TIDMLWT
RNS Number : 5518D
Loudwater Trust Limited
17 May 2012
17 May 2012
Loudwater Trust Limited ('the Company')
Annual Report & Accounts as at 31(st) December 2011
The Company is pleased to announce the publication of its Annual
Report & Accounts for the year ended 31(st) December 2011.
The Annual Report & Accounts will be posted to shareholders
shortly and can be downloaded from the Company's website at
www.loudwatertrust.com.
Highlights from the Annual Report & Accounts as at 31(st)
December 2011:
-- Net Asset Value of GBP32.2 million, or 53.5p per share.
-- GBP4.2 million of cash returned to shareholders in the year,
equivalent to 7.0p per share, with an additional GBP4.4 million,
equivalent to 7.2p per share returned since the year end.
-- Completed the sale of one company (Top Layer Networks) and
secured the release of a final tranche of a cash escrow deposit.
Since the year end, completed the sale of an equity investment in a
second company (City Financial Investment Company) and a
shareholding in an AIM listed business (Corero Network
Security).
-- Remaining portfolio consists of investments in five
companies, of which three account for approximately 80% of the NAV,
plus two small, residual loan or loan-type holdings. Two companies
are currently in exit processes and three are working towards
either IPO's or trade-sales within the next one to two years.
-- As at 31(st) March 2012, the Company had a Net Asset Value of
GBP27.1 million or 45.0p per share.
-- To date the Company has returned GBP22.4 million of capital
to shareholders, equating to a total value as at 31 March 2012, for
NAV plus cash returned of GBP49.5 million or 66.0p per share, based
on 75,000,000 shares issued on admission to trading on AIM in
January 2007.
-- No assets have been written up in value. The Investment
Advisor is, however, greatly encouraged by the progress made by
remaining investee companies, and considers that one or more exits
are likely to achieve returns for the Company's shareholders
significantly in excess of their current holding values.
For further information
Loudwater Investment Partners Limited
Charles Somerset +44(0)20 3372 6400
Panmure Gordon (UK) Limited
Andrew Potts +44(0)20 7459 3600
Table of Contents
Summary of Investment Objective and Investing Policy 1
Performance Statistics 2
Chairman's Statement 3
Investment Advisor's Report 4-8
Investing Policy 9-11
Report of the Directors 12-16
Independent Auditor's Report to the Members of Loudwater Trust
Limited 17
Statement of Financial Position 18
Statement of Comprehensive Income 19
Statement of Changes in Equity 20
Statement of Cash Flows 21
Notes to the Financial Statements 22-40
Directors & Advisors 41
Summary of Investment Objective
The Company was established to provide Shareholders with an
attractive rate of return on their investment, primarily through
investing in companies which were likely to achieve an IPO or a
sale within a short term time horizon and through a small number of
investments in companies that were already listed.
In September 2008, the Company announced that, in the light of
the then deteriorating economic environment and the lack of a
visible time frame for exits, it would return some capital to
Shareholders by way of a tender offer and would make appropriate
changes in the Company's structure and investing policy as
described below.
Summary of Investing Policy
As part of the 2008 Tender Offer, the Company adopted a new
investing policy of not making investments in new companies. If the
Board, advised by its Investment Advisor, considers that it will be
attractive to recapitalise the Company and make new investments,
the Board will seek Shareholder approval to amend the investing
policy.
For the Company's full Investing Policy please see pages 9 -
11.
Performance Statistics
Date Net Asset Value Cash Returned Net Asset Value
+ Cash Returned
GBP PPS* GBP GBP PPS**
29 January
2007 74,250,000 99.00 - 74,250,000 99.00
31 March 2007 74,732,000 99.64 - 74,732,000 99.64
30 June 2007 75,462,000 100.62 - 75,462,000 100.62
30 September
2007 75,269,000 100.36 - 75,269,000 100.36
31 December
2007 73,767,000 98.36 - 73,767,000 98.36
31 March 2008 73,959,000 98.61 - 73,959,000 98.61
30 June 2008 69,581,000 92.78 - 69,581,000 92.77
30 September
2008 70,324,000 93.77 - 70,324,000 93.77
31 December
2008 53,985,000 89.63 13,847,000 67,832,000 90.44
31 March 2009 54,303,000 90.16 13,847,000 68,150,000 90.87
30 June 2009 49,331,000 81.90 13,847,000 63,178,000 84.24
30 September
2009 48,198,000 80.02 13,847,000 62,045,000 82.73
31 December
2009 45,242,000 75.11 13,847,000 59,089,000 78.79
31 March 2010 42,330,000 70.28 13,847,000 56,177,000 74.90
30 June 2010 42,506,000 70.57 13,847,000 56,353,000 75.14
30 September
2010 40,641,000 67.47 13,847,000 54,488,000 72.65
31 December
2010 40,382,000 67.04 13,847,000 54,229,000 72.31
31 March 2011 39,351,000 65.33 13,847,000 53,199,000 70.93
30 June 2011 35,037,000 58.17 18,063,000 53,100,000 70.80
30 September
2011 32,842,000 54.52 18,063,000 50,905,000 67.87
31 December
2011 32,211,000 53.48 18,063,000 50,275,000 67.03
31 March 2012 27,076,000 44.95 22,418,000 49,494,000 65.99
*Pence per ordinary share; note that number of shares in
issuance was reduced from 75,000,000 to 60,232,855 following the
share buy-back in November 2008.
**Pence per ordinary share; this assumes that the number of
shares in issuance is held constant at 75,000,000.
Chairman's Statement
Year ended 31 December 2011
I am pleased to report on the performance of Loudwater Trust
Limited (the "Company" or "Loudwater") for the year ended 31
December 2011.
On 24 March 2011, Damille Investments Limited ("Damille")
acquired 27.64% of the share capital of the Company. My fellow
director at Damille, Brett Miller, and I joined the Loudwater Board
on 20 May 2011. On 27 April 2012, Lord Flight, Edward Forwood,
Robert Fearis and Roger Le Tissier resigned from the Board, leaving
myself, Brett Miller and Christopher Fish as directors. I have been
appointed non-executive Chairman, replacing Lord Flight.
As Damille is a substantial shareholder in the Company, myself
and Brett Miller are not deemed to be independent directors,
whereas Chris Fish is deemed to be an independent director. Since
the Board as a whole is therefore not deemed to be independent of
Damille, the Company and Damille have entered into a relationship
agreement, which states that at all times the Company will be
capable of acting independently of Damille and/or its directors and
officers and that any transactions will take place at arm's length
and on a normal commercial basis.
We would like to put on record our appreciation for the
contribution made by the recently retired directors to the
Loudwater Board and in working with Loudwater through its initial
investment phase, and latterly in the realisation phase.
In accordance with the Investment Objective and Investing Policy
adopted by the Company in November 2008, the Company continues to
manage the orderly realisation of its investment portfolio with the
objective of maximising the return of invested capital to
shareholders within a reasonable timeframe.
The Company has continued to make good progress against this
objective. In the year to 31 December 2011, the Company completed
the sale of one company (Top Layer Networks) and secured the
release of an escrow deposit held in connection with a project
undertaken by a previous investee company (Pentadyne). Since the
year end, the Company has completed the sale of its equity
investment in a second company (City Financial Investment Company)
and its shareholding in an AIM listed business (Corero Network
Security).
The proceeds from these realisations have been used to fund the
continued return of capital to shareholders. In the year ended 31
December 2011, a further GBP4.2 million was returned to
shareholders, equivalent to 7.0 pence per share, with an additional
GBP4.4 million, equivalent to 7.2 pence per share returned since
the year end.
The Net Asset Value was GBP32.2 million or 53.5 pence per share
as at 31 December 2011 and GBP27.1 million or 45.0 pence per share
as at 31 March 2012.
To date the Company has returned GBP22.4 million of capital to
shareholders, equating to a total value as at 31 March 2012, for
NAV plus cash returned of GBP49.5 million or 66.0 pence per share,
based on 75,000,000 shares issued on admission to trading on AIM in
January 2007.
The Board of Directors continues to work closely with the
Investment Advisor to maximise further realisations. Discussions in
relation to a number of additional realisations are on-going and we
look forward to returning further funds to shareholders in due
course.
Rhys Davies
Chairman
Loudwater Trust Limited
16 May 2012
Investment Advisor's Report
Year ended 31 December 2011
Overview
In the year under review, we successfully completed the sale of
one company (Top Layer Networks) and secured the release of an
escrow deposit (Pentadyne). Since 31 December 2011, we have
completed the sale of an investment in a second company (City
Financial Investment Company) and also sold the Company's shares in
an AIM listed company (Corero Network Security).
Following these exits, a total of GBP8.6 million of cash has
been returned to shareholders since 1 January 2011, equivalent to
14.2 pence per share. The Net Asset Value was GBP32.2 million or
53.5 pence per share as at 31 December 2011 and GBP27.1 million or
45.0 pence per share as at 31 March 2012.
The Company's portfolio now consists of investments in five
companies, of which three account for approximately 80% of the NAV,
plus two small, residual loan or loan-type holdings.
Two companies are currently in exit processes and three are
working towards either IPO's or trade-sales within the next one to
two years.
The timing and feasibility of exits are, of course, highly
dependent on market conditions which, at this time, remain poor and
particularly hard to predict. In light of these conditions, it is
the Company's valuation policy not to write up the value of any
assets, unless there is a clear basis for doing so, evidenced, for
example, by the announcement of a binding offer from either an
acquirer or a new investor.
We are, however, greatly encouraged by the progress that has
been made by our remaining investee companies, and consider that
one or more exits are likely to achieve returns for the Company's
shareholders significantly in excess of their current holding
values.
Investment Highlights
In the year under review and the first quarter of 2012, the
following notable events have taken place:
-- In March 2011, the sale of Top Layer Networks to AIM listed
Corero plc for consideration of US$15.3 million (GBP9.5 million) of
which the Company received US$7.5 million (GBP4.6 million) in the
form of a mixture of Corero shares, loan notes and cash.
-- In October 2011, the release of the final tranche of an
escrow deposit, held as collateral for a performance bond
associated with a project undertaken by former investee company
Pentadyne.
-- In January 2012, the sale of the Company's investment in City
Financial Investment Company for total consideration of GBP2.75
million, including cash proceeds of GBP2.5 million and preferred
ordinary shares valued at GBP250,000.
-- In March 2012, the sale of the Company's equity interest in
Corero Network Security plc, comprising approximately 4.4 million
ordinary shares. The cash proceeds from this sale were GBP1.9
million.
Returns of Capital
Following these exits, the Company returned GBP8.6 million of
cash to shareholders. This brings the total cash returned by the
Company to a total of GBP22.4 million equivalent to 30% of the NAV
of GBP74.3m of the Company following its IPO on 29 January
2007.
Date GBPm pps*
--------------- ----- -----
November 2008 13.8 18.5
June 2011 4.2 7.0
February 2012 2.5 4.1
March 2012 1.9 3.1
--------------- ----- -----
Total 22.4 32.7
--------------- ----- -----
*Based on 75,000,000 shares outstanding at the time of the
November 2008 share buyback and 60,232,855 shares outstanding
subsequently.
Investment Advisor's Report (continued)
Year ended 31 December 2011
NAV Update
31 December 2011 31 December 2010
GBPm pps GBPm pps
------------------------------------ --------- -------- --------- --------
Investments in portfolio companies 30.2 50.2 32.5 53.9
Cash and equivalents* 2.0 3.3 7.9 13.1
------------------------------------ --------- -------- --------- --------
Total 32.2 53.5 40.4 67.0
------------------------------------ --------- -------- --------- --------
*Includes cash at bank, fixed deposits, funds held in escrow,
other receivables net of payables and interest due from loan note
investments in portfolio companies.
The NAV at 31 March 2012 was GBP27.1 million or 45.0 pence per
share. This gives a total value for current NAV plus cash returned
of GBP49.5 million or 66.0 pence per share, based on 75,000,000
shares issued on admission to trading on AIM in January 2007.
Portfolio Update
As the portfolio has developed to a stage where, at any one
time, one or more companies are likely to be in discussions with
potential acquirers, merger partners or investors, the Investment
Advisor considers that it is not in the best interests of the
Company or shareholders to disclose individual holding values or
the percentage ownership of portfolio companies.
The Company's remaining portfolio, as at 31 March 2012, is
comprised as follows:
-- Three substantial investments (representing approximately 80%
of NAV). Of these investments, one is currently in an exit process
and the other two are working towards either IPO's or trade sales
within the next one to two years. All three companies have achieved
very substantial revenue growth since the time of the Company's
investment. Two of the companies are profitable, whilst the third
company is currently loss-making as a result of its continued
investment in its development pipeline.
-- Two smaller investments (representing <10% of NAV). Of
these, the larger company is a profitable business and is currently
in an exit process. The smaller company expects to achieve
profitability in 2012 and is positioning itself for a trade sale in
due course.
