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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| City Of London Group Plc | LSE:CIN | London | Ordinary Share | GB00BD9GS058 | ORD 2P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 10.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMCIN
RNS Number : 1305K
City Of London Group PLC
05 July 2017
5 July 2017
City of London Group plc ("COLG" or "the Company" or "the Group")
Preliminary announcement of final results
The Company announces its audited final results for the year ended 31 March 2017.
Key points
Business developments
-- CAML to be retained, following strategic review
-- CAML's results improve substantially with an operating profit before shareholder capital charges of GBP171k (2016: operating loss before shareholder capital charges of GBP217k)
-- CAML's own book portfolio GBP13.8m at year end (2016: GBP13.7m) and new business volumes in March GBP1.1m following a period earlier in the year when new business volumes were constrained by the capital available
-- Additional block funding facilities arranged for CAML to facilitate business development
-- Group actively pursuing other opportunities to increase its financial strength and provide a platform for future development
Financial results
-- Loss before tax GBP1.2m (2016: loss before tax GBP6.8m after losses of GBP7.2m relating to TFPL and a profit of GBP1.4m on the sale of Therium)
-- Consolidated NAV per share attributable to shareholders 3p (2016: 6p)
For further information:
Hot Features
Premium
City of London Group
plc
---------------------------- ----------------
+44 (0)20 3795
Paul Milner (Chairman) 2686
----------------------------- ---------------
Peel Hunt LLP (Nominated
Adviser and Broker)
---------------------------- ----------------
+44 (0)20 7418
James Britton 8900
----------------------------- ---------------
Guy Wiehahn
----------------------------- ---------------
Notes to Editors:
City of London Group plc ("COLG" or "the Company") is quoted on AIM (CIN) and is an investment company focused on providing finance to the SME sector, including professional service firms. It does this through investments in companies providing lease finance and loan finance.
www.cityoflondongroup.com
Business review
Overview
During the year, the Group focused on maximising the value of its remaining investments, particularly in relation to Credit Asset Management Limited ("CAML"), its lease and professions funding platform.
The results for the Group show a loss before tax of GBP1.2m (2016: loss of GBP6.8m which included losses of GBP7.2m relating to TFPL (for impairment of the Group's investments and its share of losses) and a profit of GBP1.4m arising on the sale of Therium.
In the latter part of the year, the Group completed its examination of strategic options for CAML. The options of a sale of the CAML business and/or its loan book were ruled out. The Group has decided to retain CAML and, by arranging for an increase in the available block funding facilities, has taken steps to give CAML the ability to grow its business and achieve scale. Following the uncertainties caused by capital constraints in the first half of the year, CAML is now well-placed to move its business forward in the coming months.
The Group is actively pursuing other opportunities that, if successful, will increase the Group's financial strength and provide a solid base for future development.
The Group's associate, Trade Finance Partners Limited ("TFPL"), was put into administration on 29 March 2017. As previously reported, no amounts are expected to be available for equity and loan note holders or other unsecured creditors. Full provision has been made against all amounts owed to the Group by TFPL.
CAML and Professions Funding Limited ("PFL")
In the early part of the year, CAML benefitted from strong new business volumes before it had to scale back its operations due to capital constraints and concerns surrounding the events at TFPL. However, since the conclusion of the strategic review and the provision of additional block funding facilities, the position has stabilised and by the end of the year CAML's "own book" portfolio was marginally higher than at the beginning of the year.
In January 2017, CAML became a wholly-owned subsidiary of COLG and Martin Parsons became managing director when the other two executive directors left CAML.
The consolidated results of CAML and PFL for the year improved significantly, showing a loss of GBP0.2m (2016: loss GBP0.5m). The loss of GBP0.2m includes executive termination costs of GBP0.2m. The improvement in the results reflects the additional revenue arising from the increase in the "own book" portfolio in the previous year and strict control over costs.
