'000 GBP'000
=-------------------------------------------------------------------------------
Unrealised (losses)/gains on non-current asset investments
held at fair value through profit or loss account (10) 941
Unrealised reversal of impairments/(impairments) on non-
current asset investments held at amortised cost 228 (180)
----------------------
Unrealised gains on non-current asset investments 218 761
----------------------
Realised gains on non-current asset investments held at
fair value through profit or loss account 587 552
Realised gains on non-current asset investments held at
amortised cost 284 25
Realised gains on current asset investments held at fair
value through profit or loss account - 83
----------------------
Realised gains on current and non-current asset
investments 871 660
----------------------
1,089 1,421
----------------------
Investments measured at amortised cost are unquoted loan stock investments as
described in note 9.
3. Investment income and deposit interest
Year ended Year ended
30 June 30 June
2011 2010
GBP'000 GBP'000
=-------------------------------------------------------------------------------
Income recognised on investments held at fair value
through profit or loss
UK dividend income 287 4
Interest on convertible bonds and debt issued at a
discount 18 -
----------------------
305 4
----------------------
Income recognised on investments held at amortised cost
Return on loan stock investments 795 811
Bank deposit interest 57 88
----------------------
852 899
----------------------
----------------------
1,157 903
----------------------
Interest income earned on impaired investments at 30 June 2011 amounted to
GBP47,000 (2010: GBP315,000). These investments are all held at amortised cost.
4. Investment management fees
Year ended 30 June Year ended 30 June
2011 2010
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=--------------------------------------------------------------------
Investment management fee 109 327 436 108 324 432
--------------------------------------------
Further details of the management agreement under which the investment
management fee is paid are given in the Directors' report and enhanced business
review on page 21 in the full Annual Report and Financial Statements.
5. Profit before taxation is stated after charging:
Year ended Year ended
30 June 30 June
2011 2010
GBP'000 GBP'000
=-------------------------------------------------------------------------------
Directors' remuneration 75 83
National insurance on Directors' remuneration 7 7
Auditor's remuneration:
- audit of financial statements (inclusive of VAT) 27 26
- the auditing of accounts of associates of the Company
pursuant to legislation (inclusive of VAT) 6 6
Other expenses 121 184
----------------------
236 306
----------------------
Further information regarding Directors' remuneration can be found in the
Directors' remuneration report on page 29 in the full Annual Report and
Financial Statements.
6. Taxation
Year ended 30 June Year ended 30 June
2011 2010
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. to 31 March
2011 and 26 per cent. from 1 April 2011. (2010: 28 per cent.). The differences
are explained below:
Year ended Year ended
30 June 30 June
2011 2010
GBP'000 GBP'000
=-------------------------------------------------------------------------------
Profit on ordinary activities before taxation 1,574 1,586
----------------------
Profit on ordinary activities multiplied by the standard (428) (444)
rate of corporation tax (28 per cent. to 31 March
2011: 26 per cent. from 1 April 2011.)
Effect of capital gains not subject to taxation 300 398
Effect of income not subject to taxation 79 1
Utilisation of tax losses 49 45
----------------------
- -
----------------------
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
GBP2,216,000 (2010: GBP1,931,000) 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
GBP2,415,000 (2010: GBP3,117,000) 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
2011 2010
GBP'000 ÂGBP'000
=-------------------------------------------------------------------------------
First dividend paid on 6
November 2009 (1.25 pence
per share) - 905
Second dividend paid on 9
April 2010 (1.25 pence per
share) - 906
First dividend paid on 30
November 2010 (1.25 pence
per share) 899 -
Second dividend paid on
31 March 2011 (1.25 pence
per share) 920 -
------------------------ -----------------------
1,819 1,811
------------------------ -----------------------
In addition to the dividends paid above, the Board has declared a first dividend
for the year ending 30 June 2012, of 1.25 pence per Crown Place VCT PLC share
(to be paid out of revenue profits). This will be paid on 30 November 2011 to
shareholders on the register as at 4 November 2011. The total dividend will be
approximately GBP953,000.
