Capital for Colleagues plc Audited Results for the year ended 31 August 2016

 
TIDMCFCP 
 
Capital for Colleagues plc / EPIC: CFCP / Market: ISDX / Sector: Investment 
 
3 January 2017 
 
                          CAPITAL FOR COLLEAGUES PLC 
                  ('Capital for Colleagues' or the 'Company') 
 
               Audited Results for the year ended 31 August 2016 
 
Capital for Colleagues plc, the investment vehicle focused on opportunities in 
the Employee Owned Business ('EOB') sector, is pleased to announce its audited 
results for the year ended 31 August 2016. 
 
CHIEF EXECUTIVE'S STATEMENT 
 
At the end of our second full year as an ISDX Growth Market-quoted company, I 
am pleased to report on another busy and productive period for Capital for 
Colleagues PLC (C4C) where we have succeeded in moving the company from "proof 
of concept" to "business as usual". 
 
Employee ownership is a successful business model which is acknowledged to 
improve productivity and create wealth while providing an environment of stable 
employment as well as the potential for attractive commercial returns for 
investors. We provide capital and practical assistance to existing and aspiring 
employee-owned businesses (EOBs) and help them to become effective and 
profitable organisations driven by the ethos of employee ownership.  We tend to 
be sector agnostic in terms of business activity and we structure our 
investments to reflect the individual requirements and prospects of each 
investee company. As a result, the funding we provide is very flexible and 
takes the form of debt, equity or convertible hybrid financing structures. The 
premise underlying all of our investments is that they should facilitate the 
full engagement of employees in a business. 
 
All investments also need to offer an eventual opportunity to exit or be 
expected to return capital as well as providing an attractive dividend or 
profit stream. Often, a prerequisite for C4C investing is the establishment of 
an Employee Benefit Trust (EBT) or an Employee Ownership Trust (EOT) as a 
significant and active shareholder in the business. 
 
During the year under review, we further developed and expanded our portfolio 
of private EOBs to sixteen. We believe that the unquoted EOBs in our portfolio 
now generate total annual turnover of around GBP 67 million and support around 
550 jobs. At the year end we were also invested in twelve publicly-traded 
companies which have demonstrable employee engagement practices. They too 
yielded good returns on what is a small part of our portfolio. 
 
In the year to 31 August 2016, the Company invested a further GBP 2.44million 
in new and existing investee companies and we now have investments across a 
range of business areas, from civil engineering to accountancy, reflecting the 
diversity of EOBs and the breadth of investment opportunities available to us. 
 
Our advisory practice, which provides specialist advice and support to EOBs or 
companies looking to become employee-owned, had another encouraging year. We 
provide a comprehensive service:  advising clients on what needs to be done to 
become employee-owned, helping to manage the transition to employee owned 
status and providing the financial capital to achieve it. 
 
C4C is an active member of the Employee Ownership Association or EOA. The EOA 
represents organisations which are employee-owned or transitioning to employee 
ownership across the UK. We are an Approved Adviser for them as well as their 
only current equity funding partner. Under the terms of our agreement, the EOA 
will refer to us any members or other suitable prospects who are considering an 
employee buyout, who have begun the transition to employee ownership or who are 
seeking funding to develop an existing EOB. 
 
EOA membership has grown from significantly less than 100 three years ago to 
around 320 members today. As a sign of our commitment to leadership in the 
sector, C4C has sponsored the EOA's two-day annual conference in 2015 and 2016. 
 
We have always been convinced of the positive social impact of employee 
ownership and we remain active members of the Social Stock Exchange (SSX). The 
SSX, which is itself growing rapidly, provides access to the world's first 
regulated investment exchange dedicated to businesses and investors seeking to 
achieve a positive social and environmental impact through their activities. We 
value our membership of the SSX because it is a tangible demonstration or 
"kitemark" of our commitment to that objective. It also allows us, through the 
discipline of producing our annual Impact Report, to evidence our progress in 
social impact. As a requirement of our membership, we published our second 
Social Impact Report for C4C with the tagline "making work work better" and the 
report is available on our website. 
 
C4C was nominated in two categories at the Small Cap Awards 2016 and we were 
delighted to win the "Alternative Financing Deal of the Year" award which 
recognised the Company's innovative GBP 300,000 institutional and crowd placing 
completed in 2015. 
 