COLG
The Company continued to keep a tight control on its underlying cost base during the year. The loss of GBP1.2m (2016: loss of GBP10.7m which included provisions for impairment of GBP7.2m relating to TFPL and GBP2.8m relating to CAML) includes GBP0.2m cost of a strategic review and GBP0.1m executive termination costs.
Since the year-end the Company has moved from its previous office after exercising break clause provisions in
its lease. This will further reduce the underlying cost base going forward.
TFPL
As previously reported, the Group's associate, TFPL, restricted its activities from the latter part of 2015/16 to maximize the recovery of advances previously made. It became clear that no amounts were expected to be available for equity and loan note holders or other unsecured creditors or for its preference shareholders and, on 29 March 2017, TFPL was put into administration.
Full provision has been made against all amounts owed to the Group by TFPL.
Dividend
The Board does not recommend payment of a dividend.
Outlook
The Group continues to focus on providing a sound foundation whereby the business of CAML and PFL, its lease and professions funding platform, can realise its underlying potential. It is actively pursuing business opportunities that, if achieved, will provide a solid base for the Group's future development.
Paul Milner
Chairman
4 July 2017
This report may contain certain statements about future outlook for COLG and its subsidiaries and associates. Although the directors believe their expectations are based on reasonable assumptions, any statements about the future outlook may be influenced by factors that could cause actual outcomes to be materially different. Such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward looking statements.
This report has been drawn up and presented with the purpose of complying with English law. Any liability arising out of or in connection with this report will be determined in accordance with English law.
Consolidated income statement
for the year ended 31 March 2017
Note 31 March 31 March
2017 2016
GBP'000 GBP'000
Revenue 2,569 2,534
Cost of sales (42) (51)
================================== ==== ===================== =========
Gross profit 2,527 2,483
Administrative expenses 5 (2,579) (2,512)
(Loss)/profit on sale
of investments (81) 2
Provision for impairment
of investments (41) (51)
Profit on the disposal
of assets classified as
held for sale - 1,398
Share of profits and losses
of associates 78 (898)
Provision for impairment
of the investment in and
amounts owed by TFPL - (6,260)
Other income 138 326
================================== ==== ===================== =========
Profit/(loss) from operations 42 (5,512)
Finance expense (1,229) (1,252)
================================== ==== ===================== =========
Loss before tax (1,187) (6,764)
Corporation tax 8 - -
================================== ==== ===================== =========
Loss for the year (1,187) (6,764)
================================== ==== ===================== =========
Loss for the year attributable
to:
Owners of the parent (1,152) (6,646)
Non-controlling interests (35) (118)
================================== ==== ===================== =========
Loss for the year (1,187) (6,764)
================================== ==== ===================== =========
Basic and diluted earnings
per share attributable
to owners of the parent: 2 (3.16)p (24.36)p
================================== ==== ===================== =========
The group had no discontinued operations in either 2017 or 2016.
