TIDMCRWN
Crown Place VCT PLC
As required by the UK Listing Authority's Disclosure and Transparency
Rule 4.2, Crown Place VCT PLC today makes public its information
relating to the Half-yearly Financial Report (which is unaudited) for
the six months to 31 December 2016. This announcement was approved by
the Board of Directors on 28 February 2017.
The full Half-yearly Financial Report (which is unaudited) for the
period to 31 December 2016, will shortly be sent to shareholders. Copies
of the full Half-yearly Financial Report will be shown via the Albion
Ventures LLP website by clicking www.albion-ventures.co.uk/funds/CRWN.
Investment objective
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
Record date for second dividend 10 March 2017
Payment of second dividend 31 March 2017
Financial year end 30 June
Financial highlights
Six months ended Six months ended Year ended
31 December 2016 31 December 2015 30 June 2016
(pence per share) (pence per share) (pence per share)
Opening net asset
value 28.94 30.97 30.97
Revenue return 0.26 0.29 0.59
Capital return/(loss) 2.59 0.25 (0.18)
Total return 2.85 0.54 0.41
Dividends paid (1.00) (1.25) (2.50)
Impact from buy-backs
and issue of share
capital 0.05 - 0.06
Closing net asset
value 30.84 30.26 28.94
Shareholder return and shareholder value
Crown Place
VCT PLC*
(pence per
share)
Shareholder return from launch to April 2005
(date that Albion Ventures was appointed investment
manager):
Total dividends paid to 6 April 2005 (i) 24.93
Decrease in net asset value (56.60)
Total shareholder return to 6 April 2005 (31.67)
Shareholder return from April 2005 to 31 December
2016:
Total dividends paid 27.80
Decrease in net asset value (12.56)
Total shareholder return from April 2005 to 31 December
2016 15.24
Shareholder value since launch:
Total dividends paid to 31 December 2016 (i) 52.73
Net asset value as at 31 December 2016 30.84
Total shareholder value as at 31 December 2016 83.57
Current dividend objective:
Pence per share (per annum) 2.00
Dividend yield on net asset value as at 31 December
2016 6.5%
Notes
(i) 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
The above financial summary is for the Company, Crown Place VCT PLC
only. Details of the financial performance of CP1 VCT PLC (previously
Murray VCT PLC) and CP2 VCT PLC (previously Murray VCT 2 PLC) which have
been merged into the Company, can be found at the end of the
announcement.
Total shareholder value since launch:
31 December 2016
(pence per share)
Total dividends paid during the period from launch
to 6 April 2005
(prior to change of manager) 24.93
Total dividends paid during:
the year ended 28 February 2006 1.00
the period ended 30 June 2007 3.30
the year ended 30 June 2008 2.50
the year ended 30 June 2009 2.50
the year ended 30 June 2010 2.50
the year ended 30 June 2011 2.50
the year ended 30 June 2012 2.50
the year ended 30 June 2013 2.50
the year ended 30 June 2014 2.50
the year ended 30 June 2015 2.50
the year ended 30 June 2016 2.50
the six months ended 31 December 2016 1.00
Total dividends paid to 31 December 2016 52.73
Net asset value as at 31 December 2016 30.84
Total shareholder value as at 31 December 2016 83.57
In addition to the dividends paid above, the Board has declared a second
dividend for the year ending 30 June 2017 of 1 penny per Crown Place VCT
PLC share, to be paid on 31 March 2017 to shareholders on the register
on 10 March 2017.
Interim management report
Results
In the six month period to 31 December 2016, the Company achieved an
encouraging total return of 2.85 pence per share (31 December 2015: 0.54
pence per share) equivalent to a return of 9.8% on opening net assets
(31 December 2015: 1.8%). Following payment of the first dividend for
the year of 1 penny per share on 30 November 2016, the net asset value
as at 31 December 2016 was 30.84 pence per share (30 June 2016: 28.94
pence per share). The total return for the period was GBP3,670,000,
compared to GBP576,000 at 31 December 2015, of which the revenue profit
was GBP333,000 and the capital profit was GBP3,337,000. Total expenses
including investment management fees resulted in an ongoing charges
ratio of 2.5% (31 December 2015: 2.6%).
Portfolio review
During the six month period, the Company deployed a total of
GBP1,553,000 into qualifying investments (31 December 2015:
GBP1,964,000). Of this amount, GBP728,000 related to three new
investments and GBP825,000 in several existing portfolio companies to
support their continuing growth. The new investments are Secured by
Design (GBP220,000), an international automotive consultancy; Oviva
(GBP108,000), a nutritional therapy company; and Convertr Media
(GBP400,000), a company that specialises in digital lead generation
software. Further investments in existing portfolio companies included a
total of GBP420,000 to fund the continued construction of three care
homes, Active Lives Care, Ryefield Court Care and Shinfield Lodge Care.
Proveca (GBP240,000), Dysis (GBP87,000), Abcodia (GBP50,000) and Mirada
(GBP28,000) were the remaining companies to receive further investment
during the period.
Investments realised during the period totalled GBP1,162,000 of which
GBP820,000 related to the sale of the Company's investment in Exco,
achieving a return, including interest, of 3 times cost. The remaining
GBP342,000 was mainly made up of loan stock repayments and deferred
consideration, and more details can be found in the realisations table
below.
The portfolio remains well diversified and benefits from a high
proportion of asset-based investments (61% at the period end). Radnor
House School (Holdings) continues to grow profitably, with particular
progress at its recently acquired Sevenoaks school, and saw a further
increase in valuation in the period. The three care home investments
based in Hillingdon, Reading and Oxford are all now open and trading
according to plan, resulting in strong upwards valuations.
In the growth portfolio, Proveca, Hilson Moran and Egress have continued
to grow strongly resulting in an increase in their valuations and are
well positioned to deliver further value. Against this, the valuations
in Dysis, Abcodia and Cisiv were reduced in the period as a result of
their current trading levels.
The investment portfolio sector chart at the end of the announcement
illustrates the composition of the portfolio by industry sector. The
majority of the investments in the hotels, pubs, health and fitness
clubs, education and environmental segments, plus the larger healthcare
investments, are backed by freehold or long leasehold assets with no
external gearing.
