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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Loudwater | LSE:LWT | London | Ordinary Share | GG00B1LT5C96 | ORD NPV |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 2.55 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMLWT
RNS Number : 5829O
Loudwater Trust Limited
20 September 2013
20 September 2013
Loudwater Trust Limited ('the Company')
Interim Report for the six month period ended 30 June 2013
The Company is pleased to announce the publication of its Interim Report and Unaudited Condensed Financial Statements for the six month period ended 30 June 2013.
The Interim Report & Accounts will be posted to shareholders shortly and can be downloaded from the Company's website at www.loudwatertrust.com.
Highlights from the Interim Report for the period ended 30 June 2013, and events post 30 June 2013:
-- Net Asset Value as at 30 June 2013 of GBP11.1 million, or 18.4p per share
-- Financial statements prepared on a non going concern basis given announcements on disposal of remaining investments and intention to put forward proposals for a voluntary winding up
-- GBP903,500 returned to shareholders during May 2013, equivalent to approximately 1.5p per share
-- Agreed the terms for a disposal of the remaining investment portfolio for a cash consideration of GBP10.53 million to Loudwater Capital LP, as announced on 4 September 2013
-- Announced on 4 September 2013 a return of capital to shareholders of approximately GBP11.1m, equating to 18.4p per share
-- To 30 June 2013 the Company has returned some GBP46.8m of capital to shareholders, equating to a total value for the 30 June NAV plus cash returned of GBP57.9 million or 77p per Ordinary Share based on the initial offering of 75 million Ordinary Shares of GBP1 each
-- Notice issued to shareholders of an EGM taking place on 1 October 2013 to consider the cancellation of admission to trading on AIM. If passed, cancellation from AIM will occur on 9 October 2013 and subsequently proposals will be put to shareholders for the liquidation of the Company
For further information
Loudwater Investment Partners Limited Edward Forwood +44(0)20 3372 6400 Panmure Gordon (UK) Limited Andrew Potts +44(0)20 7886 2500
SUMMARY OF INVESTMENT OBJECTIVE
The Company was initially established to provide Shareholders with an attractive rate of return on their investment, primarily through investing in companies which were likely to achieve an IPO or a sale within a short term time horizon and through a small number of investments in companies that were already listed.
In September 2008, the Company announced that, in the light of the then deteriorating economic environment and the lack of a visible time frame for exits, it would return some capital to Shareholders by way of a tender offer and would make appropriate changes in the Company's structure and investing policy.
SALE OF ASSETS AND RETURN OF CAPITAL
On 4 September 2013, the Company announced that it had sold its remaining investment portfolio for cash and planned to return all remaining cash to shareholders. This transaction is now completed, and if the resolution is passed for the cancellation of the shares from trading on AIM, proposals are intended to be put forward regarding the voluntary winding up of the Company.
CHAIRMAN'S STATEMENT
For the period ended 30 June 2013
I am pleased to report on the performance of Loudwater Trust Limited (the "Company" or "Loudwater") for the period ended 30 June 2013, and the subsequent disposal of its remaining assets.
On 4 September 2013, the Company announced that it had entered into an agreement to dispose of its remaining investment portfolio for a cash consideration of GBP10.53 million to Loudwater Capital LP (the "Transaction"). I commented then as follows;
"The Board asked the Investment Advisor to explore options for the sale of the remaining investments in one transaction, as well as continue to review options for individual asset sales. An exhaustive sales process has been undertaken and a number of parties have been approached. Given prior disposals and subsequent returns of capital, the investment portfolio has become more concentrated, and one of the investee companies represented 47.5% of the carrying value of the remaining investment portfolio at 30 June 2013. In negotiations on the consideration, Headway Capital Partners LLP and Committed Advisors SAS formed a different view on the value of this investee company which impacted the overall consideration.
Whilst the consideration for the Transaction is below the 30 June 2013 carrying values of the remaining investments, the Board, having received advice from the Investment Advisor, believe that the Transaction reduces uncertainty over the timing and value that could be obtained from future asset sales and future running costs, and also removes any risk of the Company being required to provide additional funding in the future to any of the investee companies, as the Company did in early 2013 with a GBP500,000 loan to preserve value for one of our investments. The Investment Advisor and the Board has also consulted with a significant number of shareholders (by percentage of Loudwater's share capital) on the Transaction process."
The Transaction has now completed, and as the Company announced, on 4 September that the Board of Directors has approved a return of approximately GBP11.1m of capital to shareholders, equating to approximately 18.4 pence per Ordinary Share.
The capital will be returned by way of a bonus issue of B shares to shareholders pro rata to shareholders' existing holdings of Ordinary Shares in the capital of the Company. The B shares were issued to shareholders on the Company's register on the record date of 13 September 2013 and had an ex-date of 11 September 2013.
Following their issue, the Directors are expected to consider the redemption of the issued B shares on or around 1 October. A subsequent announcement will then be released confirming the decision of the Board.
Shortly thereafter, the Company will seek to delist from AIM and commence the process of winding-up the Company The final estimated return of capital (following, and subject to, delisting and liquidation process), is expected to be in the region of 0.2 pence per Ordinary Share.
Loudwater Trust Limited was listed in January 2007, and raised GBP75 million. In 2008, it became apparent that market conditions were changing and that there was no visible exit time frame for such investments through an Initial Public Offering ("IPO") and limited trade sale opportunities. Therefore, the Board, advised by the Investment Adviser, changed the Company's investment policy to make no new investments (apart from required follow on investments) and to progressively dispose of investments and return cash to shareholders.
The Company has followed this policy and returned cash as follows:
Date GBP million PPS* PPS** ----------------------------------------- ------------ ----- ------ November 2008 13.85 18.5 18.5 June 2011 4.22 7.0 5.6 January 2012 2.50 4.1 3.3 March 2012 1.86 3.1 2.5 August 2012 23.49 39.0 31.3 May 2013 0.90 1.5 1.2 October 2013 11.10 18.4 14.8 Final (estimated) 0.12 0.2 0.2 Total return (including final estimate) 58.03 91.8 77.4
*Pence per Ordinary Share; based on the number of Ordinary Shares outstanding at the time i.e. 75,000,000 before Nov-08 and 60,232,855 after.