Consolidated statement of comprehensive income
for the year ended 31 March 2017
31 March 2017 31 March
GBP'000 2016
GBP'000
============================================ ================================ =======================
Total loss for the year (1,187) (6,764)
============================================ ================================ =======================
Other comprehensive income/(expense)
from continuing operations
Items that will or may be reclassified
to profit or loss
'Available-for-sale' financial
assets
- Valuation losses taken on equity
investments (43) (20)
- Provision for impairment transferred
to income statement 41 51
- Loss/(profit) on sale transferred
to income statement 78 (2)
============================================ ================================ =======================
Other comprehensive income from
continuing operations 76 29
============================================ ================================ =======================
Total other comprehensive income 76 29
============================================ ================================ =======================
Total comprehensive expense from
continuing operations (1,111) (6,735)
Total comprehensive income from - -
discontinued operations
============================================ ================================ =======================
Total comprehensive expense (1,111) (6,735)
============================================ ================================ =======================
Total comprehensive expense attributable
to:
Owners of the parent (1,076) (6,617)
Non-controlling interests (35) (118)
============================================ ================================ =======================
(1,111) (6,735)
============================================ ================================ =======================
Consolidated statement of changes in equity
Attributable to owners
of the parent company
------------------------------------------------------- ----------------------------------------------------------- ----------- --------------------- -----------
Fair Attributable
value Accumulated Share Share to non-controlling Total
reserve losses premium capital Total interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 March 2015 (105) (7,888) 11,497 2,021 5,525 (1,154) 4,371
'Available-for-sale'
investments
- Valuation losses
taken to equity (20) - - - (20) - (20)
* Provision for impairment transferred to income
statement 51 - - - 51 - 51
- Profit on sale
transferred to income
statement (2) - - - (2) - (2)
======================================================= ========= ================== ============= ============= =========== ===================== ===========
Net income recognised
directly in equity 29 - - - 29 - 29
Loss for the year
- continuing operations - (6,646) - - (6,646) (118) (6,764)
Total comprehensive
income 29 (6,646) - - (6,617) (118) (6,735)
Contributions by
and distributions
to owners
Value of employee
services - 20 - - 20 - 20
Issue of shares - - 2,835 1,664 4,499 - 4,499
======================================================= ========= ================== ============= ============= =========== ===================== ===========
Total contributions
by and distributions
to owners - 20 2,835 1,664 4,519 - 4,519
Reduction in non-controlling
interests - (1,218) - - (1,218) 1,172 (46)
======================================================= ========= ================== ============= ============= =========== ===================== ===========
At 31 March 2016 (76) (15,732) 14,332 3,685 2,209 (100) 2,109
'Available-for-sale'
investments
- Valuation losses
taken to equity (43) - - - (43) - (43)
- Provision for
impairment transferred
to income statement 41 - - - 41 - 41
- Loss on sale transferred
to income statement 78 - - - 78 - 78
======================================================= ========= ================== ============= ============= =========== ===================== ===========
Net income recognised
directly in equity 76 - - - 76 - 76
Loss for the year
- continuing operations - (1,152) - - (1,152) (35) (1,187)
======================================================= ========= ================== ============= ============= =========== ===================== ===========
Total comprehensive
income 76 (1,152) - - (1,076) (35) (1,111)
Contributions by - - - - - - -
and distributions
to owners
Reduction in non-controlling
interests - (135) - - (135) 135 -
======================================================= ========= ================== ============= ============= =========== ===================== ===========
At 31 March 2017 - (17,019) 14,332 3,685 998 - 998
======================================================= ========= ================== ============= ============= =========== ===================== ===========
(i) The fair value reserve shows the movement in the fair value of the 'available-for-sale' financial assets.
Consolidated balance sheet
as at 31 March 2017
31 March 31 March
Notes 2017 2016
GBP'000 GBP'000
================================ ============================ ======================= =======================
Assets
Non-current assets
Property, plant and equipment 16 27
'Available-for-sale' financial
assets 8 151
Interests in associates 224 146
Legal case investments 132 138
Loans 4,665 9,005
Finance leases 2,916 2,477
================================ ============================ ======================= =======================
Total non-current assets 7,961 11,944
================================ ============================ ======================= =======================
Current assets
Loans 5,054 5,446
Finance leases 2,211 1,635
Trade and other receivables 1,225 810
Cash and cash equivalents 1,763 2,497
================================ ============================ ======================= =======================
Total current assets 10,253 10,388