Dividends
At the time of the announcement of the 2015/16 full year's results in
September, we said that we would be recalibrating the Company's dividend
policy, and reducing the target pay out from 2.50 pence per share to
2.00 pence per share. Consequently, the first dividend for the current
financial year of 1 penny per share was paid on 30 November 2016. A
second dividend of 1 penny per share will be paid on 31 March 2017 to
shareholders on the register on 10 March 2017. The Board aims to
maintain this level of annualised dividend distribution going forward,
subject to the availability of cash resources and distributable
reserves. Based on the net asset value as at 31 December 2016, this
equates to a 6.5% yield (31 December 2015: 8.3%).
Dividends are paid free of tax to shareholders. Qualifying shareholders
who elect to participate in the Dividend Reinvestment Scheme will be
able, in respect of further dividends, to receive their dividends in the
form of new shares rather than cash, which will entitle them to income
tax relief at the rate of 30% (new shares will need to be held for at
least five years to retain the tax relief). Further details of the
Dividend Reinvestment Scheme can be found on the Manager's website
www.albion-ventures.co.uk/funds/CRWN.
Risks and uncertainties
Whilst recent higher than forecasted economic growth projections for the
UK have confounded the bearish predictions made following the EU
referendum, there is still considerable uncertainty as to the long-term
impact of the UK's withdrawal from the EU. In addition, rising inflation
brings the risk of increased interest rates, which may have a negative
effect on consumer and business confidence. Overall investment risk,
however, is mitigated through a variety of processes, including our
policies of ensuring that the Company has a first charge over portfolio
companies' assets wherever possible, and secondly by aiming to achieve
balance in the portfolio through the inclusion of sectors that are less
exposed to the business and consumer cycles.
Other risks and uncertainties remain unchanged and are as detailed in
note 12.
Share buy-backs
It remains the Board's primary objective to maintain sufficient
resources for investment in existing and new portfolio companies and for
the continued payment of dividends to shareholders. The Board's policy
is to buy back shares in the market, subject to the overall constraint
that such purchases are in the Company's interest, and it is the Board's
intention for such buy-backs to be in the region of a 5% discount to net
asset value, so far as market conditions and liquidity permit.
During the period, the Company bought back and held in treasury
1,738,000 shares at a total cost of GBP455,000, in-line with the share
buy-back policy.
Transactions with the Manager
Details of the transactions that took place with the Manager in the
period can be found in note 4.
Going concern
In accordance with the Guidance on Risk Management, Internal Control and
Related Financial and Business Reporting issued by the Financial
Reporting Council in September 2014, the Board has assessed the
Company's operation as a going concern. The Company has significant cash
and liquid resources, its portfolio of investments is well diversified
in terms of sector, and the major cash outflows of the Company (namely
investments, buy-backs and dividends) are within the Company's control.
Accordingly, after making diligent enquiries the Directors have a
reasonable expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future. For this
reason, the Directors have adopted the going concern basis in preparing
the accounts.
The Board's assessment of liquidity risk and details of the Company's
policies for managing its capital and financial risks remain as detailed
on pages 57 to 60 of the Annual Report and Financial Statements for the
year ended 30 June 2016.
Albion VCTs Prospectus Top Up Offers 2016/2017
Your Board, in conjunction with the boards of other VCTs managed by
Albion Ventures LLP, launched a prospectus top up offer of new Ordinary
shares on 29 November 2016. Your Board has elected to exercise the
over-allotment facility referred to in the prospectus and accordingly,
the maximum amount that may be raised by the Company is GBP6 million.
The Board is pleased to announce that it reached its GBP6 million limit,
which as of 22 February 2017 was fully subscribed and closed. The
proceeds will be used to provide further resources at a time when a
number of attractive investment opportunities are being seen. Details of
the first allotment on 31 January 2017 are shown in note 10.
Outlook
Despite the uncertain broader global environment and the potential
disruption resulting from the departure of the UK from the EU, your
Company's investment portfolio gives grounds for optimism. It is well
balanced, both across sectors and risk classes, and has the potential
for further good growth in the healthcare, education and technology
sectors. Deal flow, meanwhile, is strong, and the current top up offer
will help to fund further investments in promising growth areas.
Richard Huntingford
Chairman
28 February 2017
Responsibility statement
The Directors, Richard Huntingford, James Agnew, Karen Brade and Penny
Freer, are responsible for preparing the Half-yearly Financial Report.
The Directors have chosen to prepare this Half-yearly Financial Report
for the Group in accordance with International Financial Reporting
Standards ("EU IFRS") as adopted by the European Union.
In preparing the condensed set of Financial Statements for the period to
31 December 2016 we, the Directors, confirm that to the best of our
knowledge:
(a) the condensed set of Financial Statements has been prepared in
accordance with International Accounting Standard
(IAS) 34 "Interim Financial Reporting" issued by the International
Accounting Standards Board;
(b) the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year);
(c) the condensed set of Financial Statements give a true and fair view
in accordance with EU IFRS of the assets, liabilities, financial
position and of the profit and loss of the Group for the six months
ended 31 December 2016 as required by DTR 4.2.4R, and comply with EU
IFRS and Companies Act 2006; and
(d) the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
This Half-yearly Financial Report has not been audited or reviewed by
the Auditor.