**Pence per Ordinary Share; based on 75,000,000 Ordinary Shares originally issued (to provide cash-to-cash comparison).
Whilst this performance is disappointing in absolute terms, the Company has performed well against its peer group during a difficult economic period.
I should like to take this opportunity to thank the Investment Adviser, Loudwater Investment Partners Limited, and the other professional advisers to the Company for their work and advice over the last six years.
Rhys Davies
Chairman
Loudwater Trust Limited
19 September 2013
INVESTMENT ADVISOR'S REPORT
For the period ended 30 June 2013
Overview
In the period under review, we received an early repayment of a loan to one of our investments of some GBP506,000 and made a further loan to another of GBP500,000. We also took the decision to make a GBP1.5million impairment against this investment, as, although it has been trading profitably at the operating level, its level of gearing gave cause for some concern. In May 2013, GBP904,000 or 1.5p per Ordinary Share was returned to shareholders.
As noted in the Chairman's Statement, on 4 September, the sale of the Company's remaining assets to Loudwater Capital LP, a new limited partnership backed by two secondary investors, being funds managed by Headway Capital Partners LLP and Committed Advisors SAS, was announced.
The Asset Disposal
Following discussions with the Board, we looked into the options available to the Board in order to provide an early exit for shareholders. The decision to investigate this possibility was based on the fact that:
-- The size of the Company is such that expenses have become quite significant as a proportion of the expected returns.
-- The Company is subject to a continuation vote in May 2014, and it is prudent to have options known to the Board well in advance of that date.
-- The market for the Company's Ordinary Shares is illiquid.
Therefore, LIPL engaged the services of an intermediary, Bluetower Associates ("BTA"), to seek offers for the purchase of the remaining assets of LWT. BTA has a good track record of raising funds from the secondary market and both partners have worked as principals in major secondary firms.
BTA were formally engaged on 31 January. Since then they have approached some 200 funds of which 18 signed non-disclosure agreements and had access to the Company's data room.
We finally received offers from two, who are prepared to fund jointly the offer through a new vehicle Loudwater Capital LP, to be managed by Loudwater Investment Partners Limited. The offer was at a discount of 47.5% to the current Net Asset Value (excluding cash and other current assets and liabilities).
The disposal results in a total return to shareholders of an estimated GBP58 million out of an initial investment of GBP75 million, representing 77p per Ordinary Share based on the initial offering of 75 million Ordinary Shares of GBP1 each. Whilst disappointing, the Company has performed significantly better than its peer group and this loss of 22.3% compares with a fall of 24% by the FTSE Small cap (ex Investment Companies) index from the start of the Company to the start of our disposal process in January.
Richard Wyatt & Edward Forwood
Loudwater Investment Partners Limited
19 September 2013
UNAUDITED CONDENSED STATEMENT OF FINANCIAL POSITION
As at 30 June 2013
Audited Unaudited 31 December 2012 Unaudited Notes 30 June 2013 30 June 2012 ----------------------------------------------------- ------- -------------- ----------------- -------------- GBP GBP GBP Non-current assets Investments at fair value through profit or loss 8 - 10,290,730 42,626,104 Other receivables 10 - 5,674,509 2,432,813 -------------- - 15,965,239 45,058,917 -------------- ----------------- -------------- Current assets Investments held for sale 9 5,384,616 2,705,150 1,550,150 Other receivables 10 4,543,744 780,952 22,443 Cash and cash equivalents 11 1,372,069 2,109,461 1,888,407 -------------- ----------------- -------------- 11,300,429 5,595,563 3,461,000 -------------- ----------------- -------------- Total Assets 11,300,429 21,560,802 48,519,917 -------------- ----------------- -------------- Liabilities Financial liabilities measured at amortised cost Other payables 12 201,642 56,410 40,052 Total net assets 11,098,787 21,504,392 48,479,865 ============== ================= ============== Represented by equity attributable to equity holders Share capital 13 - - - Distributable reserve 13 27,536,530 28,444,336 51,935,149 Revenue reserve 14 (16,437,743) (6,939,944) (3,445,284) Total equity 11,098,787 21,504,392 48,479,865 ============== ================= ============== Net asset value per Ordinary Share (GBP) 15 0.1843 0.3570 0.8049 ============== ================= ==============
UNAUDITED CONDENSED STATEMENT OF COMPREHENSIVE INCOME
For the period ended 30 June 2013
Unaudited Unaudited Notes 30 June 2013 30 June 2012 Discontinued operations and Total GBP GBP Income Interest income from cash and cash equivalents 7 7,483 7,817 Total income 7,483 7,817 --------------------------------- ------------- Expenses Investment Advisor's fee 4 219,863 296,435 Administration fee 4 27,175 29,248 Directors' fees and expenses 5 64,355 65,195 Auditor's remuneration 13,178 12,902 Legal and professional 40,000 14,732 Other professional advisers 19,014 26,978 Provision for liquidation and closure fees 165,633 - Other expenses 13,296 7,881 Total expenses 562,514 453,371 --------------------------------- ------------- Net loss before investment result (555,031) (445,554) Net gains on investments at fair value through profit or loss 8 - 19,850,724 Movement in net unrealised losses on investments held for sale at fair value through profit or loss 9 (7,584,768) 1,232,563 Net impairment on loans and receivables 7 (1,430,810) (104,049) Interest on loan notes 7 7,592 100,988 Net foreign exchange gains/(losses) 65,218 (11,260) (Loss)/profit for the financial period 14 (9,497,799) 20,623,412 --------------------------------- ------------- Other comprehensive income - - Total comprehensive (loss)/income for the period (9,497,799) 20,623,412 ================================= ============= (Loss)/earnings per Ordinary Share (GBP) 6 (0.1577) 0.3424 ================================= =============
The results from the current period are derived from dis-continued operations. The results from prior periods are derived from continuing operations.