8. Basic and diluted return per share
Year ended 30 June Year ended 30 June
2011 2010
Revenue Capital Total Revenue Capital Total
=-------------------------------------------------------------------------------
Return attributable to equity shares
( GBP'000) 812 762 1,574 489 1,097 1,586
Weighted average shares (excluding
treasury shares) 73,413,178 72,321,482
Return attributable per Ordinary
share (pence) (basic and diluted) 1.11 1.04 2.15 0.68 1.52 2.20
The return per share has been calculated excluding treasury shares of 7,260,410
(2010: 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
2011 2010
GBP'000 GBP'000
=---------------------------------------------------------------------
Group and Company
Qualifying unquoted equity and preference shares 7,141 6,900
Qualifying quoted equity 763 971
Qualifying equity derived instruments - 98
Discounted debt and convertible loan stock 839 -
Qualifying unquoted loan stock 12,340 10,862
Non-qualifying quoted equity 8 10
Non-qualifying unquoted loan stock 81 251
--------------------
21,172 19,092
--------------------
=-------------------------------------------------------------------------------
Opening valuation as at 1 July 2010 19,092
Purchases at cost 4,916
Disposal proceeds (3,758)
Realised gains 871
Movement in loan stock accrued income (167)
Unrealised gains 218
--------
Closing valuation as at 30 June 2011 21,172
--------
Movement in loan stock accrued income
Opening movement in loan stock accrued income 216
Movement in loan stock accrued income (167)
--------
Closing movement in loan stock accrued income 49
--------
Movement in unrealised losses
Opening accumulated unrealised losses (6,004)
Movement in unrealised gains 218
Transfer of previously unrealised losses to realised reserves on 1,036
disposal
--------
Closing accumulated unrealised losses (4,751)
--------
Historic cost basis
Opening book cost 24,880
Purchases at cost 4,916
Sales at cost (3,922)
--------
Closing book cost 25,874
--------
=-------------------------------------------------------------------------------
Opening valuation as at 1 July 2009 15,878
Purchases at cost 3,236
Disposal proceeds (1,410)
Realised gains 577
Movement in loan stock accrued income 50
Unrealised gains 761
--------
Closing valuation as at 30 June 2010 19,092
--------
Movement in loan stock accrued income
Opening movement in loan stock accrued income 128
Interest restructuring 38
Movement in loan stock accrued income 50
--------
Closing movement in loan stock accrued income 216
--------
Movement in unrealised losses
Opening accumulated unrealised losses (7,616)
Interest restructuring (38)
Movement in unrealised gains 761
Transfer of previously unrealised losses to realised reserves on 889
disposal
--------
Closing accumulated unrealised losses (6,004)
--------
Historic cost basis
Opening book cost 23,367
Purchases at cost 3,236
Sales at cost (1,723)
--------
Closing book cost 24,880
--------
Non-current asset investments held at fair value through profit or loss total
GBP8,751,000 (2010: GBP7,979,000) and include convertible bonds and debt with a
carrying value of GBP431,000 at 30 June 2011 which have been re-presented from the
amortised cost to fair value category in the accounts having previously been
designated at fair value through profit or loss on initial recognition.
Investments held at amortised cost total GBP12,421,000 (2010: GBP11,113,000).
Loan stocks (including those carried at fair value through profit and loss) with
a fixed interest rate total GBP13,260,000 (2010: GBP10,953,000). Loan stocks with a
floating rate of interest total GBPnil (2010: GBP160,000).
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.
Additions and disposal proceeds included in the cash flow statement differ from
the amounts shown in the note above, due to deferred consideration and
settlement creditors and the restructuring of investments.
A schedule of material disposals, repayments and permanent diminution in value
which took place in the year is shown on page 14 in the full Annual Report and
Financial Statements.
