REG-Crown Place VCT PLC : Annual Financial Report <Origin Href="QuoteRef">CRPL.L</Origin>
27/09/2017 11:45
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Crown Place VCT PLC
LEI number: 213800SYIQPA3L3T1Q68
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 2017.
This announcement was approved for release by the Board of Directors on 26
September 2017.
This announcement has not been audited.
You will shortly be able to view the Annual Report and Financial Statements
for the year ended 30 June 2017 (which have been audited) at:
www.albion.capital/funds/CRWN.The Annual Report and Financial Statements for
the year ended 30 June 2017 will be available as a PDF document via a link in
the 'Financial Reports and Circulars' section. The information contained in
the Annual Report and Financial Statements will include information as
required by the Disclosure and Transparency Rules, including Rule 4.1.
Investment objective
The investment objective and policy of the Company* is to achieve long term
capital and income growth principally through investment in smaller unquoted
companies in the United Kingdom.
In pursuing this policy, the Manager aims to build a portfolio which
concentrates both on more mature or asset-based investments and higher risk
companies with greater growth prospects.
In this way, risk is spread by investing in a number of different businesses
within venture capital trust qualifying industry sectors using a mixture of
securities. The maximum amount which the Company will invest in a single
company is 15 per cent. of the Company's assets at cost, thus ensuring a
spread of investment risk. The value of an individual investment may increase
over time as a result of trading progress and it is possible that it may grow
in value to a point where it represents a significantly higher proportion of
total assets prior to a realisation opportunity being available.
Under its Articles of Association, the Company's maximum exposure in relation
to gearing is restricted to the amount of its adjusted share capital and
reserves.
*The 'Company' is Crown Place VCT PLC. The 'Group' is the Company together
with its subsidiary CP1 VCT PLC.
Financial calendar
Record date for first dividend 3 November 2017
Annual General Meeting 11.00 am on 8 November 2017
Payment of first dividend 30 November 2017
Announcement of half-yearly results for the six months ended 31 December 2017 February 2018
Payment of second dividend (subject to Board approval) 29 March 2018
Financial highlights
31.0p Net asset value per share as at 30 June 2017
4.0p Total return per share to shareholders for the year ended 30 June 2017
14.0% Increase in total return on opening net asset value
2.0p Total tax-free dividends per share paid during the year ended 30 June 2017
6.9% Tax-free dividend yield on share price (total dividends paid in the year/share price as at 30 June 2017)
30 June 2017 30 June 2016
pence per share pence per share
Opening net asset value 28.94 30.97
Revenue return 0.41 0.59
Capital return/(loss) 3.63 (0.18)
Total return 4.04 0.41
Dividends paid (2.00) (2.50)
Impact from buy-backs and issue of share capital - 0.06
Closing net asset value 30.98 28.94
Shareholder return and shareholder value
Crown Place VCT PLC*
pence per share
Shareholder return from launch to April 2005 (date that Albion Capital was appointed investment manager):
Total dividends paid to 6 April 2005 ((i)) 24.93
Decrease in net asset value (56.60)
Total shareholder return to 6 April 2005 (31.67)
Shareholder return from April 2005 to 30 June 2017:
Total dividends paid 28.80
Decrease in net asset value (12.42)
Total shareholder return from April 2005 to 30 June 2017 16.38
Shareholder value since launch:
Total dividends paid to 30 June 2017 ((i)) 53.73
Net asset value as at 30 June 2017 30.98
Total shareholder value as at 30 June 2017 84.71
Current annual dividend objective 2.00
Dividend yield on net asset value as at 30 June 2017 6.5%
Notes
1. Prior to 6 April 1999, venture capital trusts were able to add 20 per cent.
to dividends and figures for the period up until 6 April 1999 are included at
the gross equivalent rate actually paid to shareholders.
* Formerly Murray VCT 3 PLC
The above financial summary is for the Company, Crown Place VCT PLC only.
Details of the financial performance of CP1 VCT PLC (previously Murray VCT
PLC) and CP2 VCT PLC (previously Murray VCT 2 PLC), which were merged into the
Company, can be found on page 67 of the full Annual Report and Financial
Statements.