UNAUTIED CONDENSED STATEMENT OF CHANGES IN EQUITY
For the period ended 30 June 2013
Share Distributable Revenue Total Notes capital reserve reserve Equity ------------------------------------------ ----- ------- ------------- ------------ ----------- GBP GBP GBP GBP For the period ended 30 June 2013 At 31 December 2012 - 28,444,336 (6,939,944) 21,504,392 Profit for the period - - (9,497,799) (9,497,799) Other comprehensive income - - - - Total comprehensive income for the period - - (9,497,799) (9,497,799) ------- ------------- ------------ ----------- Transactions with owners Capital distributions paid in the period 13 - (907,806) - (907,806) Total transactions with owners - (907,806) - (907,806) ------- ------------- ------------ ----------- At 30 June 2013 - 27,536,530 (16,437,743) 11,098,787 ======= ============= ============ =========== Share Distributable Revenue Total capital reserve reserve Equity ----------------------------------------- ----- ------- ------------- ------------ ----------- Notes GBP GBP GBP GBP For the period ended 30 June 2012 At 31 December 2011 - 56,289,984 (24,078,696) 32,211,288 Profit for the period - - 20,623,412 20,623,412 Other comprehensive income - - - - Total comprehensive loss for the period - - 20,623,412 20,623,412 ------- ------------- ------------ ----------- Transactions with owners Capital distributions paid in the period 13 - (4,354,835) - (4,354,835) Total transactions with owners - (4,385,835) - (4,354,835) ------- ------------- ------------ ----------- At 30 June 2012 - 51,904,149 (3,455,284) 48,479,865 ======= ============= ============ ===========
UNAUDITED CONDENSED STATEMENT OF CASH FLOWS
For the period ended 30 June 2013
Unaudited Unaudited Notes Period ended Period ended 30 June 2013 30 June 2012 ----------------------------------------------------- ------- ------------- ------------- GBP GBP Cash flows from operating activities Net loss before investment result (555,031) (445,554) Adjusted for: Bank interest receivable (7,483) (7,817) Decrease/(increase) in other receivables 8,763 (14,686) Increase in other payables 145,232 5,201 Proceeds from sale of investments 505,568 4,947,349 Bank interest received 8,147 7,601 Net cash from operating activities 105,196 4,492,094 ------------- ------------- Cash flows used in financing activities Capital distributions paid 13 (907,806) (4,354,835) Net cash used in financing activities (907,806) (4,354,835) ------------- ------------- Net (decrease)/increase in cash and cash equivalents (802,610) 137,259 Cash and cash equivalents at the start of the period 2,109,461 1,762,408 Effect of exchange rate changes during the period 65,218 (11,260) ------------- ------------- Cash and cash equivalents at the end of the period 11 1,372,069 1,888,407 ============= =============
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
For the period ended 30 June 2013
1. The Company
The Company is a Guernsey closed-ended investment company and was registered with limited liability in Guernsey on 11 January 2007. The Company commenced business on 29 January 2007 when the Ordinary Shares of the Company were admitted to trading on AIM.
The Company is an Authorised Closed-Ended Investment Scheme and is subject to the Authorised Closed-Ended Investment Scheme Rules 2008.
The Company was established to provide Shareholders with an attractive rate of return on their investment, primarily through investing in companies which were likely to achieve an IPO or a sale within a short term time horizon and through a small number of investments in companies that were already listed.
As detailed further within the Chairman's statement, on 4 September 2013, the Company announced that it had entered into an agreement to dispose of its remaining investments for a cash consideration of GBP10.53 million to Loudwater Capital LP (the "Transaction"). The Company also announced its intention to return all remaining cash to shareholders. Once this is completed a proposal will be put to shareholders for a liquidator to be appointed and for the Company to be placed into voluntary liquidation.
On 10 September 2013, the Company issued a Notice of Extraordinary Meeting relating to the cancellation of admission to trading on AIM.
In light of the announcements above and the intention of the Board to put forward proposals to Shareholders for the voluntary winding-up of the Company and the appointment of a liquidator, the Board of Directors have resolved to prepare these unaudited financial statements on the basis that the Company is no longer a going concern and therefore they have been prepared on a non-going concern basis.
2. Significant Accounting Policies
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the Company's financial statements:
(a) Basis of preparation
(i) Statement of compliance
These unaudited condensed financial statements ("Financial Statements") have been prepared in accordance with International Accounting Standard (IAS) 34 'Interim Financial Reporting', as adopted by the European Union. They do not include all the information and disclosures required in annual financial statements and should be read in conjunction with the Company's annual audited financial statements for the year ended 31 December 2012.
(ii) Judgments and estimates
In preparing these Financial Statements, the Directors make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.
The significant judgments made by the Directors in applying the Company's accounting policies and the key sources of estimation uncertainty are the same as those that applied to the audited financial statements as at and for the year ended 31 December 2012.
2. Significant Accounting Policies (continued)
(iii) IFRS
New accounting policies effective and adopted
The following new standards, which became effective and have been applied for the current period, are relevant to the Company's operations:
-- IFRS 13, 'Fair value measurement', establishes a single framework for measuring fair value and making disclosures about fair value measurements, when such measurements are required or permitted by other IFRSs. In particular, it unifies the definition of fair value as the price at which an orderly transaction to sell an asset or to transfer a liability would take place between willing market participants at the measurement date. It also replaces and expands the disclosure requirements about fair value measurements in other IFRSs, including IFRS 7 "Financial Instruments: Disclosures". Some of these disclosures are specifically required in interim financial statements for financial instruments and accordingly have been included in note 8 to these Financial Statements. Notwithstanding the above, the adoption of this new Standard has had no significant impact on the measurements of the Company's assets and
At the date of approval of these Financial Statements, the following standards and interpretations, which have not been applied in these Financial Statements, were in issue but not yet effective:
-- IFRS 9, 'Financial instruments', effective for annual periods beginning on or after 1 January 2015, specifies how an entity should classify and measure financial assets and liabilities, including some hybrid contracts. The standard improves and simplifies the approach for classification and measurement of financial assets compared with the requirements of IAS 39. Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward unchanged. The standard applies a consistent approach to classifying financial assets and replaces the numerous categories of financial assets in IAS 39, each of which had its own classification criteria.