By order of the Board of Directors
Richard Huntingford
Chairman
28 February 2017
Portfolio of investments
The following is a summary of non-current asset investments with a value
as at 31 December 2016:
As at 31 December 2016 As at 30 June 2016
(unaudited) (audited)
%
voting
rights Change in
% of AVL* value for the
Investment Nature of Voting managed Cost Value Cost Value period**
name business rights companies GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Unquoted
asset-based
investments
Radnor House
School
(Holdings) Independent schools
Limited for children aged 5-18 9.0 50.0 2,881 5,631 2,971 4,933 787
Shinfield Owner and operator of a
Lodge Care residential care home
Limited for the elderly in Berkshire 11.8 50.0 2,140 3,233 2,090 2,530 651
Chonais
River Hydro Hydro power project in
Limited Scotland 14.0 50.0 1,549 2,159 1,549 1,716 443
Owner and operator
of a residential care
Active Lives home for the elderly
Care Limited in Oxford 7.5 50.0 1,530 1,969 1,350 1,421 368
The Crown
Hotel Owner and operator
Harrogate of the Crown Hotel,
Limited Harrogate 15.0 50.0 2,976 1,906 2,976 1,855 51
Owner and operator
Ryefield of a residential care home
Court Care for the elderly in
Limited Greater London 7.7 50.0 1,160 1,616 970 1,014 412
Gharagain
River
Hydro Hydro power project
Limited in Scotland 15.0 50.0 1,116 1,335 1,116 1,245 90
Earnside
Energy Limited Anaerobic digestion 7.0 50.0 1,123 1,241 1,123 1,232 9
Owner and operator
of the 'Holiday Inn
Kew Green VCT Express' at
(Stansted) Limited Stansted Airport 2.0 50.0 805 900 865 776 184
The Street
by Street
Solar
Programme
Limited Photovoltaic installations 4.4 50.0 461 693 461 666 27
Bravo Inns II Owner and operator
Limited of freehold pubs 3.6 50.0 595 662 595 631 31
Owner and operator
The Stanwell Hotel of the Stanwell Hotel
Limited at Heathrow Airport 10.8 50.0 1,682 646 1,682 690 (44)
Alto Prodotto
Wind
Limited Wind power generator 4.1 50.0 370 568 371 571 (1)
The
Charnwood Former owner and operator
Pub Company Limited of freehold pubs 6.9 50.0 481 482 481 481 1
Regenerco
Renewable
Energy
Limited Photovoltaic installations 3.4 50.0 344 475 344 441 34
Infinite
Ventures
(Goathill)
Limited Wind power generator 6.1 31.0 256 328 256 317 11
Bravo Inns Owner and operator of
Limited freehold pubs 2.6 50.0 306 225 306 221 4
Small scale anaerobic
Harvest AD Limited digestion project - - 164 164 164 164 -
AVESI
Limited Photovoltaic installations 3.8 50.0 123 163 123 151 12
Erin Solar
Limited Photovoltaic installations 5.7 50.0 160 157 160 157 -
Premier
Leisure
(Suffolk) Former freehold
Limited cinema owner 5.4 47.4 95 114 95 92 22
Greenenerco Limited Wind power generator 1.9 50.0 65 102 65 102 -
The
Weybridge Owner and operator
Club of a freehold health and
Limited fitness club in Surrey 1.2 50.0 230 59 230 75 (16)
Total
unquoted
asset-
based
investments 20,612 24,828 20,343 21,481 3,076
As at As at
31 December 2016 30 June 2016
(unaudited) (audited)
% voting Change
rights of in value
% AVL* for the
Investment Nature of voting managed Cost Value Cost Value period**
name business rights companies GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Unquoted
growth
investments
Manufacturer
ELE Advanced of precision
Technologies engineering
Limited components 41.9 41.9 1,050 1,890 1,050 1,910 (20)
Repositioning
Proveca of paediatric
Limited medicines 6.7 54.1 586 1,197 346 591 366
Developer of
medical
Mirada Medical imaging
Limited software 6.5 45.0 321 745 293 699 18
Provider of
Blackbay mobile data
Limited solutions 4.1 34.9 463 521 463 476 45
Provider of
Process process
Systems systems
Enterprise modelling
Limited solutions 1.4 20.7 138 435 138 392 43
Multi-
disciplinary
Hilson Moran Holdings engineering
Limited consultancy 3.1 34.7 91 426 104 338 106
Convertr Digital lead
Media generation
Limited software 4.3 27.0 400 400 - - -
Software for
managing
MyMeds pharmaceutical
&Me adverse
Limited events 3.3 29.9 255 377 255 367 10
Medical devices
for the
DySIS detection of
Medical epithelial
Limited cancers 2.9 20.7 802 362 716 401 (125)
International
Masters distribution of
Pharmaceuticals specialist
Limited pharmaceuticals 2.8 19.7 211 347 211 417 (70)
Business
collaboration
and
Relayware communication
Limited solutions 1.1 11.6 324 323 324 318 5
Aridhia Healthcare
Informatics informatics
Limited and analysis 2.4 22.3 377 254 377 275 (21)
Provider of
Egress cloud-based
Software email and file
Technologies encryption
Limited software 0.8 22.0 80 230 80 132 98
Provider and
consultancy of
Secured by automotive
Design technology
Limited research 1.5 10.0 220 221 - - 1
Provider of
digital
Grapeshot marketing
Limited software 0.7 13.9 141 183 141 152 31
Refurbisher
of
semi-
conductor
Memsstar fabrication
Limited equipment 3.0 44.7 130 170 130 168 2
Drug
development
services to the
AMS life-
Sciences science
Limited industries 3.7 49.6 193 137 193 80 57
Black Analytical
Swan platform for
Data market
Limited research 0.4 2.9 115 115 115 115 -
Web-based
solutions for
healthcare
data capture
Cisiv and
Limited management 2.8 28.9 216 111 216 215 (104)
Provides
medical
nutritional
Oviva AG counselling 1.4 9.1 108 108 - - -
Business to
OmPrompt business
Holdings integration
Limited software 0.8 19.7 100 104 100 103 1
Developer
and
producer of
high
Oxsensis temperature
Limited sensors 1.4 20.6 224 99 224 99 -
Services for
validation and
discovery of
Abcodia serum
Limited biomarkers 1.7 19.5 227 97 177 158 (111)
Palm
Tree
Technology
Limited Software company 0.2 0.7 102 62 102 62 -
Provider of
cyber security
Panaseer threat
Limited analysis 1.0 7.8 50 50 50 50 -
Provides mobile
InCrowd platform for for
Sports brands to access fans
Limited at live events 1.0 6.8 42 42 42 42 -
Commercial
insurance
Dickson broker,
Financial trading as
Services Innovation
Limited Broking 2.7 30.0 27 37 27 27 10
CSS Drinks distributor
Group to the
Limited travel sector 2.3 15.0 28 27 28 28 (1)
Provider of
online gym
passes,
Sandcroft trading as
Avenue Payas
Limited Ugym.com 0.2 5.6 20 17 20 22 (5)
Elements Provider of
Software traceability
Limited software solutions 0.7 4.5 4 - 4 - -
Total unquoted growth
investments 7,045 9,087 5,926 7,637 336
Total unquoted
investments 27,657 33,915 26,269 29,118 3,412
As at 31 December 2016 As at 30 June 2016
(unaudited) (audited)
%
voting
rights Change in
% of AVL* the value for
Investment Nature of voting managed Cost Value Cost Value the period**
name business rights companies GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Quoted
investments
Mi-Pay Group PLC Provider of mobile payment services 3.3 34.7 713 273 713 301 (28)
Augean PLC Waste management 0.4 0.4 593 193 593 162 31
Avanti Communications
Group plc Supplier of satellite communications 0.1 0.1 136 14 136 37 (23)
Provider of workforce management solutions
ComOps Limited software 0.2 1.4 13 11 13 18 (7)
Total quoted
investments 1,455 491 1,455 518 (27)
Total
investments 29,112 34,406 27,724 29,636 3,385
Total change in value of investments 3,385
Movement in loan stock accrued interest (127)
Unrealised gains sub-total 3,258
Realised gains in current period 333
Total gains on investments as per consolidated statement
of comprehensive income 3,591
* AVL is Albion Ventures LLP
** As adjusted for additions and disposals between the two accounting
periods
The total comparative cost and valuations for 30 June 2016 do not agree
to the Annual Report and Financial Statements for the year ended 30 June
2016 as the above list does not include brought forward investments that
were fully disposed of in the period.