We undertook a short survey among employees of investee companies to gain an 
insight into attitudes towards employee ownership. Our sample size was far too 
small for scientific analysis, but the respondents were very positive about EO. 
For example, 82% say that working for an EOB "makes me feel happier in my work" 
and 81% agree with the statement that "If I want to, I can participate in 
important decisions about my company." 89% agree that "when properly 
implemented, EO is a force for social good". 
 
The progress of C4C over the last year is reflected in the development of our 
investment portfolio. As I have mentioned, we were invested in 28 companies by 
the end of the financial year. 
 
An example of a new addition to the portfolio during the financial year is 
Anthesis Consulting Group Ltd. Anthesis is a consultancy business specialising 
in sustainability. Since its foundation in 2013, the company has developed 
rapidly through organic growth and acquisition, building an international 
business with operations in Britain, North America, Continental Europe and Asia 
and attracting a broad range of clients. The company advises on areas such as, 
strategy and communications, operations, product and supply chain plus software 
and systems. Initially, we invested GBP 500,000 in the company and, post the 
year end, we subscribed another GBP 100,000 for additional ordinary shares as 
part of a larger fundraising in which new professional investors participated 
alongside employees of Anthesis and other existing investors. The funds raised 
by Anthesis will be used to support its ambitious growth plans. 
 
After making our initial investments, we are now moving successfully into the 
next phase of our investment strategy in which we convert some existing loans 
into equity and financially recognise the growth in value and acknowledge the 
success of our unquoted portfolio. 
 
With regard to education and advocacy, we will continue to promote employee 
ownership as a better way of doing business not just on behalf of C4C, but also 
through the EOA. We have also organised and attended events to raise awareness 
of employee ownership amongst companies and professionals in London, Liverpool, 
Sheffield and Manchester and we plan more events this year. In education, we 
presented on C4C and employee ownership at Alliance Manchester Business School. 
 
During the year, we became involved in assisting the Social Mobility Foundation 
(Registered Charity No. 1115888) by offering mentoring and work experience to 
sixth formers from disadvantaged backgrounds. A student joined us for a week's 
work experience in August and we continue to support other Foundation 
initiatives. 
 
Financial Results 
 
In the twelve months ended 31 August 2016, the Group invested GBP 2.44 million 
across a portfolio of sixteen unquoted EOBs and twelve publicly traded EOBs. 
The Company generated revenue of GBP 560,000 in the year and as at 31 August 
2016 the Group had net assets of GBP 5.25 million equating to a Net Asset Value 
per share of 54.54p. As illustrated by the Consolidated Statement of 
Comprehensive Income, the effect of our planned move away from high yielding 
loans and towards equity-linked instruments was yet to be felt during the year. 
However, generally, we have now begun to give up the income we receive on 
investments of a fixed capital natural and are replacing it with a reduced 
income but an added entitlement to future hoped-for capital growth. Our focus 
has always been on enhancing long term net asset value and this transition is 
the best way of achieving this, in our view. It is entirely in accordance with 
our stated strategy and hopefully well understood by our fellow shareholders. 
 
The Directors do not recommend the payment of a dividend. 
 
Outlook 
 
As we build on our leading position in the EOB sector, we remain committed to 
the continued expansion of our investment and advisory portfolio and to 
generating attractive returns for our shareholders. We have increasing access 
to numerous potential investee companies, in varying sectors and of various 
sizes, which we believe can deliver the returns we require. The Directors are 
confident that the EOB sector will keep expanding and that EOBs will continue 
to deliver strong performance. Reflective of this, after the period end we made 
two new investments, increasing our portfolio to eighteen unquoted EOBs. 
 
Subject to having adequate funds, we expect to keep making investments into 
EOBs. A broad strategic objective is to make larger investments into bigger 
businesses so that more workers can enjoy the benefits of employee ownership. 
We remain very positive about the opportunities to develop our company and we 
believe that we are well placed to capitalise on the significant growth 
potential of the EOB sector. Statistics demonstrate that the EOB sector is 
becoming increasingly important to our economy, with 10% of UK GDP expected to 
be generated by EOBs by 2020. As a result, we are confident in our ability to 
create value for our shareholders and we would like to thank them for their 

continued support. We are proud to be in the vanguard of this exciting sector 
and I look forward with confidence to another year of progress. 
 