================================ ============================ ======================= =======================
Total assets 18,214 22,332
================================ ============================ ======================= =======================
Current liabilities
Borrowings (5,160) (3,935)
Trade and other payables (1,685) (3,051)
================================ ============================ ======================= =======================
Total current liabilities (6,845) (6,986)
================================ ============================ ======================= =======================
Non-current liabilities
Borrowings (10,371) (13,237)
================================ ============================ ======================= =======================
Total non-current liabilities (10,371) (13,237)
================================ ============================ ======================= =======================
Total liabilities (17,216) (20,223)
================================ ============================ ======================= =======================
Net assets 998 2,109
================================ ============================ ======================= =======================
Equity
Share capital 7 3,685 3,685
Share premium 14,332 14,332
Accumulated losses (17,019) (15,732)
Fair value reserve - (76)
================================ ============================ ======================= =======================
Equity attributable to
owners of the parent 998 2,209
Non-controlling interests - (100)
================================ ============================ ======================= =======================
Total equity 998 2,109
================================ ============================ ======================= =======================
Consolidated statement of cash flows
for the year ended 31 March 2017
31 March 31 March
2017 2016
GBP'000 GBP'000
--------------------------------------------------- -------- --------
Cash flows from operating activities
Loss before tax (1,187) (6,764)
Adjustments for:
Depreciation and amortisation 16 36
Share-based payments - 20
Impairment of 'available-for-sale'
financial assets 41 51
Loss/ (profit) on disposal of 'available-for-sale'
financial assets 81 (2)
Share of profits and losses of associates (78) 898
Provision for impairment of the
investment in and amounts owed by
TFPL - 6,260
Profit on the disposal of assets
classified as held for sale - (1,398)
Interest payable 1,229 1,252
Changes in working capital:
(Increase) in trade and other receivables (415) (724)
(Decrease)/increase in trade and
other payables (1,508) 1,334
Proceeds from sale of 'available-for-sale'
financial assets 97 5
Leases advanced (3,717) (4,118)
Leases repaid 2,702 1,702
Loans advanced (10,510) (15,875)
Loans repaid 11,838 8,958
Loans repaid by related parties 3,000 300
--------------------------------------------------- -------- --------
Cash generated from/used in operations 1,589 (8,065)
--------------------------------------------------- -------- --------
Corporation tax - -
--------------------------------------------------- -------- --------
Net cash generated from/used in
operating activities 1,589 (8,065)
--------------------------------------------------- -------- --------
Cash flow from investing activities
Disposal of assets classified as
held for sale, including part repayment
of deferred consideration 404 2,216
Return of seed capital in legal
case investments 6 94
Distribution of profits from related
parties - 39
Purchase of property, plant and
equipment (6) (23)
Proceeds from sale of equipment 1 -
Purchase of preference shares in
subsidiary - (2,010)
Purchase of additional shares in
related company - (193)
--------------------------------------------------- -------- --------
Net cash generated from investing
activities 405 123
--------------------------------------------------- -------- --------
31 March 31 March
2017 2016
GBP'000 GBP'000
-------------------------------------- -------- --------
Cash flow from financing activities
Proceeds from issue of ordinary
shares - 4,499
Proceeds from the issue of preference
shares by subsidiary - 5,000
Loans drawn down 9,897 17,888
Repayment of loans (11,538) (16,863)
Interest paid (1,087) (1,306)
Net cash (used in)/generated from
financing activities (2,728) 9,218
-------------------------------------- -------- --------
Net increase/(decrease) in cash
and cash equivalents (734) 1,276
-------------------------------------- -------- --------
Cash and cash equivalents brought
forward 2,497 1,221
-------------------------------------- -------- --------
Net cash and cash equivalents 1,763 2,497
-------------------------------------- -------- --------
Cash and cash equivalents 1,763 2,497
Bank overdraft - - -------------------------------------- -------- -------- Net cash and cash equivalents 1,763 2,497 -------------------------------------- -------- --------
Notes
1 Basis of preparation
1.1 Preliminary announcement
The financial information contained in this preliminary announcement does not constitute full accounts as defined in section 434 of the Companies Act 2006 and has been extracted from the statutory accounts for the year ended 31 March 2017. The auditors have issued an unqualified report on these statutory accounts. The statutory accounts for the year ended 31 March 2016 have been filed with the Registrar of Companies and the statutory accounts for the year ended 31 March 2017 will be filed with the Registrar of Companies in due course.
This announcement has been prepared using recognition and measurement principles of IFRS as endorsed for use in the European Union (IFRS). This announcement does not contain sufficient information to comply with IFRS.
The same accounting and presentation policies were used in the preparation of the statutory accounts for the year ended 31 March 2016.
