REG - Craven House Capital - Annual Results for year ended 31 May 2014 <Origin Href="QuoteRef">CRV.L</Origin> <Origin Href="QuoteRef">KSK.L</Origin> - Part 2
28/11/2014 07:10
- Part 2: For the preceding part double click ID:nRSb2476Ya
599 2,018
Disposals - (437) - (437)
Revaluations 94 - - 94
Effect of foreign exchange - (18) - (18)
At 31 May 2013 2,987 124 599 3,710
Additions 2,382 - - 2,382
Disposals - - - -
Revaluations (1,282) (33) 621 (694)
Effect of foreign exchange - - - -
Reclassification 686 - 686
At 31 May 2014 4,773 91 1,220 6,084
Unquoted investments - Company
Equity£'000 Convertible loans£'000 Loan£'000 Total £'000
At 1 June 2012 1,474 579 - 2,053
Additions 763 - 599 1,362
Disposals - (437) - (437)
Revaluations 94 - - 94
Effect of foreign exchange - (18) - (18)
At 31 May 2013 2,331 124 599 3,054
Additions 2,382 - - 2,382
Disposals - - - -
Revaluations (1,222) (33) 621 (634))
Effect of foreign exchange - - - -
Reclassification 686 - 686
At 31 May 2014 4,177 91 1,220 5,488
Quoted investments at 31 May 2014 relate to shares held in Farm Lands of
Africa Inc, a company listed on the OTC markets in New York. These shares have
been measured on a Level 3 basis due to these not being traded in an active
market.
Unquoted investments at 31 May 2014 have been measured on a Level 3 basis as
no observable market data was available. These investments are as follows:
Shares in Pressfit Holdings Plc are valued at £1,090,700, representing a 22.6%
holding. These have been valued at the share price of Pressfit at the date of
its IPO as the Directors believe this is the best indication of the fair value
of the investment at the reporting date. They are not aware of any
circumstances to indicate an impairment of this investment.
Shares in Ceniako Limited valued at £813,401, representing a 49% holding.
These have been valued at the price paid by Craven House Capital as the
Directors believe that the price of recent investment continues to represent
the best indication of the fair value at the year end.
Shares in Finishtec Acabamento Tecnicos em Matais Ltda valued at £596,658.
This is held through a 95% subsidiary Craven House Industries Limited giving
the group a 50.1% stake. These have been valued at the price paid by Craven
House Capital, as the Directors believe that the price of recent investment
continues to represent the best indication of the fair value at the year end.
Shares in EmVest Barvale (Pty) Ltd valued at £431,380, representing a 49%
holding. These have been valued at the price paid by Craven House Capital,
during the year, as the Directors believe that this is the best indication of
the value at the year end.
Shares in EmVest Evergreen (Pty) Ltd valued at £0, representing a 49% holding.
These have not been attributed a value as the Directors believe that this is
the best indication of the value at the year end.
Shares in EmVest Evergreen Properties (Pty) Ltd valued at £485,241,
representing a 49% holding. These have been valued at the price paid by Craven
House Capital, during the year, as the Directors believe that this is the best
indication of the value at the year end.
Shares in EmVest Foods (Pty) Ltd valued at £161,747, representing a 49%
holding. These have been valued at the price paid by Craven House Capital,
during the year, as the Directors believe that this is the best indication of
the value at the year end.
Shares in Royalty Sports Brands Ltd valued at £1,193,239, representing a 49%
holding. These have been valued at the price paid by Craven House Capital,
during the year, as the Directors believe that this is the best indication of
the value at the year end.
Shares in Farm Lands of Africa Ltd valued at £311,966, representing a 50%
holding. The value of the shares have been written down to zero as the
Directors believe that this is the best indication of the value at the year
end considering the recent Ebola outbreak in Guinea.
A convertible loan to Pressfit Holdings Plc valued at £91,376. This has been
valued based on the number of shares that Craven House Capital would receive
on conversion at the same market price as the shares held above as these can
be converted at any time at Craven House's option.
A loan with Greentel Limited valued at £1,220,100. The year end valuation is
based on the agreed conversion of the loan into a facility of E1,500,000 on 28
November 2013, which the Directors believe is the most appropriate indicator
of the year end valuation based on the information available to them.
