Annual Financial Report

As required by the UK Listing Authority's Disclosure and Transparency Rules 4.1 and 6.3, Crown Place VCT PLC today makes public its information relating to the Annual Report and Financial Statements for the year ended 30 June 2010. This announcement was approved by the Board of Directors on 7 October 2010. This announcement has not been audited. Please click on the following link to view the full Annual Report and Financial Statements (which have been audited) for the year to 30 June 2010. The information contained in this link includes information as required by the Disclosure and Transparency Rules, including Rule 4.1. http://hugin.info/141806/R/1449977/391637.pdf Alternatively you may view the Annual Report and Financial Statements at: www.albion-ventures.co.uk by clicking on the 'Our Funds' section. Investment objectives The investment objective and policy of the Company is to achieve long term capital and income growth principally through investment in smaller unquoted companies in the United Kingdom. In pursuing this policy, the Manager aims to build a portfolio which concentrates on two complementary investment areas. The first are lower risk, often asset-based investments that can provide a strong income stream combined with protection of capital. These will be balanced by a smaller proportion of the portfolio being invested in higher risk companies with greater growth prospects. Financial calendar Record date for first dividend 29 October 2010 Annual General Meeting 9 November 2010 Payment of first dividend for the year ending 30 June 2011 30 November 2010 Announcement of half-yearly results for the six months ended February 2011 31 December 2010 Payment of second dividend subject to Board approval April 2011 Financial highlights 8.2% Dividend yield on share price as at 30 June 2010 2.2p Â Â Â Â Â Â Total return to shareholders for the year ended 30 June 2010 2.5p Total tax free dividends per share paid during the year ended 30 June 2010 33.9p Net asset value per share as at 30 June 2010 1.25p First tax free dividend per share declared for the year to 30 June 2011 +-------------------------------------------------------------------+ | Â Â 30 June 2010 30 June 2009 | | | | Â Â pence per share pence per share | | | | Net asset value per share Â 33.9 34.2 | | | | Dividends paid Â 2.5 2.5 | | | | Revenue return per share Â 0.7 0.9 | | | | Capital return per share Â 1.5 (5.4) | +-------------------------------------------------------------------+ Shareholder returns and shareholder value Â Proforma ((i)) Proforma ((i)) Crown Place VCT Murray VCT PLC Murray VCT 2Â PLC PLC* Â (pence per share) (pence per share) (pence per share) Shareholder return from launch to April 2005 (date that Albion Ventures was appointed investment manager): Total dividends paid to 30.36 30.91 24.93 6 April 2005 ((ii)) Decrease in net asset (69.90) (64.50) (56.60) value -------------------------------------------------------- Total shareholder return (39.54) (33.59) (31.67) to 6 April 2005 -------------------------------------------------------- Shareholder return from April 2005 to 30 June 2010: Total dividends paid 8.69 10.19 11.80 Decrease in net asset (5.94) (6.62) (9.46) value -------------------------------------------------------- Total shareholder return from April 2005 to 30 June 2010 2.75 3.57 2.34 -------------------------------------------------------- Shareholder value since launch: Total dividends paid to 39.05 41.10 36.73 30 June 2010 ((ii)) Net asset value as at 24.16 28.88 33.94 30 June 2010 -------------------------------------------------------- Total shareholder value 63.21 69.98 70.67 as at 30 June 2010 -------------------------------------------------------- Current dividend objective: Pence per share 1.78 2.13 2.50 -------------------------------------------------------- Percentage dividend yield on net asset value 7.4% 7.4% 7.4% as at 30 June 2010 -------------------------------------------------------- Net asset value total return to shareholders since launch: +------------------------------------------------------------------------------+ |Â 30 June 2010| | (pence per share)| +------------------------------------------------------------------------------+ |Total dividends paid during the period from launch to 6 24.93| |April 2005 (prior to change of Manager) | | | |Total dividends paid during the year ended 28 February 2006 1.00| | | |Total dividends paid during the period ended 30 June 2007 3.30| | | |Total dividends paid during the year ended 30 June 2008 2.50| | | |Total dividends paid during the year ended 30 June 2009 2.50| | | |Total dividends paid during the year ended 30 June 2010 2.50| | ------------------+ |Total dividends paid to 30 June 2010 36.73| | | |Net asset value as at 30 June 2010 33.94| | ------------------+ |Total net asset value return as at 30 June 2010 70.67| +------------------------------------------------------------------------------+ Notes Â (i)Â Â Â Â Â Â Â Â Â Â Â The proforma shareholder returns presented above are based on the dividends paid to shareholders before the merger and the pro-rata net asset value per share and pro-rata dividends per share paid to 30 June 2010 since the merger. This pro-forma is based upon the proportion of shares received by Murray VCT PLC (now renamed CP1 VCT PLC) and Murray VCT 2 PLC (now renamed CP2 VCT PLC) shareholders at the time of the merger with Crown Place VCT PLC on 13 January 2006. Â (ii)Â Â Â Â Â Â Â Â Â Â Prior to 6 April 1999, venture capital trusts were able to add 20 per cent. to dividends and figures for the period up until 6 April 1999 are included at the gross equivalent rate actually paid to shareholders. *Â Â Â Â Â Â Â Â Â Â Â Â Â Formerly Murray VCT 3 PLC In addition to the dividends paid above, the Board has declared a first dividend for the year ending 30 June 2011, of 1.25 pence per Crown Place VCT PLC share (to be paid out of revenue profits) on 30 November 2010 to shareholders on the register as at 29 October 2010. Chairman's statement Introduction I have pleasure in presenting the results for the year ended 30 June 2010. The year was characterised by significant uncertainty in the business environment, both in the UK and globally, and, particularly in the first half, reduced economic activity. Against this background, the Company achieved a positive total return per share of 2.2 pence with both the quoted and unquoted portfolios increasing in value during 2009/10. This is an encouraging result following a difficult year in 2008/09. The Company maintained its regular dividend of 2.5 pence per share and continues to maintain substantial cash balances for future investment and for dividend payments. Results and Dividends As at 30 June 2010, the net asset value was Â£24.4 million or 33.9 pence per share compared to Â£24.8 million or 34.2 pence per share as at 30 June 2009. The revenue return before taxation was Â£489,000, compared to the return in the previous year of Â£682,000. This decrease was predominantly due to the lower return on the Company's cash holdings: the previous year also benefited from a one-off recovery of VAT. The increase during the year to 30 June 2010 in net asset value with dividends reinvested was 6.1 per cent., compared to an increase in the FTSE All-Share index of 21.1 per cent. over the same period. Historically, the net asset value of the portfolio has been less volatile than the FTSE All-Share index. It is the Company's stated policy to pay regular and predictable dividends to investors out of revenue income and realised capital gains. During the year to 30 June 2010, the Company maintained its dividend distribution of 2.5 pence per share. The first dividend for the current financial year of 1.25 pence per share (to be paid out of revenue profits) will be paid on 30 November 2010 to shareholders on the register as at 29 October 2010. Subject to the longer-term performance of the investment portfolio, the Board aims to maintain the current annualised dividend distribution of 2.5 pence per share going forward. The dividend is tax free to investors. Investment performance and progress Both the unquoted and the quoted portfolios increased in value during the year, resulting in a total capital return of Â£1.1 million or 1.5 pence per share. This is equivalent to a capital return of 4.4 per cent. on opening net assets. During the year, the Company invested Â£3.2 million in aggregate in five new investments and fifteen follow-on investments. Further detail on investment activity is given in the Manager's report. The Board noted in the interim statement on 11th May 2010 that "discussions to sell its interest in one of its investee companies are ongoing and if the investee company is sold it is likely to result in a material uplift in Crown Place VCT PLC NAV per share but there remains no certainty as to whether any transaction will complete". These discussions have now ceased and no sale is foreseen in the short term. This has no impact on Crown Place VCT PLC net asset value since the valuation of the investee company had not been increased to reflect the sale discussions. The investee company's trading continues to be healthy. The Company sold its holding in RFI Global Services, which generated exit proceeds of Â£0.6 million on cost of Â£0.4 million before taking into account possible future deferred consideration, and also part disposed of shares in the AIM listed Avanti Communications Group Plc, which generated proceeds of Â£0.4 million on cost of Â£0.2 million. In addition, loan stock redemptions to the value of Â£0.4 million were received during the year. Overall, the Company benefits from a well diversified portfolio, with a high proportion of asset-backed investments. A number of the unquoted growth investments are making good progress to maturity despite the difficult economic environment. Risks and uncertainties The outlook for the UK economy continues to be the key risk affecting your Company: although current indications are that the worst of the recession is now over, at the time of writing this report there is continuing uncertainty as to the impact on the economy of the Coalition Government's impending public spending cuts. Importantly, your Company remains conservatively financed with no bank borrowings, and risk is further mitigated through the Company's current policy for investee companies not to have external bank debt with a chargeable security ranking ahead of Crown Place VCT PLC. Meanwhile, opportunities within our target sectors continue to arise at attractive valuations, including the healthcare sector which continues to be one of our core areas of concentration going forwards. A more detailed analysis of risks and uncertainties is set out in note 23 to this announcement. Cap on Total Expense Ratio ("TER") In line with market practice, the Board has agreed with the Manager that the ratio of total normal expenses (excluding corporation tax, any management performance incentive and exceptional costs) will be limited to 3.5 per cent. per annum of net assets, with any excess being borne by the Manager through a reduction in its management fee. For the year to 30 June 2010, the TER was 3.0 per cent. Discount management and share buy-backs It remains the Board's policy to buy back shares in the market, subject to the overall constraint that such purchases are in the Company's interest, including the maintenance of sufficient resources for investment in existing and new investee companies and the continued payment of dividends to shareholders. It is the Board's intention for such buy-backs to be in the region of a 10 to 15 per cent. discount to net asset value, so far as market conditions and liquidity permit. Top up offer Your Board, in conjunction with the Boards of the other VCTs managed by Albion Ventures, is planning to launch a top up offer of new Ordinary shares later this month. In aggregate, the Albion VCTs will be aiming to raise up to Â£15 million, of which Crown Place VCT's share will be approximately Â£2.25 million, or 15 per cent. of the total. The proceeds will be used to provide further resources at a time when a number of attractive investment opportunities are being seen. An offer document will be sent to shareholders later this month. Supporting enterprise and growth Recent research undertaken by the Association of Investment Companies has demonstrated that VCT investment provides substantial benefits for UK small businesses and the economy in at least three ways: first, by creating jobs; second, by providing additional management skill to support growing businesses; and finally, by being cost-effective, in that the cost to the public purse is more than offset by the increased tax returns by the growth of VCT-backed companies. In common with other VCTs, your Board recommends that the new Government continues to support the VCT sector as one of the best ways to encourage enterprise and future economic growth. Outlook and prospects The outlook for the UK economy remains uncertain. In particular, the full impact of public sector cuts on the wider economy has not yet been felt. To mitigate against this, a number of the investee companies in the higher growth element of the portfolio operate in international markets, and some, such as Masters Pharmaceuticals Limited and Helveta Limited, in fast growing developing countries. There is a widely held view that interest rates will remain low in the short term, which will continue to depress income from deposits. With this in mind, the Company is