Unquoted investments held at fair value through profit or loss are valued in
accordance with the IPEVCV guidelines as follows:
30 June 30 June
2011 2010
Investment valuation methodology GBP'000 GBP'000
=----------------------------------------------------------------------------
Cost (reviewed for impairment) 1,341 845
Net asset value supported by third party or desktop valuation 1,127 1,722
Recent investment price 697 1,643
Earnings multiple 3,427 2,788
Revenue Multiple 1,388 -
----------------
7,980 6,998
----------------
The unquoted equity instruments had the following movements between investment
methodologies between 30 June 2010 and 30 June 2011:
Value as at
Change in investment valuation 30 June 2011
methodology (2010 to 2011) GBP'000 Explanatory note
=-------------------------------------------------------------------------------
Recent investment price to 1,026 Industry benchmarks available
revenue multiple
Cost (reviewed for impairment) to 159 More recent information available
recent investment price
Cost (reviewed for impairment) to 84 Industry benchmarks available
earnings multiple
Cost (reviewed for impairment) to 237 Industry benchmarks available
revenue multiple
Earnings multiple to revenue 99 Temporary trading losses
multiple
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 2011.
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, preference shares, convertible loan stock and debt issued at a
discount are all valued according to Level 3 valuation methods.
The unquoted investments held at fair value through profit or loss (level 3) had
the following movements in the year to 30 June 2011:
30 June 2011 30 June 2010
GBP'000 GBP'000
=---------------------------------------------------------------------
Opening balance 6,998 4,924
Additions 1,298 1,325
Disposal proceeds (1,381) (343)
Realised gains 545 356
Debt/equity swap - 78
Representation of convertible debt 338 -
Unrealised gains on equity investments 182 658
------------------------------
Closing balance 7,980 6,998
------------------------------
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 39 per cent. of
the unquoted friar value investments (by valuation) is 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 remainder of the portfolio would lead to a significant change
in the fair value of the portfolio. The impact of these changes could result in
an increase in the valuation of the equity investments by GBP760,000 or a decrease
in the valuation of equity investments by GBP790,000.
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 of a
portfolio company. 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 2011 as
described below:
Company Country of Principal activity % class and % total
incorporation share type voting
rights
=-------------------------------------------------------------------------------
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 Limited manufacturer Ordinary
Tuscan Energy Great Britain In administration 42.5% C 1.5%
Group Limited* Ordinary
Uctal Limited Great Britain TV production 56.7% B 24.2%
(formerly Unique company Ordinary/A
Communications Preference and
Limited) B Preference
* Carried at nil as at 30 June 2011.
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 2011
CP1 VCT PLC CP2 VCT PLC Total
GBP'000 GBP'000 GBP'000
=-----------------------------------------------------------------------
Carrying value as at 1 July 2010 6,572 8,441 15,013
Movement in subsidiary net assets 650 781 1,431
-------------------------------------
Carrying value as at 30 June 2011 7,222 9,222 16,444
-------------------------------------
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)
-------------------------------------
Carrying value as at 30 June 2010 6,572 8,441 15,013
-------------------------------------
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 2011
CP1 VCT PLC CP2 VCT PLC
=----------------------------------------------------------------------------
Nominal value of shares held GBP6,382,746 GBP8,219,350
Percentage of authorised share capital in issue 57.8% 59.8%
Percentage of total voting rights held 100% 100%
30 June 2010
CP1 VCT PLC CP2 VCT PLC
=----------------------------------------------------------------------------
Nominal value of shares held GBP6,382,746 GBP8,219,350
Percentage of authorised share capital in issue 57.8% 59.8%
Percentage of total voting rights held 100% 100%
12. Trade and other receivables/debtors:
30 June 2011 30 June 2010
Group Company Group Company
GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Trade and other receivables/debtors less than one
year 102 102 68 68
Trade and other receivables/debtors greater than one
year 80 80 - -
----------------------------
182 182 68 68
----------------------------
13. Trade and other payables/creditors
30 June 2011 30 June 2010
Group Company Group Company
GBP'000 GBP'000 GBP'000 GBP'000
=---------------------------------------------------------------------------
Amounts falling due within one year:
Amounts due to subsidiary undertakings - 16,166 - 14,940
Other payables 53 53 161 161
Accruals 190 175 99 59
------------------------------------
243 16,394 260 15,160
------------------------------------
14. Called up share capital
30 June 30 June
2011 2010
GBP'000 GBP'000
=---------------------------------------------------------------------------
Authorised
140,000,000 Ordinary shares of 10p each (2010: 140,000,000) 14,000 14,000
----------------
Allotted, called up and fully paid
83,509,177 Ordinary shares of 10p each (2010: 79,177,624) 8,350 7,918
----------------
Allotted, called up and fully paid excluding treasury shares
76,248,767 Ordinary shares of 10p each (2010: 71,917,214)
The Company repurchased for cancellation 861,875 (2010: 697,446) Ordinary shares
during the year at a total cost of GBP252,000 (2010: GBP205,000) representing 1.2
per cent. of the shares in issue as at 1 July 2010. The shares purchased for
cancellation were funded from the special reserve. The total number of shares
held in treasury as at 30 June 2011 was 7,260,410 (2010: 7,260,410) representing
8.7 per cent. of the shares in issue as at 30 June 2011.