2 Earnings per share
Basic earnings per share is calculated by dividing the loss attributable to equity holders of the Group by the weighted average number of ordinary shares in issue during the year less those held in treasury and in the Employee Benefit Trust. 426,996 shares were held by the Employee Benefit Trust at 31 March 2017 (2016: 426,996). The calculation of the basic and diluted earnings per share divides the loss by the weighted average number of shares of 36,426,000 (2016: 27,284,000).
3 Dividends
The directors do not recommend payment of a final dividend (2016: nil).
4 Segmental reporting
A reportable segment is identified based on the nature and size of its business and risk specific to its operations. It is reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, which is responsible for allocating resources and assessing performance of the operating segments, has been identified as the full Board of the Company.
The Group is managed through its operating platforms: lease and professions financing and, in prior periods, trade financing and legal case funding. The COLG segment includes the Group's central functions and an investment portfolio.
Pre-tax profit and loss
For the year ended 31 March 2017
Share
of profits
and Profit/(loss)
Operating losses Finance before
Revenue profit/(loss) of associates expense tax
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- --------- --------------- --------------- --------- --------------
COLG
Intra-Group 140 233 (116) 117
Other 7 (1,138) - (68) (1,206)
-------------- --------- --------------- --------------- --------- --------------
147 (905) - (184) (1,089)
Platforms
Lease and
professions
financing
CAML/ PFL 2,403 826 - (1,005) (179)
Other 275 275 78 (296) 57
Legal case
funding 13 - - 13
Other - 11 - - 11
Intra-Group (256) (256) - 256 -
2,569 (36) 78 (1,229) (1,187)
-------------- --------- --------------- --------------- --------- --------------
The Profit from operations in the Consolidated income statement of GBP42,000 is the sum of GBP78,000 less GBP36,000 as shown above.
Pre-tax profit and loss
For the year ended 31 March 2016
TFPL
Profit provisions
on the and
disposal share
of assets of profits
classified and Profit/(loss)
Operating as held losses Finance before
Revenue profit/(loss) for sale of associates expense tax
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- --------- --------------- ------------- --------------- --------- --------------
COLG
Intra-Group 689 789 (166) 623
Other 18 (897) (158) (6,260) (180) (7,495)
------------------- --------- --------------- ------------- --------------- --------- --------------
707 (108) (158) (6,260) (346) (6,872)
Platforms
Trade financing
-TFPL * 468 489 - (940) (489) (940)
Lease and
professions
financing
CAML/ PFL 1,734 215 - - (756) (541)
Other 426 426 - 42 (466) 2
Legal case
funding 4 (3) - - - (3)
Other - 34 - - - 34
Intra-Group (805) (805) - - 805 -
Others
Assets classified
as held for
sale - - 1,556 - - 1,556
2,534 248 1,398 (7,158) (1,252) (6,764)
------------------- --------- --------------- ------------- --------------- --------- --------------
* Revenue represents interest earned on loans to Trade Finance Partners Limited.
The Loss from operations in the Consolidated income statement of GBP5,512,000 is the sum of GBP248,000 and GBP1,398,000 less GBP7,158,000 as shown above.
Consolidated Net Assets
For the year ended 31 March 2017
Total
GBP'000 GBP'000
---------- -------------------------------- ------- --------
'Available-for-sale' financial
COLG assets 8
Legal case investments 132
Platforms Lease and professions financing 2,010
Other 150
-------
2,160
Net liabilities (1,317)
------------------------------------------- ------- --------
Net assets per entity balance sheet 983
Other net assets of subsidiary companies 15
-------------------------------------------- ------- --------
Consolidated net assets 998
-------------------------------------------- ------- --------
Consolidated Net Assets
For the year ended 31 March 2016
Total
GBP'000 GBP'000
---------- -------------------------------- ------- --------
'Available-for-sale' financial
COLG assets 151
Legal case investments 138
Platforms Lease and professions financing 2,010
Other 150
-------
2,160
Net liabilities (313)
------------------------------------------- ------- --------
Net assets per entity balance sheet 2,136
Other net liabilities of subsidiary
companies (27)
-------------------------------------------- ------- --------
Consolidated net assets 2,109
-------------------------------------------- ------- --------
The Board reviews the assets and liabilities of the Group on a net basis.