John Eckersley 
 
Chief Executive 
 
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 AUGUST 
2016 
 
                                                                   2016          2015 
 
                                                              GBP 000's     GBP 000's 
 
Revenue                                                             560           523 
 
Realised gains on investments                                       157             - 
 
Unrealised revaluation gains on investments                          71           459 
 
                                                          ------------- ------------- 
 
                                                                    788           982 
 
Administrative expenses                                           (630)         (557) 
 
                                                          ------------- ------------- 
 
OPERATING PROFIT                                                    158           425 
 
Finance income                                                        -             1 
 
                                                          ------------- ------------- 
 
PROFIT BEFORE TAX                                                   158           426 
 
Tax (charge)/credit                                               (130)             2 
 
                                                          ------------- ------------- 
 
RETAINED PROFIT AFTER TAX FOR THE YEAR                               28           428 
 
                                                                 ======        ====== 
 
RETAINED PROFIT ATTRIBUTABLE TO: 
 
Owners of the company for the year                                   28           428 
 
                                                                 ======        ====== 
 
TOTAL COMPREHENSIVE INCOME 
ATTRIBUTABLE TO: 
 
Owners of the company for the year                                   28           428 
 
                                                                =======       ======= 
 
Profit per share 
 
Basic and diluted                                                 0.32p         5.79p 
 
                                                                =======        ====== 
 
GROUP AND COMPANY STATEMENT OF FINANCIAL POSITION AT 31 AUGUST 2016 
 
                                                 Group                          Company 
 
                                                2016            2015           2016           2015 
 
                                           GBP 000's       GBP 000's      GBP 000's      GBP 000's 
 
ASSETS 
 
NON-CURRENT ASSETS 
 
Investments held at fair value 
through profit or loss                         3,427           1,855          3,427          1,855 
 
Loans and receivables                          1,081           1,507          1,081          1,507 
 
                                    ----------------   -------------  -------------  ------------- 
 
                                               4,508           3,362          4,508          3,362 
 
                                     ---------------  -------------- -------------- -------------- 
 
CURRENT ASSETS 
 
Trade and other receivables                      654             417            658            414 
 
Cash and cash equivalents                        279             355            279            355 
 
                                     ---------------  -------------- -------------- -------------- 
 
                                                 933             772            937            769 
 
                                      -------------- --------------- -------------- -------------- 
 
TOTAL ASSETS                                   5,441           4,134          5,445          4,131 
 
                                             =======          ======         ======         ====== 
 
EQUITY AND LIABILTIES 
 
EQUITY 
 
Called up share capital                        3,850           3,070          3,850          3,070 
 
Share premium                                  1,036             672          1,036            672 
 
Retained profit                                  364             336            369            343 
 
                                     ---------------    ------------   ------------   ------------ 
 
TOTAL EQUITY                                   5,250           4,078          5,255          4,085 
 
                                      --------------   -------------  -------------  ------------- 
 
CURRENT LIABILITIES 
 
Trade and other payables                          89              56             88             46 
 
                                      --------------   -------------  -------------  ------------- 
 
                                                  89              56             88             46 
 
                                              ======         =======        =======        ======= 
 
CREDITORS: AMOUNTS FALLING DUE IN 
MORE THAN ONE YEAR 
 
Provisions for liabilities                       102               -            102              - 
 
                                      --------------   -------------  -------------  ------------- 
 
TOTAL EQUITY AND LIABILITIES                   5,441           4,134          5,445          4,131 
 
                                              ======         =======        =======        ======= 
 
 
The Directors of the Company are responsible for the contents of this 
announcement. 
 
For further information please visit www.capitalforcolleagues.com or contact: 
 
CAPITAL FOR COLLEAGUES PLC                                         0161 233 4891 
Richard Bailey, Chairman 
John Eckersley, Chief Executive 
 
PETERHOUSE CORPORATE FINANCE LIMITED                               020 7469 0930 
Mark Anwyl 
Duncan Vasey 
 
 
 
END 
 

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January 03, 2017 05:19 ET (10:19 GMT)