Opening Total Gain on
carrying Disposal realised opening
Cost value proceeds gain value
Non-current asset realisations GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Exco Intouch Limited 290 659 820 530 161
Radnor House School (Holdings) Limited
(loan stock repayment) 90 90 90 - -
Kew Green VCT (Stansted) Limited
(loan stock repayment) 60 60 60 - -
UCTAL Limited 1 1 54 53 53
Hilson Moran Holdings Limited
(loan stock repayment) 13 18 18 5 -
Alto Prodotto Wind Limited
(loan stock repayment) 1 1 1 - -
Escrow adjustments - - 119 119 119
Total realisations 455 829 1,162 707 333
Condensed consolidated statement of comprehensive income
Unaudited Unaudited Audited
six months ended six months ended year ended
31 December 2016 31 December 2015 30 June 2016
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gains on investments 2 - 3,591 3,591 - 481 481 - 238 238
Investment income and deposit interest 3 566 - 566 530 - 530 1,114 - 1,114
Investment management fees 4 (85) (254) (339) (72) (219) (291) (149) (448) (597)
Other expenses (148) - (148) (144) - (144) (289) - (289)
Profit/(loss) before taxation 333 3,337 3,670 314 262 576 676 (210) 466
Taxation - - - - - - - - -
Profit/(loss) and total comprehensive income/(loss)
attributable to shareholders 333 3,337 3,670 314 262 576 676 (210) 466
Basic and diluted earnings/(loss) per Ordinary share
(pence)* 6 0.26 2.59 2.85 0.29 0.25 0.54 0.59 (0.18) 0.41
* excluding treasury shares
Comparative figures have been extracted from the unaudited Half-yearly
Financial Report for the six months ended 31 December 2015 and the
audited statutory accounts for the year ended 30 June 2016.
The accompanying notes form an integral part of this Half-yearly
Financial Report.
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 reserve 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 parent company.
Condensed consolidated balance sheet
Unaudited Audited
31
December 30 June
2016 2016
Notes GBP'000 GBP'000
Non-current assets
Investments 7 34,406 30,296
Current assets
Trade and other receivables less than one year 492 476
Cash and cash equivalents 4,855 6,896
5,347 7,372
Total assets 39,753 37,668
Current liabilities
Trade and other payables less than one year (233) (283)
Total assets less current liabilities 39,520 37,385
Equity attributable to equity holders
Ordinary share capital 8 14,178 14,110
Share premium 14,006 13,872
Capital redemption reserve 1,415 1,415
Unrealised capital reserve 5,016 2,131
Realised capital reserve (448) (900)
Other distributable reserve 5,353 6,757
Total equity shareholders' funds 39,520 37,385
Basic and diluted net asset value per share (pence)* 30.84 28.94
* excluding treasury shares
Comparative figures have been extracted from the audited statutory
accounts for the year ended 30 June 2016.
The accompanying notes form an integral part of this Half-yearly
Financial Report.
These Financial Statements were agreed by the Board of Directors, and
authorised for issue on 28 February 2017 and were signed on its behalf
by
Richard Huntingford
Chairman
Company number 03495287
Condensed Company balance sheet
Unaudited Audited
31
December 30 June
2016 2016
Notes GBP'000 GBP'000
Non-current assets
Investments 7 34,406 30,296
Investment in subsidiary undertakings 6,613 6,823
41,019 37,119
Current assets
Investment in subsidiary undertakings 8,230 8,230
Trade and other receivables less than one year 488 436
Cash and cash equivalents 4,839 6,880
13,557 15,546
Total assets 54,576 52,665
Creditors: amounts falling due within one year
Trade and other payables less than one year (15,056) (15,280)
Total assets less current liabilities 39,520 37,385
Equity attributable to equity holders
Ordinary share capital 8 14,178 14,110
Share premium 14,006 13,872
Capital redemption reserve 1,415 1,415
Unrealised capital reserve 4,801 2,127
Realised capital reserve (657) (1,109)
Other distributable reserve 5,777 6,970
Total equity shareholders' funds 39,520 37,385
Basic and diluted net asset value per share (pence)* 30.84 28.94
* excluding treasury shares
Comparative figures have been extracted from the audited statutory
accounts for the year ended 30 June 2016.
The accompanying notes form an integral part of this Half-yearly
Financial Report.