Total shareholder value since launch: 30 June 2017 (pence per share)
Total dividends paid during:
the period from launch to 6 April 2005 (prior to change of manager) 24.93
the year ended 28 February 2006 1.00
the period ended 30 June 2007 3.30
the year ended 30 June 2008 2.50
the year ended 30 June 2009 2.50
the year ended 30 June 2010 2.50
the year ended 30 June 2011 2.50
the year ended 30 June 2012 2.50
the year ended 30 June 2013 2.50
the year ended 30 June 2014 2.50
the year ended 30 June 2015 2.50
the year ended 30 June 2016 2.50
the year ended 30 June 2017 2.00
Total dividends paid to 30 June 2017 53.73
Net asset value as at 30 June 2017 30.98
Total shareholder value as at 30 June 2017 84.71
In addition to the dividends paid above, the Board has declared a first
dividend for the year ending 30 June 2018, of 1 penny per Crown Place VCT PLC
share, payable on 30 November 2017 to shareholders on the register on 3
November 2017.
Chairman's statement
Introduction
Crown Place VCT PLC achieved a total return of 4.04 pence per share (14.0 per
cent. on opening NAV) for the year ended 30 June 2017, extending its track
record of delivering a positive return to shareholders. The asset based
portfolio performed particularly well, with a number of growth investments
also contributing to the overall uplift in returns. The Company also saw
significant interest from investors, with the Top Up Offer raising the full
subscription amount of £6.0 million, ahead of its planned closing date.
Results and dividends
As at 30 June 2017, the net asset value was £45.6 million or 30.98 pence per
share compared to £37.4 million or 28.94 pence per share at 30 June 2016. The
ongoing charges ratio for the year reduced to 2.4 per cent. (2016: 2.5 per
cent.).
During the year, the Company's realised and unrealised capital gains amounted
to £5,435,000 compared to £238,000 in the previous year. Notable increases
in valuations include Radnor House School, which has continued to trade
strongly; Shinfield Lodge Care, Active Lives Care and Ryefield Court Care, the
three luxury care homes near Reading, Oxford and Hillingdon, which are making
good progress to maturity; Chonais River Hydro, which benefitted from
increased valuations for infrastructure assets; and Proveca, a developer of
paediatric drugs, which gained its first regulatory approval and saw strong
interest from external investors. These uplifts were further supplemented by
the successful exit of Exco InTouch, the digital health business, which was
sold for around three times original cost, and the sales of Blackbay and
Masters Pharmaceuticals, both at valuations above their costs.
These positive developments in the investment portfolio were partially offset
by reductions in valuations in DySIS Medical, Cisiv and Abcodia and in respect
of the Company's quoted investment, Mi-Pay Group. Further details of the
Company's financial performance are given in the Strategic report below.
The Company paid dividends totalling 2.0 pence per share during the financial
year, representing a dividend yield on NAV of 6.5 per cent. (2016: 6.9 per
cent.). The Board is proposing a first dividend for the year to 30 June 2018
of 1 penny per share, payable on 30 November 2017 to shareholders on the
register on 3 November 2017. Shareholders will recall that it was announced
last year that the dividend had not been covered by the total return for a
number of years. This year's strong result covers the dividend twice over,
though the Board will require further substantial increases in NAV, before it
can reconsider increasing the dividend.
The Company's balance sheet was strengthened in the year by a successful
Prospectus Top-Up Offer which raised £6.0 million (£5.8 million, net of
costs). The Company intends to deploy these funds into new investment
opportunities.
Investment performance
We had four principal exits in 2017: Exco InTouch, AMS Sciences, Masters
Pharmaceuticals and Blackbay, which in total, returned disposal proceeds of
£1.9 million. The sale of Exco InTouch achieved a return, including
interest, of 2.8 times cost; AMS Sciences delivered 1.6 times our holding
value but an overall loss, with further sums due by way of deferred
consideration; Masters Pharmaceuticals achieved a return, including
interest, of 1.6 times cost; and Blackbay achieved a return, including
interest, of 2.3 times cost. Overall, the Company achieved disposal proceeds,
including repayments of loan stock by portfolio companies, of £2.4 million
compared to £2.9 million in the previous year. Subsequent to the year end,
The Crown Hotel Harrogate was sold. The Company's expected share of net
proceeds is approximately £2.0 million, compared to our holding value at 30
June 2017 of £1.9 million. Further information on realisations can be found
on page 20 of the full Annual Report and Financial Statements.