5 Administrative expenses
31 March
31 March 2017 2016
GBP'000 GBP'000
------------------------------- ------------- --------
Staff costs
Payroll 1,249 1,415
Other staff costs 46 69
Establishment costs
Property costs 309 234
Other 518 444
Auditor's remuneration (see
below) 94 89
Legal fees 50 17
Consultancy fees 188 98
Other professional fees 109 108
Depreciation 16 36
Foreign exchange loss - 2
=============================== ============= ========
Total administrative expenses 2,579 2,512
=============================== ============= ========
31 March 31 March
Auditor's remuneration 2017 2016
GBP'000 GBP'000
======================================== ========================== =======================
Fees payable to the Company's auditor
for the audit of the parent company's
annual financial statements 41 35
Fees payable to the Company's auditors
for other services:
The audit of subsidiaries pursuant
to legislation 30 32
Audit related assurance services - 2
Tax services 23 20
======================================== ========================== =======================
Total fees 94 89
======================================== ========================== =======================
6 Related party transactions and directors' remuneration
Directors' emoluments are disclosed in the directors' remuneration report. The aggregate emoluments paid to directors during the year were GBP156,420 (2016: GBP332,535) and there were no awards under the incentive scheme for 2016/17 (2016: nil). There are no other persons having the authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly. Accordingly, the aggregate amounts payable to directors equate to the aggregate compensation to key management personnel. As all directors' emoluments are paid by the Company, the figure relates both to the Company and the Group.
Tables that summarise the main related party balances and transactions for both the Company and the Group are included in the financial statements to 31 March 2017.
A summary of the total remuneration for directors is given below:
Executive directors
Jason Granite
(a) John Kent Howard Goodbourn
---------------- ----------------- -------------------
2017 2016 2017 2016 2017 2016
GBP GBP GBP GBP GBP GBP
---------------------- -------- ------ ------- -------- ------- ----------
Salary 7,000 - 6,626 105,571 - 83,835
Payment in lieu
of notice - - 47,250 - - 41,358
Compensation for
loss of office - - 30,000 - - 30,000
All taxable benefits - - 195 2,244 - 2,167
Total 7,000 - 84,071 107,815 - 157,360
---------------------- -------- ------ ------- -------- ------- ----------
(a) Jason Granite is a director of FCFM Group Limited which received GBP168,000 for consultancy services provided to the Group during the year (2016: nil).
Non-executive directors
Year ended Year ended
31 March 31 March
2017 2016
GBP GBP
===================== ==================== ====================
Paul Milner 27,500 27,500
Andrew Crossley (a) 27,500 12,360
Andrew Crowe 10,349 27,500
===================== ==================== ====================
(a) The remuneration for A Crossley was paid to Stockdale Securities Ltd.
Group related parties
The transactions of Group companies with related parties included:
Transactions of the Company
FCFM Group Limited, which received GBP168,000 during the year for consultancy services, was a related party of the Company as Jason Granite was a director of both companies.
In the year ended 31 March 2016, the Company purchased GBP2,000,000 of 7% preference shares in Credit Asset Management Limited at par for cash from Citymain Investments Limited, a related party of the Company.