10. TRADE AND OTHER RECEIVABLES
Group & Group &
Company Company
2014 2013
£'000 £'000
Current:
Trade receivables - 6
Other receivables 56 54
Prepayments and accrued income 58 19
114 79
11. CASH AND CASH EQUIVALENTS
2014 2013
£'000 £'000
Bank accounts - 1
12. CALLED UP SHARE CAPITAL
Authorised
Equity shares Nominal 2014 2013
Number: Class: Value: £'000 £'000
2,280,038,212 Ordinary 0.001 2,280 2,280
77,979,412 Deferred 0.09 7,018 7,018
77,979,412 Deferred 0.009 702 702
10,000 10,000
Allotted, called up and fully paid
Equity shares Nominal 2014 2013
Number: Class: Value: £'000 £'000
798,466,557 Ordinary 0.001 799 593
(2013: 592,695,949)
77,979,412 Deferred 0.09 7018 7018
77,979,412 Deferred 0.009 702 702
8,519 8,313
The deferred shares carry no entitlement to receive notice of any general
meeting, to attend, speak or vote at such general meeting. Holders are not
entitled to receive dividends, and on a winding up of the Company holders of
deferred shares are entitled to a return of capital only after the holder of
each Ordinary share has received a return of capital together with a payment
of £1 million per share. The deferred shares may be cancelled at any time for
no consideration by way of a reduction in capital.
On 4 November 2013, the Company allotted 94,322,598 new ordinary shares to
EmVest Asset Management for a consideration of CAD$1,960,000 (£1,177,000).
On 28 November 2013, the Company allotted 13,648,000 new ordinary shares to
Desmond Holdings Ltd in lieu of the performance fee due for the year ended
31st May 2013. The value of the performance being £170,600.
On 28 November 2013, the Company allotted 1,800,000 new ordinary shares to Mr
Balbir Bindra in lieu of remuneration totalling £18,000.
On 19 March 2014, the Company allotted 96,000,000 new ordinary shares to
Depston 1 (Pty) Ltd now known as Royalty Sports Brands Ltd for a consideration
of $2,000,000 (£1,200,000).
13. TRADE AND OTHER PAYABLES
Group & Group &
Company Company
2014 2013
£'000 £'000
Current:
Bank overdraft 16 -
Trade payables 212 184
Accruals and deferred income 111 188
339 372
14. FINANCIAL LIABILITIES - BORROWINGS
2014 2013
£'000 £'000
Current:
Other loans 340 463
Term and debt repayment schedule 1 year or less
£'000
Other loans 340
Other loans of £340,000 comprise advances made by Desmond Holdings Ltd
("Desmond") totalling £270,000 and loans made by Wise Star Capital Investment
Limited, both being Hong Kong investment companies. The loans were provided to
enable the Company to make qualifying investments under its Investing Policy
and to provide working capital for the Company.
The terms of the loans provided by Desmond are as follows:
a) Investment facility
Non-interest bearing loan facility of up to £700,000, originally provided in
December 2010. The majority of this has now been repaid and as at 31 May 2014,
the Company's borrowings under this facility totalled £56,000.
b) Working capital loans
Interest-bearing loans provide financial support to enable the Company to meet
its reasonable working capital requirements. The facility will remain in place
for at least 12 months from the date of approval of the financial statements.
Desmond has agreed that it will not seek repayment of outstanding balances in
respect of both facilities unless the Company is in a position to make the
repayment.
The loan provided by Wise Star Capital Investment Limited includes interest
payable at a rate of 6% per annum. The loan was provided for 12 months dated
1st September 2011; however this loan has since been extended. The amount owed
to Wise Star Capital Investment Limited at the balance sheet date was
£70,000.
15. FINANCIAL INSTRUMENTS
Financial risk management objectives and policies
Management has adopted certain policies on financial risk management with the
objective of:
i. ensuring that appropriate funding strategies are adopted to meet the
Company's short-term and long-term funding requirements taking into
consideration the cost of funding, gearing levels and cash flow projections;
ii. ensuring that appropriate strategies are also adopted to manage related
interest and currency risk funding; and
iii. ensuring that credit risks on receivables are properly managed.
Financial instrument by category
The accounting policies for financial instruments have been applied to the
line items below:
Financial assets at fair value through profit or loss
Financial instruments that are measured subsequent to initial recognition at
fair value are grouped into Levels 1 to 3 based on the degree to which the
fair value is observable:
Level 1 fair value measurements are those derived from quoted prices
(unadjusted) in active markets for identical assets or liabilities; and
Level 2 fair value measurements for those derived from inputs other than
quoted prices included within Level 1 that are observable for the assets or
liability, either directly or indirectly.
Level 3 fair value measurements are those derived from inputs that are not
based on observable market data.
At the balance sheet date all of the Company's financial assets fell into
Level 2 and Level 3.
Carrying values of all financial assets and liabilities approximate to fair
values. They are neither past due nor impaired.