-- IFRS 10, 'Consolidated financial statements', effective for annual periods beginning on or after 1 January 2014, introduces a new control model that is applicable to all investees, by focusing on whether a company has power over an investee, exposure or rights to variable returns from its involvement in the investee and the ability to use its power to affect those returns. Amendments to this Standard for investment entities are effective for annual periods beginning on or after 1 January 2014.
-- IFRS 12, 'Disclosures of interests in other entities', effective for annual periods beginning on or after 1 January 2014, includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. Under the Standard, the Company would classify interests in joint arrangements as either joint operations or joint ventures depending on whether the Company had rights to the assets and obligations for the liabilities of the arrangement.
There are no other standards, interpretations or amendments to existing standards that are not yet effective that would be expected to have a significant impact on the Company. It is the Board's intention to place the Company into voluntary liquidation prior to the year end, should this proceed as expected the above standards will not have an impact on the Company as annual financial statements will not be required.
2. Significant Accounting Policies (continued)
(b) Determination and presentation of operating segments
IFRS 8 requires a "management approach", under which segment information is presented on the same basis as that used for internal reporting purposes.
The key measure of performance used by the Board in its capacity of Chief Operating Decision Maker ("CODM") is to assess the Company's performance and to allocate resources based on the total return of each individual investment within the Company's portfolio, as opposed to geographic regions. As a result, the Board is of the view that the Company is engaged in a single segment of business, being investment in companies which were likely to achieve an IPO or a sale within a short term time horizon and through a small number of investments in companies that were already listed. Therefore, no reconciliation is required between the measure of gains or losses used by the Board and that contained in these financial statements.
The Company receives no revenues from external customers.
3. Critical Accounting Judgements and Estimates
The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results could differ from such estimates.
Critical judgements in applying accounting policies:
(a) Non-going concern basis of accounting
The Board of Directors have prepared the Financial Statements on the basis that the Company is no longer a going concern for reasons outlined in Note 1 above. The Financial Statements have been prepared on a non-going concern basis.
The preparation of financial statements on a non-going concern basis still requires that the normal recognition, measurement and disclosure requirements of IFRS apply as if the Company was a going concern. However, additional consideration has been given by the Directors as to the recognition and measurement of certain assets and liabilities under the non-going concern basis as detailed below.
Investments
The value of the Company's investments are based on the sales value as determined and agreed in the Transaction as announced on 4 September 2013. In accordance with IFRS when preparing the financial statement on a non-going concern basis the Company must value investments at the period end at the realisable value of these investments.
(b) Investment held for sale
The Board determines that an investment is held for sale if it is available for immediate sale in its present condition; there is a plan to sell the asset; an active programme to locate a buyer has been initiated; the asset is being marketed at a reasonable price in relation to its fair value, and the asset is expected to sell within twelve months. All investments have been presented under this category as all investments will be disposed of in there present condition within 12 months of the period end.
3. Critical Accounting Judgements and Estimates (continued)
(c) Sales proceeds receivable
These represent receivables for securities sold that have been contracted for but not yet settled. These are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method less provision for impairment. In August 2012, the Company sold its shareholding in AgraQuest for initial cash consideration of GBP27.3 million. Under the terms of the sale agreement, the maximum additional consideration the Company could receive is GBP6.6 million based on outcomes of certain milestones and escrow terms. As part the agreed disposal of the remaining investments, the Board has agreed the sale of the remaining AgreQuest interests held by the Company. As a result, the sale proceeds receivable have been impaired by approximately GBP1.5m.
4. Related Parties
Robert Fearis, a former Director of the Company, is a shareholder in, and a director of, Praxis Holdings Limited, the holding company of the Administrator. Roger Le Tissier, a former Director of the Company, is a director of Capita Registrars (Guernsey) Limited, the Company's Registrar, and a partner in Ogier, the Guernsey Advocate to the Company. Edward Forwood, a former Director of the Company, is a shareholder in, and the Managing Director of the Investment Advisor. Brett Miller and Rhys Davies are Directors of the Company and shareholders in, and directors of, Damille Investments Limited, as at 30 June 2013 a 29.8% Shareholder in the Company.
Christopher Fish is an independent Director.
The Company is responsible for the continuing fees of the Investment Advisor, Administrator and the Registrar in accordance with the Investment Advisory, Administration and Registrar Agreements dated 24 January 2007.
Investment Advisory Agreement
Pursuant to the provisions of the Investment Advisory Agreement, the Investment Advisor is entitled to receive a management fee during the period at 2.0% per annum of the net asset value of the Company, payable quarterly in advance.As at 30 June 2013, the Investment Advisory fee payable was GBPnil (31 December 2012: GBPnil & 30 June 2012: GBPnil). For the period ended 30 June 2013, the investment advisory fee expense was GBP219,863 (30 June 2012: GBP296,435).
The Investment Advisor is also entitled to a performance fee calculated by taking an amount equal to 20% of the adjusted closing net asset value (NAV) per Ordinary Share over the opening NAV per Ordinary Share, (where the adjusted NAV is the NAV of the Company excluding any liability for accrued performance fees and after adding back any dividends or distributions of capital declared or paid during the performance period), such that the Company and the Investment Manager share all profits in the ratio of 80% and 20% respectively. The Investment Advisor will become entitled to a performance fee in respect of a performance period only if the adjusted closing NAV per Ordinary Share at the end of the relevant performance period exceeds the opening NAV per Ordinary Share at the start of the relevant period increased by a hurdle amount of 7.5% and if the adjusted closing NAV exceeds the "High Watermark". The High Watermark is the highest previously recorded Opening NAV as reduced by the sum of all dividends and distributions per share since such highest opening NAV per share was established, but not reduced by dividends and distributions of capital made in the current performance year. The first performance period began on Admission and ended on 31 December 2007. Each subsequent performance period is a period of one financial year.