looking to expand further its portfolio of asset-based, income producing investments, where we have seen an improvement in the pipeline at attractive prices across a broad range of industries, but with particular emphasis on the healthcare and environmental sectors. Changes to the Board of Directors From October 2010, the Association of Investment Companies Code of Corporate Governance (to which your Company adheres) regarding the 'independence' of Directors of a VCT requires that the Chairman of a VCT shall not serve as a Director of another investment company managed by the same manager. Geoffrey Vero is Chairman of Albion Development VCT PLC, also managed by Albion Ventures LLP, and he therefore stepped down from the Board of Crown Place VCT PLC on 27 September 2010. The Board would like to thank Geoffrey for his contribution both as a Board member and as Chairman of the Audit & Risk Committee over the last five years and we wish him well for the future. Following Geoffrey Vero's retirement, Rachel Beagles has been appointed Chairman of the Audit & Risk Committee. Sir Andrew Cubie has been a Director of Crown Place VCT and its predecessor company for twelve years and in accordance with best practice has been subject to annual re-election. The Combined Code requires that "the Board should ensure planned and progressive refreshing of the Board", and accordingly Sir Andrew has agreed to retire from the Board and its subsidiaries at the forthcoming Annual General Meeting. Sir Andrew has given generously of his time, experience and expertise over a long period, particularly over the transition to new managers in 2005, and the Board are grateful to him for his considerable contribution to your Company. I am pleased to welcome in his place, Karen Brade who will join the Board and be proposed for re-election at the forthcoming Annual General Meeting. Karen has over 20 years of experience in project finance and private equity, including with the Commonwealth Development Corporation (now known as Actis), where she held a variety of positions in equity and debt investing, portfolio management, fund raising and investor development. Karen currently acts as an adviser to hedge funds, family offices and private equity houses. Further details are set out on page 10 of the full Annual Report and Financial Statements. The Board has discussed and agreed that the number of Directors should be reduced from five to four members. Patrick Crosthwaite Chairman 7 October 2010 Manager's report An analysis by sector of Crown Place VCT PLC's investment portfolio as at 30 June 2010 is shown below. Care has been taken to diversify the portfolio across a broad number of sectors, with those that are consumer facing, such as pubs, health and fitness clubs and cinemas, being balanced by other investments in the business services, healthcare, IT and environmental sectors. In addition, over 50 per cent. of the portfolio is in asset-backed investments. As at 30 June 2010, the portfolio included investments in 51 unquoted and AIM quoted companies. At the year end, cash and liquid assets amounted to Â£5.5 million or 22% of the Company's net assets. http://hugin.info/141806/R/1449977/391642.pdf New investments The Company invested a total of Â£3.2 million during the year. Of this amount Â£0.9 million was invested in fifteen existing investee companies andÂ Â£2.3 million in five new companies. The Company invested an aggregate of Â£1.4 million in Geronimo Inns VCT I Limited and Geronimo Inns VCT II Limited to acquire four freehold pubs in London. Following a period of refurbishment, the pubs reopened in the autumn of 2009 and are trading on budget and well ahead of their performance under the previous owner. In March 2010, the Company invested a total of Â£0.5 million in Orchard Portman Hospital Limited and Taunton Nursing Home Limited. These two companies acquired an existing care home on a 8 acre site in Taunton, Somerset. This will be extended and repositioned as a slow stream rehabilitation unit for mental health patients. Shortly before the year end, the Company invested Â£0.4 million in Masters Pharmaceuticals Limited, an established and profitable distributor of pharmaceutical products, predominantly to developing countries. The investment will enable the company to expand its international operations further. Investment realisations The Company was pleased to achieve a profitable exit on its investment in RFI Global Services, despite the difficult economic environment and the reduced level of acquisition activity. The total consideration received is Â£0.6 million against cost of Â£0.4 million. In addition, the Company may receive up to a further Â£0.1 million in deferred consideration if certain performance conditions are met. Following the strong performance of the share price of Avanti Communications Group Plc, the satellite service provider, the Company took the opportunity to dispose of a third of its holding for an aggregate consideration of Â£0.4 million against cost of Â£0.2 million. In addition, various investee companies made a partial repayment of loan stock. Portfolio review Overall, the value of the quoted and unquoted portfolio, taking into account additions and disposals for the year, Â increased by Â£1.4 million during the year. Of this amount, Â£0.9 million is attributable to the unquoted portfolio and Â£0.5 million to the quoted portfolio, where the biggest contributor was Avanti Communications Group Plc. In the unquoted portfolio, ELE Advanced Technologies Limited continues to perform well. The business is profitable andÂ benefiting from its international base of blue chip customers. Other investee companies in the growth portfolio performing particularly well include Blackbay Limited, Helveta Limited and Mirada Medical Limited. House of Dorchester Limited remains profitable, however, profitability declined during the year and this is reflected in the lower valuation. Elsewhere in the unquoted portfolio, the previous strong performance at Chichester Holdings, the drinks distributor, has reversed, leading to a decline in value, though the business still remains profitable. Rostima Limited has suffered from delays in delivering contracts, which impacted on the financial position of the business. In the asset-backed investment portfolio, the leisure sector investments are performing in line with expectations, with particularly good trading results achieved by Geronimo Inns VCT I Limited, Geronimo Inns VCT II Limited, CS (Brixton) Limited and Tower Bridge Health Clubs Limited. The Crown Hotel in Harrogate, meanwhile, continues to see an improved performance, with an increase in interest payable to the VCT. As indicated in the last annual report, we have increased our focus on the healthcare and environmental sectors, which offer attractive long term prospects. Three of the new investments made by the Company operate in the healthcare sector and since the year end we have made a further investment in the environmental sector, investing Â£0.4 million in TEG Biogas (Perth) Limited. The company is developingÂ a waste to energy facility in Perthshire, Scotland, utilising anaerobic digestion technology. A number of further opportunities in the renewable energy sector are under review. Since the year end, the Company has also invested Â£1.6 million in Radnor House School Limited, a new independent school for biys and girls aged 7-18 located in Twickenham, Greater London. Following a period of refurbishment, the school will open in September 2011. The pipeline of future investment opportunities is strong and includes a range of asset-backed, income generating businesses as well as higher growth companies. Albion Ventures LLP Manager 7 October 2010 Responsibility Statement In preparing these financial statements for the year to 30 June 2010, the Directors of the Company, being Patrick Crosthwaite, Rachel Beagles, Karen Brade, Andrew Cubie and Vikram Lall, confirm that to the best of their knowledge: - summary financial information contained in this announcement and the full Annual Report and Financial Statements for the year ended 30 June 2010 for the Company has been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (UK Accounting Standards and applicable law) and give a true and fair view of the assets, liabilities, financial position and profit and loss of the Company for the year ended 30 June 2010 as required by DTR 4.1.12.R; -the Chairman's statement and Manager's report include a fair review of the information required by DTR 4.2.7R (indication of important events during the year ended 30 June 2010 and description of principal risks and uncertainties that the Company faces); and -the Chairman's statement and Manager's report include a fair review of the information required by DTR 4.2.8R (disclosure of related parties transactions and changes therein). A detailed "Statement of Directors' responsibilities for the preparation of the Company's financial statements" is contained within the full audited Annual Report and Financial Statements which is attached to this announcement. By order of the Board Patrick Crosthwaite Chairman Consolidated statement of comprehensive income +---------------------------+----+---------------------+-----------------------+ | Â | Â | Year ended | Year ended | +---------------------------+----+---------------------+-----------------------+ | Â | Â | 30 June 2010 | 30 June 2009 | +---------------------------+----+-------+-------+-----+-------+-------+-------+ |Â | Â |Revenue|Capital|Total|Revenue|Capital| Total| +---------------------------+----+-------+-------+-----+-------+-------+-------+ |Â |Note| Â£'000| Â£'000|Â£'000| Â£'000| Â£'000| Â£'000| +---------------------------+----+-------+-------+-----+-------+-------+-------+ |Â | | | | | | | | |Profits/(losses) on | | | | | | | | |investments |2 | -| 1,421|1,421| -|(3,869)|(3,869)| +---------------------------+----+-------+-------+-----+-------+-------+-------+ |Investment income and | | | | | | | | |deposit interest |3 | 903| -| 903| 988| -| 988| +---------------------------+----+-------+-------+-----+-------+-------+-------+ |Investment management fees |4 | (108)| (324)|(432)| (118)| (354)| (472)| +---------------------------+----+-------+-------+-----+-------+-------+-------+ |Recovery of VAT |Â | -| -| -| 92| 277| 369| +---------------------------+----+-------+-------+-----+-------+-------+-------+ |Other expenses |5 | (306)| -|(306)| (280)| -| (280)| +---------------------------+----+-------+-------+-----+-------+-------+-------+ |Â | | | | | | | | |Profit/(loss) before | | | | | | | | |taxation |Â | 489| 1,097|1,586| 682|(3,946)|(3,264)| +---------------------------+----+-------+-------+-----+-------+-------+-------+ |Taxation |6 | -| -| -| -| -| -| +---------------------------+----+-------+-------+-----+-------+-------+-------+ |Profit/(loss) and total | | | | | | | | |comprehensive income for | | | | | | | | |the year |Â | 489| 1,097|1,586| 682|(3,946)|(3,264)| +---------------------------+----+-------+-------+-----+-------+-------+-------+ |Basic and diluted | | | | | | | | |return/(loss) per Ordinary | | | | | | | | |share (pence)* |8 | 0.7| 1.5| 2.2| 0.9| (5.4)| (4.5)| +---------------------------+----+-------+-------+-----+-------+-------+-------+ *Â excluding treasury shares The accompanying notes form an integral part of this announcement. The total column of this statement represents the Group's statement of comprehensive income, prepared in accordance with International Financial Reporting Standards ('IFRS'). The supplementary revenue and capital columns are prepared under guidance published by the Association of Investment Companies. All revenue and capital items in the above statement derive from continuing operations and are wholly attributable to the owners of the parent company. Consolidated balance sheet +-----------------------------------------------+----+------------+------------+ | Â | Â | Â | Â | +-----------------------------------------------+----+------------+------------+ | Â | Â |30 June 2010|30 June 2009| +-----------------------------------------------+----+------------+------------+ | Â |Note| Â£'000| Â£'000| +-----------------------------------------------+----+------------+------------+ |Non-current assets | Â | Â | Â | +-----------------------------------------------+----+------------+------------+ |Investments | 9| 19,092| 15,878| +-----------------------------------------------+----+------------+------------+ |Â | Â | Â | Â | +-----------------------------------------------+----+------------+------------+ |Current Assets | Â | Â | Â | +-----------------------------------------------+----+------------+------------+ |Trade and other receivables | 12| 68| 55| +-----------------------------------------------+----+------------+------------+ |Current asset investments | 12| -| 2,718| +-----------------------------------------------+----+------------+------------+ |Cash and cash equivalents | 17| 5,513| 6,472| +-----------------------------------------------+----+------------+------------+ |Â | Â | 5,581| 9,245| +-----------------------------------------------+----+------------+------------+ |Â | Â | Â | Â | +-----------------------------------------------+----+------------+------------+ |Total assets | Â | 24,673| 25,123| +-----------------------------------------------+----+------------+------------+ |Current liabilities | Â | Â | Â | +-----------------------------------------------+----+------------+------------+ |Trade and other payables | 