-- Two residual loan or loan-type instruments (representing
<10% of NAV). These are residual instruments left over from the
sale of previously held company investments. One is a secured loan
earning 8% interest and with a maturity date of March 2014. The
other consists of preference shares.
-- Cash and equivalents (representing <10% of NAV).
In 2011, the Company made one follow-on investment in a US
company Glimmerglass of US$0.7 million (GBP0.4 million) as part of
an internal financing round to strengthen working capital and
support expansion into new markets.
Whilst the economic climate of the past three years has been a
difficult one in which to build businesses, we have been greatly
encouraged by the progress that that these companies have made. All
have grown in scale over the period of our investment, in some
cases doubling or even trebling in size.
Looking forwards, we consider that one or more company exits are
likely to achieve returns for the Company's shareholders
significantly in excess of their current holding values.
Further details of the progress made by each of the portfolio
companies are provided in the next section. Investment Advisor's
Report (continued)
Year ended 31 December 2011
Portfolio Companies
AgraQuest Inc. (Davis, California) - www.agraquest.com
AgraQuest is a world leading bio-technology company that
develops and manufactures natural pest management products for
agricultural and horticultural markets. Building on its established
fungicide business, the company is working to expand its product
range and develop new applications in areas such as bio-fumigants
and seed treatment. In developing and bringing these products to
market, AgraQuest partners with a number of the world's leading
agricultural companies.
Growing at an annual rate of 30% the company has built its share
of the global pesticide market from circa 0.1% in 2007 to 0.5% by
the end of 2011. This business growth is supported by a global
trend, currently led by the European Union, to ban an increasing
range of chemicals which may be used by food producers for crop
protection. On the research and development side of the business,
the company continues to make significant advances, and over the
last three years, has hired 40 new scientists and doubled the size
and capacity of its research facilities.
Antenova Limited (Cambridge, UK) - www.antenova.com
Antenova is a developer and supplier of antenna components for
mobile handsets, portable devices and laptop computers. Antenova
has developed a range of patented IP which enables it to develop
antennae and radio modules which allow multiple signals (e.g. 3G,
GPRS, GPS, Bluetooth, Wi-Fi) to be combined in very small
components whilst maintaining high performance. Manufacture is
carried out by contract manufacturers in Asia.
Despite difficult market conditions over the last few years, the
company expects to see strengthening in demand, driven in part by
the increased use of smart phones and tablet PC's and the roll-out
of 4G networks.
The Engine Group Limited (London, UK) -
www.theenginegroup.com
Engine is a substantial marketing and communications group based
in the UK. The company is headed up by WCRS co-founder Peter Scott,
who established Engine following the management buyout of WCRS from
Havas in April 2004. The group is comprised of eleven partner
companies in the UK and a further two companies in the US that have
been acquired by Engine's recently created US subsidiary. Engine
provides services spanning across advertising agency, PR, brand
consultancy, direct marketing and digital consultancy and serves a
host of blue chip clients.
Engine grew strongly in 2010, through a combination of organic
and acquisitive growth, with revenues increasing by 25% to GBP74
million and EBITDA up 12% to GBP15 million. The company continued
to make progress in 2011 and completed the acquisitions of Mischief
PR, an awarding winning consumer PR business, and Fantastic
Thinking, a digital production business.
Glimmerglass Networks Inc. (Hayward, California) -
www.glimmerglass.org
Glimmerglass is the market leader in the design and supply of
intelligent optical systems, based on large scale MEMs
(Micro-Electro-Mechanical) switching technology, for fibre optic
networks. These switches allow up to 200 light beams to be switched
on a 'many-to-many' basis. The company's technology enables network
operators to remotely create, monitor and protect light paths and
take active or 'intelligent' control of the fibre optic layer.
Glimmerglass is an established supplier to a number of large
telecom carriers, who install these systems at key nodes within
their fibre optic networks, and to a growing number of cyber
security agencies worldwide.
In 2011 the company significantly expanded its presence in the
cyber security market and has built a large pipeline of business to
drive revenue growth into 2012 and beyond. In addition, the company
continues to develop its service offering with new software and
other system capabilities.
Investment Advisor's Report (continued)
Year ended 31 December 2011
Portfolio Companies (continued)
Somethin' Else Limited (London, UK) - www.somethinelse.com
Somethin' Else is cross-platform media production company and
the largest independent radio producer in the UK with programmes
such as Jazz on 3, Gardeners' Question Time and the '606'
Programme. The company is a growing producer of digital media and
manages performers such as Jeremy Kyle and JK & Joel through
its talent management agency. The company has won many awards
including Bafta and Sony Radio Academy.
Somethin' Else has achieved substantial revenue growth over the
last two years. In particular, the company has been successful in
growing the digital side of the business and has delivered a number
of flagship projects. The company is largest supplier of radio
content to the BBC and continues to develop this long-term
relationship.
Other investments
Corero Network Security Plc (Rickmansworth, UK) - www.corero.com
(acquirer of Top Layer Networks)
As announced on 3 March 2011, the sale of Top Layer Networks,
Inc., to AIM listed Corero Network Security plc (previously Corero
plc) completed and Loudwater received consideration for its Top
Layer shareholding of 4,399,891 Corero shares (US$3.1 million at
45p per share), Corero consideration loan notes with a value of
US$2.7 million and cash of US$1.7 million.
As announced on 17 February 2012, Loudwater's shares in Corero
were placed as part of an equity fundraising by Corero, at 43p per
share for a gross consideration of GBP1.89 million, and Loudwater
received the proceeds in early March following approval of the
equity placing by Corero's shareholders.
Following the sale of Loudwater's shareholding in Corero, on 19
March 2012 Loudwater exercised the right to appoint an observer to
the Corero board, and on 20 March 2012, Edward Forwood stepped down
from the board of Corero.
Loudwater continues to hold the consideration loan notes with
original face value of US$2.7 million, generating interest at 8%
per annum which is accrued and added to the principal amount on a
bi-annual basis. The consideration loan notes are repayable on 3
March 2014 but can be repaid prior to the repayment date without
penalty at the sole election of Corero.
Corero announced their 2011 results on 20 March 2012. The
following is an extract from their results announcement:
"...2011 was a transformational year for Corero with the
acquisition and successful integration of Top Layer Networks, Inc.
("Top Layer") coupled with the continuing growth of the Corero
Business Systems division ("CBS"). The Top Layer acquisition closed
on 2 March 2011 and Top Layer was rebranded Corero Network Security
("CNS") in June 2011.
CNS has made significant progress post acquisition, with the
establishment of an international sales team and considerable
investment into product development, leading to increased sales
momentum and order intake. In addition, CBS has experienced strong
growth during the period.
In the year ended 31 December 2011 the Group reported revenues
of GBP11.3 million (2010: GBP3.0 million) and operating profit
before depreciation, amortisation, acquisition and restructuring
costs and financing of GBP287,000 (2010: GBP333,000).
On 6 March 2012, the Company raised GBP4.56 million (before
issue costs), of which the directors and senior management
contributed GBP1.4 million, by way of a placing of 10,615,694 new
ordinary shares at a price of 43p per share. The money was raised
to support the growth of the Corero Network Security business by
investing in the sales of marketing functions of the business to
gain end-user customer and channel partner awareness, and investing
in its product development capabilities...".
Investment Advisor's Report (continued)
Year ended 31 December 2011
Other investments (continued)
City Financial Investment Company Limited (London, UK) -
www.cityfinancial.co.uk
City Financial is an established London based fund management
firm that was acquired in January 2006 by an experienced team from
Invesco UK. The Company financed City Financial's significant
expansion by acquisition in 2007. City Financial is responsible for
a portfolio of funds including gilt, global bond and multi-manager
absolute return.
On 18 January 2012, Loudwater announced the sale of its
investment in City Financial. Loudwater's shares in City Financial,
which represented a non-controlling equity interest, were acquired
by City Financial itself, for total consideration of GBP2.75
million. Loudwater received cash proceeds of GBP2.5 million,
together with preferred ordinary shares valued at GBP250,000.
The total consideration of GBP2.75 million was 10% below the
carrying value of the investment as at 30 September 2011.
Richard Wyatt & Edward Forwood
Loudwater Investment Partners Limited
16 May 2012
Investing Policy
Investment Objective
The Company's investment objective on admission to trading on
AIM in January 2007 was to provide shareholders with an attractive
rate of return on their investment, primarily through investing in
companies which were likely to achieve an initial public offering
("IPO") or a sale within a short term time horizon, and through a
small number of investments in companies that were already
listed.
Following the approval of shareholders at an extraordinary
general meeting on 5 November 2008, the Company made the following
key changes to its investment objective:
-- The Company will not make any new investments other than
follow-ons. Remaining capital will be reserved for follow-on
investments in existing portfolio companies where the Investment
Advisor believes further funding is required.
-- Cash proceeds from realisations in full following the exit of
a portfolio investment will be distributed to shareholders, subject
to the retention of sufficient cash for follow-on investments in
existing portfolio companies where the Investment Advisor believes
further funding is required.
Assets or Companies in which the Company can invest
The Company will not make any investments in new portfolio
companies, apart from follow-on investments in existing portfolio
companies.
As and when economic and market uncertainties have receded and
the IPO markets for smaller companies show signs of improvement,
the Board will review the options of either recapitalising the
Company and resuming investment activity or initiating an orderly
disposal of the portfolio and the return of all capital to
shareholders.
Whether investments will be active or passive investments
Investments in portfolio companies are passive in nature but
managed on an active basis.
The Investment Advisor formally monitors each of the Company's
investments on an ongoing basis. Whilst the Company would usually
require a right to a board seat or observer status, this right
would generally only be exercised in the event of problems in the
investee company or if the Company owns a significant equity
holding in the investee company.
Holding period for investments
At admission to trading on AIM in January 2007, the Company's
policy was to invest in companies which were likely to achieve a
listing or realisation within six to twenty-four months.
Furthermore, the Company wished to invest in businesses which would
achieve an acceptable level of market capitalisation if they were
listed on a public market. As such the Company's policy was not to
invest in early stage or start-up situations, and instead it would
focus on investing in companies which had achieved suitable levels
of revenues and were either profitable or close to achieving
profitability at the time of investment.
In light of the deteriorating economic environment towards the
end of 2008, the Board, as advised by the Investment Advisor,
believed that exit timeframes for potential new investments and the
existing portfolio would be longer than previously envisaged.
Moreover, whilst attractive returns were anticipated from the
existing investment portfolio, some were likely to need further
funding before an exit could be achieved. As a result, the
investment objective and policy of the Company was amended and
approved by shareholders in November 2008. It is therefore
difficult to determine the timing of exits at this stage.
Spread of investments and maximum exposure limits
On admission to trading on AIM in January 2007, it was the
Company's intention to use the net proceeds of the placing of circa
GBP74 million to build an initial portfolio of investments in at
least 15 companies.
The Company also stated that it would not seek to invest (or
commit to invest) more than 10 per cent. of the Company's gross
assets in any single investment at the time of investment (or
commitment), although such limit was able to be exceeded in certain
cases where the Board deemed it appropriate on the advice of the
Investment Advisor.
Investing Policy (continued)
Spread of investments and maximum exposure limits
(continued)
Typically, investments in pre-IPO opportunities were to be made
by way of a convertible loan note that would convert on an exit
event at a discount to the relevant exit price. The loans may also
have an attached equity interest in the form of a warrant or option
over shares. However, a proportion, not envisaged to exceed 25 per
cent. of the net asset value of the portfolio, would be in
investments made at a fixed price. This was necessary in order to
capture attractive pre-IPO opportunities that are not available
with a loan note security.
In addition, the Company was able to invest in companies that
were already listed. These investments were to be made on an
opportunistic basis and were expected to represent a small number
of the Company's transactions, not exceeding 15 per cent. of the
total net asset value of the Company. As investee companies achieve
successful listings, however, the net asset value attributable to
holdings in listed companies may be substantial.
The shareholders resolved at an extraordinary general meeting on
5 November 2008 that the Company would not make investments in any
new portfolio companies, and that funds would be reserved for
follow-on investments in existing portfolio companies. Accordingly,
the Company will not be able to increase the spread of investments
beyond its investment in 8 investee companies as at 31 December
2011 (31 December 2010: 8 investee companies).
Policy in relation to gearing
The Directors may exercise the powers of the Company to borrow
money and to give security over its assets.
The Company may borrow funds secured on its investments if the
Board, as advised by the Investment Advisor, considers that
satisfactory opportunities for follow-on investment arise at a time
when the Company is close to being fully invested. In any event,
borrowings will be limited to 50 per cent. of the value of the
Company's investments at the time of draw down.
The Company may be indirectly exposed to the effects of gearing
to the extent that investee companies have outstanding
borrowings.