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:
Aggregate Opening mid
nominal value Issue Net market price
Number of of shares price per consideration per share on
Allotment shares GBP'000 share received allotment
date allotted pence per GBP'000 pence per
share share
30 November
2010 107,925 11 33.80 36 29.00
31 March 2011 115,328 12 33.43 38 30.00
---------------------------- ------------------
223,253 23 74
---------------------------- ------------------
Under the terms of the Albion VCTs Linked Top Up Offer (which closed on 16 May
2011), the following Ordinary shares of nominal value 10 pence were issued
during the year;
Aggregate Opening mid
nominal value Issue Net market price
Number of of shares price consideration per share on
Allotment shares GBP'000 per received allotment
date allotted share GBP'000 pence per
pence share
per
share
7 January 1,828,380 182 35.80 619 28.50
2011
22 March 2011 1,833,102 183 35.40 614 30.00
5 April 2011 1,204,732 120 35.40 404 29.00
16 May 2011 103,961 11 34.90 34 29.00
----------------------------- ------------------
4,970,175 496 1,671
----------------------------- ------------------
15. 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
2011 2010
=---------------------------------------------------------------------------
Net asset value per share attributable (pence) 33.65 33.94
--------------------
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 76,248,767 shares (2010: 71,917,214) as at 30 June 2011.
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.
16. Analysis of changes in cash during the year
30 June 2011 30 June 2010
Group Company Group Company
GBP'000 GBP'000 GBP'000 GBP'000
=--------------------------------------------------------------
Opening cash balances 5,513 5,400 6,255 6,472
Net cash flow (963) (1,143) (742) (1,072)
----------------------------------------
Closng cash balances 4,550 4,257 5,513 5,400
----------------------------------------
17. Reconciliation of revenue return on ordinary activities before taxation to
net cash flow from operating activities
Year ended Year ended
30 June 30 June
2011 2010
GBP'000 GBP'000
=-------------------------------------------------------------------------------
Revenue return before tax 812 489
Capitalised expenses (327) (324)
Decrease/(increase) in accrued amortised loan stock
interest 132 (50)
(Increase)/decrease in receivables (3) 7
(Increase) in payables (13) (103)
--------------------------
Net cash flow from operating activities 601 19
--------------------------
18. 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 GBP24,708,000 (2010: GBP23,514,000) and as
at 30 June 2011, the Group's gearing was nil (2010: nil). The Group's policy on
gearing is described in more detail on page 18 of the Directors' report and
enhanced business review within 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 within the full Annual Report and Financial
Statements.
The Group's financial instruments comprise equity and loan stock investments in
unquoted companies, equity in AIM quoted companies, cash balances, 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 11 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 GBP21,172,000 (2010:
GBP19,092,000). Non-current and current asset investments form 83 per cent. of the
net asset value as at 30 June 2011 (2010: 78 per cent.).
More details regarding the classification of non-current investments are shown
in note 9.
Investment price risk
Investment price risk is the risk that the fair value of future investment cash
flows will fluctuatedue 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 11 of the full Annual Report and
Financial Statements and in the Manager's report.
