31 July 2009, 16:52
Private Equity Inv: Annual Financial Report - Part 2
<pre>- Part 2: For the preceeding part double click [ID:nPRrVBBE7a]
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Total equity 74,721 77,200
Net asset value per Ordinary Share 16 213.77p 180.70p
The Group's financial statements were approved by the Board of Directors and
were authorised for issue on 31 July 2009 and were signed on its behalf by:
Peter Dicks
Chairman
COMPANY BALANCE SHEET
as at 31 March 2009
31 March 31 March
2009 2008
Notes £'000 £'000
Non-current assets
Investments at fair value through profit 9 67,762 72,466
or loss
Investment in subsidiary undertaking 10 495 226
Current assets
Trade and other receivables 11 16 236
Amount due from Subsidiary 11 24 15
Cash and cash equivalents 15 6,774 4,527
6,814 4,778
Total assets 75,071 77,470
Current liabilities
Trade and other payables 12 93 134
Net assets 74,978 77,336
Capital and reserves
Share capital 13 3 4
Share premium account 14 - 96,862
Special reserve 14 79,072
Capital redemption reserve 14 2 1
Capital reserve 14 (3,848) (20,117)
Retained earnings 14 (251) 586
Shareholders' funds 74,978 77,336
Minority Interest - -
Total equity 74,978 77,336
Net asset value per ordinary share 16 214.51p 181.02p
The Company's financial statements were approved by the Board of Directors and
were authorised for issue on 31 July 2009 and were signed on its behalf by:
Peter Dicks
Chairman
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 March 2009
Year ended Year ended
31 March 2009 31 March 2008
Notes £'000 £'000
Cash flows from operating activities
Consolidated net return before tax 15,803 3,917
Adjustments to reconcile net return
before tax to net cash flows from
operating activities:
Gains on investments (16,269) (3,356)
Exchange gains 713 121
Decrease in trade and other payables (61) (19)
Increase in trade and other 144 81
receivables
Purchases of investments (16,881) (24,750)
Sales of investments 36,800 41,283
Net cash flows generated from 20,249 17,277
operating activities
Investing activities
Purchase of property, plant and (3) -
equipment
Net cash used in investing activities (3) -
Financing
Ordinary Shares purchased (17,779) (12,732)
Dividends paid (470) (550)
Net cash used in financing activities (18,249) (13,282)
Net increase in cash and cash 1,997 3,995
equivalents
Cash and cash equivalents at 4,611 765
beginning of year
Effect of foreign exchange rates on 427 (149)
cash and cash equivalents
Cash and cash equivalents at end of 15 7,035 4,611
year
COMPANY CASH FLOW STATEMENT
for the year ended 31 March 2009
Year ended Year ended
31 March 2009 31 March 2008
Notes £'000 £'000
Cash flows from operating activities
Company net return before tax 15,902 3,919
Adjustments to reconcile net return
before tax to net cash flows from
operating activities:
Gains on investments (16,269) (3,356)
Exchange gains 713 120
Decrease in trade and other payables (52) (31)
Increase in trade and other 104 103
receivables
Purchases of investments (16,881) (24,750)
Sales of investments 36,800 41,283
Net cash flows generated from 20,317 17,288
operating activities
Investing activities
Investment in Subsidiary (180) (51)
Net cash used in investing activities (180) (51)
Financing
Ordinary Shares purchased (17,779) (12,732)
Dividends paid (470) (550)
Net cash used in financing activities (18,249) (13,282)
Net increase in cash and cash 1,888 3,955
equivalents
Cash and cash equivalents at 4,527 723
beginning of year
Effect of foreign exchange rates on 359 (151)
cash and cash equivalents
Cash and cash equivalents at end of 15 6,774 4,527
year
The notes below form part of these accounts.
NOTES TO THE ACCOUNTS
at 31 March 2009
1 ACCOUNTING POLICIES
Accounting convention
Private Equity Investor plc is a Company incorporated in Great Britain and
registered in England and Wales under the Companies Act 1985. The consolidated
Annual Report for the Group for the year ended 31 March 2009 comprises the
results of the Company and its Subsidiary, Campton Group, Inc. (together
referred to as the "Group"). For further details see Basis of Consolidation
below . The Company is registered as a public limited company and is an
investment company as defined by section 833 of the Companies Act 2006. Campton
Group, Inc. is a private equity fund-of-funds management and advisory business
based in San Francisco, California.