These Financial Statements were approved by the Board of Directors, and
authorised for issue on 28 February 2017 and were signed on its behalf
by
Richard Huntingford
Chairman
Company number 03495287
Condensed consolidated statement of changes in equity
Ordinary Capital Unrealised Realised Other
share Share redemption capital capital distributable
capital premium reserve reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 July 2016 14,110 13,872 1,415 2,131 (900) 6,757 37,385
Profit and total comprehensive income - - - 3,258 79 333 3,670
Transfer of previously unrealised gains on sale or
write off of investments - - - (373) 373 - -
Dividends paid - - - - - (1,282) (1,282)
Purchase of shares for treasury (including costs) - - - - - (455) (455)
Issue of equity 68 135 - - - - 203
Cost of issue of equity - (1) - - - - (1)
As at 31 December 2016 14,178 14,006 1,415 5,016 (448) 5,353 39,520
As at 1 July 2015 11,767 9,234 1,415 1,612 (171) 9,224 33,081
Profit/(loss) and total comprehensive income - - - 555 (293) 314 576
Transfer of previously unrealised gains on sale of
investments - - - (369) 369 - -
Dividends paid - - - - - (1,361) (1,361)
Purchase of shares for treasury (including costs) - - - - - (215) (215)
Issue of equity 279 605 - - - - 884
Cost of issue of equity - (22) - - - - (22)
As at 31 December 2015 12,046 9,817 1,415 1,798 (95) 7,962 32,943
As at 1 July 2015 11,767 9,234 1,415 1,612 (171) 9,224 33,081
Profit/(loss) and total comprehensive income - - - 422 (632) 676 466
Transfer of previously unrealised losses on sale or
write off of investments - - - 97 (97) - -
Dividends paid - - - - - (2,837) (2,837)
Purchase of shares for treasury (including costs) - - - - - (306) (306)
Issue of equity 2,343 4,819 - - - - 7,162
Cost of issue of equity - (181) - - - - (181)
As at 30 June 2016 14,110 13,872 1,415 2,131 (900) 6,757 37,385
Condensed Company statement of changes in equity
Ordinary Capital Unrealised Realised Other
share Share redemption capital capital distributable
capital premium reserve reserve reserve* reserve* Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 July 2016 14,110 13,872 1,415 2,127 (1,109) 6,970 37,385
Profit and total comprehensive income - - - 3,258 79 544 3,881
Revaluation of investment in subsidiaries - - - (211) - - (211)
Transfer of previously unrealised gains on sale of
investments - - - (373) 373 - -
Dividends paid - - - - - (1,282) (1,282)
Purchase of shares for treasury (including costs) - - - - - (455) (455)
Issue of equity 68 135 - - - - 203
Cost of issue of equity - (1) - - - - (1)
As at 31 December 2016 14,178 14,006 1,415 4,801 (657) 5,777 39,520
As at 1 July 2015 11,767 9,234 1,415 1,647 (380) 9,398 33,081
Profit/(loss) and total comprehensive income - - - 555 (293) 556 818
Revaluation of investment in subsidiaries - - - (242) - - (242)
Transfer of previously unrealised gains on sale of
investments - - - (369) 369 - -
Dividends paid - - - - - (1,361) (1,361)
Purchase of shares for treasury (including costs) - - - - - (215) (215)
Issue of equity 279 605 - - - - 884
Cost of issue of equity - (22) - - - - (22)
As at 31 December 2015 12,046 9,817 1,415 1,591 (304) 8,378 32,943
As at 1 July 2015 11,767 9,234 1,415 1,647 (380) 9,398 33,081
Profit/(loss) and total comprehensive income - - - 422 (632) 715 505
Revaluation of investment in subsidiaries - - - (39) - - (39)
Transfer of previously unrealised losses on disposal
of investments - - - 97 (97) - -
Dividends paid - - - - - (2,837) (2,837)
Purchase of shares for treasury (including costs) - - - - - (306) (306)
Issue of equity 2,343 4,819 - - - - 7,162
Cost of issue of equity - (181) - - - - (181)
As at 30 June 2016 14,110 13,872 1,415 2,127 (1,109) 6,970 37,385
* These reserves amount to GBP5,120,000 (31 December 2015: GBP8,074,000;
30 June 2016: GBP5,861,000) which is considered distributable.
Condensed consolidated statement of cash flows
Unaudited
six months Audited
ended Unaudited year ended
31 December six months ended 30 June
2016 31 December 2015 2016
GBP'000 GBP'000 GBP'000
Cash flow from operating activities
Investment income received 397 540 948
Deposit interest received 32 22 47
Dividend income received 15 6 38
Investment management fees paid (328) (290) (579)
Other cash payments (191) (150) (283)
Net cash flow from operating activities (75) 128 171
Cash flow from investing activities
Purchase of non-current asset investments (1,553) (1,964) (4,566)
Disposal of non-current asset investments 1,136 2,456 2,879
Net cash flow from investing activities (417) 492 (1,687)
Cash flow from financing activities
Issue of share capital - 1,271 7,164
Cost of issue of equity - - (2)
Equity dividends paid (1,078) (1,166) (2,413)
Purchase of shares for treasury (471) (228) (303)
Transfer of CP2 VCT PLC cash to liquidator - - (40)
Net cash flow from financing activities (1,549) (123) 4,406
(Decrease)/increase in cash and cash equivalents (2,041) 497 2,890
Cash and cash equivalents at the start of the period 6,896 4,006 4,006
Cash and cash equivalents at the end of the period 4,855 4,503 6,896
Condensed Company statement of cash flows
Unaudited Audited
six months ended Unaudited year ended
31 December six months ended 30 June
2016 31 December 2015 2016
GBP'000 GBP'000 GBP'000
Cash flow from operating
activities
Investment income
received 397 540 948
Deposit interest received 32 22 47
Dividend income received 649 697 943
Investment management
fees paid (328) (290) (579)
Intercompany interest
paid (634) (691) (905)
Other cash payments (191) (150) (283)
Net cash flow from
operating activities (75) 128 171
Cash flow from investing
activities
Purchase of non-current
asset investments (1,553) (1,964) (4,566)
Disposal of non-current
asset investments 1,136 2,456 2,879
Net cash flow from
investing activities (417) 492 (1,687)
Cash flow from financing
activities
Issue of share capital - 1,271 7,164
Cost of issue of equity - - (2)
Equity dividends paid (1,078) (1,166) (2,413)
Purchase of shares for
treasury (including
costs) (471) (228) (303)
Net cash flow from
financing activities (1,549) (123) 4,446
(Decrease)/increase in
cash and cash
equivalents (2,041) 497 2,930
Cash and cash equivalents
at the start of the
period 6,880 3,950 3,950
Cash and cash equivalents
at the end of the
period 4,839 4,446 6,880
Notes to the unaudited condensed 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 FRS 101 "Reduced
Disclosure Framework" for the Company.
Basis of accounting
The Half-yearly Financial Report has been prepared in accordance with
International Financial Reporting Standards ('EU IFRS') as adopted by
the European Union (and therefore comply with Article 4 of the EU IAS
regulation). This Half-yearly Financial Report has been prepared in
accordance with IAS 34 'Interim Financial Reporting' in the case of the
Group, and in accordance with FRS 104 'Interim Financial Reporting'
("FRS 104") 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 2014, 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 the
companies reporting under IFRS and UK GAAP. The information in this
document does not include all of the disclosures required by EU IFRS and
the SORP in full annual Financial Statements, and it should be read in
conjunction with the consolidated Financial Statements of the Group for
the year ended 30 June 2016. This Half-yearly financial information has
been prepared applying the accounting policies and presentation that
were applied in the preparation of the Group's published consolidated
Financial Statements for the year ended 30 June 2016.