13| (260)| (335)| +-----------------------------------------------+----+------------+------------+ |Â | Â | Â | Â | +-----------------------------------------------+----+------------+------------+ |Net assets | Â | 24,413| 24,788| +-----------------------------------------------+----+------------+------------+ |Â | Â | Â | Â | +-----------------------------------------------+----+------------+------------+ |Equity attributable to equityholders | Â | Â | Â | +-----------------------------------------------+----+------------+------------+ |Ordinary share capital | 14| 7,918| 7,965| +-----------------------------------------------+----+------------+------------+ |Share premium | Â | 32| 14,438| +-----------------------------------------------+----+------------+------------+ |Capital redemption reserve | Â | 972| 902| +-----------------------------------------------+----+------------+------------+ |Unrealised capital reserve | Â | (5,966)| (7,616)| +-----------------------------------------------+----+------------+------------+ |Special reserve | Â | 46,318| 32,099| +-----------------------------------------------+----+------------+------------+ |Treasury shares reserve | Â | (2,849)| (2,849)| +-----------------------------------------------+----+------------+------------+ |Realised capital reserve | Â | (23,165)| (21,163)| +-----------------------------------------------+----+------------+------------+ |Revenue reserve | Â | 1,153| 1,012| +-----------------------------------------------+----+------------+------------+ |Total equity shareholders' funds | Â | 24,413| 24,788| +-----------------------------------------------+----+------------+------------+ |Â | Â | Â | Â | +-----------------------------------------------+----+------------+------------+ |Basic and diluted net asset value per share | | | | |(pence)* | 16| 33.9| 34.2| +-----------------------------------------------+----+------------+------------+ *Â excluding treasury shares The accompanying notes form an integral part of this announcement. These Financial Statements were approved by the Board of Directors, and authorised for issue on 7 October 2010 and were signed on its behalf by Patrick Crosthwaite Chairman Company number: 03495287 Company balance sheet +-----------------------------------------------+----+------------+------------+ | Â | Â | Â | Â | +-----------------------------------------------+----+------------+------------+ | Â | Â |30 June 2010|30 June 2009| +-----------------------------------------------+----+------------+------------+ | Â |Note| Â£'000| Â£'000| +-----------------------------------------------+----+------------+------------+ |Fixed assets | Â | Â | Â | +-----------------------------------------------+----+------------+------------+ |Fixed asset investments | 9| 19,092| 15,878| +-----------------------------------------------+----+------------+------------+ |Investment in subsidiary undertakings | 11| 15,013| 15,149| +-----------------------------------------------+----+------------+------------+ |Â | Â | 34,105| 31,027| +-----------------------------------------------+----+------------+------------+ |Â | Â | Â | Â | +-----------------------------------------------+----+------------+------------+ |Current Assets | Â | Â | Â | +-----------------------------------------------+----+------------+------------+ |Trade and other debtors | 12| 68| 55| +-----------------------------------------------+----+------------+------------+ |Current asset investments | 12| -| 2,718| +-----------------------------------------------+----+------------+------------+ |Cash at bank and in hand | 17| 5,400| 6,255| +-----------------------------------------------+----+------------+------------+ |Â | Â | 5,468| 9,028| +-----------------------------------------------+----+------------+------------+ |Â | Â | Â | Â | +-----------------------------------------------+----+------------+------------+ |Total assets | Â | 39,573| 40,055| +-----------------------------------------------+----+------------+------------+ |Â | Â | Â | Â | +-----------------------------------------------+----+------------+------------+ |Creditors: amounts falling due within one year | 13| (15,160)| (15,267)| +-----------------------------------------------+----+------------+------------+ |Â | Â | Â | Â | +-----------------------------------------------+----+------------+------------+ |Net assets | Â | 24,413| 24,788| +-----------------------------------------------+----+------------+------------+ |Â | Â | Â | Â | +-----------------------------------------------+----+------------+------------+ |Capital and reserves | Â | Â | Â | +-----------------------------------------------+----+------------+------------+ |Ordinary share capital | 14| 7,918| 7,965| +-----------------------------------------------+----+------------+------------+ |Share premium | Â | 32| 14,438| +-----------------------------------------------+----+------------+------------+ |Capital redemption reserve | Â | 972| 902| +-----------------------------------------------+----+------------+------------+ |Unrealised capital reserve | Â | (6,011)| (7,525)| +-----------------------------------------------+----+------------+------------+ |Special reserve | Â | 46,318| 32,099| +-----------------------------------------------+----+------------+------------+ |Treasury shares reserve | Â | (2,849)| (2,849)| +-----------------------------------------------+----+------------+------------+ |Realised capital reserve | Â | (23,218)| (21,216)| +-----------------------------------------------+----+------------+------------+ |Revenue reserve | Â | 1,251| 974| +-----------------------------------------------+----+------------+------------+ |Shareholders' funds | Â | 24,413| 24,788| +-----------------------------------------------+----+------------+------------+ |Â | Â | Â | Â | +-----------------------------------------------+----+------------+------------+ |Basic and diluted net asset value per share | | | | |(pence)* | 16| 33.9| 34.2| +-----------------------------------------------+----+------------+------------+ *Â excluding treasury shares The Company balance sheet has been prepared in accordance with UK GAAP. The accompanying notes form an integral part of this announcement. These Financial Statements were approved by the Board of Directors, and authorised for issue on 7 October 2010 and were signed on its behalf by Patrick Crosthwaite Chairman Company number: 03495287 Consolidated statement of changes in equity +-------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+ | |Ordinary| | Capital|Unrealised| Â |Treasury|Realised| | | | | share| Share|redemption| capital| Special| shares| capital| Revenue| | | Â | capital| premium| reserve| reserve*|reserve*|reserve*|reserve*|reserve*| Total| +-------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+ | Â | Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| +-------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+ |As at 1 July | | | | | Â | | | | | |2009 | 7,965| 14,438| 902| (7,616)| 32,099| (2,849)|(21,163)| 1,012| 24,788| +-------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+ |Total | | | | | | | | | | |comprehensive| | | | | | | | | | |income for | | | | | Â | | | | | |the year | -| -| -| 761| -| -| 336| 489| 1,586| +-------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+ |Transfer of | | | | | | | | | | |previously | | | | | | | | | | |unrealised | | | | | | | | | | |losses on | | | | | | | | | | |sale of | | | | | | | | | | |investments | -| -| -| 889| -| -| (889)| -| -| +-------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+ |Dividends | | | | | Â | | | | | |paid in year | -| -| -| -| -| -| (1,449)| (362)|(1,811)| +-------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+ |Purchase of | | | | | | | | | | |own shares | | | | | Â | | | | | |for | | | | | Â | | | | | |cancellation | | | | | Â | | | | | |(including | | | | | Â | | | | | |costs) | (70)| -| 70| -| (205)| -| -| -| (205)| +-------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+ |Issue of | | | | | | | | | | |equity (net | | | | | Â | | | | | |of costs) | 23| 32| -| -| -| -| -| -| 55| +-------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+ |Cancellation | | | | | | | | | | |of share | | | | | | | | | | |premium | | | | | | | | | | |account | -|(14,438)| -| -| 14,438| -| -| -| -| +-------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+ |Costs of | | | | | | | | | | |cancellation | | | | | | | | | | |of share | | | | | | | | | | |premium | | | | | | | | | | |account | -| -| -| -| (14)| -| -| 14| -| +-------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+ |As at 30 June| | | | | Â | | | | | |2010 | 7,918| 32| 972| (5,966)| 46,318| (2,849)|(23,165)| 1,153| 24,413| +-------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+ +-------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+ | |Ordinary| | Capital|Unrealised| Â |Treasury|Realised| | | | | share| Share|redemption| capital| Special| shares| capital| Revenue| | | Â | capital|premium| reserve| reserve*|reserve*|reserve*|reserve*|reserve*| Total| +-------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+ | Â | Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| +-------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+ |As at 1 July | | | | | Â | | | | | |2008 | 8,066| 14,422| 793| (6,645)| 32,421| (2,849)|(17,206)| 1,172| 30,174| +-------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+ |Total | | | | | Â | | | | | |comprehensive| | | | | Â | | | | | |(loss)/income| | | | | Â | | | | | |for the year | -| -| -| (3,537)| -| -| (410)| 682|(3,264)| +-------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+ |Transfer of | | | | | Â | | | | | |previously | | | | | Â | | | | | |unrealised | | | | | Â | | | | | |losses on | | | | | Â | | | | | |sale of | | | | | -| | | | | |investments | -| -| -| 2,566| | -| (2,566)| -| -| +-------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+ |Dividends | | | | | Â | | | | | |paid in year | -| -| -| -| -| -| (981)| (842)|(1,823)| +-------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+ |Purchase of | | | | | | | | | | |own shares | | | | | | | | | | |for | | | | | Â | | | | | |cancellation | | | | | Â | | | | | |(including | | | | | Â | | | | | |costs) | (109)| -| 109| -| (321)| -| -| -| (321)| +-------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+ |Issue of | | | | | Â | | | | | |equity (net | | | | | -| | | | | |of costs) | 8| 16| -| -| | -| -| -| 24| +-------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+ |As at 30 June| | | | | Â | | | | | |2009 | 7,965| 14,438| 902| (7,616)| 32,099| (2,849)|(21,163)| 1,012| 24,788| +-------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+ * Included within these reserves is an amount of Â£15,491,000 (2009: Â£1,483,000) which is considered distributable. The Special reserve has been treated as distributable in determining the amounts available for distribution. Company reconciliation of movements in Shareholders' funds +------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+ | |Ordinary| | Capital|Unrealised| Â |Treasury|Realised| | | | | share| Share|redemption| capital| Special| shares| capital| Revenue| | | Â | capital| premium| reserve| reserve*|reserve*|reserve*|reserve*|reserve*| Total| +------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+ | Â | Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| +------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+ |As at 1 July| | | | | Â | | | | | |2009 | 7,965| 14,438| 902| (7,525)| 32,099| (2,849)|(21,216)| 974| 24,788| +------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+ |Return for | | | | | Â | | | | | |the year | -| -| -| 625| -| -| 336| 625| 1,586| +------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+ |Transfer of | | | | | Â | | | | | |previously | | | | | Â | | | | | |unrealised | | | | | Â | | | | | |losses on | | | | | Â | | | | | |sale of | | | | | -| | | | | |investments | -| -| -| 889| | -| (889)| -| -| +------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+ |Dividends | | | | | Â | | | | | |paid in year| -| -| -| -| -| -| (1,449)| (362)|(1,811)| +------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+ |Purchase of | | | | | Â | | | | | |own shares | | | | | Â | | | | | |for | | | | | Â | | | | | |cancellation| | | | | Â | | | | | |(including | | | | | Â | | | | | |costs) | (70)| -| 70| -| (205)| -| -| -| (205)| +------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+ |Issue of | | | | | Â | | | | | |equity (net | | | | | -| | | | | |of costs) | 23| 32| -| -| | -| -| -| 55| +------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+ |Cancellation| | | | | Â | | | | | |of share | | | | | Â | | | | | |premium | | | | | Â | | | | | |account | -|(14,438)| -| -| 14,438| -| -| -| -| +------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+ |Costs of | | | | | | | | | | |cancellation| | | | | | | | | | |of share | | | | | | | | | | |premium | | | | | | | | | | |account | -| -| -| -| (14)| -| -| 14| -| +------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+ |As at 30 | | | | | | | | | | |June 2010 | 7,918| 32| 972| (6,011)| 46,318| (2,849)|(23,218)| 1,251| 24,413| +------------+--------+--------+----------+----------+--------+--------+--------+--------+-------+ +------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+ | |Ordinary| | Capital|Unrealised| Â |Treasury|Realised| | | | | share| Share|redemption| capital| Special| shares| capital| Revenue| | | Â | capital|premium| reserve| reserve*|reserve*|reserve*|reserve*|reserve*| Total| +------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+ | Â | Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| +------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+ |As at 1 July| | | | | Â | | | | | |2008 | 8,066| 14,422| 793| (6,645)| 32,421| (2,849)|(17,206)| 1,172| 30,174| +------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+ |Return for | | | | | Â | | | | | |the year | -| -| -| (3,446)| -| -| (463)| 644|(3,264)| +------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+ |Transfer of | | | | | Â | | | | | |previously | | | | | Â | | | | | |unrealised | | | | | Â | | | | | |losses on | | | | | Â | | | | | |sale of | | | | | -| | | | | |investments | -| -| -| 2,566| | -| (2,566)| -| -| +------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+ |Dividends | | | | | Â | | | | | |paid in year| -| -| -| -| -| -| (981)| (842)|(1,823)| +------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+ |Purchase of | | | | | | | | | | |own shares | | | | | Â | | | | | |for | | | | | Â | | | | | |cancellation| | | | | Â | | | | | |(including | | | | | Â | | | | | |costs) | (109)| -| 109| -| (321)| -| -| -| (321)| +------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+ |Issue of | | | | | Â | | | | | |equity (net | | | | | -| | | | | |of costs) | 8| 16| -| -| | -| -| -| 24| +------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+ |As at 30 | | | | | Â | | | | | |June 2009 | 7,965| 14,438| 902| (7,525)| 32,099| (2,849)|(21,216)| 974| 24,788| +------------+--------+-------+----------+----------+--------+--------+--------+--------+-------+ * Included within these reserves is an amount of Â£15,491,000 (2009: Â£1,483,000) which is considered distributable. The Special reserve has been treated as distributable in determining the amounts available for distribution. Consolidated cashflow statement +--------------------------------------------------+----+-----------+----------+ | | |Â Year ended|Year ended| | | | 30 June| Â 30 June| | | | 2010| 2009| | Â |Note| Â£'000| Â£'000| +--------------------------------------------------+----+-----------+----------+ |Operating activities | Â | Â | Â | +--------------------------------------------------+----+-----------+----------+ |Investment income received | Â | 773| 1,231| +--------------------------------------------------+----+-----------+----------+ |Deposit interest received | Â | 86| 200| +--------------------------------------------------+----+-----------+----------+ |Administration fees paid | Â | (50)| (52)| +--------------------------------------------------+----+-----------+----------+ |Investment management fees paid | Â | (522)| (518)| +--------------------------------------------------+----+-----------+----------+ |Recovery of VAT | Â | -| 457| +--------------------------------------------------+----+-----------+----------+ |Other cash payments | Â | (268)| (257)| +--------------------------------------------------+----+-----------+----------+ |Cash generated from operations | Â | 19| 1,061| +--------------------------------------------------+----+-----------+----------+ |Â | Â | Â | Â | +--------------------------------------------------+----+-----------+----------+ |Tax recovered | Â | -| 52| +--------------------------------------------------+----+-----------+----------+ |Net cash flows from operating activities | 18| 19| 1,113| +--------------------------------------------------+----+-----------+----------+ |Â | Â | Â | Â | +--------------------------------------------------+----+-----------+----------+ |Cash flows from investing activities | Â | Â | Â | +--------------------------------------------------+----+-----------+----------+ |Purchase of non-current asset investments | Â | (3,095)| (1,770)| +--------------------------------------------------+----+-----------+----------+ |Disposal of non-current asset investments | Â | 1,264| 55| +--------------------------------------------------+----+-----------+----------+ |Purchase of current asset investments | Â | (2,217)| (3,835)| +--------------------------------------------------+----+-----------+----------+ |Disposal of current asset investments | Â | 5,017| 3,835| +--------------------------------------------------+----+-----------+----------+ |Net cash flows from investing activities | Â | 969| (1,715)| +--------------------------------------------------+----+-----------+----------+ |Â | Â | Â | Â | +--------------------------------------------------+----+-----------+----------+ |Cash flows from financing activities | Â | Â | Â | +--------------------------------------------------+----+-----------+----------+ |Cost of issue of share capital | Â | (16)| (5)| +--------------------------------------------------+----+-----------+----------+ |Equity dividends paid (net of costs of dividend | | | | |reinvestment scheme) | Â | (1,739)| (1,794)| +--------------------------------------------------+----+-----------+----------+ |Purchase of Ordinary shares for cancellation | Â | (192)| (364)| +--------------------------------------------------+----+-----------+----------+ |Net cash flows used in financing activities | Â | (1,947)| (2,163)| +--------------------------------------------------+----+-----------+----------+ |Â | Â | Â | Â | +--------------------------------------------------+----+-----------+----------+ |Decrease in cash and cash equivalents | Â | (959)| (2,765)| +--------------------------------------------------+----+-----------+----------+ |Cash and cash equivalents at the start of the year| Â | 6,472| 9,237| +--------------------------------------------------+----+-----------+----------+ |Â | Â | Â | Â | +--------------------------------------------------+----+-----------+----------+ |Cash and cash equivalents at the end of the year | 17| 5,513| 6,472| +--------------------------------------------------+----+-----------+----------+ Notes to the Financial Statements 1. Accounting policies The following policies refer to the Group and the Company except where noted. References to International Financial Reporting Standards ('IFRS') relate to the Group Financial Statements and Financial Reporting Standards ('FRS') relate to the the Company Financial Statements. Basis of accounting The Financial Statements have been prepared in accordance with the historical cost convention, modified to include the revaluation of investments in accordance with International Financial Reporting Standards ('IFRS') adopted for use in the European Union (and therefore comply with the Article 4 of the EU IAS regulation), in the case of the Group, and in accordance with Financial Reporting Standards ('FRS') in the case of the Company. Both the Group and the Company Financial Statements also apply the Statement of Recommended Practice: "Financial Statements of Investment Companies" ('SORP') issued by the Association of Investment Companies ("AIC") in January 2009, in so far as this does not conflict with IFRS. The Financial Statements have been prepared in accordance with those parts of the Companies Act 2006 applicable to companies reporting under IFRS and FRS. These Financial Statements are presented in Sterling to the nearest thousand. Accounting policies have been applied consistently in current and prior periods. At the date of authorisation of the Financial Statements, the following International Accounting Standards and interpretations were in issue but not yet effective: â— IFRS 2 Share-based payments (effective for annual periods beginning on or after 1 January 2010) â— IFRS 1 First time adoption of IFRS (effective for annual periods beginning on or after 1 January 2010) â— IAS 32 Financial instruments: presentation (effective for annual periods beginning on or after 1 February 2010) â— IFRS 9 Financial instruments: Recognition and measurement (effective for annual periods beginning on or after 1 January 2013) â— IAS 24 Related party disclosures (effective for annual periods beginning on or after 1 January 2011) â— IFRIC 14 Prepayments of a minimum funding requirement (effective for annual periods beginning on or after 1 January 2011) â— IFRIC 19 Extinguishing financial liabilities with equity instruments (effective for annual periods beginning on or after 1 January 2010). The above International Accounting Standards and interpretations have not been applied in this Annual Report and Financial Statements and are not expected to have any future material impact on the financial statements although some changes will be required to certain disclosures in the Financial Statements. Basis of consolidation The Group consolidated Financial Statements incorporate the Financial Statements of the Company for the year ended 30 June 2010 and the entities controlled by the Company (its subsidiaries), for the same period. Where necessary, adjustments are made to the Financial Statements of subsidiaries to bring the accounting policies into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation. As permitted by Section 408 of the Companies Act 2006, the Company has not presented its own profit and loss account. The amount of the Company's profit before tax for the period dealt with in the accounts of the Group is Â£1,586,000 (2009: loss Â£3,264,000). Segmental reporting The Directors are of the opinion that the Group and the Company are engaged in a single operating segment of business, being investment in equity and debt. The Group and the Company report to the Board which acts as the chief operating decision maker. The Group invests in smaller companies principally based in the UK. Business Combinations The acquisition of subsidiaries is accounted for using the purchase method in the Group Financial Statements. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the subsidiaries, plus any costs directly attributable to the business combination. The subsidiary's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 "Business Combinations" are recognised at their fair value at the acquisition date. Estimates The preparation of the Group's and Company's Financial Statements requires estimates, assumptions and judgements to be made, which affect the reported results and balances. Actual outcomes may differ from these estimates, with a consequential impact on the results of future periods. Those estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are those used to determine the fair value of investments at fair value through the profit or loss. The valuation of investments held at fair value through the profit or loss or measured in assessing any impairment of loan stocks is determined by using valuation techniques. The Group and the Company use judgements to select a variety of methods and makes assumptions that are mainly based on market conditions at each balance sheet date. Non-current and current asset investments Quoted and unquoted equity investments In accordance with IAS 39 'Financial Instruments: Recognition and Measurement', and FRS 26 'Financial Instruments: Recognition and Measurement', quoted and unquoted equity investments are designated as fair value through profit or loss ("FVTPL"). Investments listed on recognised exchanges are valued at the closing bid prices at the end of the accounting period. Unquoted investments' fair value is determined by the Directors in accordance with the International Private Equity and Venture Capital Valuation Guidelines (IPEVCV guidelines). The revised September 2009 guidelines have not had a material impact on the valuation of the portfolio. Fair value movements on equity investments and gains and losses arising on the disposal of investments are reflected in the capital column of the Statement of comprehensive income in accordance with the AIC SORP. Realised gains or losses on the sale of investments will be reflected in the realised capital reserve, and unrealised gains or losses arising from the revaluation of investments will be reflected in the unrealised capital reserve. Warrants, convertibles and unquoted equity derived instruments Warrants, convertibles and unquoted equity derived instruments are only valued if their exercise or contractual conversion terms would allow them to be exercised or converted as at the balance sheet date, and if there is additional value to the Company in exercising or converting as at the balance sheet date. Otherwise these instruments are held at nil value. The valuation techniques used are those used for the underlying equity investment. Unquoted loan stock Unquoted loan stock is classified as loans and receivables in accordance with IAS 39 and FRS 26 and carried at amortised cost using the Effective Interest Rate method less impairment. Movements in the amortised cost relating to interest income are reflected in the revenue column of the Statement of comprehensive income, and hence are reflected in the revenue reserve, and movements in respect of capital provisions are reflected in the capital column of the Statement of comprehensive income and are reflected in the realised capital reserve following sale, or in the unrealised capital reserve on revaluation. For all unquoted loan stock, fully performing, renegotiated, past due or impaired, the Board considers that the fair value is equal to or greater than the security value of these assets. For unquoted loan stock, the amount of the impairment is the difference between the asset's cost and the present value of estimated future cash flows, discounted at the effective interest rate. The future cash flows are estimated based on the fair value of the security held less estimated selling costs. Floating rate notes In accordance with IAS 39 and FRS 26, floating rate notes are designated as FVTPL. Floating rate notes are valued at market bid price at the balance sheet date. Floating rate notes are classified as current asset investments as they are investments held for the short term. Investments are recognised as financial assets on legal completion of the investment contract and are de-recognised on legal completion of the sale of an investment. Dividend income is not recognised as part of the fair value movement of an investment, but is recognised separately as investment income through the revenue reserve when a share becomes ex-dividend. Loan stock accrued interest is recognised in the Balance sheet as part of the carrying value of the loans and receivables at the end of each reporting period. It is not the Group or the Company's policy to exercise control or significant influence over investee companies. Therefore in accordance with the exemptions under IAS 28 "Investments in associates" and FRS 9 "Associates and joint ventures", those undertakings in which the Group or Company holds more than 20 per cent. of the equity are not regarded as associated undertakings. Receivables and payables/debtors and creditors â— Receivables are non-interest bearing and are short term in nature and are accordingly stated at amortised cost, as reduced by appropriate allowances for estimated irrecoverable amounts. The Directors consider that the carrying amount of receivables/debtors is not materially different to their fair value. â— Payables are non-interest bearing and are stated at amortised cost.