Basis of Accounting
The consolidated annual financial statements of the Group have been prepared
under International Financial Reporting Standards ("IFRS"), which comprise
standards and interpretations approved by the International Accounting
Standards Board ("IASB"). The annual financial statements of the Company have
been prepared in accordance with IFRS as adopted by the European Union, and as
applied in accordance with provisions of the Companies Act 1985. The financial
statements have also been prepared in accordance with the Statement of
Recommended Practice ("SORP") (as amended December 2005) for investment trust
companies except to any extent where it conflicts with IFRS.
The accounting policies which follow set out those policies which apply in
preparing the financial statements for the year ended 31 March 2009. There are
no differences between the accounting policies applied to the Group and the
Company.
The Group and Company financial statements are presented in Sterling and all
values are rounded to the nearest thousand pounds (£'000) except when indicated
otherwise.
Basis of Consolidation
The consolidated financial statements incorporate the financial statements of
the Company and its principal subsidiary Campton Group, Inc.
Campton Group, Inc is consolidated from the date of its acquisition, being the
date on which the Company obtained control, and will continue to be
consolidated until the date that such control ceases. Control comprises the
power to govern the financial and operating policies of the investee so as to
obtain benefit from its activities and is achieved through direct or indirect
ownership of voting rights. The Company currently has an investment of £495,000
in Campton Group, Inc. by way of a secured promissory note agreement and a
secured convertible promissory note agreement. If the Company were to exercise
its conversion rights then it would hold a majority stake in Campton Group,
Inc. As the convertible loan notes are convertible at any time, PEI has the
power to exercise control over Campton. Therefore in preparing the financial
statements, the Company has treated its investment in Campton Group, Inc. as a
subsidiary and therefore produced consolidated financial statements.
Private Equity International Limited is incorporated with share capital of £1
issued and fully paid. It was incorporated to register the business name of
Private Equity International. It has not traded during the year and has not
been consolidated as it is, in the Directors' opinion, immaterial to the
accounts.
The interest of minority holdings is stated at the minority's proportion of the
fair values of the assets and liabilities recognised. Minority interests
represent the portion of profit or loss and net assets in subsidiaries that is
not held by the Group and are presented separately in the income statement and
within equity in the consolidated balance sheet, separately from parent
shareholders' equity. However, any losses applicable to the minority interest
in excess of the minority interest are allocated against the interests of the
parent.
The financial statements of the subsidiary are prepared for the same reporting
year as the Parent Company, using consistent accounting policies. All
intercompany balances and transactions, including unrealised profits arising
from them, are eliminated.
As permitted by Section 230 of the Companies Act 1985, the Company has not
presented its own income statement. The amount of the Company's return for the
financial year dealt within in the accounts of the Group is £15,902,000 (2008:
£3,919,000).
Segmental reporting
The Directors are of the opinion that the Group is engaged in a single segment
of business, being investment business. The results of Campton Group, Inc. are
immaterial for segmental reporting purposes.
Income recognition
Dividends receivable on quoted equity shares and debt securities are included
in the accounts when the investments concerned are quoted `ex-dividend'.
Dividends receivable on equity shares and debt securities where no ex-dividend
date is quoted are brought into account when the Group's right to receive
payment is established. The fixed return on a debt security is recognised on a
time apportionment basis so as to reflect the effective yield on the debt
security. Interest receivable is included on an accruals basis.
Expenses
All expenses are accounted for on an accruals basis and are charged through the
revenue column of the income statement, except for expenses which are
incidental to the sale or purchase of an investment, which are charged through
the capital column of the income statement.
Investments at fair value through profit or loss
Investments are recognised and derecognised on the trade date where a purchase
or sale is under a contract whose terms require delivery within the time frame
established by the market concerned, and are initially measured at cost.
All investments held by the Company are designated upon initial recognition as
held at fair value through profit or loss. Investments are measured at fair
value, with unrealised gains and losses on investments and impairment of
investments recognised in the income statement and allocated to capital.
Realised gains and losses on investments sold are calculated as the difference
between sales proceeds and cost.
The Venture Capital Funds are stated at Directors' valuation with reference to
IPEVC guidelines which is in accordance with the valuations provided by the
managers of those funds. Valuations of the Funds are reported to the Company
quarterly and are incorporated in the Company's accounts when received. The
valuation methodology used by these funds is that the underlying investments
are valued at fair value determined in accordance with the relevant limited
partnership agreement. Loan notes to Campton Group, Inc. are valued at
amortised cost.
For investments actively traded in organised financial markets, fair value is
generally determined by reference to Stock Exchange quoted market bid prices at
the close of business on the balance sheet date, without any deduction for
transaction costs necessary to realise the asset.
Capital distributions received from investments are accounted for on a reducing
cost basis; cash and stock distributions received are first applied to reducing
the base cost of an investment; a realised gain will be recognised only when
the cost has been reduced to nil.