The Company may invest a proportion of its assets in underlying
investments denominated in currencies other than sterling. In an
attempt to reduce the impact on the ordinary shares of currency
fluctuations and the volatility of returns which may result from
such currency exposure, the Company will have the flexibility to
hedge the appropriate proportions of the Company's assets against
sterling through the use of foreign exchange transactions and
currency derivatives. Currency hedging will be for the purposes of
efficient portfolio management only and the Company has no
intention of using currency hedging for the purposes of currency
speculation for its own account.
Policy in relation to cross-holdings
The Company does not have a formal policy on cross-holdings.
However, the Company's policy is not to make any investments in new
portfolio companies, apart from follow-on investments in existing
portfolio companies.
The Company's policy for investments in companies that are
already listed, which include closed-ended investment funds, is
that they will be made on an opportunistic basis and are expected
to represent a small number of the Company's transactions, not
exceeding 15 per cent. of the total net asset value of the Company.
As investee companies achieve successful listings, however, the net
asset value attributable to holdings in listed companies may be
substantial.
Investing Restrictions
Following the approval of shareholders at an extraordinary
general meeting on 5 November 2008, the Company no longer intends
to make any investments in new portfolio companies. Remaining
capital will be reserved for follow-on investments in existing
portfolio companies where the Investment Advisor believes further
funding is required.
Whilst there are no restrictions on the ability of the Company
to take controlling stakes in portfolio companies, the Company
ensures that there is sufficient separation between the Company and
each portfolio company through the right to a Board seat or Board
observer status in only a non-executive capacity.
Investing Policy (continued)
Investing Restrictions (continued)
In addition, the Company also ensures that there is sufficient
separation between each portfolio company by ensuring that there is
no:
-- cross-financing, including the provision of undertakings or
security for borrowings from one portfolio company to another;
-- common treasury functions; or
-- sharing of operations.
Other than these restrictions set out above, and the requirement
to invest in accordance with its investing policy, there are no
other investing restrictions.
Returns and Distribution Policy
It is anticipated that returns from the Company's investment
portfolio will be in the form of capital upon realisation or sale
of its investee companies, rather than from dividends.
At the extraordinary general meeting on 5 November 2008, it was
resolved that the cash proceeds of realisation in full following
the exit of a portfolio investment would be returned to
shareholders, subject to the retention of sufficient cash for
follow-on investments in existing portfolio companies where the
Investment Advisor believes that further funding is required.
Whilst it is not possible to determine the timing of exits, the
Board, advised by the Investment Advisor, will seek to return
capital to shareholders when appropriate.
Life of the Company
The Company was established with an indefinite life. Following
the approval of shareholders at an extraordinary general meeting on
5 November 2008, there will be a continuation vote at the annual
general meeting of the Company to be held to consider the accounts
for the financial period ended 31 December 2013 (or any accounting
period substituted for it). It is further proposed that if any such
continuation vote is passed, that a similar continuation vote will
be proposed at every second annual general meeting thereafter. If
at any time a continuation vote is not passed, the Directors will
be required to formulate proposals to wind up the Company.
Report of the Directors
The Directors of Loudwater Trust Limited ("the Company") are
pleased to present their annual report and audited financial
statements for the year ended 31 December 2011.
THE COMPANY
The Company is a Guernsey registered closed-ended investment
company, registered with limited liability in Guernsey on 11
January 2007 in accordance with The Control of Borrowing (Bailiwick
of Guernsey) Ordinance, 1959 as amended and is governed by the
provisions of the Companies (Guernsey) Law, 2008. The Company
commenced business on 29 January 2007 when the Ordinary Shares of
the Company were admitted to trading on AIM.
The Company is an Authorised Closed-ended Investment Scheme and
is subject to the Authorised Closed-ended Investment Scheme Rules
2008.
INVESTMENT OBJECTIVES & POLICY
The Company's investment objectives and policy are detailed on
pages 9 - 11.
RESULTS AND DIVIDENDS
The results for the year are set out in the Statement of
Comprehensive Income on page 19.
The dividend policy of the Company is disclosed in note 16 to
the financial statements. The Directors do not recommend the
payment of a dividend for the year ended 31 December 2011 (31
December 2010: GBPnil).
CORPORATE GOVERNANCE
COMPLIANCE
The Board note the principles and recommendations of the Finance
Sector Code of Corporate Governance issued by the GFSC which became
effective on 1 January 2012 (the "Guernsey Code"), the principles
and recommendations of the UK Corporate Governance Code (formerly
the Combined Code) issued by the Financial Reporting Council in
June 2010 and applicable for accounting periods beginning on or
after 29 June 2010 (the "UK Code"), and the principles and
recommendations of the AIC Code of Corporate Governance issued by
the AIC in October 2010 (the "AIC Code").
As a Guernsey incorporated company and under the AIM Rules for
Companies, it is not a requirement for the Company to comply with
the UK Code. However, the Directors place a high degree of
importance on ensuring that high standards of corporate governance
are maintained and have considered the principles and
recommendations of the Guernsey Code, the UK Code and the AIC Code.
Furthermore, the Directors have considered the effectiveness of
their corporate governance practices and are satisfied with their
degree of compliance with the principles laid out in the Guernsey,
UK, and AIC Codes in the context of the nature, scale and
complexity of the Company's business.
As at 31 December 2011 the Company complied substantially with
the relevant provisions of the UK, Guernsey, and AIC Codes (save
with regard to the following provisions listed below) and it is the
intention of the Board that the Company will comply with those
provisions (save with regard to the following provisions listed
below) throughout the year ending 31 December 2012:
-- The role of the chief executive: The Board considers that the
post of chief executive officer is not relevant for the Company as
this role has effectively been delegated to the Investment Manager
under the terms of the Investment Management Agreement.
-- The appointment of a Senior Independent Director: Following
the board restructuring that took place on 27 April 2012,
Christopher Fish has been appointed the senior independent
director.
-- Executive directors' remuneration: As the Board has no
executive directors, it is not required to comply with the
principles of the Code in respect of executive directors'
remuneration and does not have a remuneration committee.
-- Establishment of nomination committee: Since all of the
Directors are non-executive, the Board does not consider it
necessary to establish a nomination committee. The Board as a whole
monitors performance and plans for succession of the Board, either
through Board meetings or, if appropriate, through the use of an
appropriately constituted committee.
Report of the Directors (continued)
CORPORATE GOVERNANCE (continued)
COMPLIANCE (continued)
-- Internal audit function: The Board has reviewed the need for
an internal audit function, as recommended by the Code. Due to the
size of the Company and the delegation of day-to-day operations to
regulated service providers, an internal audit function is not
considered necessary. The Directors consider annually whether a
function equivalent to an internal audit is needed and will
continue to monitor its systems of internal controls in order to
provide assurance that they operate as intended.
Independence of Directors
As at 31 December 2011, the Board consisted of seven members,
all of whom are non-executive and, with the exception of Edward
Forwood, Rhys Davies and Brett Miller, all are considered to be
independent.
The Directors recognise the importance of succession planning
for company boards and review the composition of the Board
annually. However, the Board is of the view that length of service
will not necessarily compromise the independence or contribution of
directors of an investment company where continuity and experience
can be a benefit to the board. Furthermore, the Board agrees with
the view expressed in the AIC Code of Corporate Governance that
long serving Directors should not be prevented from forming part of
an independent majority or from acting as Chairman. Consequently no
limit has been imposed on the overall length of service of the
Directors.
With the exception of Mr Miller and Mr Davies (appointed 20 May
2011), all other Directors, who held office during the year, were
initially appointed to the Board on 11 January 2007 and a third of
them retired, and seeked reappointment at each annual general
meeting ("AGM"). At the AGM, held on 20 June 2011, Mr Le Tissier
and Lord Flight retired by rotation under the articles of
incorporation, and were then re-elected by shareholders. On 27
April 2012, Lord Flight, Edward Forwood, Robert Fearis and Roger Le
Tissier resigned from the Board of Directors with immediate effect.
As a result, the remaining Directors are Christopher Fish, Brett
Miller and Rhys Davies. Rhys Davies was appointed non-executive
Chairman, replacing Lord Flight. As Brett Miller and Rhys Davies
are representatives of Damille, a 27.64% shareholder in the
Company, they are not deemed to be independent directors. The Board
as a whole is therefore not deemed to be independent of Damille. At
the Company's next AGM, an ordinary resolution will be proposed to
seek the reappointment of Mr Fish to retire by rotation, under the
articles of incorporation.
The Directors believe that the Board has a balance of skills and
experience which enable it to provide effective strategic
leadership and proper governance of the Company.
The Board has contractually delegated external agencies for the
management of the investment portfolio, the custodial services and
the day to day accounting and company secretarial requirements.
Each of these contracts was only entered into after proper
consideration by the Management Engagement Committee or the
Board.
BOARD COMMITTEES
AUDIT COMMITTEE
An audit committee has been appointed and is responsible for
reviewing and monitoring internal financial control systems and
risk management systems on which the Company is reliant,
considering the annual financial statements and audit report,
considering the appointment and remuneration of the Company's
auditors and monitoring and reviewing annually their independence,
objectivity, effectiveness and qualifications. The members of the
Audit Committee are Robert Fearis (Chairman), Christopher Fish,
Roger Le Tissier and Rhys Davies. The Audit Committee has performed
reviews of the internal financial control systems and risk
management systems during the year. The Audit Committee is
satisfied with the internal financial control systems of the
Company. The Audit Committee meets at least twice a year. Following
the Board restructuring on 27 April 2012, the Board as a whole will
be responsible for the functions and duties of the audit
committee.
Report of the Directors (continued)
CORPORATE GOVERNANCE (continued)
BOARD COMMITTEES (continued)
MANAGEMENT ENGAGEMENT COMMITTEE
The management engagement committee has been formed to review
the performance of the Investment Advisor in relation to the
provision of management services to the Company and to ensure that
the terms of the Investment Advisory Agreement are competitive and
sensible for shareholders. The duties of the management engagement
committee also include reviewing the performance of the NOMAD, the
Administrator and the Registrar and ensuring the terms of their
remuneration remain competitive and sensible for shareholders. The
management engagement committee comprises all of the independent
directors with Lord Flight acting as Chairman. Following the Board
restructuring on 27 April 2012, the Board as a whole will be
responsible for the functions and duties of the management
engagement committee.
REMUNERATION AND NOMINATION COMMITTEES
Since all of the Directors are non-executive, the Board does not
consider it necessary to establish remuneration or nomination
committees.
MEETINGS
The table below, details the attendance at Board and Committee
meetings during the year:
Management Engagement Committee***
Audit Committee**
Board*
Management* Ad hoc
Lord Flight 2 1 - 1
Edward Forwood 1 - - -
Christopher Fish 3 3 2 1
Robert Fearis 4 1 1 -
Roger Le Tissier 3 3 1 -
Brett Miller 1 3 - -
Rhys Davies 1 4 1 1
*9 Board meetings have been held during the year ended 31
December 2011
** 2 Audit Committee meetings have been held during the year
ended 31 December 2011
*** 1 Management Engagement Committee meeting has been held
during the year ended 31 December 2011
INTERNAL CONTROLS
The Directors are responsible for overseeing the effectiveness
of the internal financial control systems of the Company, which are
designed to ensure proper accounting records are maintained, that
the financial information on which the business decisions are made
and which is issued for publication is reliable, and that the
assets of the Company are safeguarded. Such a system of internal
financial controls can only provide reasonable and not absolute
assurance against misstatement or loss.
In accordance with the guidance published by the Institute of
Chartered Accountants in England and Wales ("the Turnbull Report"),
the Board has reviewed the Company's internal control procedures.
These internal controls are implemented by the Company's two main
service providers, the Investment Advisor and the Administrator.
The Audit Committee contacts each service provider on an annual
basis to seek confirmation that each service provider had effective
controls in place to control the risks associated with the services
that they are contracted to provide to the Company. The Board is
satisfied with the internal controls of the Company.
The Directors meet on a quarterly basis ("Management" meetings
per the table above) and at other unscheduled times ("Ad hoc"
meetings per the table above) when necessary to assess Company
operations and the setting and monitoring of investment strategy
and investment performance. At such meetings, the Board receives
from the Administrator and Investment Advisor a full report on the
Company's holdings and performance. The Board gives directions to
the Investment Advisor as to the investment objectives and
limitations, and receives reports in relation to the financial
position of the Company and the custody of its assets.
Report of the Directors (continued)
CORPORATE GOVERNANCE (continued)
INTERNAL CONTROLS (continued)
The Board does not consider it appropriate to directly implement
social, ethical and environmental policies within an investment
company investing in financial instruments. However, the Board
acknowledges that in addition to financial, legal and market due
diligence, the Investment Advisor's investment appraisal includes a
rigorous assessment of a potential Investee Company's social,
ethical and environmental policies, and therefore the Investment
Advisor monitors such policies and practices following any
investment.