Â The Directors consider that theÂ Â carrying amount of payables/creditors is not materially different to their fair value. Investment income Quoted and unquoted equity income Dividend income is included in revenue when the investment is quoted ex- dividend. Unquoted loan stock income Fixed returns on non-equity shares and debt securities are recognised on a time apportionment basis using an effective interest rate over the life of the financial instrument. Income which is not capable of being received within a reasonable period of time is reflected in the capital value of the investment. Bank interest income Interest income is recognised on an accruals basis using the rate of interest agreed with the bank. Floating rate note income Floating rate note income is recognised on an accruals basis using the interest rate applicable to the floating rate note at that time. Investment management fees, performance incentive fees and other expenses All expenses have been accounted for on an accruals basis. Expenses are charged through the revenue column of the Statement of comprehensive income, except for management fees and performance incentive fees which are allocated in part to the capital column of the Statement of comprehensive income, to the extent that these relate to an enhancement in the value of the investments and in line with the Board's expectation that over the long term 75 per cent. of the Group's investment returns will be in the form of capital gains. Issue costs Issue costs associated with the allotment of share capital have been deducted from the share premium account. Taxation Taxation is applied on a current basis in accordance with IAS 12 and FRS 16 "Income taxes". Taxation associated with capital expenses is applied in accordance with the SORP. Deferred taxation is provided in full on temporary differences in accordance with IAS 12 and timing differences in accordance with FRS 16, that result in an obligation at the balance sheet date to pay more tax or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the Financial Statements. Temporary differences arise from differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which unused tax losses and credits can be utilised. Dividends In accordance with IAS 10 and FRS 21 "Events after the balance sheet date", dividends are accounted for in the period in which the dividend has been paid or approved by shareholders. Reserves Capital redemption reserve This reserve accounts for amounts by which the issued share capital is diminished through the repurchase and cancellation of the Company's own shares. Unrealised capital reserve Increases and decreases in the valuation of investments held at the year end, against cost are included in this reserve. Special reserve The cancellation of the share premium account has created a special reserve that can be used to fund market purchases and subsequent cancellation of own shares, to cover gross realised losses, and for other distributable purposes. Treasury shares reserve This reserve accounts for amounts by which the Company's distributable reserves are diminished through the repurchase of the Company's own shares for treasury purposes. Realised capital reserve The following are disclosed in this reserve: Â Â Â Â·Â Â Â Â Â Â Â Â Â gains and losses compared to cost on the realisation of investments; Â Â Â Â·Â Â Â Â Â Â Â Â Â expenses, together with the related taxation effect, charged in accordance with the above policies; and Â Â Â Â·Â Â Â Â Â Â Â Â Â dividends paid to equity holders. 2. Profits/(losses) on investments Â Year ended Year ended 30 June Â 30 June 2010 2009 Â Â£'000 Â£'000 -------------------------------------------------------------------------------- Unrealised gains/(losses) on non-current asset investments held at fair value through profit or loss account 941 (2,177) Unrealised impairments on non-current asset investments held at amortised cost (180) (1,392) ---------------------- Unrealised gains/(losses) on non-current asset investments 761 (3,569) Unrealised gains on current asset investments held at fair value through profit or loss account - 32 ---------------------- Unrealised gains/(losses) sub total 761 (3,537) Realised gains/(losses) on non-current asset investments held at fair value through profit or loss account 552 (332) Realised gains on non-current asset investments held at amortised cost 25 - Realised gains on current asset investments held at fair value through profit or loss account 83 - ---------------------- Realised gains/(losses) sub total 660 (332) ---------------------- Total 1,421 (3,869) ---------------------- Investments valued on amortised cost basis are unquoted loan stock investments as described in note 9. The prior year analysis has been re-presented to reflect a separate transfer between reserves for accumulated unrealised gains or losses that had taken place in the previous period relating to investments sold during that year. 3. Investment income and deposit interest Â Year ended Year ended 30 June 30 June 2010 2009 Â Â£'000 Â£'000 -------------------------------------------------------------------------------- Income recognised on investments held at fair value through profit or loss UK dividend income 4 80 Management fees received from equity investments - 2 Floating rate note interest - 116 Bank deposit interest 88 135 ---------------------- Â 92 333 Income recognised on investments held at amortised cost Return on loan stock investments 811 490 Euro commercial paper interest - 165 ---------------------- Â 903 988 ---------------------- Interest income earned on impaired investments at 30 June 2010 amounted to Â£315,000 (2009: Â£77,000). These investments are all held at amortised cost. 4. Investment management fees Â Year ended 30 June Year ended 30 June 2010 2009 Â Revenue Capital Total Revenue Capital Total Â Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 --------------------------------------------------------------------- Investment management fee 108 324 432 118 354 472 -------------------------------------------- Further details of the management agreement under which the investment management fee is paid are given in the Directors' report and enhanced business review in the full Annual Report and Financial Statements. 5. Profit/(loss) before taxation is stated after charging: Â Year ended Year ended 30 June 30 June 2010 2009 Â Â£'000 Â£'000 -------------------------------------------------------------------------------- Directors' remuneration 83 83 National insurance and/or VAT on Directors' remuneration 7 7 Auditor's remuneration: - audit 26 25 -Â Â Â Â Â Â Â Â Â Â Â Â Â Â - the auditing of accounts of subsidiaries of the Company pursuant to legislation 6 6 Other expenses* 184 159 ---------------------- Â 306 280 ---------------------- Further information regarding Directors' remuneration can be found in the Directors' remuneration report on page 34 of the full Annual Report and Financial Statements. * Other expenses incurred in the year ended 30 June 2010 include Â£15,000 paid as legal fees for the cancellation of the Company's share premium account and Â£10,000 paid as legal fees for work done on historic VAT recovery. 6. Taxation Year ended 30 June Year ended 30 June 2010 2009 Revenue Capital Total Revenue Capital Total Â Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 ------------------------------------------------------------------------------ UK corporation tax (charge)/credit - - - - - - -------------------------------------------- The tax charge for the year shown in the Statement of comprehensive income is lower than the standard rate of corporation tax of 28 per cent. (2009: 28 per cent.). The differences are explained below: Â Year ended Year ended 30 June 30 June 2010 2009 Â Â£'000 Â£'000 -------------------------------------------------------------------------------- Profit/(loss) on ordinary activities before taxation 1,586 (3,264) ---------------------- Profit/(loss) on ordinary activities multiplied by the 444 (914) standard rate of corporation tax (28 per cent.) Effect of (gains)/losses on capital assets not subject to (398) 1,083 taxation Effect of income not subject to taxation (1) (22) Utilisation of tax losses (45) (147) ---------------------- Â - - ---------------------- No provision for deferred tax has been made in the current or prior accounting period.Â The Company and Group have not recognised a deferred tax asset of Â£1,931,000 (2009: Â£1,490,000) in respect of unutilised management expenses and non-trading deficits as it is not considered sufficiently probable that there will be taxable profits against which to utilise these expenses in the foreseeable future. The Group has not recognised a further deferred tax asset of Â£3,117,000 (2009: Â£3,603,000) in respect of unutilised management expenses and deficits arising from non-trading relationships which would only be used if its subsidiaries made significant profits. 7. Dividends Â Year ended 30 June Year ended 30 June 2010 2009 Revenue Capital Total Revenue Capital Total Â Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 -------------------------------------------------------------------------------- First dividend paid on 8 August 2008 (1.25 pence per share) - - - 661 257 918 Second dividend paid on 17 April 2009 (1.25 pence per share) - - - 181 724 905 First dividend paid on 6 November 2009 (1.25 pence per share) 181 724 905 - - - Second dividend paid on 9 April 2010 (1.25 pence per share) 181 725 906 - - - -------------------------------------------- Â 362 1,449 1,811 842 981 1,823 -------------------------------------------- In addition to the dividends paid above, the Board has declared a first dividend for the year ending 30 June 2011, of 1.25 pence per Crown Place VCT PLC share (to be paid out of revenue profits). This will be paid on 30 November 2010 to shareholders on the register as at 29 October 2010. The total dividend will be approximately Â£899,000. 8. Basic and diluted return per share Â Year ended 30 June Â Year ended 30 June 2010 2009 Â Revenue Capital Total Revenue Capital Total -------------------------------------------------------------------------------- Return attributable to equity shares (Â£'000) 489 1,097 1,586 682 (3,946) (3,264) Return attributable per Ordinary share (pence) (basic and diluted) 0.7 1.5 2.2 0.9 (5.4) (4.5) The return per share has been calculated on 72,321,482 shares (2009: 72,858,300), being the weighted average number of shares in issue for the year, excluding treasury shares of 7,260,410 (2009: 7,260,410). There are no convertible instruments, derivatives or contingent share agreements in issue, and therefore no dilution affecting the return per share. The basic return per share is therefore the same as the diluted return per share. 