Foreign currency translation
The functional and presentational currency of the Company is pounds sterling.
Transactions in currencies other than pounds sterling are recorded at the rates
of exchange prevailing on the dates of the transactions. At each balance sheet
date, monetary assets and liabilities that are denominated in foreign
currencies are re-translated at the rates prevailing on the balance sheet date.
Gains and losses arising on re-translation are included in the income statement
and are allocated either to revenue or capital, as appropriate.
The assets and liabilities of foreign operations are translated into sterling
at the rate of exchange ruling at the balance sheet date. Income and expenses
are translated at weighted average exchange rates for the year. Due to the
extreme volatility of the USD to GBP exchange rate in the year income and
expenses derived from foreign operations have been translated at the rates of
exchange prevailing on the date of transaction. This represents a change in
accounting basis, the effect of which is detailed in note 18. The resulting
exchange differences are taken directly to a separate component of equity. On
disposal of a foreign entity, the deferred cumulative amount recognised in
equity relating to that particular foreign operation is recognised in the
income statement.
Taxation
Deferred tax is recognised in respect of all temporary differences at the
balance sheet date where transactions or events have occurred that result in an
obligation to pay more, or the right to pay less tax in the future. This is
subject to deferred tax assets being recognised only if it is considered more
likely than not that there will be suitable profits from which the future
reversal of the temporary differences can be deducted.
The tax effect of different items of income/gain and expenditure/loss is
allocated between capital and revenue on the same basis as the particular item
to which it relates, using the marginal method.
Dividends payable to shareholders
Dividends to shareholders are recognised as a liability in the period in which
they have been declared and paid.
Any final dividend proposed by the Board is not declared until approved by the
shareholders at the Annual General Meeting following the year end.
Cash and cash equivalents
Cash and cash equivalents are held for the purpose of meeting short-term cash
commitments rather than for investment purposes. Assets are classified as cash
equivalents if they are readily convertible to cash and are not subject to
significant changes in value. The Company has classified short-term bank
deposits as cash equivalents.
Leases
Leases where the lessor retains substantially all the risks and benefits of
ownership of the assets are classified as operating leases.
Operating lease payments are recognised as an expense in the income statement
on a straight-line basis over the lease term.
New standards and interpretations not applied
IASB have issued the following standards and interpretations which are not
effective for the year ended 31 March 2009 and have not been applied in
preparing these financial statements.
Effective date
International Accounting Standards (IAS/IFRS)
IAS 1 Presentation of Financial Statements 1 January 2009
(revised)
IAS 23 Amendment - Borrowing Costs 1 January 2009
IAS 27 Consolidated and separate financial 1 July 2009
statements (revised)
IAS 32 Amendment - Puttable financial 1 January 2009
instruments and obligations existing on
Liquidation
IAS 39 Amendment - Financial Instruments: 1 July 2009
Recognition and measurement
IFRS 2 Amendment - Share based payments: 1 January 2009
vesting conditions and cancellations
IFRS 3 Business combinations (revised) 1 July 2009
IFRS 8 Operating Segments 1 January 2009
International Financial Reporting Interpretations Committee
(IFRIC)
IFRIC 16 Hedges of a net investment in foreign 1 October 2008
operation
IFRIC 17 Distribution of non-cash assets to 1 July 2009
owners
The Directors do not anticipate that the initial adoption of the above
standards, amendments and interpretations will have a material impact on the
Group's financial statements in the period of initial application.
2 INCOME
2009 2008
Group Company Group Company
£'000 £'000 £'000 £'000
Income from investments:
Interest from open-ended 580 580 1,337 1,337
investment funds
Loan interest from subsidiary - 9 - 15
Other income from unquoted - - 4 4
venture capital fund
580 589 1,341 1,356
Other income:
Deposit interest 22 20 167 160
Total income 602 609 1,508 1,516
Total income comprises:
Interest 602 609 1,508 1,516
3 EXPENSES
2009 2008
Group Company Group Company
£'000 £'000 £'000 £'000
Secretarial services 102 100 92 91
Investment adviser's fees and - 523 - 442
expenses
Auditor's remuneration for:
- audit* 28 28 24 24
Directors' remuneration 120 120 129 129
Other expenses:
- irrecoverable VAT 11 11 (1) (1)
- operating lease of land and 29 15 39 27
buildings
- public relations and 27 9 18 15
advertising
- legal and professional fees 32 (2) 94 63
- office expenditure 58 17 46 22
- staff costs (see note 4) 342 67 251 61
- banking and custody charges 6 5 6 6
- other expenses 313 84 249 74
1,068 977 947 953
*In addition £10,000 was paid to the Auditor in connection with the tender
offer.