The Board has considered non-financial areas of risk such as
disaster recovery and investment management, staffing levels within
the service providers and considers adequate arrangements to be in
place.
ANTI-BRIBERY AND CORRUPTION
The Board acknowledges that the Company's international
operations may give rise to possible claims of bribery and
corruption. In consideration of the recently enacted UK Bribery
Act, at the date of this report the Board had conducted an
assessment of the perceived risks to the Company arising from
bribery and corruption to identify aspects of business which may be
improved to mitigate such risks. The Board has adopted a zero
tolerance policy towards bribery and has reiterated its commitment
to carry out business fairly, honestly and openly.
SHAREHOLDER VIEWS
The Board regularly monitors the shareholder profile of the
Company. All shareholders have the opportunity, and are encouraged,
to attend the Company AGM at which members of the Board are
available in person to meet shareholders and answer questions. In
addition, the Company's Investment Advisor and Corporate Broker
maintain regular contact with major shareholders and report
regularly to the Board on shareholder views.
DIRECTORS
The Directors, all of whom are non-executive directors, are as
listed on page 41. Mr Brett Miller and Mr Rhys Davies were
appointed on 20 May 2011, all other Directors were appointed on
incorporation.
DIRECTORS' INTERESTS
As at 31 December 2011, the interests of the Directors who held
office during the year and their families are set out below:
31 December 2011 31 December 2010
Ordinary Shares Ordinary Shares
----------------- -----------------
Lord Flight 80,000 80,000
Edward Forwood 400,000 400,000
Brett Miller - -
Rhys Davies - -
Roger Le Tissier - -
Christopher Fish - -
Robert Fearis - -
There were no changes in the interests of the Directors since
the year end to the date of this report.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Companies (Guernsey) Law, 2008 requires Directors to prepare
financial statements for each financial year which give a true and
fair view of the state of affairs of the Company and of the profit
or loss of the Company for that period and are in accordance with
applicable laws. In preparing these financial statements the
Directors are required to:
-- Select suitable accounting policies and apply them consistently;
-- Make judgements and estimates that are reasonable and prudent;
-- State whether applicable accounting standards have been
followed subject to any material departures disclosed and explained
in the financial statements; and
-- Prepare the financial statements on a going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
Report of the Directors (continued)
STATEMENT OF DIRECTORS' RESPONSIBILITIES (continued)
The Directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the
financial position of the Company to enable them to ensure that the
financial statements have been prepared in accordance with the
Companies (Guernsey) Law, 2008 and the Company's principal
documents. They are also responsible for safeguarding the assets of
the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
So far as the Directors are aware, there is no relevant audit
information of which the Company's auditors are unaware, having
taken all steps the Directors ought to have taken to make
themselves aware of any relevant audit information and to establish
that the Company's auditors are aware of that information.
THE INVESTMENT ADVISOR
Loudwater Investment Partners Limited was appointed Investment
Advisor to the Company pursuant to an Investment Advisory Agreement
dated 24 January 2007 (the "Investment Advisory Agreement"),
between the Company and the Investment Advisor. Under this
agreement the Investment Advisor is responsible for sourcing,
evaluating, negotiating, completing and monitoring investments on
behalf of the Company, subject to overall supervision of the
Company's Directors. The Investment Advisor also advises the Board
on the proposed divestment of investments and gives effect to their
implementation.
The Investment Advisory Agreement shall continue in force until
the Annual General Meeting of the Company to be held to consider
the accounts for the financial period ended 31 December 2013 (or
any accounting period substituted for it) at which point there will
be a continuation vote to consider whether to increase the life of
the Company. If any such continuation vote is passed the Investment
Advisory Agreement is then renewable by continuation vote on every
anniversary of the date of execution of the Investment Advisory
Agreement. The Investment Advisory Agreement may be terminated
earlier upon certain breaches of the Investment Advisory Agreement
or the insolvency or receivership of either party or if the
Investment Advisor ceases to be qualified to act as such.
THE ADMINISTRATOR
Praxis Fund Services Limited has been appointed Administrator to
the Company pursuant to an Administration Agreement dated 24
January 2007 (the "Administration Agreement"), between the
Administrator and the Company. The Administrator has also been
appointed to act as Secretary of the Company. Under this agreement
the Administrator will be responsible for certain administrative
duties in accordance with the Administration Agreement.
The Administration Agreement may be terminated by either party
on not less than 3 months written notice, or earlier upon certain
breaches of the Administration Agreement or the insolvency or
receivership of either party or if the Administrator ceases to be
qualified to act as such.
STATUS OF TAXATION
The Income Tax Authority of Guernsey has granted the Company
exemption from Guernsey income tax under the Income Tax (Exempt
Bodies) (Guernsey) Ordinance, 1989 and the income of the Company
may be distributed or accumulated without deduction of Guernsey
income tax. Exemption under the above mentioned Ordinance entails
payment by the Company of an annual fee of GBP600. It should be
noted, however, that interest and dividend income accruing from the
Company's investments may be subject to withholding tax in the
country of origin. With effect from 1 January 2008 the standard
rate of income tax for most companies in Guernsey is zero per cent.
Tax Exempt status continues to exist and the Company has been
granted this status for 2011 and 2012.
The Company has not suffered any withholding tax in the year (31
December 2010: GBPnil).
AUDITORS
BDO Limited were appointed as auditors of the Company and are
eligible for re-appointment at the forthcoming Annual General
Meeting.
Director: Rhys Davies
16 May 2012
On behalf of the Board of Directors
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF LOUDWATER TRUST
LIMITED
We have audited the financial statements of Loudwater Trust
Limited for the year ended 31 December 2011 which comprise the
Statement of Financial Position, the Statement of Comprehensive
Income, the Statement of Changes in Equity, the Statement of Cash
Flows and the Statement of Changes in Equity and the related notes
1 to 18. The financial reporting framework that has been applied in
their preparation is applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the European Union.
This report is made solely to the company's members, as a body,
in accordance with Section 262 of the Companies (Guernsey) Law,
2008. Our audit work is undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of the directors and auditor
As explained more fully in the Directors' Responsibilities
Statement within the Report of the Directors, the directors are
responsible for the preparation of the financial statements and for
being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the
financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's
(APB's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the company's circumstances and have been
consistently applied and adequately disclosed; the reasonableness
of significant accounting estimates made by the directors; and the
overall presentation of the financial statements. In addition, we
read all the financial and non--financial information in the Report
of the Directors to identify material inconsistencies with the
audited financial statements. If we become aware of any apparent
misstatements or inconsistencies we consider the implications for
our report.
Opinion on the financial statements
In our opinion the financial statements:
-- give a true and fair view of the state of the company's
affairs as at 31 December 2011 and of its loss for the year then
ended;
-- have been properly prepared in accordance with IFRSs as adopted by the European Union; and
-- have been properly prepared in accordance with the
requirements of the Companies (Guernsey) Law, 2008.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies (Guernsey) Law, 2008 requires us to report to
you if, in our opinion:
-- proper accounting records have not been kept by the company; or
-- the financial statements are not in agreement with the accounting records; or
-- we have failed to obtain all the information and
explanations, which, to the best of our knowledge and belief, are
necessary for the purposes of our audit.
CHARTERED ACCOUNTANTS
BDO Limited
Place du Pre
Rue du Pre
St Peter Port
Guernsey, GY1 3LL
16 May 2012.
Statement of Financial Position
As at 31 December 2011
Notes 31 December 2011 31 December 2010
-------------------------------------------------------------------- ------ ---------------- ----------------------
GBP GBP
Non-current assets
Financial assets at fair value through profit or loss: 2 & 6
Designated at fair value through profit or loss upon initial
recognition:
Equity investments 25,968,530 29,699,648
Compound debt investments* 2,355,083 3,846,736
Other short term investment** 152,577 1,773,838
---------------- ----------------------
Total designated at fair value through profit or loss upon initial
recognition 28,476,190 35,320,222
---------------- ----------------------
Current assets:
Financial assets at fair value through profit or loss:
Designated at fair value through profit or loss upon initial
recognition:
Equity investment held for sale 7 2,000,000 -
Other receivables 8 7,541 30,936
Cash and cash equivalents 9 1,762,408 5,265,044
---------------- ----------------------
3,769,949 5,295,980
---------------- ----------------------
Total Assets 32,246,139 40,616,202
---------------- ----------------------
Liabilities
Financial liabilities measured at amortised cost:
Other payables*** 10 34,851 234,508
Total net assets 32,211,288 40,381,694
================ ======================
Equity attributable to equity holders
Distributable reserve 11 56,289,984 60,506,329
Revenue reserve 12 (24,078,696) (20,124,635)
Total equity 32,211,288 40,381,694
================ ======================
Net asset value per Ordinary Share (GBP) 13 0.5348 0.6704
================ ======================
* Compound debt investments comprise secured loan notes,
including accrued simple interest.
** Other short term investment in the comparative year is a
fixed cash deposit with a maturity of longer than 3 months from the
reporting date.
*** Creditors and accruals.
The financial statements on pages 18 to 40 were approved by the
Board of Directors and authorised for issue on 16 May 2012. They
were signed on its behalf by:
Director: Rhys Davies
The notes on pages 22 to 40 form an integral part of these
financial statements.
Statement of Comprehensive Income
For the year ended 31 December 2011
1 January 1 January
2011 2010
Notes To To
31 December 31 December
2011 2010
--------------------------------------- ------ ------------ ------------
GBP GBP
Income
Interest income from cash
and cash equivalents 17,983 38,372
Total income 17,983 38,372
------------ ------------
Expenses
Investment Advisor's fee 3 738,060 853,597
Administration fee 3 65,840 47,521
Directors' fees and expenses 4 116,439 106,404
Auditor's remuneration 27,800 23,924
Legal and professional* 105,947 5,250
Other expenses** 98,046 129,454
Total expenses 1,152,132 1,166,150
------------ ------------
Net loss before investment
result (1,134,149) (1,127,778)
Movement in net unrealised
gains/(losses) on investments
at fair value through profit
or loss 6 5,648,902 (2,360,588)
Movement in net unrealised
losses on investment held
for sale at fair value through
profit or loss 7 (1,350,000) -
Net realised loss on disposal
of investments at fair value
through profit or loss 6 (6,826,936) (1,358,789)
Net foreign exchange (losses)/gains*** 2b (62,264) 234,610
Bad debt provision**** (229,614) (247,928)
Loss for the financial year (3,954,061) (4,860,473)
------------ ------------
Other comprehensive income - -
Total comprehensive loss
for the year 12 (3,954,061) (4,860,473)
============ ============
Loss per Ordinary Share
(GBP) 5 (0.0656) (0.0807)
============ ============
*Includes costs associated with the return of capital.
**Includes Nomad fees, transaction costs, marketing expenses,
other professional fees and costs associated with capital
returns.
***Represents foreign exchange (losses)/gains in respect of US$
reserves, creditors and debtors.
****Represents a bad debt provision taken against the Pentadyne
escrow deposit as described in our report for 2010.
The results from the current and prior years are derived from
continuing operations.
The notes on pages 22 to 40 form part of these financial
statements.
Statement of Changes in Equity
For the year ended 31 December 2011
1 January 1 January
2011 2010
Notes To To
31 December 31 December
2011 2010
-------------------------- ------ ------------ ------------
GBP GBP
Balance brought forward 40,381,694 45,242,167
Total comprehensive loss
for the year (3,954,061) (4,860,473)
Capital distribution paid
in the year 11 (4,216,345) --
Balance carried forward 32,211,288 40,381,694
============ ============
The notes on pages 22 to 40 form part of these financial
statements.
Statement of Cash Flows
For the year ended 31 December 2011
1 January 1 January
2011 2010
Notes To To
31 December 31 December
2011 2010
---------------------------------- ------ ------------ ------------
GBP GBP
Cash flows used in operating
activities
Net loss before investment
result (1,363,762) (1,375,706)
Adjusted for:
Bank interest (17,983) (38,372)
Decrease/(increase) in other
receivables 24,132 (27,810)
(Decrease)/increase in other
payables (199,657) 103,502
Purchase of investments (624,204) (1,773,687)
Proceeds from sale of investments 2,940,201 4,802,254
Net cash from operating
activities 758,727 1,690,181
------------ ------------
Cash flows (used in)/from
financing activities
Bank interest received 17,246 70,089
Capital distribution paid 11 (4,216,345) -
Net cash (used in)/from
financing activities (4,199,099) 70,089
------------ ------------
Net (decrease)/increase
in cash and cash equivalents (3,440,372) 1,760,270
Cash and cash equivalents,
start of the year 5,265,044 3,270,164
Effect of exchange rate
changes during the year (62,264) 234,610
------------ ------------
Cash and cash equivalents,
end of the year* 9 1,762,408 5,265,044
============ ============
Cash and cash equivalents
comprise the following amounts:
Bank deposits 91,762,408 5,265,044
1,762,408 5,265,044
========= =========
*Cash and cash equivalents at the end of the period exclude
fixed cash deposits with a maturity of longer than 3 months from
the reporting date. As at 31 December 2011, fixed cash deposits
with a maturity of longer than 3 months from the reporting date of
GBP0.2 million (31 December 2010: GBP1.8 million) are categorised
as "other short term investments" in these financial
statements.