City Financial Limited
On 30 November 2009, Loudwater Investment Partners Limited was appointed to manage City Financial's UK Select Alpha Fund (now renamed City Financial UK Equity Income Fund). Assets under management are GBP18.9 million and Loudwater Investment Partners Limited receives a fee of 0.75% of AUM per annum for this service. The Company's interest in City Financial Limited was disposed of during the year ended 31 December 2012.
Administration Agreement
Pursuant to the provisions of the Administration Agreement, Praxis Fund Services Limited is entitled to receive a standard administration fee of GBP26,250 per annum together with a fee for company secretarial services charged on a time basis. As at 30 June 2013, the administration fee payable was GBP16,628 (31 December 2012: GBP7,710 & 30 June 2012: GBP14,490). For the period ended 30 June 2013, the administration fee expense was GBP27,175 (30 June 2012: GBP29,248).
Registrar Agreement
Pursuant to the provisions of the Registrar Agreement, Capita Registrars (Guernsey) Limited is entitled to a standard fee of GBP3,500 per annum together with a per deal fee per Shareholder transaction. As at 30 June 2013, the registrar fee payable was GBP2,988 (31 December 2012: GBP2,000 & 30 June 2012: GBP2,296). For the period ended 30 June 2013, the registrar fee expense was GBP4,014 (30 June 2012: GBP11,978).
Nominated Advisor & Broker Fees
Pursuant to the provisions of the Engagement Letter dated 9 November 2007, as subsequently amended, Panmure Gordon (UK) Limited is entitled to a standard fee of GBP30,000 per annum for acting as nominated advisor and broker.
As at 30 June 2013, the Nominated Advisor and Broker fee payable was GBPnil (31 December 2012: GBPnil & 30 June 2012: GBPnil). For the period ended 30 June 2013, the Nominated Advisor and Broker fee expense was GBP15,000 (30 June 2012: GBP15,000).
4. Directors' Fees & Interests
Each of the Directors who served during the period had entered into an agreement with the Company providing for them to act as a non-executive Director of the Company. Their annual fees, excluding all reasonable expenses incurred in the course of performing their duties which will be reimbursed by the Company, are as follows:
30 June 2013 30 June 2012 Annual Fee Actual Fee Annual Fee Actual Fee ----------- ----------- ----------- ----------- GBP GBP GBP GBP Rhys Davies** 30,000 15,000 9,000 4,500 Christopher Fish 18,000 9,000 18,000 9,000 Brett Miller** 18,000 9,000 9,000 4,500 Lord Flight* N/A N/A 30,000 17,500 Edward Forwood* N/A N/A Nil Nil Roger Le Tissier* N/A N/A 18,000 10,500 Robert Fearis* N/A N/A 18,000 10,500
*resigned 27 April 2012
**Increase in annual fee effective 1 July 2012.
In addition to the above GBP31,355 (30 June 2012: GBP8,695) of expenses, including D&O insurance, were paid in relation to the Directors.
The total Directors' fees and expenses charged to the Unaudited Statement of Comprehensive Income during the period was GBP64,355 (30 June 2012: GBP65,195) of which GBPnil remained outstanding at 30 June 2013 (31 December 2012: GBP23,943 & 30 June 2012: GBPnil).
5. Directors' Fees & Interests (continued)
The interests of the Directors and their families who held office during the period are set out below:
30 June 2013 30 June 2012 Ordinary Shares Ordinary Shares ----------------- ---------------- No. No. Rhys Davies - - Christopher Fish - - Brett Miller - - Lord Flight N/A 80,000 Edward Forwood N/A 400,000 Roger Le Tissier N/A - Robert Fearis N/A -
There were no other changes in the interests of the Directors prior to the date of this report.
6. Basic and Diluted (Loss)/Earnings per Ordinary Share
Basic and diluted (loss)/earnings per Ordinary Share is based on the (loss)/income for the period and on a weighted average number of Ordinary Shares in issue during the period.
30 June 2013 30 June 2012 ---------------- ---------------- Number of Number of Ordinary Shares Ordinary Shares Weighted average number of Ordinary Shares 60,232,855 60,232,855 ---------------- ---------------- Total comprehensive (loss)/income (9,497,799) 20,623,412 ---------------- ---------------- Basic and diluted (loss)/earnings per Ordinary Share (0.1577)p 0.3424p ---------------- ----------------
The weighted average number of Ordinary Shares as at 30 June 2013 is based on the number of Ordinary Shares in issue during the period under review, as detailed in note 13.
There are no instruments in issue that could potentially dilute earnings per Ordinary Share in future periods.
7. Net Losses and Gains on Loans and Receivables 30 June 2013 30 June 2012 ------------- ------------- GBP GBP On cash and cash equivalents 7,483 7,817 On loan notes 7,592 100,988 ------------- ------------- Total interest income 15,075 108,805 ============= ============= Net impairment on loans and receivables (1,430,810) (104,049) Net (losses)/gains on loans and receivables (1,415,735) 4,756 ============= ============= 8. Investmentsat Fair Value Through Profit or Loss 31 December 2012 30 June 2013 30 June 2012 ---------------- ------------------ --------------- GBP GBP GBP Unlisted investments - 10,290,730 42,626,104 ---------------- - 10,290,730 42,626,104 ================================================================================ ================== =============== Year ended Period ended 31 December 2012 Period ended 30 June 2013 30 June 2012 ---------------- ------------------ --------------- GBP GBP GBP Movement in unrealised (losses)/gains on investments - (791,405) 22,921,237 Realised gains/(losses) on investments - 18,826,581 (3,070,513) ---------------- ------------------ --------------- Net gains on investments held at fair value through profit or loss - 18,035,176 19,850,724 ================ ================== =============== 9. Equity Investment Classified as Held for Sale 31 December 2012 30 June 2013 30 June 2012 --------------- ------------------- --------------- GBP GBP GBP Equity investments held for sale 5,384,616 2,705,150 1,550,150 --------------- 5,384,616 2,705,150 1,550,150 =============== =================== =============== Movement in net unrealised (loss)/gain on investments held for sale at fair value through Year ended profit or loss: Period ended 31 December 2012 Period ended 30 June 2013 30 June 2012 --------------- ------------------- --------------- GBP GBP GBP Movement in unrealised (losses)/gains on equity investments held for sale (7,611,264) - 1,232,563 Realised gains on equity investments held for sale 26,496 - - --------------- ------------------- --------------- (7,584,768) - 1,232,563 =============== =================== ===============
At the period end all remaining investments have been transferred out of investments at fair value through profit or loss and classified as held for sale as a result of the Transaction as announced on 4 September 2013.