9. Non-current asset investments 30 June 30 June 2010 Â Â 2009 Â Â£'000 Â£'000 ---------------------------------------------------------------------- Group and Company Qualifying unquoted equity and preference shares 6,900 4,826 Qualifying quoted equity 971 885 Qualifying equity derived instruments 98 98 Qualifying unquoted loan stock 10,862 10,054 Non-qualifying equity 10 6 Non-qualifying unquoted loan stock 251 9 -------------------- Total investments 19,092 15,878 -------------------- Qualifying unquoted Â Qualifying Â Non- Non- equity and Qualifying equity Qualifying qualifying qualifying preference quoted derived unquoted quoted unquoted shares equity instruments loan stock equity loan stock Total Â Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 ----------------------------------------------------------------------------------------- Opening valuation as 4,826 885 98 10,054 6 9 15,878 at 1 July 2009 Purchases at 1,325 - - 1,843 - 68 3,236 cost Disposal (343) (389) - (678) - - (1,410) proceeds Realised gains 356 196 - 25 - - 577 Debt/equity 78 - - (135) - 57 - swap Movement in - - - 50 - - 50 loan stock accrued income Unrealised 658 279 - (297) 4 117 761 gains/(losses) --------------------------------------------------------------------------- Closing valuation as at 30 June 2010 6,900 971 98 10,862 10 251 19,092 --------------------------------------------------------------------------- Movement in loan stock accrued income Opening accumulated - - - 128 - - 128 movement in loan stock revenue accrued income Interest - - - 38 - - 38 restructuring Movement in - - - 50 - - 50 loan stock revenue accrued income --------------------------------------------------------------------------- Closing - - - 216 - - 216 accumulated movement in loan stock revenue accrued income --------------------------------------------------------------------------- Movement in unrealised losses Opening (4,951) (659) - (1,579) (5) (422) (7,616) accumulated unrealised losses Interest - - - (38) - - (38) restructuring Movement in 658 279 - (297) 4 117 761 unrealised gains/(losses) Transfer of 694 (27) - 193 - 29 889 previously unrealised losses/(gains) to realised reserves on disposal --------------------------------------------------------------------------- Closing (3,599) (407) - (1,721) (1) (276) (6,004) accumulated unrealised losses --------------------------------------------------------------------------- Historic cost basis Opening book 9,777 1,545 98 11,505 11 431 23,367 cost Purchases at 1,325 - - 1,843 - 68 3,236 cost Debt/equity 78 - - (135) - 57 - swap Sales at cost (681) (167) - (845) (1) (29) (1,723) --------------------------------------------------------------------------- Closing book 10,499 1,378 98 12,368 10 527 24,880 cost --------------------------------------------------------------------------- Qualifying unquoted Â Qualifying Â Non- Non- equity and Qualifying equity Qualifying qualifying qualifying preference quoted derived unquoted quoted unquoted shares equity instruments loan stock equity loan stock Total Â Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 ----------------------------------------------------------------------------------------- Opening valuation as 6,094 1,108 98 10,798 7 106 18,211 at 1 July 2008 Purchases at 1,111 - - 865 - - 1,976 cost Disposal (10) - - (46) - - (56) proceeds Realised (332) - - - - - (332) losses Movement in - - - (352) - - (352) loan stock accrued income Unrealised (2,037) (223) - (1,211) (1) (97) (3,569) losses --------------------------------------------------------------------------- Closing valuation as at 30 June 2009 4,826 885 98 10,054 6 9 15,878 --------------------------------------------------------------------------- Movement in loan stock accrued income Opening accumulated - - - 480 - - 480 movement in loan stock revenue accrued income Movement in - - - (352) - - (352) loan stock revenue accrued income --------------------------------------------------------------------------- Closing - - - 128 - - 128 accumulated movement in loan stock revenue accrued income --------------------------------------------------------------------------- Movement in unrealised losses Opening (4,720) (436) - (1,128) (4) (325) (6,613) accumulated unrealised losses Movement in (2,037) (223) - (1,211) (1) (97) (3,569) unrealised losses Transfer of 1,806 - - 760 - - 2,566 previously unrealised losses/(gains) to realised reserves on disposal --------------------------------------------------------------------------- Closing (4,951) (659) - (1,579) (5) (422) (7,616) accumulated unrealised losses --------------------------------------------------------------------------- Historic cost basis Opening book 10,813 1,545 98 11,447 11 431 24,345 cost Purchases at 1,111 - - 865 - - 1,976 cost Sales at cost (2,147) - - (807) - - (2,954) --------------------------------------------------------------------------- Closing book 9,777 1,545 98 11,505 11 431 23,367 cost --------------------------------------------------------------------------- Equity and preference share investments held at fair value through profit or loss total Â£7,979,000 (2009: Â£5,815,000). Investments held at amortised cost total Â£11,113,000 (2009: Â£10,063,000). There has been no re-designation of non- current asset investments during the year. In September 2009, Crown Place VCT PLC exchanged its shareholdings in Welland Inns VCT Limited (formerly Clear Pub Company VCT Limited), Novello Pub Limited and The Charnwood Pub Company VCT (Hotels) Limited for a shareholding in Charnwood Pub Company Limited. The reorganisation resulted in the pubs being managed by a single management team. Disposal proceeds of Â£1,264,000 included in the cash flow statement differ from the disposal proceeds of Â£1,410,000 shown in the note above, due to deferred consideration of Â£47,000 in respect of RFI Global Services Limited and consideration of Â£51,000 from Red-M Group Limited and Â£47,000 from Vibrant Energy Surveys Limited which was not received as cash. The following disposals, repayments and permanent diminution in value took place in the year: Â Â Opening carrying value Â Â as at Net consideration Cost 1 July 2009 Name of company Â£'000 Â£'000 Â£'000 -------------------------------------------------------------------------------- Avanti Communications Group PLC 389 167 194 Booth Dispensers Limited 80 227 52 Driver Hire Investment Group - 29 1 Limited GB Pub Company VCT Limited 45 45 45 Green Energy Property Services - 47 - Group Limited House of Dorchester Limited 122 122 122 Red-M Group Limited 49 295 49 RFI Global Services Limited 625 378 186 River Bourne Health Club 10 106 17 Limited The Dunedin Pub Company VCT 120 120 120 Limited Vibrant Energy Surveys Limited 51 267 51 ------------------------------------------------- Â 1,491 1,803 837 ------------------------------------------------- Fixed asset investment class valuation methodologies Quoted equity investments (both qualifying and non-qualifying) are valued at market bid price as at the balance sheet date. Unquoted loan stock investments are valued on an amortised cost basis. Loan stocks with a fixed interest rate total Â£10,953,000 (2009: Â£9,677,000). Loan stocks with a floating rate of interest total Â£160,000 (2009: Â£386,000). The Directors believe that the carrying value of loan stock valued using amortised cost is not materially different to fair value. The Company does not hold any assets as the result of the enforcement of security during the year, and believes that the carrying values for both impaired and past due assets are covered by the value of security held for these loan stock investments. The amended IFRS 7 'Financial Instruments: Disclosures' requires the Company to disclose the valuation methods applied to its investments measured at fair value through profit or loss in a fair value hierarchy according to the following definitions: Fair value hierarchy Definition of valuation method -------------------------------------------------------------------------------- Level 1 Unadjusted quoted (bid) prices applied Level 2 Inputs to valuation are from observable sources and are directly or indirectly derived from prices Level 3 Inputs to valuations are not based on observable market data Quoted AIM investments are valued according to Level 1 valuation methods. Unquoted equity and preference share investments are all valued according to Level 3 valuation methods. The unquoted equity and preference share investments and equity derived instruments held at fair value through profit or loss (level 3) had the following movements in the year to 30 June 2010: Â Â£'000 ------------------------------------------------ Opening balance as at 1 July 2009 4,924 Additions 1,325 Disposal proceeds (343) Realised gains 356 Debt/equity swap 78 Unrealised gains on equity investments 658 -------- Closing balance as at 30 June 2010 6,998 -------- Unquoted equity investments and warrants and convertibles are valued in accordance with the IPEVCV guidelines as follows: 30 June 30 June Â 2010 2009 Valuation methodology Â£'000 Â£'000 ------------------------------------------------------------------------ Cost (reviewed for impairment) 845 500 Net asset value supported by third party valuation 1,722 920 Recent investment price 1,643 993 Earnings multiple 2,788 2,511 -------------------- Â 6,998 4,924 -------------------- The unquoted equity instruments had the following movements between investment methodologies between 30 June 2009 and 30 June 2010: Â Value as at Change in valuation methodology 30 June 2010 (2009 to 2010) Â£'000 Explanatory note -------------------------------------------------------------------------------- Recent investment price to cost (reviewed for impairment) 225 Company not generating earnings Recent investment price to earnings multiple 49 Company generating earnings Earnings multiple to net asset value supported by third party Independent valuation recently valuation 15 undertaken Cost to recent investment price 146 Most recent price The valuation method used will be the most appropriate valuation methodology for an investment within its market, with regard to the financial health of the investment and the September 2009 IPEVCV Guidelines. The Directors believe that, within these parameters, there are no other possible methods of valuation which would be reasonable as at 30 June 2010. IFRS 7 requires the Directors to consider the impact of changing one or more of the inputs used as part of the valuation process to reasonable possible alternative assumptions. The valuation methodology applied to 60 per cent. of the equity investments (by valuation) are based on third party independent evidence, recent investment price and cost. The Directors believe that changes to reasonable possible alternative input assumptions for the valuation of the portfolio could result in an increase in the valuation of the equity investments by Â£1,059,000 or a decrease in the valuation of equity investments by Â£577,000. 10. Significant interests The principal activity of the Group is to select and hold a portfolio of investments in unquoted securities. Although the Company, through the Manager, will, in some cases, be represented on the board of the investee company, it will not take a controlling interest or become involved in the management. The size and structure of the companies with unquoted securities may result in certain holdings in the portfolio representing a participating interest without there being any partnership, joint venture or management consortium agreement. The Company has interests of greater than 20 per cent. of the nominal value of any class of the allotted shares in the investee companies as at 30 June 2010 as described below: Company Country of Principal activity % class and % total incorporation share type voting rights -------------------------------------------------------------------------------- Booth Dispensers Great Britain Manufacturer of 100.0% A 22.8% Limited vending machine Ordinary components and beer pump coolers ELE Advanced Great Britain Manufacturer of 74.3% B 48.3% Technologies precision Ordinary Limited engineering components for the industrial gas turbine, aerospace and automotive markets House of Great Britain Chocolate 33.2% B 23.3% Dorchester manufacturer Ordinary Limited Tuscan Energy Great Britain In administration 42.5% C None Group Limited* Ordinary GW 665 Limited* Great Britain No trading activity 37.0% B 37.0% Ordinary * Carried at nil as at 30 June 2010. The investments listed above are held as part of an investment portfolio, and their value to the Company is as part of a portfolio of investments. Therefore these investments are not considered to be associated undertakings as permitted by IAS 28 and FRS 9. 