Credit risk
The Company's credit risk is primarily attributable to other receivables.
Management has a credit policy in place and the exposure to credit risks is
monitored on an ongoing basis. In respect of other receivables, individual
credit evaluations are performed whenever necessary. The Company's maximum
exposure to credit risk is represented by the total financial assets held by
the Company. At 31 May 2014 no financial assets were past due.
Interest rate risk
The Company currently operates with positive cash and cash equivalents as a
result of issuing share capital in anticipation of future funding
requirements. As the Company has no borrowings from the bank and the amount of
deposits in the bank are not significant, the exposure to interest rate risk
is not significant to the Company. The effect of a 10% increase or fall in
interest rates obtainable on cash and on short-term deposits would be to
increase or decrease the Company's profit by less than £1,000 (2013: Less than
£1,000).
Liquidity risk
The Company manages its liquidity requirements by the use of both short-term
and long-term cash flow forecasts. The Company's policy to ensure facilities
are available as required is to issue equity share capital in accordance with
agreed settlement terms with vendors or professional firms, and all are due
within one year.
Price risks
The Company's securities are susceptible to price risk arising from
uncertainties about future value of its investments. This price risk is the
risk that the fair value of future cash flows will fluctuate because of
changes in market prices, whether those changes are caused by factors specific
to the individual investment or financial instrument or its holder or factors
affecting all similar financial instruments or investments traded in the
market.
During the year under review, the Company did not hedge against movements in
the value of its investments. A 10% increase/decrease in the fair value of
investments would result in a £1,000 (2013: £89,000) increase/decrease in the
net asset value.
While investments in companies whose business operations are based in emerging
markets may offer the opportunity for significant capital gains, such
investments also involve a degree of business and financial risk, in
particular for quoted investments.
Generally, the Company is prepared to hold unquoted investments for a middle
to long time frame, in particular if an admission to trading on a stock
exchange has not yet been planned. Sale of securities in unquoted investments
may result in a discount to the book value.
Currency risks
As investments may be made in foreign currencies (primarily US$), the Company
is exposed to the risk of unrealised losses on retranslation into the
reporting currency at reporting dates and to realised losses on realisations
of investments denominated in foreign currencies. There is no systematic
hedging in foreign currencies against such possible losses on
translation/realisation. Otherwise the Company operates primarily within its
local currency.
Capital management
The Company's financial strategy is to utilise its resources to further grow
its portfolio. The Company keeps investors and the market informed of its
progress with its portfolio through periodic announcements and raises
additional equity finance at appropriate times.
The Company regularly reviews and manages its capital structure for the
portfolio companies to maintain a balance between the higher shareholder
returns that might be possible with certain levels of borrowing for the
portfolio and the advantages and security afforded by a sound capital
position, and makes adjustments to the capital structure of the portfolio in
the light of changes in economic conditions. Although the Company has utilised
loans from shareholders to acquire investments, it is the Company's policy as
far as possible to finance its investing activities with equity and not to
have gearing in its portfolio.
At the balance sheet date the capital structure of the Company consisted of
borrowings disclosed in note 14, cash and cash equivalents and equity
comprising issued capital and reserves.
16. RELATED PARTY DISCLOSURES
During the year, the Company entered into the following transactions with
related parties and connected parties:
Loans from Wise Star Capital Investment Limited
At the year end the Company owed £70,000 to Wise Star Capital Investment
Limited, Mark Pajak was Director of Wise Star Capital Investment Limited
during the year. Details of the loan are set out in note 14.
Loans from Desmond Holdings Limited
At the year end the Company owed £270,000 to Desmond Holdings Limited, the
Company's Investment Manager and major shareholder in the Company. Details of
the loan are set out in note 14.
Management fees payable to Desmond Holdings Limited
At the year end, included in trade creditors, is an amount of £70,000 payable
to Desmond Holdings Limited, in respect of management services provided in the
year. The total amount owed to Desmond in respect of unpaid invoices at the
balance sheet date was £192,500.
Performance fee payable to Desmond Holdings Limited
At the year end, included in accruals and deferred income is an amount of
£88,400 payable to Desmond Holdings Limited in respect of the performance fee
due for the year. The performance fee calculation is based on the increase in
net asset value per share in the year. Payment of the performance fee will be
by way of shares issued in the Company. These shares had not yet been issued
at 31st May 2014.
Investment in Pressfit Holdings Plc
At the year end the Company held shares in Pressfit Holdings Plc and a
convertible loan was owed to the Company, both of which were included in
unquoted investments as detailed in note 9. Mark Pajak wasRecent news on KSK Power Ventur
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