Movement on held for sale investments are detailed within note 16.
10. Other Receivables
31 December 2012 30 June 2013 30 June 2012 --------------- ----------------- --------------- GBP GBP GBP Current Investment sales proceeds 2,433,132 263,268 - Loan note 2,109,849 430,637 - Loan note interest - 76,856 - Bank interest receivable 763 1,427 1,153 Prepayments - 8,764 21,290 --------------- ----------------- --------------- 4,543,744 780,952 22,443 --------------- ----------------- --------------- Non-current Investment sales proceeds - 3,725,590 - Loan note - 1,684,374 2,333,016 Loan note interest - 264,545 99,797 --------------- ----------------- --------------- - 5,674,509 2,432,813 --------------- ----------------- --------------- Total receivables 4,543,744 6,455,461 2,455,256 =============== ================= ===============
The investment sales proceeds are based on amounts received post period end and the amount receivable as agreed in the Transaction for contingent interests from the sale of an investment during 2012.
The Directors consider that the carrying amount of other receivables approximates fair value.
11. Cash and Cash Equivalents
31 December 2012 30 June 2013 30 June 2012 --------------- ----------------- --------------- GBP GBP GBP Cash at bank 1,372,069 2,109,461 1,737,423 Fixed deposit < 3 months - - 150,984 --------------- 1,372,069 2,109,461 1,888,407 =============== ================= ===============
12. Other Payables
31 December 2012 30 June 2013 30 June 2012 --------------- ----------------- --------------- GBP GBP GBP Directors' fees and expenses - 23,943 - Audit fee 10,588 17,375 13,152 Administration fee 16,628 7,710 14,490 Registrar's fee 2,988 2,000 2,296 Corero deposit claim creditor - - 9,191 Provision for Liquidation and closure fees 165,633 - - Sundry 5,805 5,382 923 --------------- ----------------- --------------- 201,642 56,410 40,052 =============== ================= ===============
The Directors consider that the carrying amount of other payables approximates fair value.
13. Share Capital & Distributable Reserve
30 June 2013, Authorised Share Capital 31 December 2012 & 30 June 2012 ------------ GBP Unlimited Shares of no par value that may be issued as Ordinary Shares - ============ 1 January 2013 1 January 2012 1 January 2012 To To To Share Capital 30 June 2013 31 December 2012 30 June 2012 -------------- ----------------- -------------- Allotted, issued and fully paid Shares: Brought forward & carried forward GBP- GBP- GBP- ============== ================= ============== Ordinary Shares brought forward and carried forward 60,232,855 60,232,855 60,232,855 ============== ================= ============== 1 January 2013 1 January 2012 1 January 2012 To To To Distributable Reserve 30 June 2013 31 December 2012 30 June 2012 -------------- ----------------- -------------- GBP GBP GBP Brought forward 28,444,336 56,289,984 56,289,984 Capital distributions paid (907,806) (27,845,648) (4,354,835) -------------- ----------------- -------------- Carried forward 27,536,530 28,444,336 51,935,149 ============== ================= ==============
The authorised share capital of the Company on incorporation was divided into an unlimited number of Shares of no par value which upon issue, for cash or otherwise, the Directors may categorise as Ordinary Shares or otherwise. The Company's Articles of Association confer pre-emption rights to Shareholders in the event of any issue of shares which would increase the issued share capital by 25 per cent. or more.
Subject to the provisions of the Law and without prejudice to any rights attaching to any existing Shares or to the provisions of the Articles, any share in the Company may be issued with or have attached thereto such preferred, deferred, conversion or other special rights, or such restrictions whether in regard to dividend, return of capital, voting, conversion or otherwise as the Company may from time to time by ordinary resolution determine or, subject to or in default of any such direction, as the Directors may determine.
The Company may issue fractions of shares and any such fractional shares shall rank pari passu in all respects with the other shares issued by the Company.
The initial offering of the Ordinary Shares was at a price of GBP1.00 per Ordinary Share.
On 16 January 2007, the holders of the Ordinary Shares in the Company passed a written resolution approving the cancellation of the entire amount which stood to the credit of the share premium account immediately after the Placing, conditionally upon the issue of the Shares and the payment in full thereof and with approval of the Royal Court. The cancellation was confirmed by the Royal Court on 27 April 2007. The cancelled share premium was transferred to the Distributable Reserve.
The Distributable Reserve may be applied in any manner in which the Company's profits available for distribution are able to be applied, including purchase of the Company's own Shares and the payment of capital distributions through the Capital Return Scheme as detailed below.
At the Annual General Meeting on 20 June 2011, the Shareholders approved the Capital Return Scheme whereby, a bonus issue of new, fully paid, redeemable B Shares ("B shares") could be issued to Shareholders pro rata in proportion to Shareholders' existing holdings of Ordinary Shares on the relevant record date. These B shares were expected to be redeemed by the Company shortly after they were issued with the redemptions paid in cash as a return of capital.
During the year 2011, the Company made a capital return by way of bonus issue of B shares. The capital returned to Shareholders was GBP4.2 million, equating to approximately 7.0 pence per B share, and included the cash element received from the disposal of Top Layer Networks.