These Financial Statements are presented in Sterling to the nearest
thousand.The accounting policies applied to the Half-yearly Financial
Report have been consistently applied in current and prior periods and
are those applied in the Annual Report and Financial Statements for the
year ended 30 June 2016.
Basis of consolidation
The Group consolidated Financial Statements incorporate the Financial
Statements of the Company for the period ended 31 December 2016 and the
entities controlled by the Company (its subsidiaries), for the same
period. Where necessary, adjustments are made to the Financial
Statements of subsidiaries to bring the accounting policies into line
with those used by the Group. All intra-group transactions, balances,
income and expenses are eliminated on consolidation.
As permitted by Section 408 of the Companies Act 2006, the Company has
not presented its own profit and loss account. The amount of the
Company's profit before tax for the period dealt within the accounts of
the Group is GBP3,881,000 (31 December 2015: GBP818,000; 30 June 2016:
GBP505,000).
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 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 and Company's Half-yearly Financial Report
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 profit or loss ('FVTPL').
The valuation of investments held at FVTPL 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.
Investment in subsidiaries
Investments in subsidiaries are revalued at the balance sheet date based
on the underlying net assets of the subsidiary. Revaluation movements
are recognised in the unrealised reserve.
CP2 VCT PLC is a wholly-owned subsidiary of the Company. CP2 VCT PLC
transferred its business to Crown Place VCT PLC and ceased trading with
effect from the date of merger on 12 January 2006. Since then, CP2 VCT
PLC has had no further business other than to hold cash and intercompany
balances. CP2 VCT PLC had significant tax losses which have been
utilised by the Company through group relief. As the tax losses were
depleted, the Directors decided to place CP2 VCT PLC into Members'
Voluntary Liquidation. BDO LLP, were appointed to undertake this task on
14 December 2015. The final meeting of CP2 VCT PLC was held on 8
December 2016 and will be struck from the Companies House register
three months after this meeting.
The above decision does not affect CP1 VCT PLC, which continues to be a
wholly supported subsidiary company.
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', quoted and unquoted equity, debt issued at a discount and
convertible bonds are designated as 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).
Fair value movements 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.
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.
Warrants and unquoted equity derived instruments
Warrants and unquoted equity derived instruments are only valued if
there is deemed to be 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 as a whole on a unit of account basis.
Unquoted loan stock
Unquoted loan stock (excluding debt issued at a discount and convertible
bonds) is classified as loans and receivables as permitted by IAS 39 and
measured 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 other distributable 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 for impairments arising from revaluations of the fair value of
the security.
For all unquoted loan stock, fully performing, 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 original
effective interest rate. The future cash flows are estimated based on
the fair value of the security held less estimated selling costs.
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.
In accordance with the exemptions under IAS 28 "Investments in
associates", undertakings in which the Group or Company holds more than
20 per cent. of the equity as part of an investment portfolio are not
accounted for using the equity method.
Investment income
Quoted and unquoted equity income
Dividends receivable on quoted equity shares are recognised on the
ex-dividend date. Income receivable on unquoted equity is recognised
when the Company's right to receive payment and expected settlement is
established.
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". Taxation associated with capital expenses is applied in
accordance with the SORP. Deferred taxation is provided in full on
timing differences, and temporary differences (in accordance with IAS
12) 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.
Temporary differences arise from differences between the carrying
amounts of assets and liabilities for financial reporting and the
amounts used for taxation purposes. Timing differences (IAS 12) 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. 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. Deferred
tax assets and liabilities are not discounted.
Dividends
In accordance with IAS 10 "Events after the balance sheet date",
dividends are accounted for in the period in which the dividend is paid
or approved at the Annual General Meeting.
Reserves
Share premium reserve
This reserve accounts for the difference between the price paid for the
Company's shares and the nominal value of the shares, less issue costs
and transfers to the other distributable 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.
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.
Other distributable reserve
This reserve accounts for movements from the revenue column of the
Statement of comprehensive income, the payment of dividends, the buyback
of shares and other non-capital realised movements.
2. Gains on investments
Unaudited Unaudited Audited
six months ended six months ended year ended
31 December 2016 31 December 2015 30 June 2016
GBP'000 GBP'000 GBP'000
Unrealised gains on investments held
at fair value through profit or loss 3,060 396 288
Unrealised reversal of impairments measured
at amortised cost 198 159 133
Unrealised gains on investments 3,258 555 422
Realised gains/(losses) on investments held
at fair value through profit or loss 333 (45) (152)
Realised losses on investments measured
at amortised cost - (29) (32)
Realised gains/(losses) on investments 333 (74) (184)
3,591 481 238
Investments measured at amortised cost are unquoted loan stock
investments.
3. Investment income and deposit interest
Unaudited Unaudited Audited
six months ended six months ended year ended
31 December 2016 31 December 2015 30 June 2016
GBP'000 GBP'000 GBP'000
Income recognised on investments held
at fair value through profit or loss
UK dividend income 15 6 38
Interest on convertible bonds and debt issued
at a discount 274 181 469
289 187 507
Income recognised on investments
measured at amortised cost
Return on loan stock investments 250 321 557
Bank deposit interest 27 22 50
277 343 607
566 530 1,114
4. Investment management fees
Unaudited Unaudited Audited
six months ended six months ended year ended
31 December 2016 31 December 2015 30 June 2016
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment
management fee 85 254 339 72 219 291 149 448 597
Further details of the management agreement under which the investment
management fee is paid are given on pages 10 and 11 of the Strategic
report in the Annual Report and Financial Statements for the year ended
30 June 2016.
During the period, services of a total value of GBP364,000 (six months
ended 31 December 2015: GBP316,000; year ended 30 June 2016: GBP647,000)
were purchased by the Company from Albion Ventures LLP; comprising
GBP339,000 management fee and GBP25,000 administration fee. At the
financial period end, the amount due to Albion Ventures LLP disclosed as
payables was GBP186,500 (administration fee accrual GBP12,500,
management fee accrual GBP174,000) (31 December 2015: GBP157,500; 30
June 2016: GBP174,500).