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. (2010: 10per 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 GBP2,117,200 (2010: GBP1,909,000).
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 estimated that a rise of half a percentage point in
all interest rates would have increased total return before tax for the year by
approximately GBP19,000. On the basis of the Company'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 5.6 per cent. (2010: 6.3 per cent.). The
weighted average period to maturity for the fixed rate assets is approximately
2.5 years (2010: 2.7 years).
The Group's financial assets and liabilities as at 30 June 2011, all denominated
in pounds sterling, consist of the following:
30 June 2011 30 June 2010
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
=-------------------------------------------------------------------------------
Unquoted
loan stock
(including
convertible
loan stock
and
discounted
bonds) 13,260 - - 13,260 10,953 160 - 11,113
Unquoted
equity - - 7,141 7,141 - - 6,998 6,998
Quoted
equity - - 771 771 - - 981 981
Receivables - - 182 182 - - 68 68
Payables - - (243) (243) - - (260) (260)
Cash - 4,550 - 4,550 - 5,513 - 5,513
--------------------------------------------------------------------
Net assets 13,260 4,550 7,851 25,661 10,953 5,673 7,787 24,413
--------------------------------------------------------------------
The Company's financial assets and liabilities as at 30 June 2011, all
denominated in pounds sterling, consist of the following:
30 June 2011 30 June 2010
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
=----------------------------------------------------------------------------------
Unquoted
loan stock
(including
convertible
loan stock
and
discounted
bonds) 13,260 - - 13,260 10,953 160 - 11,113
Unquoted
equity - - 23,585 23,585 - - 22,011 22,011
Quoted
equity - - 771 771 - - 981 981
Debtors - - 182 182 - - 68 68
Current
liabilities (16,166) - (228) (16,394) (14,940) - (220) (15,160)
Cash - 4,257 - 4,257 - 5,400 - 5,400
------------------------------------------------------------------------
Net assets (2,906) 4,257 24,310 25,661 (3,987) 5,560 22,840 24,413
------------------------------------------------------------------------
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 cash on deposit with banks.
The Manager evaluates credit risk on loan stock 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 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 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 2011 was limited to GBP13,260,000
(2010: GBP11,113,000) of unquoted loan stock instruments and GBP4,550,000 (2010:
GBP5,513,000) of cash deposits with banks.
As at the balance sheet date, the cash held by the Group is held with the Royal
Bank of Scotland plc, Lloyds TSB Bank Plc, Scottish Widows Bank plc and Standard
Life Cash Savings (part of Barclays Bank plc). Credit risk on 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.
The cost, impairment and carrying value of impaired loan stocks at 30 June 2011
and 30 June 2010 are as follows:
30 June 2011 30 June 2010
Cost Impairment Carrying value Cost Impairment Carrying value
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Impaired loan 3,040 (1,403) 1,637 6,875 (1,702) 5,173
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.
Liquidity risk
Liquid assets are held as cash on current account and cash on deposit or short
term money market account. 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
GBP24,708,000 (2010: GBP23,514,00) as at 30 June 2011.
The Group has no committed borrowing facilities as at 30 June 2011 (2010: nil)
and had cash balances of GBP4,550,000 (2010: GBP5,513,000) (Company GBP4,257,000;
2010: GBP5,400,000). 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
GBP243,000 (2010: GBP260,000) for the year to 30 June 2011 (Company: 30 June 2011;
GBP16,394,000; 30 June 2010: GBP15,160,000). An amount of GBP16,166,000 (2010:
GBP14,940,000) which is included within the Company's creditors, relates to
intercompany balances and is not considered to carry liquidity risk.