The notes on pages 22 to 40 form part of these financial
statements.
Notes to the Financial Statements
For the year ended 31 December 2011
1. The Company
The Company is a Guernsey registered closed-ended investment
company and was registered with limited liability in Guernsey on 11
January 2007. The Company commenced business on 29 January 2007
when the Ordinary Shares of the Company were admitted to trading on
AIM.
The Company is an Authorised Closed-Ended Investment Scheme and
is subject to the Authorised Closed-Ended Investment Scheme Rules
2008.
The Company was established to provide Shareholders with an
attractive rate of return on their investment, primarily through
investing in companies which were likely to achieve an IPO or a
sale within a short term time horizon and through a small number of
investments in companies that were already listed. Refer to pages 9
to 11 for full details of the Company's investing policy.
The Company made its last investment in a new opportunity,
AgraQuest, Inc. in October 2007. By early 2008, the Investment
Advisor was becoming increasingly aware that equity values were
under pressure and that opportunities for exit by IPO or trade sale
were weakening.
2. Significant Accounting Policies
The following accounting policies have been applied consistently
in dealing with items which are considered material in relation to
the Company's financial statements:
(a) Basis of Preparation
(i) Statement of compliance
The financial statements of the Company have been prepared in
accordance with International Financial Reporting Standards
("IFRS"), which comprise standards and interpretations approved by
the International Accounting Standards Board ("IASB"), and
International Accounting Standards and Standing Interpretations
Committee interpretations approved by the International Accounting
Standards Committee ("IASC") and adopted by the European Union that
remain in effect.
The financial statements of the Company have been prepared under
the historical cost convention modified by the revaluation of
investments and assets and liabilities at fair value through profit
or loss, and in accordance with IFRS and the Companies (Guernsey)
Law, 2008.
(ii) Judgements and estimates
The preparation of financial statements in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. The estimates and associated
assumptions are based on historical experience and other factors
that are considered to be relevant. Actual results could differ
from such estimates.
The estimates and underlying assumptions are reviewed on an
on-going basis. Revisions to accounting estimates are recognised in
the period in which the estimate was revised if the revision
affects only that period or in the period of the revision and
future periods if the revision affects both current and future
periods.
The most critical judgements, apart from those involving
estimates, that management has made in the process of applying the
Company's accounting policies and that have the most significant
effect on the amounts recognised in the financial statements, are
the functional currency of the Company (see note 2(b)(i)) and the
fair value of investments designated to be at fair value through
profit or loss (see note 2(f)).
2. Significant Accounting Policies (continued)
(iii) IFRS
New standards and interpretations adopted
The Company has adopted the following new and amended standards
and interpretations, which are applicable to the Company's
operations, for the accounting period commencing 1 January
2011:
-- Improvements to IFRSs 2009 - various standards (effective 1
January 2010)
-- Amendments to IFRS 1 - Limited Exemption from Comparative
IFRS 7 Disclosures for First-time Adopters (effective 1 July
2010)
-- Improvements to IFRSs 2010 - various standards (effective 1
July 2010)
Significant new standards and interpretations not yet
adopted
A number of new standards, amendments to standards and
interpretations are not yet effective for the current year, and
have not been applied in preparing these financial statements. None
of these will have a significant effect on the financial statements
of the Company, with the exception of the following:
-- IFRS 9 Financial Instruments, published on 12 November 2009
(effective 1 January 2015) as part of phase I of the IASB's
comprehensive project to replace IAS 39, deals with classification
and measurement of financial assets. The requirements of this
standard represent a significant change from the existing
requirements in IAS 39 in respect of financial assets. The standard
contains two primary measurement categories for financial assets:
amortised cost and fair value. A financial asset would be measured
at amortised cost if it is held within a business model whose
objective is to hold assets in order to collect contractual cash
flows, and the asset's contractual terms give rise on specified
dates to cash flows that are solely payments of principal and
interest on the principal outstanding. All other financial assets
would be measured at fair value.
The standard eliminates the existing IAS 39 categories of held
to maturity, available for sale and loans and receivables. For an
investment in an equity instrument which is not held for trading,
the standard permits an irrevocable election, on initial
recognition, on an individual share-by-share basis, to present all
fair value changes from the investment in other comprehensive
income. No amount recognised in other comprehensive income would
ever be reclassified to profit or loss at a later date. However,
dividends on such investments are recognised in profit or loss,
rather than other comprehensive income unless they clearly
represent a partial recovery of the cost of the investment.
Investments in equity instruments in respect of which an entity
does not elect to present fair value changes in other comprehensive
income would be measured at fair value with changes in fair value
recognised in profit or loss.
The standard requires that derivatives embedded in contracts
with a host that is a financial asset within the scope of the
standard are not separated; instead the hybrid financial instrument
is assessed in its entirety as to whether it should be measured at
amortised cost or fair value.
The Directors' are currently in the process of evaluating the
potential effect of this standard. The standard is not expected to
have a significant impact on the financial statements since the
majority of the Company's financial assets are designated at fair
value through profit or loss. The amendments will become mandatory
for the Company's 31 December 2016 annual financial statements.
-- IFRS 10 Consolidated Financial Statements, IFRS 10 supersedes
IAS 27 Consolidated and Separate Financial Statements and SIC-12
Consolidation - Special Purpose Entities. It introduces a new,
principle-based definition of control which will apply to all
investees to determine the scope of consolidation.
-- IFRS 13 Fair Value Measurement, currently, guidance on
measuring fair value is distributed across many IFRS. Some
standards contain limited guidance and others quite extensive
guidance that is not always consistent. IFRS 13 has been developed
to remedy this problem, by:
2. Significant Accounting Policies (continued)
(iii) IFRS (continued)
Significant new standards and interpretations not yet adopted
(continued)
-- IFRS 13 Fair Value Measurement (continued)
1) establishing a single source of guidance for all fair value measurements;
2) clarifying the definition of fair value and related guidance; and
3) enhancing disclosures about fair value measurements
The fair value measurement framework is based on a core
principle that defines fair value as an exit price, whilst
retaining the exchange price notion contained in the existing
definition of fair value in IFRS.
The standard also clarifies that fair value is based on a
transaction taking place in the principal market for the asset or
liability or, in the absence of a principal market, the most
advantageous market. The principal market is the market with the
greatest volume and level of activity for the asset or
liability.
For liabilities, the standard provides extensive guidance to
deal with the problematic issue of measuring the fair value of a
liability in the absence of a quoted price in an active market to
transfer an identical liability.
Proposed disclosures in the new standard will increase
transparency about fair value measurements, including the valuation
techniques and inputs used to measure fair value.
The Directors believe that other pronouncements, which are in
issue but not yet operative or adopted by the Company, will not
have a material impact on the financial statements of the
Company.
(b) Foreign Currency
(i) Functional and Presentation Currency
The Company's investors are mainly from the UK, with the share
price of the Ordinary Shares denominated in sterling. The primary
activity of the Company is to offer UK investors an attractive
return on their investment, primarily through investing in
companies which are likely to achieve an IPO or a sale within a
short term time horizon and through a small number of investment
companies that are already listed. The performance of the Company
is measured and reported to investors in sterling. The Directors
consider sterling to be the currency that most faithfully
represents the economic effects of the underlying transactions,
events and conditions. The financial statements are presented in
sterling, which is the Company's functional and presentation
currency.
(ii) Transactions and Balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
period-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the profit and
loss. Translation differences on non-monetary financial assets and
liabilities such as equities at fair value through profit or loss
are recognised in other comprehensive income.
(c) Income
Bank interest, investment income and loan stock interest are
included in the financial statements on an accruals basis.
(d) Financial Instruments
Financial assets and financial liabilities are recognised in the
Statement of Financial Position when the Company becomes a party in
the contractual provisions of the instrument.
(i) Financial assets
The classification of financial assets at initial recognition
depends on the purpose for which the financial assets were acquired
and their characteristics.
2. Significant Accounting Policies (continued)
(d) Financial Instruments (continued)
(i) Financial assets (continued)
All financial assets are initially recognised at fair value. All
purchases of financial assets are recorded at trade date, this
being the date on which the Company became party to the contractual
requirement of the financial asset.
The Company's financial assets are categorised as financial
assets at fair value through profit or loss and loans and
receivables. Unless otherwise indicated the carrying amounts of the
Company's financial assets approximate to their fair values. Gains
and losses arising from changes in the fair value of financial
assets classified as fair value through profit or loss are
recognised in the Statement of Comprehensive Income.
Loans and receivable assets are non-derivative financial assets
with fixed or determinable payments that are not quoted in an
active market. They principally comprise trade and other
receivables, but also incorporate other types of contractual
monetary assets. They are initially recognised at fair value plus
transaction costs that are directly attributable to the acquisition
and subsequently carried at amortised cost plus using the effective
interest rate method, less provisions for impairment. The effect of
discounting on these financial instruments is not considered to be
material.
A financial asset (in whole or in part) is derecognised
either:
-- When the Company has transferred substantially all the risk and rewards of ownership;
-- When it has not retained substantially all the risk and
rewards and when it no longer has control over the asset or a
portion of the asset; or
-- When the contractual right to receive cash flow has expired.
(ii) Financial liabilities
The classification of financial liabilities at initial
recognition depends on the purpose for which the financial
liability was issued and its characteristics.
All financial liabilities are initially recognised at fair value
net of transaction costs incurred. All purchases of financial
liabilities are recorded on trade date, this being the date on
which the Company becomes party to the contractual requirements of
the financial liability. Unless otherwise indicated the carrying
amounts of the Company's financial liabilities approximate to their
fair values.
Financial liabilities include trade payables and other
short-term monetary liabilities, which are initially recognised at
fair value and subsequently carried at amortised cost. The effect
of amortising these liabilities using the effective interest rate
method is nil.
A financial liability (in whole or in part) is derecognised when
the Company has extinguished its contractual obligations, it
expires or is cancelled. Any gain or loss on derecognition is taken
to the Statement of Comprehensive Income.
(e) Impairment of financial assets
Financial assets are assessed at each reporting date to
determine whether there is any objective evidence that they are
impaired. A financial asset is considered to be impaired if
objective evidence indicates that one or more events have had a
negative effect on the estimated future cash flows of that
asset.
An impaired loss in respect of a financial asset measured at
amortised cost is calculated as the difference between its carrying
amount and the present value of the estimated future cash flows
discounted at the original effective interest rate.
Individually significant financial assets are tested for
impairment on an individual basis. The remaining financial assets
are assessed collectively in groups that share similar credit risk
characteristics.
2. Significant Accounting Policies (continued)
(e) Impairment of financial assets (continued)
All impairment losses are recognised in the Statement of
Comprehensive Income.
An impairment loss is reversed if the reversal can be related
objectively to an event occurring after the impairment loss was
recognised. The reversal is recognised in the Statement of
Comprehensive Income.
(f) Investments
(i) Classification
Investments have been designated as fair value through profit or
loss in accordance with IAS 39 (Revised) "Financial Instruments:
Recognition and Measurement". Investments include quoted
investments, unquoted investments, compound financial instruments
and fixed cash deposits which have a maturity of greater than 3
months after the period end date. These fixed cash deposits are
included in the Statement of Financial Position as other short term
investments.
Investments designated at fair value through profit or loss at
inception are those that are managed and their performance
evaluated on a fair value basis in accordance with the Company's
documented investment strategy with the exception of fixed cash
deposits which is held at cost which is deemed to be their fair
value. The Company's policy is for the Investment Advisor and the
Board of Directors to evaluate the information about these
investments on a fair value basis together with other related
financial information.
Warrant investments meet the definition of "Derivatives" under
IAS 39 and have been designated as held for trading in accordance
with IAS 39 (Revised) "Financial Instruments: Recognition and
Measurement". They are accounted for as fair value through profit
or loss.
(ii) Measurement
Investments at fair value through profit or loss are initially
recognised at fair value. Transaction costs are expensed in the
Statement of Comprehensive Income. Subsequent to initial
recognition, all investments at fair value through profit or loss
are measured at fair value. Realised and unrealised gains and
losses arising on 'investments at fair value through profit or
loss' are presented in the Statement of Comprehensive Income in the
period in which they arise. Interest income from debt investments
at fair value through profit or loss is recognised in the Statement
of Comprehensive Income within interest income using the effective
interest method. Dividend income from equity investments at fair
value through profit or loss is recognised in the Statement of
Comprehensive Income within dividend income when the Company's
right to receive payments is established.