Albion Ventures LLP is, from time to time, eligible to receive
transaction fees and Directors' fees from portfolio companies. During
the period to 31 December 2016, fees of GBP72,100 attributable to the
investments of the Company were received pursuant to these arrangements
(31 December 2015: GBP69,700; 30 June 2016: GBP125,000).
Albion Ventures LLP, the Manager, holds 56,152 Ordinary shares in the
Company.
5. Dividends
Unaudited Unaudited Audited
six months ended six months ended year ended
31 December 2016 31 December 2015 30 June 2016
GBP'000 GBP'000 GBP'000
First dividend paid on 30 November 2015
(1.25 pence per share) - 1,361 1,361
Second dividend paid on 31 March 2016
(1.25 pence per share) - - 1,476
First dividend paid on 30 November 2016
(1 penny per share) 1,282 - -
1,282 1,361 2,837
In addition, the Board has declared a second dividend of 1 penny per
share for the year ending 30 June 2017. This will be paid on 31 March
2017 to shareholders on the register on 10 March 2017. This is expected
to amount to approximately GBP1,406,000.
6. Basic and diluted return per share
Unaudited Unaudited Audited
six months ended six months ended year ended
31 December 2016 31 December 2015 30 June 2016
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Return/(loss) attributable to equity shares (GBP'000) 333 3,337 3,670 314 262 576 676 (210) 466
Weighted average shares in issue (excluding treasury
shares) 128,752,216 107,785,226 114,998,634
Return/(loss) attributable per share (pence) (basic
and diluted) 0.26 2.59 2.85 0.29 0.25 0.54 0.59 (0.18) 0.41
The return per share has been calculated excluding treasury shares of
13,653,410 (31 December 2015: 11,595,410; 30 June 2016: 11,915,410).
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.
7. Non-current asset investments
Unaudited Audited
31 December 2016 30 June 2016
GBP'000 GBP'000
Investments held at fair value through
profit or loss
Unquoted equity and preference shares 16,150 11,542
Quoted equity 491 518
Discounted debt and convertible loan stock 8,354 8,903
24,995 20,963
Investments measured at amortised cost
Unquoted loan stock 9,411 9,333
34,406 30,296
8. Ordinary share capital
Unaudited Audited
31 December 2016 30 June 2016
GBP'000 GBP'000
Allotted, called up and fully paid
141,784,834 Ordinary shares of 10p each
(30 June 2016: 141,097,990) 14,178 14,110
Voting rights
128,131,424 Ordinary shares of 10p each (30 June 2016:
129,182,580)
The Company purchased 1,738,000 Ordinary shares for treasury during the
period at a cost of GBP455,000 (year ended 30 June 2016: 1,063,000
shares at a cost of GBP306,000). The total number of shares held in
treasury as at 31 December 2016 was 13,653,410 (30 June 2016:
11,915,410).
Under the terms of the Dividend Reinvestment Scheme Circular dated 26
February 2009, the following new Ordinary shares of nominal value 10
pence per share were allotted during the period:
Aggregate Opening
Number of nominal value Net market price
Allotment shares of shares Issue price invested on allotment date
date allotted (GBP'000) (pence per share) (GBP'000) (pence per share)
30
November
2016 686,844 69 29.70 202 27.00
9. Contingencies and guarantees
There are no external contingencies for or guarantees by the Group or
Company as at 31 December 2016 (30 June 2016: nil).
As at 31 December 2016 the Company had no financial commitments in
respect of investments (30 June 2016: GBP529,000).
Under the terms of the Transfer Agreement dated 16 January 2006, the
Company has indemnified its subsidiaries, CP1 VCT PLC and CP2 VCT PLC in
respect of all costs, claims and liabilities in exchange for the
transfer of assets.
10. Post balance sheet events
Since 31 December 2016, the Company has completed the following material
transactions:
-- Investment of GBP83,000 in Black Swan Data Limited;
-- Proceeds of GBP121,000 from the sale of AMS Sciences Limited;
-- Proceeds of GBP90,000 received from the repayment of loan stock by Radnor
House School (Holdings) Limited.
Albion VCTs Prospectus Top Up Offers 2016/2017
On 29 November 2016 the Company announced the publication of a
prospectus in relation to an offer for subscription for new Ordinary
shares. A Securities Note, which forms part of the prospectus, has been
sent to shareholders.
A copy of the prospectus may be obtained from www.albion-ventures.co.uk.
The following new Ordinary shares of nominal value 10 pence per share
were allotted under the Offers since the period end:
Aggregate Opening
Number of nominal value Issue price Net consideration market price
Allotment shares of shares (pence per received on allotment date
date allotted (GBP'000) share) (GBP'000) (pence per share)
31 January
2017 2,436,624 243 30.40 726 28.50
31 January
2017 987,718 99 30.50 294 28.50
31 January
2017 8,997,127 900 30.70 2,679 28.50
12,421,469 1,242 3,699
The Board is pleased to announce that it has reached its GBP6 million
limit under its Offer, which as of 22 February 2017 was fully subscribed
and has now closed.
11. Related party transactions
Other than transactions with 100 per cent. owned Group companies and
those with the Manager as disclosed in note 4, there are no other
related party transactions.
12. Risks and uncertainties
The Board considers that the Company faces the following principal risks
and uncertainties:
1. Economic risk
Changes in economic conditions, including, for example, interest rates,
rates of inflation, industry conditions, competition, political and
diplomatic events and other factors could substantially and adversely
affect the Company's prospects in a number of ways.
To reduce this risk, in addition to investing equity in portfolio
companies, the Company often invests in fixed interest secured loan
stock and has a policy of not normally permitting any external bank
borrowings within portfolio companies. Additionally, the Manager has
been rebalancing the sector exposure of the portfolio with a view to
reducing reliance on consumer led sectors.
2. Investment risk
This is the risk of investment in poor quality assets which reduces the
capital and income returns to shareholders, and negatively impacts on
the 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. The success of
investments in certain sectors is also subject to regulatory risk, such
as those affecting companies involved in UK renewable energy.
To reduce this risk, the Board places reliance upon the skills and
expertise of the Manager in investing in this segment of the market. The
Manager invests in a diversified portfolio of companies, across a number
of sectors of the economy, thus spreading investment risk. 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, and takes account of, comments from non-executive
Directors of the Company on investments discussed at the Investment
Committee meetings. Investments are actively and regularly monitored by
the Manager (investment managers normally sit on portfolio company
boards) and the Board receives detailed reports on each investment as
part of the Manager's report at quarterly board meetings. It is the
policy of the Company for portfolio companies to not normally have
external borrowings. The Board and the Manager closely monitor
regulatory changes in the sectors in which the Company is invested.