Of the total expenses above, £615,000 (2008: £436,000) relate to Campton Group,
Inc.
4 STAFF COSTS
2009 2008
Group Company Group Company
£'000 £'000 £'000 £'000
Salaries and other payments 335 60 245 55
Social security costs 7 7 6 6
342 67 251 61
With the exception of the Directors, whose remuneration is shown in the
Directors' remuneration report, the Group employed four members of staff during
the year (2008: four members of staff).
5. TAXATION ON ORDINARY ACTIVITIES
2009 2008
Revenue Capital Total Revenue Capital Total
Return Return Return Return
£'000 £'000 £'000 £'000 £'000 £'000
UK corporation tax at - - - - - -
28% (2008: 30%)
The Company is subject to corporation tax at 28% (2008: 30%). As at 31 March
2009 the total current taxation charge in the Company's revenue account is
lower than the standard rate of corporation tax in the UK (28%). The
differences are explained below:
2009 2008
Revenue Capital Revenue Capital
Return Return Total Return Return Total
£'000 £'000 £'000 £'000 £'000 £'000
Net return before (466) 16,269 15,803 561 3,356 3,917
finance costs and
taxation
Theoretical tax at UK (131) 4,555 4,424 168 1,007 1,175
corporation tax rate
of 28% (2008: 30%)
Effects of:
- utilisation of - - - (172) - (172)
brought forward losses
- expenses disallowed 26 - 26 4 - 4
for taxation purpose
- gains on investments - (4,555) (4,555) - (1,007) (1,007)
and exchange losses on
capital items
- excess management 105 - 105 - - -
expenses
- - - - - -
At 31 March 2009, the Company had no unprovided deferred tax liabilities (2008:
£nil). At that date, based on current estimates and including the accumulation
of net allowable management expenses deriving from its partnership interests in
its Venture Capital Funds, the Company had surplus management expenses of
approximately £11,927,000 (2008: £10,388,000) which have not been recognised as
a deferred tax asset. This is because the Company is not expected to generate
sufficient taxable income in future periods in excess of the available
deductible expenses and accordingly, the Company is unlikely to be able to
reduce future tax liabilities through the use of existing surplus expenses.
Due to the Company's status as an investment trust, and the intention to
continue meeting the conditions required to obtain approval in the foreseeable
future, the Company has not provided deferred tax on any capital gains and
losses arising on the revaluation or disposal of investments.
6 DIVIDENDS
2009 2008
£'000 £'000
Amounts recognised as distributions to equity
holders within the period
Dividend for the year ended 31 March 2008 of 470 550
1.1p (2007: 1.1p) per Ordinary Share
No distribution is proposed for the year ended 31 March 2009.
The requirements of Section 842 of the Income and Corporation Taxes act 1988
are considered on the basis of dividends declared in respect of the financial
year as shown below.
2009 2008
£'000 £'000
Net return after taxation per Company (367) 563
accounts
Final dividend proposed of nil (2008: 1.1p - (470)
per share
Revenue retained for s842 purpose (367) 93
7 PROFIT OF PARENT COMPANY
As permitted by Section 230 of the Companies Act 1985, the Profit and Loss
Account of the Company is not presented as part of these financial statements.
The consolidated net return after taxation for the financial year includes £
15,902,000 (2008: £3,919,000) which is dealt with in the financial statements
of the Company.
8 RETURN PER ORDINARY SHARE
2009 2008
Revenue Capital Revenue Capital
return return Total return return Total
pence pence pence pence pence pence
Return per Ordinary (1.15) 40.19 39.04 1.17 7.02 8.19
Share
Revenue return per Ordinary Share is based on the net less on ordinary
activities after taxation of £466,000 (2008: net return of £561,000), and on
40,482,139 (2008: 47,807,054) Ordinary Shares, being the weighted average
number of Ordinary Shares in issue during the year.
Capital return per Ordinary Share is based on net capital gains for the year of
£16,269,000 (2008: net capital gains of £3,356,000), and on 40,482,139 (2008:
47,807,054) Ordinary Shares, being the weighted average number of Ordinary
Shares in issue during the year.
Total return per Ordinary Share is based on net return for the year of £
15,803,000 (2008: £3,917,000), and on 40,482,139 (2008: 47,807,054) Ordinary
Shares, being the weighted average number of Ordinary Shares in issue during
the year.
9 INVESTMENTS
2009 2008
£'000 £'000
Group and Company
a) Investment portfolio summary
USA
Listed investments
- common stock 383 511
Unlisted Venture Capital funds 59,705 48,293
Other investments
- open-ended investment funds 7,674 23,648
- unlisted common stock - 14
67,762 72,466
A full listing of the investment portfolio is provided in the annual report.