Classification of Fair Value Measurements
The amendment to IFRS 7, effective 1 January 2009, requires the
Company to classify fair value measurements using a fair value
hierarchy that reflects the significance of the inputs used in
making the measurements. The fair value hierarchy has the following
levels:
-- Quoted prices (unadjusted) in active markets for identical
assets or liabilities (level 1);
-- Inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices) (level
2); and
-- Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (level
3).
The level in the fair value hierarchy within which the fair
value measurement is categorised in its entirety is determined on
the basis of the lowest level input that is significant to the fair
value measurement in its entirety. For this purpose, the
significance of an input is assessed against the fair value
measurement in its entirety. If a fair value measurement uses
observable inputs that require significant adjustment based on
unobservable inputs, the measurement is a level 3 measurement.
Assessing the significance of a particular input to the fair value
measurement in its entirety requires judgement considering factors
specific to the asset or liability.
2. Significant Accounting Policies (continued)
(g) Investments (continued)
(ii) Measurement (continued)
Classification of Fair Value Measurements (continued)
The determination of what constitutes "observable" requires
significant judgement by the Company. The Company considers
observable data to be that market data that is readily available,
regularly distributed or updated, reliable and verifiable, not
proprietary, and provided by independent sources that are actively
involved in the relevant market.
(iii) Recognition/derecognition
All regular way purchases and sales of investments are
recognised on trade date - the date on which the Company commits to
purchase or sell the investment. Investments are derecognised when
the rights to receive cash flows from the investments have expired
or the Company has transferred substantially all risks and rewards
of ownership.
(iv) Fair value estimation
Quoted investments at fair value through profit or loss are
valued at the bid price on the relevant stock exchange, discounted,
where necessary, to reflect any lack of liquidity.
Unquoted investments at fair value through profit or loss are
valued in accordance with the International Private Equity and
Venture Capital valuation guidelines.
Unquoted debt investments are carried at fair value in
accordance with the International Private Equity and Venture
Capital valuation guidelines.
(g) Expenses
Expenses are accounted for on an accruals basis.
(h) Cash and Cash Equivalents
Cash and cash equivalents are defined as cash in hand, demand
deposits having a maturity of less than 3 months and highly liquid
investments readily convertible to known amounts of cash and
subject to insignificant risk of changes in value. For the purposes
of the Statement of Cash Flows, cash and cash equivalents consist
of cash in hand, deposits in bank which have a maturity of less
than 3 months and overdrafts.
(i) Determination and presentation of operating segments
IFRS 8 requires a "management approach", under which segment
information is presented on the same basis as that used for
internal reporting purposes.
The key measure of performance used by the Board in its capacity
of Chief Operating Decision Maker ("CODM") is to assess the
Company's performance and to allocate resources based on the total
return of each individual investment within the Company's
portfolio, as opposed to geographic regions. As a result, the Board
is of the view that the Company is engaged in a single segment of
business, being investment in companies which were likely to
achieve an IPO or a sale within a short term time horizon and
through a small number of investments in companies that were
already listed. Therefore, no reconciliation is required between
the measure of gains or losses used by the Board and that contained
in these financial statements.
The Company receives no revenues from external customers.
3. Related Parties
Robert Fearis, a Director of the Company, is a shareholder in,
and a director of, Praxis Holdings Limited, the holding company of
the Administrator. Roger Le Tissier, a Director of the Company, is
a director of Capita Registrars (Guernsey) Limited, the Company's
Registrar, and a partner in Ogier, the Guernsey Advocate to the
Company. Edward Forwood is a Director of the Company, and a
shareholder in, and the Managing Director, of the Investment
Advisor. Brett Miller and Rhys Davies are Directors of the Company
and shareholders in, and directors of, Damille Investments Limited,
a 27.64% shareholder in the Company.
3. Related Parties (continued)
Lord Flight and Christopher Fish are independent Directors.
The Company is responsible for the continuing fees of the
Investment Advisor, Administrator and the Registrar in accordance
with the Investment Advisory, Administration and Registrar
Agreements dated 24 January 2007.
Investment Advisory Agreement
Pursuant to the provisions of the Investment Advisory Agreement,
the Investment Advisor is entitled to receive a management fee
during the year at 2.0% per annum of the net asset value of the
Company, payable quarterly in advance. As at 31 December 11, the
Investment Advisory fee creditor was GBPnil (31 December 2010:
GBPnil).
Performance Fee
The Investment Advisor is also entitled to a performance fee
calculated by taking an amount equal to 20% of the adjusted closing
net asset value (NAV) per Ordinary Share over the opening NAV per
Ordinary Share, (where the adjusted NAV is the NAV of the Company
excluding any liability for accrued performance fees and after
adding back any dividends declared or paid during the performance
period), such that the Company and the Investment Manager share all
profits in the ratio of 80% and 20% respectively. The Investment
Advisor will become entitled to a performance fee in respect of a
performance period only if the adjusted closing NAV per Ordinary
Share at the end of the relevant performance period exceeds the
opening NAV per Ordinary Share at the start of the relevant period
increased by a hurdle amount of 7.5%. The first performance period
began on Admission and ended on 31 December 2007. Each subsequent
performance period is a period of one financial year. As at 31
December 2011, the performance fee creditor was GBPnil (31 December
2010: GBPnil).
City Financial Limited
On 30 November 2009, Loudwater Investment Partners Limited was
appointed to manage City Financial's UK Select Alpha Fund (now
renamed City Financial UK Equity Income Fund). Assets under
management are some GBP16.5 million and Loudwater Investment
Partners Limited receives a fee of 0.75% of AUM per annum for this
service.
Administration Agreement
Pursuant to the provisions of the Administration Agreement,
Praxis Fund Services Limited is entitled to receive a standard
administration fee of GBP26,250 per annum together with a fee for
company secretarial services charged on a time basis. As at 31
December 2011, the administration fee creditor was GBP13,451 (31
December 2010: GBP9,580).
Registrar Agreement
Pursuant to the provisions of the Registrar Agreement, Capita
Registrars (Guernsey) Limited is entitled to a standard fee of
GBP3,500 per annum together with a per deal fee per shareholder
transaction. As at 31 December 2011, the registrar fee creditor was
GBP1,764 (31 December 2010: GBP1,764).
Nominated Advisor & Broker Fees
Pursuant to the provisions of the Engagement Letter dated 9
November 2007, as subsequently amended, Panmure Gordon (UK) Limited
is entitled to a standard fee of GBP30,000 per annum for acting as
nominated advisor and broker.
As at 31 December 2011, the Nominated Advisor and Broker fee
creditor was GBPnil (31 December 2010: GBPnil).
4. Directors' Fees & Interests
Each of the Directors has entered into an agreement with the
Company providing for them to act as a non-executive director of
the Company. Their annual fees, excluding all reasonable expenses
incurred in the course of their duties which will be reimbursed by
the Company are as follows:
31 December 2011 31 December 2010
Annual Fee Annual Fee
----------------- -----------------
GBP GBP
Lord Flight** 30,000 30,000
Edward Forwood** Nil Nil
Brett Miller* 9,000 Nil
Rhys Davies* 9,000 Nil
Roger Le Tissier** 18,000 18,000
Christopher Fish 18,000 18,000
Robert Fearis** 18,000 18,000
The total Directors' fees and expenses charged to the Statement
of Comprehensive Income during the year was GBP116,439 (31 December
2010: GBP106,404) of which GBPnil remained outstanding at 31
December 2011 (31 December 2010: GBPnil).
The interests of the Directors and their families who held
office during the year are set out below:
31 December 2011 31 December 2010
Ordinary Shares Ordinary Shares
----------------- -----------------
No. No.
Lord Flight** 80,000 80,000
Edward Forwood** 400,000 400,000
Brett Miller*(1) - -
Rhys Davies*(1) - -
Roger Le Tissier** - -
Christopher Fish - -
Robert Fearis** - -
*appointed 20 May 2011
**resigned 27 April 2012
On 27 April 2012, Lord Flight, Edward Forwood, Roger Le Tissier
and Robert Fearis resigned as Directors of the Company. Rhys Davies
was also appointed as non-executive Chairman of the Company,
replacing Lord Flight.
(1) Brett Miller and Rhys Davies are Directors of the Company
and shareholders in, and directors of, Damille Investments Limited,
a 27.64% shareholder in the Company.
There were no other changes in the interests of the Directors
prior to the date of this report.
5. Loss per Ordinary Share
Loss per Ordinary Share is based on the loss for the year of
GBP3,954,061 (31 December 2010: GBP4,860,473 loss) and on a
weighted average number of Ordinary Shares in issue during the year
of 60,232,855 (31 December 2010: 60,232,855).
6. Investments at Fair Value Through Profit or Loss
31 December 2011 31 December 2010
------------------ ------------------
GBP GBP
Listed investments 1,891,953 -
Unlisted investments 26,431,660 33,546,384
Other short term investment* 152,577 1,773,838
------------------ ------------------
28,476,190 35,320,222
================== ==================
Movement in net unrealised gain/(loss) on investments at fair value 1 January 2011 1 January 2010
through profit or loss: To To
31 December 2011 31 December 2010
------------------ ------------------
GBP GBP
Payment in kind interest ("PIK") receivable on convertible loan notes - (652,510)
Simple interest receivable on convertible loan notes (989,259) (1,004,514)
Interest receivable on other short term investments (408) (868)
Other unrealised gains/(losses) on investments 6,638,569 (702,696)
------------------ ------------------
5,648,902 (2,360,588)
================== ==================
Net realised loss on disposal of investments at fair value through
profit or loss:
Payment in kind interest receivable on convertible loan notes - 787,927
Simple interest receivable on convertible loan notes 1,185,886 1,445,809
Realised losses on investments (8,012,822) (3,592,525)
------------------ ------------------
(6,826,936) (1,358,789)
================== ==================
*Other short term investment is a fixed cash deposit with a
maturity of longer than 3 months from the reporting date.
As at prior year end, 31 December 2010, the Company had provided
funds to support a standby letter of credit on behalf of a
portfolio company which had provided a performance bond in support
of a major contract. The standby letter of credit was supported by
a fixed cash deposit of US$2.8 million held with Lloyds TSB Bank
PLC. The final amount of US$1.3 million of the fixed cash deposit
matured on 17 October 2011 as a result of the termination the
portfolio company project at the request of the client. As at 31
December 2010, this balance was classified as a fixed cash deposit
maturing in greater than 3 months after the Company's year end and
was included within 'Other Short Term Investments' in the Statement
of Financial Position.
7. Investment classified as held for sale
In accordance with the Company's Investing Policy, the
Investment Advisor has been working with the management team of
Somethin' Else (the "company" or "investment") to develop a
structure for a phased buyout of the Fund's investment in its
entirety. The Investment Advisor has been involved in discussions
with potential buyers regarding a potential sale of the company. At
the date of signing of these financial statements, the Fund is
currently in talks with the management team of the company for a
possible management buyout.
The investment has been classified as held for sale in the
Statement of Financial Position with fair value through profit or
loss of GBP2,000,000 (31 December 2010: GBP3,350,000). An
unrealised loss of GBP1,350,000 on the investment at fair value
through profit or loss has been recognised in the Statement of
Comprehensive Income in relation to the investment.
8. Other Receivables
31 December 2011 31 December 2010
----------------- -----------------
GBP GBP
Bank interest receivable 936 199
Prepayments 6,605 30,737
----------------- -----------------
7,541 30,936
================= =================
The Directors consider that the carrying amount of other
receivables approximates fair value. The Company's exposure to
credit risk related to other receivables is disclosed in note
14.
9. Cash and Cash Equivalents
31 December 2011 31 December 2010
----------------- -----------------
GBP
Cash at bank 1,762,408 2,996,992
Fixed deposits (maturity <3 months) - 2,268,052
----------------- -----------------
1,762,408 5,265,044
================= =================
Total cash and deposits amount to GBP1.91 million (31 December
2010: GBP7.04 million), being GBP1.76 million (31 December 2010:
GBP5.27 million) cash and cash equivalents and GBP0.15 million (31
December 2010: GBP1.77 million) in note 6, Other short term
investment.
The Company's exposure to interest rate risk and sensitivity
analysis for financial assets and liabilities are disclosed in note
15.
10. Other Payables
31 December 2011 31 December 2010
----------------- -----------------
GBP
Administration fee 13,451 9,580
Interest due on purchase of Initial Portfolio* - 105,504
Registrar's fee 1,764 1,764
Audit fee 17,200 16,750
Letter of credit obligation** - 96,080
Sundry 2,436 4,830
----------------- -----------------
34,851 234,508
================= =================
*Relates to Top Layer interest owed back to Panmure Capital
Partners and settled on the sale of Toplayer.
**Relates to Pentadyne Letter of Credit bad debt provision.
The Company's exposure to liquidity risk related to other
payables is disclosed in note 15.
The Directors consider that the carrying amount of other
payables approximates fair value.