On 10 February 2012, by way of bonus issue of B shares, the Company made a capital return of GBP2.5 million to Shareholders, equating to approximately 4.15 pence per B share held. This capital return was made following the sale of the Company's investment in City Financial Investment Company Limited.
On 30 March 2012, by way of bonus issue of B shares, the Company made a capital return of GBP1.9 million to Shareholders, equating to approximately 3.08 pence per B share held. This capital return was made following the sale of the Company's listed shares in Corero Network Security Plc.
On 10 September 2012, by way of bonus issue of B shares, the Company made a capital return of GBP23.49 million to Shareholders, equating to 39.0 pence per B share held. This capital return was made following the sale of the Company's shares in AgraQuest, Inc.
On 31 May 2013, by way of bonus issue of B shares, the Company made a capital return of GBP0.9 million to Shareholders, equating to 1.5 pence per B share held.
13. Revenue Reserve
1 January 2012 1 January 2013 To 1 January 2012 To 31 December 2012 To 30 June 2013 30 June 2012 ---------------- ----------------- ---------------- GBP GBP GBP Retained revenue reserve brought forward (6,939,944) (24,078,696) (24,078,696) Total comprehensive (loss)/income for the period/year (9,497,799) 17,138,752 20,623,412 ---------------- ----------------- ---------------- Retained revenue reserve carried forward (16,437,743) (6,939,944) (3,445,284) ================ ================= ================
14. Net Asset Value per Ordinary Share
The net asset value per Ordinary Share is based on the net assets attributable to equity Shareholders of GBP11,098,787 (31 December 2012: GBP21,504,392 & 30 June 2012: GBP48,479,865) and on the period end number of Ordinary Shares in issue of 60,232,855 (31 December 2012: 60,232,855 & 30 June 2012: 60,232,855).
In accordance with IFRS, these interim condensed financial statements have been prepared on a non-going concern basis as disclosed in Note 1. As a result, the net asset value ("NAV") disclosed within these Financial Statements differs from the NAV which was published on 31 July 2013. The table below provides a reconciliation between the Published NAV and the NAV per the Financial Statements:
Number of ordinary shares in Net Asset Value per ordinary Net Asset Value issue share As at 30 June 2013: GBP Published NAV 21,381,011 60,232,855 35.50p Fair value and impairment adjustments* (10,096,222) 60,232,855 (16.76)p Accrual and prepayment adjustments** (186,002) 60,232,855 (0.31)p ------------------ ------------------------------- NAV per Financial Statements 11,098,787 60,232,855 18.43p ------------------ -------------------------------
*The reduction in the NAV of GBP10,096,222 resulted from the consideration value for investments within the Transactions as announced on 4 September 2013.
**The accrual and prepayment adjustments resulted from the Company preparing these financial statements on a non-going concern basis, subsequently for financial statements purposes prepayments were expensed during the period and liquidation/closure costs have been accrued for.
15. Classification of Fair Value Measurements
IFRS 7 requires the Company to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:
-- Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
-- Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2); and
-- Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, the measurement is a level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement considering factors specific to the asset or liability.
The determination of what constitutes "observable" requires significant judgement by the Company. The Company considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.
The following table analyses, within the fair value hierarchy, the Company's financial assets (by class) measured at fair value at 30 June 2013:
Fair Value as at 30 June 2013 Level Level Level Total 1 2 3 ------- ---------- ------ ---------- GBP GBP GBP GBP Designated at fair value through profit or loss upon initial recognition: Investments - - - - Held for sale investments - 5,384,616 - 5,384,616 ------- ---------- ------ ---------- - 5,384,616 - 5,384,616 ======================================= ========== ====== ========== Fair Value as at 31 December 2012 Level Level Level Total 1 2 3 ------- ------- ----------- ----------- GBP GBP GBP GBP Designated at fair value through profit or loss upon initial recognition: Investments - - 10,290,730 10,290,730 Held for sale investments - - 2,705,150 2,705,150 ------- ------- ----------- ----------- - - 12,995,880 12,995,880 ======= ======================================= =========== =========== Fair Value as at 30 June 2012 Level Level Level Total 1 2 3 ------- ------- ----------- ----------- GBP GBP GBP GBP Designated at fair value through profit or loss upon initial recognition: Investments - - 42,626,104 42,626,104 Held for sale investments - - 1,550,150 1,550,150 ------- ------- ----------- ----------- - - 44,176,254 44,176,254 ======= ======================================= =========== ===========
The table below provides a reconciliation from brought forward to carried forward balances of financial instruments categorised under level 3:
1 January 2013 To 30 June 2013 Assets at Fair Value categorised as Level 3: Investments Held for sale investments Total ------------- -------------------------- -------------- GBP GBP GBP Fair value brought forward 10,290,730 2,705,150 12,995,880 Purchases or conversions - - - Sales or conversions - - - Net loss on fair value through profit or loss investments - (7,611,264)) (7,611,264) Transfers (10,290,730) 10,290,730 - Transfers to Level 2 categorisation (5,384,616) (5,384,616) ------------- -------------------------- -------------- Fair value carried forward - - - ============= ========================== ============== 1 January 2012 To 31 December 2012 Assets at Fair Value categorised as Level 3: Investments Held for sale investments Total ------------- -------------------------- ------------- GBP GBP GBP Fair value brought forward 24,076,578 2,000,000 26,076,578 Purchases or conversions - - - Sales or conversions (30,884,158) (449,850) (31,334,008) Net gain on fair value through profit or loss investments 18,253,310 - 18,253,310 Transfers (1,155,000) 1,155,000 - ------------- -------------------------- ------------- Fair value carried forward 10,290,730 2,705,150 12,995,880 ============= ========================== ============= 1 January 2012 To 30 June 2012 Assets at Fair Value categorised as Level 3: Investments Held for sale investments Total -------------- -------------------------- -------------- GBP GBP GBP Fair value brought forward 24,076,578 2,000,000 26,076,578 Purchases or conversions - - - Sales or conversions (2,500,000) (449,850) (2,949,850) Net gain on fair value through profit or loss investments (3,035,544) - (3,035,544) Transfers 24,085,070 - 24,090,450 -------------- -------------------------- -------------- Fair value carried forward 42,626,104 1,550,150 44,176,254 ============== ========================== ==============
As at 30 June 2013, investments held for sale have been valued based on the consideration agreed within the Transaction.