Provision
for
Other other
Loans amounts amounts
due due due
Charged Charged to City to City to City
by City to City of London of London of London
of London of London Group Group Group
Group Group plc plc plc
plc plc at year at year at year
in year in year end end end
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------- ----------- ----------- ----------- -----------
Year ended 31 March
2016
Trade Finance Partners
Limited 211 - - 123 (123)
------------------------ ------- ----- ----- ------ -----
Transactions of other Group companies
The transactions of other Group companies with related parties included:
Provision Provision
Interest Loans for loans Other amounts for other
charged due to due to due to amounts
by Group Group Group Group at due to
in year at year at year year end Group at
GBP'000 end end GBP'000 year end
GBP'000 GBP'000 GBP'000
================ ========================== ================ ===================== =============== ==============
Year ended
31 March 2017
Trade Finance
Partners
Limited
(a) - 5,881 (5,881) 276 (276)
COLG SME Loans
LP 62 425 - 8 -
COLG SME LP 96 825 - 15 -
================ ========================== ================ ===================== =============== ==============
Year ended
31 March 2016
Trade Finance
Partners
Limited 468 5,881 (5,881) 276 (276)
COLG SME Loans
LP 105 1,500 - 26 -
COLG SME LP 204 2,750 - 48 -
================ ========================== ================ ===================== =============== ==============
(a) No interest on loan notes issued by TFPL has been recognised during the year.
7 Called-up share capital
31 March 31 March
Allotted, called up and fully paid 2017 2016
GBP'000 GBP'000
======================================== ======== ========
36,852,681 (2016: 36,852,681) ordinary
shares of GBP0.10 3,685 3,685
======================================== ======== ========
The Company did not hold any shares in treasury at 31 March 2017 (2016: nil). 426,996 shares were held by the Employee Benefit Trust at 31 March 2017 (2016: 426,996). The Company did not purchase any shares from the Trust during the year (2016: nil).
8 Corporation tax
31 March 31 March
2017 2016
GBP'000 GBP'000
--------------------------- -------- --------
UK corporation tax
Current year charge - -
--------------------------- -------- --------
Total UK corporation tax - -
--------------------------- -------- --------
Deferred tax
Total for year - -
Total tax (credit) / charge - -
--------------------------- -------- --------
Factors affecting the tax charge for the year
The tax charge for the year differs from the theoretical amount that would arise using the standard rate of corporation tax in the UK, which is 20% (2016: 20%). The differences are explained below.
31 March 31 March
2017 2016
Tax reconciliation GBP'000 GBP'000
------------------------------------------ -------- --------
Loss before tax (1,187) (6,764)
------------------------------------------ -------- --------
At standard rate of corporation
tax in the UK: (237) (1,353)
Effects of
Depreciation less than capital allowances (3) (1)
Items not deductible for tax purposes 68 1,273
Non-taxed dividend income - (1)
Movement on unrecorded deferred
tax asset 172 82
------------------------------------------ -------- --------
- -
------------------------------------------ -------- --------
Deferred tax
Total unrecognised deferred tax assets of the Group were GBP2,192,000 (2016: GBP2,330,000).
9 Financial instruments - price risk
The Group is subject to price risk on its legal case investments and, previously, on its portfolio of 'available for sale' financial assets. At 31 March 2017, the only investment held, other than residual investments, was an unlisted security. At 31 March 2016, 9% of the Group's portfolio comprised unlisted equity securities. There is no material sensitivity on the valuation of the legal case investments or the 'available-for-sale' financial assets.
Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly
Level 3: techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data.
The fair value of listed financial assets is established by reference to current bid market prices.
The fair value of unlisted investments is determined using appropriated valuation techniques.
The fair value of investments in legal funds is taken to be cost as at the balance sheet date there was not a sufficient track record on which to base a valuation. Due to their short maturity profiles, management is of the opinion that there is no material difference between the fair value and carrying value of trade and other receivables, cash and cash equivalents, and trade and other payables. The directors therefore consider that the carrying value of financial instruments equates to fair value.
The following table presents the Group's assets that are measured at fair value at 31 March 2017:
Level 1 Level 3 Total
GBP'000 GBP'000 GBP'000
------------------------------- -------- -------- --------
'Available-for-sale' financial
assets
Equity securities - 8 8
Legal case investments - 132 132
------------------------------- -------- -------- --------
- 140 140
------------------------------- -------- -------- --------
The following table presents the Group's assets that are measured at fair value at 31 March 2016:
Level 1 Level 3 Total
GBP'000 GBP'000 GBP'000
------------------------------- -------- -------- --------
'Available-for-sale' financial
assets
Equity securities 138 13 151
Legal case investments - 138 138
------------------------------- -------- -------- --------
138 151 289
------------------------------- -------- -------- --------
Level 1 assets are quoted ordinary shares. There are no level 2 assets.