11. Share Capital & Distributable Reserve
31 December
2011
Authorised Share Capital &
31 December
2010
------------
GBP
Unlimited Shares of no par value
that may be issued as Ordinary Shares -
============
1 January 2011 1 January 2010
To To
Share Capital 31 December 2011 31 December 2010
----------------- -----------------
GBP GBP
Allotted, issued and fully paid Shares:
Brought forward & carried forward - -
================= =================
As at 31 December 2011, there were 60,232,855 shares in issue
(31 December 2010: 60,232,855).
1 January 2011 1 January 2010
To To
Distributable Reserve 31 December 2011 31 December 2010
----------------- -----------------
GBP GBP
Brought forward 60,506,329 60,506,329
Capital distribution paid (4,216,345) -
----------------- -----------------
Carried forward 56,289,984 60,506,329
================= =================
The authorised share capital of the Company on incorporation was
divided into an unlimited number of Shares of no par value which
upon issue, for cash or otherwise, the Directors may categorise as
Ordinary Shares or otherwise. The Company's Articles of Association
confer pre-emption rights to Shareholders in the event of any issue
of shares which would increase the issued share capital by 25 per
cent. or more.
Subject to the provisions of the Law and without prejudice to
any rights attaching to any existing Shares or to the provisions of
the Articles, any share in the Company may be issued with or have
attached thereto such preferred, deferred, conversion or other
special rights, or such restrictions whether in regard to dividend,
return of capital, voting, conversion or otherwise as the Company
may from time to time by ordinary resolution determine or, subject
to or in default of any such direction, as the Directors may
determine.
The Company may issue fractions of Shares and any such
fractional Shares shall rank pari passu in all respects with the
other shares issued by the Company.
The initial offering of the Ordinary Shares was at a price of
GBP1.00 per Ordinary Share.
On 16 January 2007, the holders of the Subscriber Shares in the
Company passed a written resolution approving the cancellation of
the entire amount which stood to the credit of the share premium
account immediately after the Placing, conditionally upon the issue
of the Shares and the payment in full thereof and with approval of
the Royal Court. The cancellation was confirmed by the Royal Court
on 27 April 2007.
During the year the Company made a capital return by way of
bonus issue of B shares. The capital returned to shareholders was
GBP4.2 million, equating to approximately 7.0 pence per share, and
included the cash element received from the disposal of Top Layer
Networks.
12. Revenue Reserve
1 January 2011 1 January 2010
To To
31 December 2011 31 December 2010
----------------- -----------------
GBP GBP
Retained revenue reserve brought forward (20,124,635) (15,264,162)
Total comprehensive loss for the year (3,954,061) (4,860,473)
----------------- -----------------
Retained revenue reserve carried forward (24,078,696) (20,124,635)
================= =================
13. Net Asset Value per Ordinary Share
The net asset value per Ordinary Share is based on the net
assets attributable to equity shareholders of GBP32,211,288 (31
December 2010: GBP40,381,694) and on the year end number of
Ordinary Shares in issue of 60,232,855 (31 December 2010:
60,232,855).
14. Financial Instruments
(a) Significant accounting policies:
Details of the significant accounting policies and methods
adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are
recognised, in respect of its financial assets and financial
liabilities are disclosed in note 2 to these financial
statements.
(b) Categories of financial assets:
Financial instruments are made up of quoted and unquoted
investments, fixed cash deposits of greater than 3 months maturity
classified as investments at fair value through profit or loss,
cash and cash equivalents and other receivables excluding
prepayments. As at 31 December 2011, the fair value of the
Company's financial assets was GBP32,239,535 (31 December 2010:
GBP40,585,465). This was 100.09% (31 December 2010: 100.50%) of net
assets attributable to equity shareholders.
There are no financial liabilities other than other payables as
disclosed in note 10.
(c) Derivatives:
In accordance with the Company's scheme particulars the Company
may invest in derivatives or forward foreign exchange contracts for
the purpose of efficient portfolio management. No such forward
foreign exchange contracts were held during the year ended 31
December 2011 (31 December 2010: GBPnil). As at 31 December 2011,
the Company held one warrant derivative contract investment, which
was valued at GBPnil. (31 December 2010: one contract valued at
GBPnil).
A warrant is a derivative financial instrument which gives the
right, but not the obligation to buy a specific amount of a given
stock, at a specified price (strike price) on a specific date. The
fair value of the warrants are classified as financial assets at
fair value through profit or loss, as disclosed in note (b) above.
The warrants for underlying unlisted equities are valued at GBPnil
in accordance with the International Private Equity and Venture
Capital valuation guidelines.
15. Financial Risk Management
Strategy in using Financial Instruments
The Company's activities expose it to a variety of financial
risks: market risk (including currency risk, fair value interest
rate risk, cash flow interest rate risk and price risk), credit
risk and liquidity risk. The Company's overall risk management
program focuses on the unpredictability of financial markets and
seeks to minimise potential adverse effects on the Company's
financial performance.
The Company's investment objective was to provide shareholders
with an attractive return on their investment, primarily through
investing in companies which were likely to achieve an IPO or a
sale within a short term time horizon and through a small number of
investment companies that were already listed.
In September 2008, the Company announced that, in the light of
the deteriorating economic environment and the lack of a visible
time frame for exits, it would return some capital to Shareholders
by way of a tender offer and would make appropriate changes in the
Company's structure and investment policy as described in the
Tender Offer document and in note 1.
Market Price Risk
All securities investments present a risk of loss of capital.
The Investment Advisor moderates this risk through a careful
selection of securities and other financial instruments within
specified limits. The maximum risk resulting from financial
instruments is determined by the fair value of the financial
instruments. The Company's portfolio and investment strategy is
reviewed continuously by the Investment Advisor and on a quarterly
basis by the Board.
The Company's exposure to market price risk arises from
uncertainties about future prices of its investments. This risk is
managed through diversification of the investment portfolio.
Generally the Company will seek not to invest (or commit to invest)
more than 10% of the Company's gross assets to any single
investment at the time of investment (or commitment), although such
limit may be exceeded in certain cases where the Board deems
appropriate on the advice of the Investment Advisor. Typically,
investments in pre-IPO opportunities will be made by way of a
convertible loan note that will convert on an exit event at a
discount to the relevant exit price. The loans may also have an
attached equity interest in the form of a warrant. However, a
proportion of investments will be made at a fixed price. This is
necessary in order to capture attractive pre-IPO opportunities that
are not available with a loan note security. In addition, the
Company may invest in companies that are already listed. These
investments will be made on an opportunistic basis and are expected
to represent a small number of the Company's transactions not
exceeding 15% of the net asset value of the Company. As investee
companies achieve successful listings, however, the net asset value
attributable to holdings in listed companies may be
substantial.
At 31 December 2011, the Company's market risk is affected by
three main components: changes in actual market prices, interest
rate and foreign currency movements. Interest rate and foreign
currency movements are covered below. A 25% increase in the value
of investments, with all other variables held constant, would bring
about a GBP7,580,904 or 23.53% (31 December 2010: GBP8,830,055 or
21.87%) increase in net assets attributable to equity shareholders.
If the value of investments had been 25% lower, with all other
variables held constant, net assets attributable to equity
shareholders would have fallen by GBP7,580,904 or 23.53% (31
December 2010: GBP8,830,055 or 21.87%).
Interest Rate Risk
The Company is exposed to risks associated with the effects of
fluctuations in the prevailing levels of market interest rates on
its financial instruments and future cash flows.
The table below summarises the Company's exposure to interest
rate risk by the earlier of contractual maturities:
15. Financial Risk Management (continued)
Interest Rate Risk (continued)
The table below summarises the Company's exposure to interest
rate risk by the earlier of contractual maturities:
At 31 Weighted Less than 1 3 months - 1 1 - 3 No fixed Total
December average month year years maturity
2011 effective
interest rate
------------------- --------------- ---------------- ---------------- ----------- ---------------- -----------
% GBP GBP GBP GBP GBP
Assets:
Fixed
interest
rate
unlisted
debt
securities 8.79 - - 2,283,924 - 2,283,924
Fixed
interest
rate cash at
bank 0.00 - 152,577 - - 152,577
Floating
interest
rate cash at
bank 0.62 1,762,408 - - - 1,762,408
Non-interest
bearing - 936 - - 28,039,691 28,040,627
---------------- ---------------- ----------- ---------------- -----------
Total assets
excluding
prepayments 1,763,344 152,577 2,283,924 28,039,691 32,239,536
================ ================ =========== ================ ===========
Liabilities:
Non-interest
bearing - - - - 34,851 34,851
---------------- ---------------- ----------- ---------------- -----------
Total
liabilities - - - 34,851 34,851
================ ================ =========== ================ ===========
At 31 December Weighted average Less than 1 month 3 months - 1 year No fixed maturity Total
2010 effective interest
rate
---------------------- --------------------- ------------------ ------------------ ------------------ -----------
% GBP GBP GBP GBP
Assets:
Fixed interest
rate unlisted
debt securities 7.00 - 1,773,430 2,786,318 4,559,748
Fixed interest
rate cash at
bank 0.17 2,268,052 - - 2,268,052
Floating
interest rate
cash at bank 0.31 2,996,992 - - 2,996,992
Non-interest
bearing - 199 408 30,760,066 30,760,673
------------------ ------------------ ------------------ -----------
Total assets
excluding
prepayments 5,265,243 1,773,838 33,546,384 40,585,465
================== ================== ================== ===========
Liabilities:
Non-interest
bearing - - - 234,508 234,508
------------------ ------------------ ------------------ -----------
Total
liabilities - - 234,508 234,508
================== ================== ================== ===========
The sensitivity analyses below have been determined based on the
Company's exposure to interest rates for interest bearing assets
and liabilities (included in the interest rate exposure table
above) at the period end date and the stipulated change taking
place at the beginning of the financial period and held constant
through the reporting period in the case of instruments that have
floating rates.
A 250 basis point increase or decrease is used when reporting
interest rate risk internally to key management personnel and
represents management's assessment of the possible change in
interest rates.
If interest rates had been 250 basis points higher, for assets
and liabilities as at 31 December 2011 that are subject to changing
interest rates, and all other variables were held constant, the
Company's increase in net assets attributable to equity holders for
the period ended 31 December 2011 would have been an increase of
GBP44,060 (31 December 2010: GBP74,925) due to the increase in the
interest earned on the Company's cash balances.
15. Financial Risk Management (continued)
Interest Rate Risk (continued)
If interest rates had been 250 basis points lower, for assets
and liabilities as at 31 December 2011 that are subject to changing
interest rates, and all other variables were held constant, the
Company's increase in net assets attributable to equity holders for
the year ended 31 December 2011 would have been a decrease of
GBP10,927 (31 December 2010: GBP9,291) due to the decrease in the
interest earned on the Company's cash balances.
The Company's sensitivity to interest rates has decreased during
the current period as the Company has invested its capital into its
investments thereby reducing its cash balances that are interest
bearing.
Foreign Currency Risk
Foreign currency risk is the risk that the fair value of future
cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates.
The Company's assets may be invested in securities and other
investments that are denominated in currencies different to the
reporting currency. Accordingly, the value of an investment may be
affected favourably or unfavourably by fluctuations in exchange
rates. The Company may, through forward foreign exchange contracts,
hedge its exposure back to sterling but has not done so during the
financial period.
Currency Exposure
A proportion of the net assets of the Company are denominated in
currencies other than sterling. The carrying amounts of these
assets and liabilities are as follows:
Assets Liabilities
31 December 31 December
2011 2011
----------- -----------
GBP GBP
Sterling 12,454,676 34,851
US Dollars 19,791,463 -
Equity attributable to Ordinary
Shareholders 32,246,139 34,851
=========== ===========
Assets Liabilities
31 December 31 December
2010 2010
----------- -----------
GBP GBP
Sterling 17,641,468 129,004
US Dollars 22,943,997 105,504
Equity attributable to Ordinary
Shareholders 40,585,465 234,508
=========== ===========
The Company is exposed to US Dollar currency risk.
The sensitivity analysis below has been determined based on the
sensitivity of the Company's outstanding foreign currency
denominated financial assets and liabilities to a 25% increase /
decrease in the Sterling against US Dollar, translated at the
period end date.
25% is the sensitivity rate used when reporting foreign currency
risk internally to key management personnel and represents
management's assessment of the possible change in foreign exchange
rates.
As at 31 December 2011, if Sterling had weakened by 25% against
the US Dollar, with all other variables held constant, the increase
in net assets attributable to equity shareholders would have been
GBP4,947,866 or 15.36% (31 December 2010: GBP5,709,623 or 14.14%)
higher. Conversely, if Sterling had strengthened by 25% against the
US Dollar, with all other variables held constant, the increase in
net assets attributable to equity shareholders would have been
GBP4,947,866 or 15.36% (31 December 2010: GBP5,709,623 or 14.14%)
lower.