11. Investments in subsidiary undertakings Â 30 June 2010 Â CP1 VCT PLC CP2 VCT PLC Total Â Â£'000 Â£'000 Â£'000 ------------------------------------------------------------------------ Carrying value as at 1 July 2009 6,636 8,513 15,149 Movement in subsidiary net assets (64) (72) (136) ------------------------------------- Â 6,572 8,441 15,013 ------------------------------------- Â 30 June 2009 Â CP1 VCT PLC CP2 VCT PLC Total Â Â£'000 Â£'000 Â£'000 ------------------------------------------------------------------------ Carrying value as at 1 July 2008 6,585 8,474 15,059 Movement in subsidiary net assets 51 39 90 ------------------------------------- Â 6,636 8,513 15,149 ------------------------------------- The subsidiary companies currently hold cash and intercompany balances. Both CP1 VCT PLC and CP2 VCT PLC are wholly owned by Crown Place VCT PLC as follows: Â 30 June 2010 30 June 2009 Â CP1 VCT PLC CP2 VCT PLC CP1 VCT PLC CP2 VCT PLC Nominal value of shares held Â£6,382,746 Â£8,219,350 Â£6,382,746 Â£8,219,350 Percentage of authorised share 57.8% 59.8% 57.8% 59.8% capital in issue Percentage of total voting 100% 100% 100% 100% rights held 12. Current assets include the following: Â 30 June 2010 30 June 2009 Â Group Company Group Company Â Â£'000 Â£'000 Â£'000 Â£'000 -------------------------------------------------------------------------------- Trade and other receivables/debtors 68 68 55 55 ---------------------------- Nationwide Building Society floating rate note 7 July 2009 - - 2,718 2,718 ---------------------------- 13. Trade and other payables/creditors 30 June 2010 30 June 2009 Â Group Company Group Company Â Â£'000 Â£'000 Â£'000 Â£'000 ---------------------------------------------------------------------------- Amounts falling due within one year: Amounts due to subsidiary undertakings - 14,940 - 14,968 Trade creditors 161 161 39 39 Accruals 99 59 296 260 ------------------------------------ Â 260 15,160 335 15,267 ------------------------------------ 14. Called up share capital Â 30 June 30 June 2010 2009 Â£'000 Â£'000 ---------------------------------------------------------------------------- Authorised 140,000,000 Ordinary shares of 10p each (2009: 140,000,000) 14,000 14,000 ---------------- Allotted, called up and fully paid 79,177,624 Ordinary shares of 10p each (2009: 79,657,180) 7,918 7,965 ---------------- Allotted, called up and fully paid excluding treasury shares 71,917,214 Ordinary shares of 10p each (2009: 72,396,770) 7,192 7,240 ---------------- The Company repurchased for cancellation 697,446 (2009: 1,091,300) Ordinary shares during the year at a total cost of Â£205,000 (2009: Â£321,000) representing 0.9 per cent. of the shares in issue as at 1 July 2009. The shares purchased for cancellation were funded from the Special reserve. The total number of shares held in treasury as at 30 June 2010 was 7,260,410 (2009: 7,260,410). Under the terms of the Dividend Reinvestment Scheme Circular dated 26 February 2009, the following Ordinary shares of nominal value 10 pence were allotted during the year: Â Opening Â Â Issue market price Â Â Aggregate price per Â per share on Â Number of nominal value share Consideration allotment Allotment shares of shares pence per received pence per date allotted Â£'000 share Â£'000 share -------------------------------------------------------------------------------- 6 November 106,946 11 32.95 35 25.00 2009 9 April 2010 110,944 12 32.93 37 30.00 15. Cancellation of share premium account Shareholders approved the cancellation of the Company's share premium account by way of special resolution at a General Meeting on 1 September 2009. The share premium account amounting to Â£14,438,000 was subsequently cancelled on 16 September 2009 by order of the High Court and the Notice regarding the cancellation was registered at Companies House on 18 September 2009. The purpose of this cancellation was to increase the special reserve available for distribution as dividends, or for making market purchases or for any other distributable purpose under the Companies Act 2006. 16. Basic and diluted net asset value per Ordinary share The Group and Company net asset value attributable to the Ordinary shares at the year end was as follows: 30 June 30 June Â Â Â 2010 2009 ---------------------------------------------------------------------------- Net asset value per share attributable (pence) Â Â 33.9 34.2 -------------------- The net asset value per share at the year end is calculated in accordance with the Articles of Association and is based upon total shares in issue less treasury shares, of 71,917,214 shares (2009: 72,396,770) as at 30 June 2010. There are no convertible instruments, derivatives or contingent share agreements in issue. The Company's policy is to sell treasury shares at a price greater than the purchase price hence the net asset value per share on a diluted basis would be equal to or greater than the basic net asset value per share, depending on the actual price achieved for selling the treasury shares. 17. Cash and cash equivalents/cash at bank and in hand 30 June 2010 30 June 2009 Â Group Company Group Company Â Â£'000 Â£'000 Â£'000 Â£'000 -------------------------------------------------- Cash at bank 5,513 5,400 6,472 6,255 ------------------------------------ Â 18. Reconciliation of revenue return on ordinary activities before taxation to net cash inflow from operating activities Year ended Year ended 30 June Â 30 June Â 2010 2009 Â Â Â Â£'000 Â£'000 -------------------------------------------------------------------------------- Revenue return before tax Â Â 489 682 Capitalised expenses Â Â (324) (354) Recovery of VAT charged to capital Â Â - 277 (Increase)/decrease in accrued amortised loan stock interest Â Â (50) 352 Decrease in receivables Â Â 7 139 (Decrease)/increase in payables Â Â (103) 17 -------------------------- Net cash inflow from operating activities Â Â 19 1,113 -------------------------- 19. Capital and financial instruments risk management The following policies are with reference to both the Company and the Group except where the 'Company' is used below. The Group's maximum permitted gearing is Â£23,514,000 (2009: Â£23,883,000) and as at 30 June 2010, the Group's gearing was nil (2009: nil). The Group's policy on gearing is described in more detail on page 22 of the Directors' report and enhanced business review in the full Annual Report and Financial Statements. The Group's capital comprises Ordinary shares as described in note 14. The Company is permitted to buy back its own shares for cancellation or treasury purposes, and this is described in more detail on page 23 of the Directors' report and enhanced business review in the full Annual Report and Financial Statements. As noted above, the share premium account was cancelled during the year to increase the distributable special reserve. The Group's financial instruments comprise equity and loan stock investments in unquoted companies, equity in AIM quoted companies, cash balances, short term debtors and creditors which arise from its operations. The main purpose of these financial instruments is to generate revenue and capital appreciation for the Group's operations. The Group has no gearing or other financial liabilities apart from short term creditors. The Group does not use any derivatives for the management of its balance sheet. The principal risks arising from the Group's operations are: Â Â Â Â·Â Â Â Â Â Â Â Â Â Investment (or market) risk (which comprises investment price and cash flow interest rate risk); Â Â Â Â·Â Â Â Â Â Â Â Â Â credit risk; and Â Â Â Â·Â Â Â Â Â Â Â Â Â liquidity risk. The Board regularly reviews and agrees policies for managing each of these risks. There have been no changes in the nature of the risks that the Group has faced during the past year, and apart from where noted below, there have been no changes in the objectives, policies or processes for managing risks during the past year. The key risks are summarised as follows: Investment risk As a venture capital trust, it is the Group's specific nature to evaluate and control the investment risk of its portfolio in unquoted and in quoted companies, details of which are shown on page 13 of the full Annual Report and Financial Statements. Investment risk is the exposure of the Group to the revaluation and devaluation of investments. The main driver of investment risk is the operational and financial performance of the investee companies and the dynamics of market quoted comparators. The Manager receives management accounts from investee companies, and members of the investment management team often sit on the boards of unquoted investee companies; this enables the close identification, monitoring and management of investment risk. The Manager and the Board formally reviews investment risk (which includes market price risk), both at the time of initial investment and at quarterly Board meetings. The Board monitors the prices at which sales of investments are made to ensure that profits to the Group are maximised, and that valuations of investments retained within the portfolio appear sufficiently prudent and realistic compared to prices being achieved in the market for sales of unquoted investments. The maximum investment risk as at the balance sheet date is the value of the non-current and current asset investment portfolio which is Â£19,092,000 (2009: Â£18,596,000). Non-current and current asset investments form 78 per cent. of the net asset value as at 30 June 2010 (2009: 75 per cent.). More details regarding the classification of non-current and current asset investments are shown in notes 9 and 12. Investment price risk Investment price risk is the risk that the fair value of future investment cash flows will fluctuate due to factors specific to an investment instrument or to a market in similar instruments. To mitigate the investment price risk for the Group as a whole, the strategy of the Group is to invest in a broad spread of industries with approximately two-thirds of the unquoted investments comprising debt securities, which, owing to the structure of their yield and the fact that they are usually secured, have a lower level of price volatility than equity. Details of the industries in which investments have been made are contained in the Portfolio of investments section on page 13 and in the Manager's report within the full Annual report and Financial Statements. The valuation method used will be the most appropriate valuation methodology for an investment within its market, with regard to the financial health of the investment and the September 2009 IPEVCV Guidelines. As required under IFRS 7 and FRS 29, the Board is required to illustrate by way of a sensitivity analysis, the degree of exposure to market risk. The Board considers that the value of the non-current and current asset investment portfolio is sensitive to a 10 per cent. change based on the current economic climate. The impact of a 10 per cent. change has been selected as this is considered reasonable given the current level of volatility observed both on a historical basis and future expectations. The sensitivity of a 10 per cent. (2009: 10 per cent.) increase or decrease in the valuation of the non-current and current asset investments (keeping all other variables constant) would increase or decrease the net asset value and return for the year by Â£1,909,000 (2009: Â£1,860,000). Cash flow interest rate risk It is the Group's policy to accept a degree of interest rate risk on its financial assets through the effect of interest rate changes. On the basis of the Group's analysis, it is considered that further falls in interest rates would not have a significant impact. The weighted average interest rate applied to the Group's fixed rate assets during the year was approximately 6.3 per cent. (2009: 4.5 per cent.). The weighted average period to maturity for the fixed rate assets is approximately 2.7 years (2009: 2.2 years). Credit risk Credit risk is the risk that the counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Group. The Group is exposed to credit risk through its debtors, investment in unquoted loan stock, and through the holding of floating rate notes and cash on deposit with banks. The Manager evaluates credit risk on loan stock, floating rate note instruments and other similar instruments prior to investment, and as part of its ongoing monitoring of investments. In doing this, it takes into account the extent and quality of any security held. Typically loan stock instruments have a first fixed charge or a fixed and floating charge over the assets of the investee company in order to mitigate the gross credit risk. The Manager receives management accounts from investee companies, and members of the investment management team often sit on the boards of unquoted investee companies; this enables the close identification, monitoring and management of investment- specific credit risk. Bank deposits and floating rate notes are held with banks which have a Moody's credit rating of at least 'A'. The Group has an informal policy of limiting counterparty banking and floating rate note exposure to a maximum of 20 per cent. of net asset value for any one counterparty. The Manager and the Board formally review credit risk (including receivables) and other risks, both at the time of initial investment and at quarterly Board meetings. The Group's total gross credit risk at 30 June 2010 was limited to Â£11,113,000 (2009: Â£10,063,000) of unquoted loan stock instruments, Â£5,513,000 (2009: Â£6,472,000) cash deposits with banks and Â£nil (2009: Â£2,718,000) floating rate notes. As at the balance sheet date, the cash held by the Group is held with the Royal Bank of Scotland plc, Lloyds Banking Group plc, HSBC plc, Scottish Widows Bank plc and Standard Life Bank plc. Credit risk on floating rate note and cash transactions is mitigated by transacting with counterparties that are regulated entities subject to prudential supervision, with high credit ratings assigned by international credit-rating agencies. Liquidity risk Liquid assets are held as cash on current account, cash on deposit or short term money market account and as floating rate notes. Under the terms of its Articles, the Group has the ability to borrow up to the amount of its adjusted capital and reserves of the latest published audited consolidated balance sheet, which amounts to Â£23,514,000 (2009: Â£23,883,000) as at 30 June 2010. The Group has no committed borrowing facilities as at 30 June 2010 (2009: nil) and had cash balances of Â£5,513,000 (2009: Â£6,472,000) (Company Â£5,400,000; 2009: Â£6,255,000) Â together with Â£nil (2009: Â£2,718,000) invested in floating rate notes. The main cash outflows are for new investments, dividends and share buy backs, which are within the control of the Group. The Manager formally reviews the cash requirements of the Group on a monthly basis, and the Board on a quarterly basis, as part of its review of management accounts and forecasts. All of the Group's financial liabilities are short term in nature and total Â£260,000 (2009: Â£335,000) for the year to 30 June 2010 (Company: 30 June 2010; Â£15,160,000: 30 June 2009: Â£15,267,000). An amount of Â£14,940,000 (2009: Â£14,968,000) which is included within the Company creditor relates to intercompany balances and is not considered to carry liquidity risk. In view of this, the Board considers that the Group is subject to low liquidity risk. The