There were no transfers of assets between categories during the year (2016 - none). An asset is transferred when, due to changes in circumstances, it falls into another category within the fair value hierarchy.
The movement on level 3 assets is as follows:
31 March 2017 31 March
GBP'000 2016
GBP'000
==================== ============= =======================
Balance at 1 April 151 276
Additions - -
Impairment (5) (29)
Disposals (6) (96)
==================== ============= =======================
Balance at 31 March 140 151
==================== ============= =======================
10 Risk statement
The principal risks of the Group are reviewed by the Board at least twice each year. A summary of the key risks is set out below together with their mitigation strategies.
(i) Credit risk
Credit risk particularly arises in CAML. This is mitigated in a number of different ways. For the leasing business the exposure is reduced by ownership of the asset which can usually be resold. In the case of professional loans, personal guarantees are obtained wherever possible but in any event the professional reputation of the partners of the firm is at stake. In all cases there is a well-defined process for approval including credit committees with specific delegated powers.
(ii) Interest rate risk
Where lending is longer term as in professional lending or leasing then borrowing rates are fixed at the start to avoid interest rate exposure. Group borrowing is all at fixed rates.
(iii) Legal and regulatory risk
This risk arises in various ways but the risk of non-compliance with FCA regulations is considered low as limited business falling within this environment is undertaken. City of London Financial Services Limited, which is ranked in the lowest risk category by the FCA, is, now undertaking the activity of 'Operator' only for the two CAML limited partnerships, generating income of a few thousand pounds. CAML itself has full permission to operate under the FCA consumer credit regulations. CAML, which lends only to businesses, is regulated for those businesses that fall within the Consumer Credit Act. The risk of non-compliance by CAML is considered low as these regulated activities constitute only a minor part of its overall revenue.
The risk of other legal and regulatory non-compliance (including non-compliance with the AIM rules) is mitigated by the use of external advisers, whose appointment and terms of reference are, as appropriate, agreed after consultation with the board.
(iv) Cash flow
There is a risk that the strategy for CAML does not develop as planned and it may require further working capital funding from COLG. It has an annual budget including a budgeted funding requirement. There are some mitigations which can be invoked by it to reduce working capital including cost cutting and managing the portfolio growth.
(v) Competition
There is a risk that the Group may become subject to increased competition in sourcing and making investments in the event that liquidity comes back into the SME market from the high street banks and other investors. This could lead to the platform finding it difficult to invest at the planned yields. This risk is mitigated by specialist expertise and by increased sales and marketing activity. In the case of the leasing and loans business the speed of credit decisions and the quality of operations is a key differentiator.
(vi) Business continuity
This is the risk that the business premises are unavailable due to fire or other disasters or of failure of IT systems. The consequential risk is the loss of key documentation and the inability to enter the business premises. This is mitigated by the ability of staff to work remotely from home and a disaster recovery plan. Key documents are held electronically and also separately with our lawyers. IT systems and data are backed up remotely and can be restored within acceptable timescales.
(vii) People/succession
There is a risk that key management are poached or leave the business which would compromise the business. As a mitigation management is incentivised with equity and bonuses comparable with the market.
12 Post balance sheet events
There are no reportable post balance sheet events to be disclosed.
Annual General Meeting
The 2017 annual general meeting will be held at 9am on Thursday 24 August 2017 at the offices of Shakespeare Martineau, 60 Gracechurch Street, London EC3V 0HR. The notice of meeting and proxy form for the meeting will be included in the Annual Report which will be posted to shareholders in late July 2017.
The company news service from the London Stock Exchange
END
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