3. Valuation risk
The Company's investment valuation methodology is reliant on the
accuracy and completeness of information that is issued by portfolio
companies. In particular, the Directors may not be aware of or take into
account certain events or circumstances which occur after the
information issued by such companies is reported.
As described in note 1 of the Financial Statements, the unquoted equity
investments, convertible loan stock and debt issued at a discount held
by the Company are designated at fair value through profit or loss and
valued in accordance with the International Private Equity and Venture
Capital Valuation Guidelines. These guidelines set out recommendations,
intended to represent current best practice on the valuation of venture
capital investments. These investments are valued on the basis of
forward looking estimates and judgements about the business itself, its
market and the environment in which it operates, together with the state
of the mergers and acquisitions market, stock market conditions and
other factors. In making these judgements the valuation takes into
account all known material facts up to the date of approval of the
Financial Statements by the Board. The sensitivity of these assumptions
are commented on further in notes 9 and 16 of the Annual Report and
Financial Statements for the year ended 30 June 2016. All other
unquoted loan stock is measured at amortised cost. The values of a
number of investments are also underpinned by independent third party
professional valuations.
4. VCT 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, which has a
team with significant experience in venture capital trust management,
used to operating within the requirements of the venture capital trust
legislation. In addition, to provide further formal reassurance, the
Board has appointed Philip Hare & Associates LLP as its taxation adviser
who 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. Each investment in a new
portfolio company is also pre-cleared with H.M. Revenue & Customs.
5. VCT regulatory changes risk
The Company is required to comply with regular changes to VCT specific
regulations including the latest ones relating to European State Aid
regulations which are enacted by the UK Government. Non-compliance could
result in a loss of VCT status and/or demands for repayment of State Aid
by a portfolio company or by VCT investors.
The Board receives advice from Philip Hare & Associates LLP in respect
of these requirements and conducts its affairs in order to comply with
these requirements. The Manager engages regularly with policy makers on
regulation. In addition, the Board places reliance upon the skills and
expertise of the Manager in investing in this segment of the market.
6. 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 or advising quoted businesses. In addition, the Board and
the Manager receive regular updates on new regulation from its auditor,
lawyers and other professional bodies. The Company is subject to
compliance checks via the Manager's Compliance Officer. The Manager
reports monthly to its Board on any issues arising from compliance or
regulation. These controls are also reviewed as part of the quarterly
Manager Board meetings, and also as part of the review work undertaken
by the Manager's Compliance Officer. The report on controls is evaluated
by Internal Audit during its reports.
7. 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 Auditor,
PKF 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. Karen Brade as the Chairman of the Audit and Risk
Committee has access to the internal audit partner of PKF Littlejohn LLP
to discuss the Internal Audit Report 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 Company's internal controls through
the implementation of the Risk Guidance report are detailed on page 31
of the Annual Report and Financial Statements for the year ended 30 June
2016.
Measures are in place to mitigate information security risk in order to
ensure the integrity, availability and confidentiality of information
used within the business.
8. Reliance upon third parties risk
The Group and the Company are reliant upon the services of Albion
Ventures LLP and other third party service providers 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 further detail, see the
Management agreement paragraph on pages 10 and 11 of the Annual Report
and Financial Statements for the year ended 30 June 2016). In addition,
the Manager has demonstrated to the Board that there is no undue
reliance placed upon any one individual within Albion Ventures LLP. The
Board monitors the performance of other third party service providers
annually.
9. Financial risk
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 16 of the Annual Report and
Financial Statements for the year ended 30 June 2016.
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 for speculative purposes.
10. Reputational risk
This arises from broader performance and ethical issues, including
investment in businesses and sectors that are inconsistent with the
values of Board and the VCT or, by the Boards of portfolio companies
taking actions which similarly are inconsistent with the values of the
VCT.
The Board clearly articulates to the Investment Manager its broader aims
and standards including those sectors which are consistent with the
values of the Board. The Board regularly reviews the performance and
investment strategy of the Investment Manager. The Investment Manager
periodically attends Board meetings of the VCT's portfolio companies and
across the portfolio receives periodic management information and is
alert to potential threats to reputation.
13. Other information
The information set out in the Half-yearly Financial Report does not
constitute the Group's statutory accounts within the terms of section
434 of the Companies Act 2006 for the periods ended 31 December 2016 and
31 December 2015 and is unaudited. The financial information for the
year ended 30 June 2016 does not constitute statutory accounts within
the terms of section 434 of the Companies Act 2006 and is derived from
the statutory accounts for the financial year, which have been delivered
to the Registrar of Companies. The Auditor's report on those accounts
was unqualified and did not contain statements under s498 (2) or (3) of
the Companies Act 2006.
14. Publication
This Half-yearly Financial Report is 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/funds/CRWN.
Shareholder returns for CP1 VCT PLC (previously Murray VCT PLC) and CP2
VCT PLC (previously Murray VCT 2 PLC) (unaudited)
Proforma (i) Murray VCT Proforma (i) Murray VCT 2
PLC PLC
(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 6 April 2005 (ii) 30.36 30.91
Decrease in net asset value (69.90) (64.50)
Total shareholder return to 6 April 2005 (39.54) (33.59)
Shareholder return from April 2005 to
31 December 2016:
Total dividends paid 20.07 23.81
Decrease in net asset value (8.15) (9.25)
Total shareholder return from April 2005 to
31 December 2016 11.92 14.56
Shareholder value since launch:
Total dividends paid to 31 December 2016 (ii) 50.43 54.72
Net asset value as at 31 December 2016 21.95 26.25
Total shareholder value as at 31 December
2016 72.38 80.97
Current dividend objective:
Pence per share (per annum) 1.42 1.70
Dividend yield on net asset value as at
31 December 2016 6.5% 6.5%
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 31
December 2016 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.
LEI Code 213800SYIQPA3L3T1Q68
Crown Place VCT PLC Split of investment portfolio by sector:
http://hugin.info/141806/R/2082491/784717.pdf
This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Crown Place VCT PLC via Globenewswire
http://www.closeventures.co.uk
(END) Dow Jones Newswires
February 28, 2017 10:15 ET (15:15 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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