15. Financial Risk Management (continued)
Credit and Liquidity Risk
Credit risk is the risk that an issuer or counterparty will be
unable or unwilling to meet a commitment that it has entered into
with the Company. The maximum exposure to credit risk that the
Company faces is equal to the fair value of the financial
instruments held by the Company.
Liquidity risk is the risk that the Company will encounter in
realising assets or otherwise raising funds to meet financial
commitments. Refer to the interest rate risk table for a detailed
maturity analysis of the Company's assets and liabilities. All the
fixed deposits held by the Company mature within 1 year.
The Board, advised by the Investment Advisor, has made changes
to the Company's investing policy and, in particular, the Company
will make no further investments in new portfolio companies for the
time being.
The Company manages the credit risk of third party borrowers by
regularly reviewing their underlying performance.
Classification of Fair Value Measurements
The following table analyses, within the fair value hierarchy,
the Company's financial assets (by class) measured at fair value at
31 December 2011:
Fair Value as at 31 December
2011
Level Level Level Total
1 2 3
-------- ---------- ----------- -----------
GBP GBP GBP GBP
Designated at fair
value through profit
or loss upon initial
recognition:
Equity investments - 1,891,953 26,076,577 27,968,530
Compound debt investments - - 2,355,083 2,355,083
Other short term investment* 152,577 - - 152,577
-------- ---------- ----------- -----------
152,577 1,891,953 28,431,661 30,476,190
======== ========== =========== ===========
Fair Value as at 31 December
2010
Level Level Level Total
1 2 3
---------- ------ ----------- -----------
GBP GBP GBP GBP
Designated at fair
value through profit
or loss upon initial
recognition:
Equity investments - - 29,699,648 29,699,648
Compound debt investments - - 3,846,736 3,846,736
Other short term investment* 1,773,838 - - 1,773,838
---------- ------ ----------- -----------
1,773,838 - 33,546,384 35,320,222
========== ====== =========== ===========
*Other short term investment is a fixed cash deposit with a
maturity of longer than 3 months from the reporting date.
Investments whose values are based on quoted market prices in
active markets, and are therefore classified within level 1,
include active listed equities and fixed cash deposits with a
maturity of longer than 3 months from the reporting date. The
Company does not adjust the quoted price for these instruments.
Financial instruments that trade in markets that are not
considered to be active but are valued based on quoted market
prices, dealer quotations or alternative pricing sources supported
by observable inputs are classified within level 2. As level 2
investments may include positions that are not traded in active
markets and/or are subject to transfer restrictions, valuations may
be adjusted to reflect illiquidity and/or non-transferability,
which are generally based on available market information. None of
the Company's investments are categorised as level 2 financial
assets.
15. Financial Risk Management (continued)
Classification of Fair Value Measurements (continued)
Investments classified within level 3 have significant
unobservable inputs, as they trade infrequently. Level 3
instruments include corporate compound debt instruments and
unquoted equity instruments which the Company values in accordance
with the International Private Equity and Venture Capital valuation
guidelines. There have been no effects of changes in significant
unobservable assumptions that will result in a material change to
the investment values. The Company considers liquidity, credit and
other market risk factors.
The table below provides a reconciliation from brought forward
to carried forward balances of financial instruments categorised
under level 3:
1 January 2011 To 31 December
2011
Equity Compound
Assets at Fair Value investments debt investments Total
based on Level 3:
------------- ------------------ -------------
GBP GBP GBP
Fair value brought forward 29,699,648 3,846,736 33,546,384
Purchases or conversions - 2,175,117 2,175,117
Sales or conversions (846,921) (3,876,387) (4,723,308)
Net realised loss on
fair value through profit
or loss investments (6,736,419) (117,363) (6,853,782)
Movement in net unrealised
gains on fair value
through profit or loss
investments 3,960,270 326,980 4,287,250
------------- ------------------ -------------
Fair value carried forward 26,076,578 2,355,083 28,431,661
============= ================== =============
1 January 2010 To 31 December
2010
Equity Compound
Assets at Fair Value investments debt investments Total
based on Level 3:
------------- ------------------ -------------
GBP GBP GBP
Fair value brought forward 24,606,225 14,644,110 39,250,335
Purchases or conversions 12,167,965 - 12,167,965
Sales or conversions (4,058,779) (8,711,321) (12,770,100)
Net realised (loss)/gain
on fair value through
profit or loss investments (2,848,524) 787,927 (2,060,597)
Movement in net unrealised
losses on fair value
through profit or loss
investments (167,239) (2,873,980) (3,041,219)
------------- ------------------ -------------
Fair value carried forward 29,699,648 3,846,736 33,546,384
============= ================== =============
Capital Management
The Company monitors "adjusted capital" which comprises all
components of equity (i.e. distributable and revenue reserves). The
Company's objectives when maintaining capital are:
-- to safeguard the Company's ability to continue as a going
concern, so that it can continue to provide returns for
shareholders and benefits for other stakeholders; and
-- to provide an adequate return to shareholders by pricing
products and services commensurately with the level of risk.
The Directors set and manage the amount of capital required in
proportion to risk. The Directors may exercise the powers of the
Company to borrow money and to give security over its assets. The
Company may borrow funds secured on its investments if the Board
(with the advice the Investment Advisor) considers that
satisfactory opportunities for investment arise at a time when the
Company is close to being fully invested. In any event, borrowing
will be limited to 50 per cent. of the Company's investments at the
time of draw down. The Company may also be indirectly exposed to
the effects of gearing to the extent that investee companies have
outstanding borrowings.
15. Financial Risk Management (continued)
Capital Management (continued)
The Company has been granted authority to make market purchases
of up to 14.99% of its own Ordinary Shares. Any such purchases
require shareholders approval.
The Company has the ability to apply to the Financial Services
Authority for a Placing and Offer to increase the size of the
Company through further share issuance.
As at 31 December 2011 and 31 December 2010, the Company had no
borrowings and held none of its own shares in treasury.
In accordance with the Company's Investing Policy, cash proceeds
from realisation in full following the exit of a portfolio
investment are returned to shareholders, subject to the retention
of sufficient cash for follow-on investments in existing portfolio
companies where the Investment Advisor believes that further
funding is required and operating expenses of the Fund. At the
Annual General Meeting on 20 June 2011, the shareholders approved
the Capital Return Scheme whereby, a bonus issue of new, fully
paid, redeemable B Shares ("B shares") is issued to Shareholders
pro rata in proportion to Shareholders' existing holdings of
Ordinary Shares on the relevant record date. These B shares are
expected to be redeemed by the Company shortly after they are
issued with the redemptions paid in cash as a return of capital.
Whilst it is not possible to determine the timing of exits, the
Board, advised by the Investment Advisor, will seek to return
capital to shareholders through the Capital Return Scheme when
appropriate upon the realisation of investments.
16. Dividends
Following the approval of shareholders at an extraordinary
general meeting on 5 November 2008, the Directors intend to
distribute cash proceeds of realisations in full following
disposals of portfolio investments, subject to the retention of
sufficient cash for follow-on investments in existing portfolio
companies and after taking into account all costs, liabilities and
expenses of the Company. Such distributions shall be made by share
buy-back or dividend from time to time as the Directors consider
economic and appropriate.
For the year ended 31 December 2011, the realised losses of the
Company that had physically been received were as follows:
1 January 1 January
2011 2010
To To
31 December 31 December
2011 2010
------------- -------------
GBP GBP
Total comprehensive loss
for the year (3,954,061) (4,860,473)
(Less)/Add back:
Movement in net unrealised
losses (4,298,902) 2,360,588
Adjusted realised loss
for distribution for the
year (8,252,963) (2,499,885)
============= =============
The Directors do not recommend the payment of a dividend for the
year ended 31 December 2011 (31 December 2010:GBPnil).
During the year a capital distribution was paid to shareholders
of GBP4,216,345 (31 December 2010: GBPnil).
17. Taxation
The Income Tax Authority of Guernsey has granted the Company
exemption from Guernsey income tax under the Income Tax (Exempt
Bodies) (Guernsey) Ordinance, 1989 and the income of the Company
may be distributed or accumulated without deduction of Guernsey
income tax. Exemption under the above mentioned Ordinance entails
payment by the Company of an annual fee of GBP600. It should be
noted, however, that interest and dividend income accruing from the
Company's investments may be subject to withholding tax in the
country of origin. With effect from 1 January 2008 the standard
rate of income tax for most companies in Guernsey is zero per cent.
Tax Exempt status continues to exist and the Company has been
granted this status for 2011 and 2012.
17. Taxation (continued)
The Company has not suffered any withholding tax in the year (31
December 2010: GBPnil).
Investors other than Guernsey residents are not subject to any
tax in Guernsey in respect of any Ordinary Shares owned by them.
Guernsey income tax will not be deducted from dividends (if any)
payable in respect of Ordinary Shares held by or on behalf of
residents of Guernsey. However, the Company will be obliged to
furnish such particulars of any distributions as may be required by
the Director of Income Tax. No other deductions will be made in
respect of tax.
No withholding tax is payable in Guernsey in respect of Ordinary
Shares held by person's resident outside Guernsey.
18. Post Period End Events
On 16 January 2012, the Company sold its investment in City
Financial Investment Company Limited. The equity shares were sold
for a total consideration of GBP2.75 million. GBP2.5 million was
received in cash proceeds, together with preferred ordinary shares
in City Financial Investment Company Limited valued at GBP0.25
million.
On 10 February 2012, by way of bonus issue of B shares, the
Company made a capital return of GBP2.5 million to shareholders,
equating to approximately 4.15 pence per B share held.
On 9 March 2012, the Company received GBP1.9m as cash proceeds
from the sale of the Company's holding of 4.4 million shares in
Corero Network Security plc.
Following the receipt of these sale proceeds on 14 March 2012,
the Company approved a capital return, by way of bonus issue of B
shares, of GBP1.9 million to shareholders, equating to
approximately 3.08 pence per B share held.
On 27 April 2012, Lord Flight, Edward Forwood, Robert Fearis and
Roger Le Tissier retired from the Board of Directors with immediate
effect. As a result, the remaining Directors are Christopher Fish,
Brett Miller and Rhys Davies. Rhys Davies was appointed
non-executive Chairman, replacing Lord Flight.
There are no other significant post period end events that
require disclosure in these financial statements.
Directors & Advisors (as at 25 May 2012)
Directors: Lord Flight (Chairman) (resigned on 27 April
2012)
Robert Fearis (resigned on 27 April 2012)
Christopher Fish
Edward Forwood (resigned on 27 April 2012)
Roger Le Tissier (resigned on 27 April 2012)
Rhys Davies (appointed 20 May 2011, appointed non-executive
Chairman on 27 April 2012)
Brett Miller (appointed 20 May 2011)
Administrator Designated Manager, Secretary, Praxis Fund
Services Limited Tel: +44 (0)1481 737 600
Provider of Safe Custody & Registered Office: Sarnia House Fax: +44(0)1481 749 829
Le Truchot www.pfs.gg
St Peter Port
Guernsey, GY1 4NA
Registrar: Capita Registrars (Guernsey) Limited
2(nd) Floor, No.1 Le Truchot
St Peter Port
Guernsey, GY1 4AE
Investment Advisor & Promoter: Loudwater Investment Partners
Limited Tel: +44 (0)20 3372 6400
Little Tufton House Fax: +44(0)20 7222 2991
3 Dean Trench Street
London, SW1P 3HB www.loudwaterpartners.com
Share dealing:
Shares can be purchased or sold through your usual
stockbroker.
Sources of further information:
The Company's Ordinary Shares are quoted on the AIM market of
the London Stock Exchange. Information updates are available on the
Company from the Investment Advisor's website
www.loudwaterpartners.com.
Key Dates:
Company's year end 31 December 2011
Annual results announced By 31 May 2012
Company's half-year 30 June 2012
Interim results announced By 30 September 2012
Frequency of NAV publication:
The Company's net asset value is released to the Stock Exchange
quarterly.
Auditors: BDO Limited
PO Box 180, Place du Pre
Rue du Pre, St Peter Port
Guernsey, GY1 3LL
Nominated Advisor & Broker: Panmure Gordon (UK) Limited
Moorgate Hall
155 Moorgate
London, EC2M 6XB
Guernsey Advocates: Ogier
Ogier House
St Julian's Avenue
St Peter Port
Guernsey, GY1 1WA
Bankers: Lloyds TSB Offshore Limited
Corporate Banking
PO Box 123
Sarnia House
Le Truchot
St Peter Port
Guernsey, GY1 4EF
Barclays Private Clients International Limited
PO Box 41
Le Marchant House
St Peter Port
Guernsey, GY1 3BE
English Solicitors: Berwin Leighton Paisner LLP
Adelaide House
London Bridge
London, EC4R 9HA
Company Number: 46213 (Registered in Guernsey)
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BKODKFBKKOPD
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