carrying value of loan stock investments held at amortised cost at 30 June 2010 is analysed by the expected maturity dates as follows: Past due Impaired Fully performing loan stock loan stock* loan stock Total Redemption date Â£'000 Â£'000 Â£'000 Â£'000 ---------------------------------------------------------------------------- Less than one year 385 - 219 604 1-2 years 1,679 - 1,002 2,681 2-3 years 345 1,081 2,541 3,967 3-5 years 1,823 627 1,284 3,734 More than 5 years - - 127 127 ---------------------------------------------------------- Total 4,232 1,708 5,173 11,113 ---------------------------------------------------------- The carrying value of loan stock investments held at amortised cost at 30 June 2009 is analysed by the expected maturity dates as follows: Past due Impaired Fully performing loan stock loan stock* loan stock Total Redemption date Â£'000 Â£'000 Â£'000 Â£'000 ---------------------------------------------------------------------------- Less than one year 246 - 196 442 1-2 years 1,123 343 2,274 3,740 2-3 years 1,414 226 1,558 3,198 3-5 years 639 1,210 825 2,674 More than 5 years - - 9 9 ---------------------------------------------------------- Total 3,422 1,779 4,862 10,063 ---------------------------------------------------------- *Of the loan stock categorised as past due, 76 per cent. (2009: 84 per cent.) is in respect of loan stocks where interest arrangements have been temporarily changed through discussions with the Manager, but under the contractual agreement Â£141,000 of loan stock interest would have been between one and twelve months past due. The balance relates to Â£4,000 of loan stock interest which is between one and four months past due. The cost, impairment and carrying value of impaired loan stocks held at amortised cost at 30 June 2010 and 30 June 2009 are as follows: Â 30 June 2010 30 June 2009 Â Cost Impairment Carrying value Cost Impairment Carrying value Â Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 -------------------------------------------------------------------------------- Impaired loan 6,875 (1,702) 5,173 6,947 (2,085) 4,862 stock ---------------------------------------------------------------- Impaired loan stock instruments have a first fixed charge or a fixed and floating charge over the assets of the investee company and the Board estimate that the security value approximates to the carrying value. Fair values of financial assets and financial liabilities All the Group's financial assets and liabilities as at 30 June 2010 are stated at fair value as determined by the Directors, with the exception of loans and receivables included within investments, which are carried at amortised cost, in accordance with IAS 39. In the opinion of the Directors, the amortised cost of loan stock is not materially different to the fair value of the loan stock. There are no financial liabilities other than short term trade and other payables. The Group's financial liabilities are all non-interest bearing. It is the Directors' opinion that the book value of the financial liabilities is not materially different to the fair value and all are payable within one year, and that the Group is subject to low financial risk as a result of having nil gearing and positive cash balances. The Group's financial assets and liabilities as at 30 June 2010, all denominated in pounds sterling, consist of the following: Â 30 June 2010 30 June 2009 Fixed Floating Non- Fixed Floating Non- rate rate interest Total rate rate interest Total Â Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 -------------------------------------------------------------------------------- Floating rate notes - - - - - 2,718 - 2,718 Unquoted loan stock 10,953 160 - 11,113 9,677 386 - 10,063 Unquoted equity - - 6,998 6,998 - - 4,924 4,924 Quoted equity - - 981 981 - - 891 891 Receivables - - 68 68 - - 55 55 Current liabilities - - (260) (260) - - (335) (335) Cash - 5,513 - 5,513 - 6,472 - 6,472 -------------------------------------------------------------------- Net assets 10,953 5,673 7,787 24,413 9,677 9,576 5,535 24,788 -------------------------------------------------------------------- The Company's financial assets and liabilities as at 30 June 2010, all denominated in pounds sterling, consist of the following: Â 30 June 2010 30 June 2009 Fixed Floating Non- Fixed Floating Non- rate rate interest Total rate rate interest Total Â Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 ----------------------------------------------------------------------------------- Floating rate notes - - - - - 2,718 - 2,718 Unquoted loan stock 10,953 160 - 11,113 9,677 386 - 10,063 Unquoted equity - - 22,011 22,011 - - 20,073 20,073 Quoted equity - - 981 981 - - 891 891 Receivables - - 68 68 - - 55 55 Current liabilities (14,940) - (220) (15,160) (14,968) - (299) (15,267) Cash - 5,400 - 5,400 - 6,255 - 6,255 ------------------------------------------------------------------------ Net assets (3,987) 5,560 22,840 24,413 (5,291) 9,359 20,720 24,788 ------------------------------------------------------------------------ 20. Post balance sheet events Since 30 June 2010 the Company has completed the following material transactions: Â Â·Â Â Â Â Â Â Â Â Â Â Â July and August 2010: Investment in Rostima Limited of Â£62,000 Â Â·Â Â Â Â Â Â Â Â Â Â Â July 2010: Investment in TEG Biogas (Perth) Limited of Â£109,000 Â Â·Â Â Â Â Â Â Â Â Â Â Â July 2010: Disposal of Green Energy Property Services Group Limited for deferred consideration of up to Â£38,000 Â Â·Â Â Â Â Â Â Â Â Â Â Â August 2010: Investment in Xceleron Limited of Â£31,000 Â Â·Â Â Â Â Â Â Â Â Â Â Â September 2010: Investment in Radnor House School Limited of Â£1,564,000 The Company has a commitment to invest a further Â£243,000 in TEG Biogas (Perth) Limited. 21. Contingencies and guarantees There are no contingencies or guarantees of the Group or Company as at 30 June 2010 (2009: nil). 22. Related party transactions The Manager, Albion Ventures LLP, could be considered to be a related party by virtue of the fact that it is party to a management agreement with the Company (details disclosed on page 25 of the full Annual Report and Financial Statements). During the year, services of a total value of Â£482,000 (2009: Â£522,000) were purchased by the Company from Albion Ventures LLP; this includes Â£432,000 investment management fee and Â£50,000 administration fee. At the financial year end, the amount due to Albion Ventures LLP disclosed as accruals and deferred income was Â£118,000 (2009: Â£208,000). Albion Ventures LLP holds 1,256 Ordinary shares as a result of fractional entitlements arising on the merger of Crown Place VCT PLC, CP1 VCT PLC and CP2 VCT PLC on 13 January 2006. 23. Principal risks and uncertainties In addition to the current economic risks outlined in the Chairman's statement, the Board considers that the Company faces the following major risks and uncertainties: 1. Investment risk This is the risk of investment in poor quality assets which reduces the capital and income returns to shareholders, and negatively impacts on the Group's reputation. By nature, smaller unquoted businesses, such as those that qualify for venture capital trust purposes, are more fragile than larger, long established businesses. To reduce this risk, the Board places reliance upon the skills and expertise of the Manager and its strong track record for investing in this segment of the market. The Company's policy is to lower investment risk by investing part of the portfolio in asset-backed businesses and taking a first charge over the relevant assets. In addition, the Manager operates a formal and structured investment process, which includes an Investment Committee, comprising investment professionals from the Manager and at least one external investment professional. The Manager also invites comments from all non-executive Directors on investments discussed at the Investment Committee meetings. Investments are actively and regularly monitored by the Manager (investment managers normally sit on investee company boards) and the Board receives detailed reports on each investment as part of the Manager's report at quarterly board meetings. 2. Venture Capital Trust approval risk The Company's current approval as a venture capital trust allows investors to take advantage of tax reliefs on initial investment and ongoing tax free capital gains and dividend income. Failure to meet the qualifying requirements could result in investors losing the tax relief on initial investment and loss of tax relief on any tax-free income or capital gains received. In addition, failure to meet the qualifying requirements could result in a loss of listing of the shares. To reduce this risk, the Board has appointed the Manager, who has a team with significant experience in venture capital trust management, used to operating within the requirements of the venture capital trust legislation. In addition, to provide further formal reassurance, the Board has appointed PricewaterhouseCoopers LLP as its taxation advisors. PricewaterhouseCoopers LLP report quarterly to the Board to independently confirm compliance with the venture capital trust legislation, to highlight areas of risk and to inform on changes in legislation. 3. Compliance risk The Company is listed on The London Stock Exchange and is required to comply with the rules of the UK Listing Authority, as well as with the Companies Act, Accounting Standards and other legislation. Failure to comply with these regulations could result in a delisting of the Company's shares, or other penalties under the Companies Act or from financial reporting oversight bodies. Board members and the Manager have experience of operating at senior levels within quoted businesses. In addition, the Board and the Manager receive regular updates on new regulation from its auditors, lawyers and other professional bodies. 4. Internal control risk Failures in key controls, within the Board or within the Manager's business, could put assets of the Company at risk or result in reduced or inaccurate information being passed to the Board or to shareholders. The Audit and Risk Committee meets with the Manager's internal auditors, Littlejohn LLP, at least once a year, receiving a report regarding the last formal internal audit performed on the Manager, and providing the opportunity for the Audit and Risk Committee to ask specific and detailed questions. During the year, the Board has met with the Partner of Littlejohn LLP internal audit to discuss the most recent Internal Audit Report completed on the Manager. The Manager has a comprehensive business continuity plan in place in the event that operational continuity is threatened. Further details regarding the Board's management and review of the Group's internal controls through the implementation of the Turnbull guidance are detailed on page 31 of the full Annual Report and Financial Statements. Measures are in place to mitigate information risk in order to ensure the integrity, availability and confidentiality of information used within the business. 5. Reliance upon third parties risk The Company is reliant upon the services of Albion Ventures LLP for the provision of investment management and administrative functions. There are provisions within the management agreement for the change of Manager under certain circumstances (for more detail, see the management agreement paragraph on page 25 of the full Annual Report and Financial Statements). In addition, the Manager has demonstrated to the Board that there is no undue reliance placed upon any one individual within Albion Ventures LLP. 6. Financial risks By its nature, as a venture capital trust, the Company is exposed to investment risk (which comprises investment price risk and cash flow interest rate risk), credit risk and liquidity risk. The Company's policies for managing these risks and its financial instruments are outlined in full in note 19. All of the Group's income and expenditure is denominated in sterling and hence the Group has no foreign currency risk. The Group is financed through equity and does not have any borrowings. The Group does not use derivative financial instruments. 24. Other information The information set out in this announcement does not constitute the Company's statutory accounts within the terms of section 434 of the Companies Act 2006 for the periods ended 30 June 2010 and 30 June 2009, and is derivedÂ from theÂ statutory accounts for those financial years, which have been, or in the case of the accounts for the year ended 30Â June 2010, which will be, delivered to the Registrar of Companies. The Auditors reported on those accounts; their reports were unqualified and did not contain a statement under s498 (2) or (3) of the Companies Act 2006. The Company'sÂ Annual General Meeting will be held at The City of London Club, 19 Old Broad Street, London, EC2N 1DS on 9 November 2010 at 12 noon. 25. Publication The full audited Annual Report and Financial StatementsÂ are being sent to shareholders and copies will be made available to the public at the registered office of the Company, Companies House, the National Storage Mechanism Â and also electronically atÂ www.albion-ventures.co.ukÂ under the 'Our Funds' section. [HUG#1449977] Annual Financial Report: http://hugin.info/141806/R/1449977/391637.pdf Pie chart: http://hugin.info/141806/R/1449977/391642.pdf This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Crown Place VCT PLC via Thomson Reuters ONE

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