During the year, a strong investment pipeline allowed new investments
totalling £1.7 million to be made namely; £550,000 in MPP Global Solutions,
which provides a cloud based subscription platform for publishers; £400,000
in Convertr Media, a company that specialises in digital lead generation
software; £220,000 in Secured by Design, an international automotive
consultancy; £190,000 in Quantexa, which offers a predicative analytics
platform with a focus on cyber security for enterprises; £186,000 in
G.Network Communications, which provides fibre optic broadband in Central
London; £108,000 in Oviva, a digital health consultancy; and £80,000 in
Locum's Nest, which has developed a digital platform to allow the NHS to
manage their requirements for locum doctors more efficiently. In addition, a
total of £1.2 million was invested in existing portfolio companies, including
a combined £420,000 in Active Lives Care, Ryefield Court Care and Shinfield
Lodge Care as the care homes opened up for business; £240,000 in Proveca,
which develops paediatric drugs; and £233,000 in DySIS Medical, which
develops medical devices for the detection of cancer.
Companies in the portfolio that performed particularly well during the year
included Radnor House School, where the Twickenham school is operating at
close to full capacity and the Sevenoaks school saw a significant increase in
the student roll, as the turnaround programme started to deliver results; the
three care homes, Active Lives Care, Ryefield Court Care and Shinfield Lodge
Care have seen strong valuation uplifts, as they progress to maturity;
Proveca, which develops paediatric drugs, after it gained its first regulatory
approval; and Egress Software Technologies, whose encrypted email and document
collaboration services achieved significant revenue growth. The renewable
energy investments continue to perform to plan and provide a good yield to the
Company despite falling global energy prices, with Chonais River Hydro
delivering a particularly strong valuation uplift during the year.
The largest negative valuation movements over the year were mainly in the
growth portfolio and included DySIS Medical and Abcodia, both of which
required further finance during the year as they continue to develop their
businesses. There was also a decline in the value of Cisiv and the share price
of the AIM quoted Mi-Pay Group fell during the year.
Risks and uncertainties
The outlook for the UK and global economies continues to be the key risk
affecting the Company. The withdrawal of the UK from the European Union is
likely to have an impact on the Company and its investments, although it is
difficult to quantify it at this time. Overall investment risk, however, is
mitigated through a variety of processes, including our policies of first
ensuring that the Company has a first charge over portfolio companies' assets
wherever possible, and second of aiming to achieve balance in the portfolio
through the inclusion of sectors that are less exposed to the business
consumer cycles. In addition, the current consultation entitled "Financing
growth in innovative firms" may result in changes to VCT legislation in the
next Budget, which may limit the category of business in which the Company
currently invests.
A detailed review of risk management is set out in the Strategic report below.
Albion VCTs Top Up Offers
In November 2016, the Company announced the launch of the Albion VCTs
Prospectus Top Up Offers 2016/2017 and was pleased to announce on 22 February
2017 that it had reached its £6 million limit under its Offer which was fully
subscribed and closed, as shown in note 14. The proceeds of the Offer will be
used to provide further resources at a time when a number of attractive new
investment opportunities are being seen.
On 6 September 2017 the Company announced the publication of a prospectus in
relation to an offer for subscription for new Ordinary shares. The Company is
aiming to raise circa £6 million out of a target of £32 million in aggregate
that the Albion VCTs are seeking to raise. A Securities Note, which forms part
of the Prospectus, was sent out to shareholders the week commencing 18
September 2017.
Dividend re-investment scheme
During the year, the Company raised £429,000 from the dividend re-investment
scheme. Through the scheme, shareholders may elect to reinvest the whole of
the dividend received by subscribing for new shares in the Company. Under
current tax rules, shareholders re-investing their dividends will be eligible
for the income and capital gains tax advantages available to investors
subscribing for new shares in venture capital trusts and will be able to
increase their shareholding in the Company, without incurring dealing costs or
stamp duty. Full details of the scheme and the application form are available
on the Manager's website at: www.albion.capital/funds/CRWN.