Listed Unlisted
open-
ended Venture
Unlisted Listed investment Capital
equities equities funds funds Total
£'000 £'000 £'000 £'000 £'000
b) Analysis of investment
portfolio movements
Opening book cost 58 1,134 24,914 65,444 91,550
Investment holding losses (44) (623) (1,266) (17,151) (19,084)
Opening valuation 14 511 23,648 48,293 72,466
Movements in the year:
Purchases at cost - - 12,025 - 12,025
Calls at cost - - - 4,856 4,856
Sales
- proceeds - (1,449) (33,608) - (35,057)
- realised (losses)/gains (58) (349) 2,595 - 2,188
on sales
Book cost adjustments from
capital distributions
- cash distributions - - - (1,636) (1,636)
- stock distributions - 1,358 - (1,358) -
Investment holdings gains 44 312 3,014 9,550 12,920
Closing valuation - 383 7,674 59,705 67,762
Closing book cost - 694 5,926 67,306 73,926
Investment holding - (311) 1,748 (7,601) (6,164)
(losses)/gains
- 383 7,674 59,705 67,762
2009 2008
£'000 £'000
c) Analysis of capital gains and losses
Realised gains/(losses) on sales 2,188 (1,299)
Increase in investment holding gains 12,920 4,687
Gains on investments 15,108 3,388
Realised exchange gains on capital items 713 120
Unrealised exchange gains/(losses) on 448 (152)
capital items
Exchange gains/(losses) on capital items 1,161 (32)
d) Significant holdings
The Company owns 14.9% and 10.3% of the total value of the called capital of
Dawntreader Fund II and Zone Venture Fund II respectively.
e) Transaction costs
During the year the Company incurred no transaction costs (2008: £nil) in
relation to purchases of investments and £5,000 (2008: £6,000) in relation to
sales of investments. These amounts are included within gains and losses on
investments at fair value within the income statement.
10 INVESTMENT IN SUBSIDIARY
The Company has an investment of £495,000 (2008: £226,000) in Campton Group,
Inc., a company registered in the United States providing private equity
advisory services. As at 31 March 2009, loan interest of £24,000 (2008: £
15,000) was due to the Company from its subsidiary.
The subsidiary acts as investment adviser for the Company. Fees amounting to £
523,000 have been charged to the Company by its subsidiary during the year
(2008: £442,000).
11 TRADE AND OTHER RECEIVABLES
2009 2008
Group Company Group Company
£'000 £'000 £'000 £'000
Amounts owed to subsidiary - 24 - 15
Sales for future - - 107 107
settlement
Prepayments and other 24 12 57 14
debtors
Accrued income 4 4 115 115
28 40 279 251
12 TRADE AND OTHER PAYABLES
2009 2008
Group Company Group Company
£'000 £'000 £'000 £'000
Other payables 89 72 151 125
Other taxation and social 2 2 1 1
security
Tender offer costs 19 19 8 8
110 93 160 134
13 SHARE CAPITAL
2009 2008
£'000 £'000
Authorised:
100,000,000 Ordinary Shares of 0.01p each 10 10
50,000 Redeemable Preference Shares of £1.00 each 50 50
60 60
Allotted, called up and fully paid:
34,953,675 (2008: 42,723,408) Ordinary Shares of 0.01p 3 4
each
During the year the Company purchased for cancellation 7,769,733 Ordinary
Shares under a Tender Offer for a total consideration of £17,500,000 plus
expenses of £290,000. The full cost of the Tender Offer has been taken to the
special reserve.
14 RESERVES
Capital
reserve
Capital Capital investment Currency
Share Special redemption reserve holding translation Retained
premium reserve reserve realised losses reserve earnings
£'000 £'000 £'000 £'000 £'000 £'000
Group
Beginning of 96,862 - 1 (777) (19,340) 9 441
year
Transfer between (96,862) 96,862 - - - - -
reserves
Net gains on - - - 2,188 - - -
realisation of
investments
Investment - - - - 12,920 - -
holding gains
Exchange gains - - - 713 448 - -
Exchange - - - - - (22) -
differences on
retranslation of
net assets of
subsidiary
Shares purchased - (17,790) 1 - - - -
for cancellation
Dividends paid - - - - - - (470)
Net deficit for - - - - - - (466)
the year
End of year - 79,072 2 2,124 (5,972) (13) (495)
Capital
reserve
Capital Capital investment
Share Special redemption reserve holding Retained
premium reserve reserve realised losses earnings
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