As at 30 June 2013, all investments with the total value of GBP5,384,616 have been transferred from level 3 investments to level 2 investments, the investments have been transferred as they are now deemed to be valued on observable prices under the terms of the Transaction as announced on 4 September 2013.
17. Dividends
Following the approval of Shareholders at an extraordinary general meeting on 5 November 2008, the Directors intended to distribute cash proceeds of realisations in full following disposals of portfolio investments, subject to the retention of sufficient cash for follow-on investments in existing portfolio companies and after taking into account all costs, liabilities and expenses of the Company. Such distributions were made by share buy-back or dividend from time to time as the Directors considered economic and appropriate.
For the period ended 30 June 2013, the realised gains of the Company that had physically been received were as follows:
1 January 1 January 2013 2012 To To 30 June 30 June 2013 2012 ------------ ------------- GBP GBP Total comprehensive (loss)/income for the period (9,441,535) 20,623,441 Add/(less): Movement in net unrealised losses/(gains) 9,060,750 (24,078,389) Adjusted realised losses for distribution for the period (380,785) (3,454,978) ============ =============
The Directors do not recommend the payment of a dividend for the period ended 30 June 2013 (30 June 2012:GBPnil).
During the period capital distributions were paid to Shareholders totalling GBP907,806 (31 December 2012: GBP4,354,835).
18. Taxation
The Income Tax Authority of Guernsey has granted the Company exemption from Guernsey income tax and the income of the Company may be distributed or accumulated without deduction of Guernsey income tax. The exemption mentioned above entails payment by the Company of an annual fee of GBP600. It should be noted, however, that interest and dividend income accruing from the Company's investments may be subject to withholding tax in the country of origin. With effect from 1 January 2008, the standard rate of income tax for most companies in Guernsey is zero per cent. Tax Exempt status continues to exist and the Company has been granted this status for 2012 and 2013.
The Company has not suffered any withholding tax in the period (30 June 2012: GBPnil).
19. Contingent liabilities
The Company has no contingent liabilities at the reporting date.
20. Post Period End Events
On 25 July 2013, the Company issued a loan of GBP500,000 to one of its investee Companies. The loan forms part of the consideration within the Transaction.
On 4 September 2013, the Company announced its intention to a return of capital of 18.4 pence per ordinary share and a final estimated return of capital of 0.2 pence per ordinary share. The Financial Statements net asset value can be reconciled to the final expected capital return as follows:
Number of ordinary shares in Net Asset Value per ordinary Net Asset Value issue share GBP NAV per Financial Statements 11,098,787 60,232,855 18.43p Loan to investee company (500,000) 60,232,855 (0.83)p Bonus payment to Investment Advisor (250,000) 60,232,855 (0.42)p General on-going expenses (60,000) 60,232,855 (0.09)p Consideration in Transaction for Loan to investee Company 926,500 60,232,855 1.54p Estimated final return of capital 11,215,287 60,232,855 18.63p ------------------ -------------------------------
For further details and summary of the additional post period end event, please refer to the Chairman's Statement and the Investment Advisor's Report.
There were no other significant post period end events that require disclosure in these financial statements other than those listed in the Investment Advisor's Report.
DIRECTORS & ADVISORS
Directors:
Rhys Davies (appointed non-executive Chairman on 27 April 2012)
Christopher Fish
Brett Miller
Lord Flight (Chairman) (resigned on 27 April 2012)
Robert Fearis (resigned on 27 April 2012)
Edward Forwood (resigned on 27 April 2012)
Roger Le Tissier (resigned on 27 April 2012)
Administrator, Designated Manager, Secretary, Praxis Fund Services Limited Tel: +44 (0)1481 737 600
Provider of Safe Custody & Registered Office: Sarnia House Fax: +44(0)1481 749 829 Le Truchot www.praxisgroup.com
St Peter Port
Guernsey, GY1 4NA
Registrar: Capita Registrars (Guernsey) Limited
2(nd) Floor, No.1 Le Truchot
St Peter Port
Guernsey, GY1 4AE
Investment Advisor & Promoter: Loudwater Investment Partners Limited Tel: +44 (0)20 3372 6400
Little Tufton House Fax: +44(0)20 7222 2991
3 Dean Trench Street
London, SW1P 3HB www.loudwaterpartners.com
Share dealing:
Ordinary Shares can be purchased or sold through your usual stockbroker.
Sources of further information:
The Company's Ordinary Shares are quoted on the AIM market of the London Stock Exchange. Information updates are available on the Company from the Investment Advisor's website www.loudwaterpartners.com.
Key Dates*:
Company's year end 31 December 2013 Annual results announced By 31 May 2014 Company's half-year 30 June 2014 Interim results announced By 30 September 2014
*As announced on 4 September 2013, the Board intend to propose the Company is entered into voluntary liquidation prior to the year end of the Company.
Frequency of NAV publication:
The Company's net asset value is released to the Stock Exchange quarterly.
Auditor: BDO Limited
PO Box 180, Place du Pré
Rue du Pré, St Peter Port
Guernsey, GY1 3LL
Nominated Advisor & Broker: Panmure Gordon (UK) Limited
One New Change
London, EC4M 9AF
Guernsey Advocates: Ogier
Ogier House
St Julian's Avenue
St Peter Port
Guernsey, GY1 1WA
Bankers: Lloyds TSB Offshore Limited
Corporate Banking
PO Box 123
Sarnia House
Le Truchot
St Peter Port
Guernsey, GY1 4EF
Barclays Private Clients International Limited
PO Box 41
Le Marchant House
St Peter Port
Guernsey, GY1 3BE
English Solicitors: Berwin Leighton Paisner LLP
Adelaide House
London Bridge
London, EC4R 9HA
Company Number: 46213 (Registered in Guernsey)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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