The carrying value of loan stock investments at 30 June 2011, is analysed by
expected maturity dates as follows:
Fully
performing loan Past due Impaired Renegotiated loan
stock loan stock* loan stock stock Total
Redemption date GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
Less than one 813 360 364
year 171 1,708
1-2 years 881 3,805 - - 4,686
2-3 years 419 705 179 316 1,619
3-5 years 3,461 439 1,098 129 5,127
More than 5 120 - -
years - 120
----------------------------------------------------------------
4,932 5,882 1,637 809 13,260
----------------------------------------------------------------
The carrying value of loan stock investments at 30 June 2010, is analysed by
expected maturity dates as follows:
Fully
performing loan Past due Impaired
stock loan stock* loan stock Renegotiated loan Total
Redemption date GBP'000 GBP'000 GBP'000 stock GBP'000 GBP'000
=-------------------------------------------------------------------------------
Less than one - 219 -
year 385 604
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 - 127 -
years - 127
----------------------------------------------------------------
4,232 1,708 5,173 - 11,113
----------------------------------------------------------------
*Of the loan stock categorised as past due, 100 per cent. (2010: 76 per cent.)
is in respect of loan stocks where interest and capital arrangements have been
temporarily changed through discussions with the Manager.
Loan stocks can be past due as a result of interest or capital not being paid in
accordance with contractual terms.
The average annual interest yield on the total cost of past due loan stocks is
6 per cent..
Loan stock with a carrying value of GBP600,000 had loan stock interest past due of
less than 12 months.
Loan stock with a carrying value of GBP4,891,000 had loan stock interest past due
greater than 12 months.
Loan stockwith a carrying value of GBP391,000 had capital past due up to 8 months.
Interest on this loan stock was received at a rate of 14.17 per cent. in
accordance with agreed contractual terms.
In view of the availability of adequate cash balances and the repayment profile
of loan stock investments, the Board considers that the Group is subject to low
liquidity risk.
Fair values of financial assets and financial liabilities
All the Group's financial assets and liabilities as at 30 June 2011 are stated
at fair value as determined by the Directors, with the exception of loans and
receivables (excluding debt and convertible loan stock) included within
investments, which are carried at amortised cost, as permitted by 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.
19. Post balance sheet events
Since 30 June 2011 the Company has completed the following material
transactions:
* Investment of GBP54,000 in Helveta Limited completed in July 2011
* Investment of GBP28,000 in Rostima Holdings Limited completed in July 2011
* Investment of GBP147,000 in Oakland Care Centre Limited completed in July and
August 2011
* Investment of GBP141,000 in Alto Prodotto Limited completed in August 2011
* Investment of GBP44,000 in The Stanwell Hotel Limited completed in August
2011
20. Contingencies, guarantees and financial commitments
There were no contingencies for, or guarantees by, the Group or Company as at
30 June 2011 (2010: nil).
As at 30 June 2011 Crown Place VCT PLC had the following financial commitments:
* GBP95,000 for Regenerco Renewable Energy Limited
* GBP570,000 to the Oakland Care Centre Limited
* GBP100,000 to the Stanwell Hotel Limited
21. 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 21 of the full Annual Report and Financial
Statements). During the year, services of a total value of GBP486,000 (2010:
GBP482,000) were purchased by the Company from Albion Ventures LLP; this includes
GBP436,000 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 GBP124,000 (2010: GBP118,000).
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.
During the year the Company raised new funds through the Albion VCTs Linked Top
Up Offer as detailed in note 14. The total cost of the issue of these shares was
5.5per cent. of the sums subscribed. Of these costs, an amount of GBP3,450 was
paid to the Manager, Albion Ventures LLP in respect of receiving agent services.
There were no sums outstanding in respect of receiving agent services at the
year end.
22. 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 reduce the capital
and income returns to shareholders, and negatively impacts on the Company'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 their 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-based 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, and is 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 advisers. 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 the Auditor, 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, when required, 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 internal audit partner of Littlejohn LLP 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 27 in 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 21 in 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 18 to the Financial
Statements.
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.
23. 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 2011 and 30 June 2010, 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 2011, 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 2011 at 12 noon.
24. 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, by
clicking on Crown Place VCT PLC', where the Report can be accessed as a PDF
document via a link under the 'Investor Centre' in the 'Financial Reports and
Circulars' section.
Investment portfolio by sector at 30 June 2011:
http://hugin.info/141806/R/1553504/478820.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
[HUG#1553504]
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