Outlook
We are pleased with the progress made during the course of the year across the
portfolio, with the asset based portfolio delivering strong returns and many
growth investments making good progress. The Company made a number of new
investments within the growth portfolio which have excellent prospects and
give us confidence that our portfolio will continue to deliver value in the
future.
Richard Huntingford
Chairman comprising investment professionals from the Manager and at least one external investment professional. The Manager also invites and takes account of comments from non
-executive Directors of the Company on investments discussed at the Investment Committee meetings. Investments are actively and regularly monitored by the Manager
(investment managers normally sit on portfolio company boards), including the level of diversification in the portfolio, and the Board receives detailed reports on each
investment as part of the Manager's report at quarterly Board meetings.
Valuation risk The Company's investment valuation methodology is reliant on the accuracy and completeness of information that is issued by portfolio companies. In particular, the Directors may not be aware of or take into account certain events or circumstances which occur after the information issued by such companies is reported. As described in note 1 of the Financial Statements, the unquoted equity investments, convertible loan stock and debt issued at a discount held by the Company are
designated at fair value through profit or loss and valued in accordance with the International Private Equity and Venture Capital Valuation Guidelines. These guidelines
set out recommendations, intended to represent current best practice on the valuation of venture capital investments. These investments are valued on the basis of forward
looking estimates and judgements about the business itself, its market and the environment in which it operates, together with the state of the mergers and acquisitions
market, stock market conditions and other factors. In making these judgements the valuation takes into account all known material facts up to the date of approval of the
Financial Statements by the Board. The sensitivity of these assumptions are commented on further in notes 9 and 17. All other unquoted loan stock is measured at amortised
cost. The values of a number of investments are also underpinned by independent third party professional valuations.
VCT approval risk The Company must comply with section 274 of the Income Tax Act 2007 which enables its investors to take advantage of tax relief on their investment and on future returns. Breach of any of the rules enabling the Company to hold VCT status could result in the loss of that status. To reduce this risk, the Board has appointed the Manager, which has a team with significant experience in venture capital trust management, used to operating within the
requirements of the venture capital trust legislation. In addition, to provide further formal reassurance, the Board has appointed Philip Hare & Associates LLP as its
taxation adviser, who report quarterly to the Board to independently confirm compliance with the venture capital trust legislation, to highlight areas of risk and to
inform on changes in legislation. Each investment in a new portfolio company is also pre-cleared with H.M. Revenue & Customs.
Regulatory and compliance risk The Company is listed on The London Stock Exchange and is required to comply with the rules of the UK Listing Authority, as well as with the Companies Act, Accounting Standards and other legislation. Failure to comply with these regulations could result in a delisting of the Company's shares, or other penalties under the Companies Act or from financial reporting oversight bodies. Board members and the Manager have experience of operating at senior levels within or advising quoted companies. In addition, the Board and the Manager receive regular
updates on new regulation from its auditor, lawyers and other professional bodies. The Company is subject to compliance checks through the Manager's Compliance Officer.
The Manager reports monthly to its Board on any issues arising from compliance or regulation. These controls are also reviewed as part of the quarterly Board meetings,
and also as part of the review work undertaken by the Manager's Compliance Officer. The report on controls is also evaluated by the internal auditor.
Operational and internal control risk The Company relies on a number of third parties, in particular the Manager, for the provision of investment management and administrative functions. Failures in key systems and controls 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 Company and its operations are subject to a series of rigorous internal controls and review procedures exercised throughout the year. The Audit and Risk Committee
reviews the Internal Audit Reports prepared by the Manager's internal auditor, PKF Littlejohn LLP. On an annual basis, the Audit and Risk Committee chairman meets with
the internal audit partner to provide an opportunity to ask specific detailed questions in order to satisfy itself that the Manager has strong systems and controls in
place including those in relation to business continuity. In addition, the Board regularly reviews the performance ofRecent news on Albion Crown VCT
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