Crown Place Regulatory News (CRWN)

27 Jun 2006 15:32

Crown Place VCT PLC27 June 2006 27 June 2006 CROWN PLACE VCT PLC Preliminary announcement of final results for the year ended 28 February 2006 Crown Place VCT PLC ("the Company"), managed by Close Venture ManagementLimited, today announces unaudited preliminary results for the year ended 28February 2006. The announcement has been approved by the Board of Directors on27 June 2006 Financial Highlights ------------------------------------------------------------------------------------------------Shareholder value since launch Proforma (i) Proforma (i) Crown PlacePrevious holders of shares in: Murray VCT PLC Murray VCT 2 PLC VCT PLC* ------------------------------------------------------------------------------------------------Dividends per share paid to date (pence per share) (ii) 31.36 31.91 25.93 Net asset value (pence per share) as at 28 February 2006 (i) 30.60 36.59 43.00------------------------------------------------------------------------------------------------ 61.96 68.50 68.93------------------------------------------------------------------------------------------------ (i) The proforma shareholder value is based on the dividends paid to date for a share with a pro-rata net asset value per share based upon the proportion of shares received by Murray VCT PLC (now renamed CP1 VCT PLC) and Murray VCT 2 PLC (now renamed CP2 VCT PLC) shareholders at the time of the merger. (ii) Prior to 6 April 1999, venture capital trusts were able to add 20% to dividends, and figures for the period up until 6 April 1999 are included at the gross equivalent rate actually paid to shareholders. * Formerly Murray VCT 3 PLC In addition to the dividends paid above, the Directors have declared a firstdividend of 1.25 pence per Crown Place VCT PLC share to be paid out of realisedcapital gains, subject to H M Revenue & Customs approval. For further information, please contact: Patrick Reeve/ Emil Gigov John West/ Clemmie CarrClose Venture Management Limited Tavistock CommunicationsTel: 020 7422 7830 Tel: 020 7920 3150 www.closeventures.co.uk CHAIRMAN'S STATEMENT Overview In this, my first Chairman's statement to shareholders of Crown Place VCT PLC, Iam pleased to report the Group's net asset value of 43.0 pence per share as at28 February 2006, compared to 41.9 pence per share reported at the interim stageand 42.4 pence per share as at 28 February 2005 (or 43.4 pence per share asrestated under the new accounting standards mentioned below). The increase inthe net asset value per share over the six months to 28 February 2006 is afterthe payment of a 1.00 pence per share dividend on 9 September 2005. The Groupreports a revenue profit for the year of £562,000 before non-recurring operatingitems and a revenue operating loss of £187,000 after such non-recurring itemshave been taken into account. The total profit after taxation for the year is£923,000. The Board, after taking advice, has decided to change the Company's year end to30 June. For the period 1 March 2006 to 30 June 2007 the Board intends to paythree dividends, the first dividend being 1.25 pence per share payable out ofgross realised capital profits. This dividend is expected to be paid toshareholders in September 2006, subject to receiving clearance from HM Revenue &Customs. It is the Board's policy to significantly increase the dividend fromthe 1.00 pence per share paid in the previous financial year. The year to 28 February 2006 has been a period of great change for the Company.In April 2005 the Company appointed Close Venture Management Limited as the newInvestment Manager. Later in the summer, the Board of the Company became thesubject of a hostile shareholder action by a small group of shareholders.Attempts to remove the Board were decisively defeated by shareholders in anextraordinary general meeting held in September 2005. The cost of defending thishostile action is shown as part of non-recurring operating expenses. At an extraordinary general meeting held in December 2005 the shareholdersapproved the merger of the Company with Murray VCT PLC and Murray VCT 2 PLCunder a scheme of arrangement; the Company's name was subsequently changed toCrown Place VCT PLC. Following court approval, the merger became effective on 13January 2006 and shortly thereafter the shareholders of Murray VCT PLC andMurray VCT 2 PLC were issued with new share certificates in Crown Place VCT PLC.The old Murray VCT 3 PLC share certificates remain valid and have not beenreplaced in order to save on administrative expenses. The costs of the merger,which are in line with the estimates set out in the merger prospectus, are fullyrecognised in the results for the year. The reduction in the running costs ofthe Company will have a positive effect on the results of future years. Following the merger Peter Timms, James Cooper and Alistair Mair resigned fromthe Board and I would like to take this opportunity to thank them for their hardwork over the years and in particular in the past 12 months. I would also liketo welcome Rachel Beagles, Vikram Lall and Geoffrey Vero who join Andrew Cubieon the Board as non-executive directors. The Board would like to thank Close Venture Management Limited for supportingthe Company in its defence against the shareholder action last summer and forits efforts during the merger in December, all of which are outside the scope ofthe investment management agreement and for which it received no remuneration.Close Venture Management Limited worked hard during the period under review topreserve and enhance shareholder value and continues to do so. Buy back policy and tender offer At the extraordinary general meeting in December 2005, the shareholders approvedthe buy-back of up to 10% of the issued share capital of the Company by way of atender offer. As part of this arrangement, 3.7 million shares in the Company, orapproximately 9% of the issued share capital, were repurchased and are held intreasury. All shareholders who tendered shares were able to sell their shares. The Board is concerned that there should be liquidity in the shares and that thediscount to net asset value be reduced. To this end it will remain the Company'spolicy to continue to buy back shares in the market, subject to the overallconstraint of ensuring that such purchases are in the Company's interest,including the maintenance of sufficient resources for investment in existing andnew investee companies. Performance As discussed further below, significant progress was made during the year inturning around the investment portfolio. As a result the Group achieved totalnet capital gains on investments of £2,504,000 during the year. This positiveperformance was partly offset by the non-recurring operating costs in connectionwith the shareholder action of £178,000, merger costs of £356,000 and a bad debtprovision of £400,000, which represents income accrued in previous years nolonger considered recoverable. The costs for the year also include a performancefee of £233,615 plus VAT payable to the Manager in accordance with the amendedinvestment management agreement approved by shareholders in December 2005. We are pleased to have reached an agreement with HM Revenue & Customs on theoutstanding tax claims dating back several years. This agreement, which wasreached after the year end following protracted investigations and negotiations,ensures that the full outstanding amount of £1.4 million including interest willbe repaid to the Group. The provision of £0.5 million against this amount, whichwas made previously after detailed consultations with the Group's tax advisers,has now been released. Investment portfolio Following the merger of the Company with Murray VCT PLC and Murray VCT 2 PLC,the investment portfolios of the merged entities were combined. The Company'sinvestment portfolio has changed during the year to reflect the Company'sstrategy of balancing lower risk asset-backed investments with higher riskinvestments offering greater growth prospects. The former category includes anumber of holdings in cinemas, pubs and hotels, where the Company's investmentis fully secured through a first charge on freehold property. The lattercomprises a broader range of investments in the areas of business services,healthcare and IT and provides a portfolio balance in sectors that are lessexposed to consumer spending. Full or partial exits were achieved from investments including Astraeus,Clamonta, Enterprise Foods, Link Up Mitaka, Mining Communications, PLM Dollarand Voxsurf. The flotation of Synexus Clinical Research plc on AIM in November2005 enabled the Group to realise a significant part of its investment whileretaining a shareholding in this fast growing business. In total the realisedproceeds from the sale of investments in the combined portfolio were in excessof £9 million. The Group made 15 new investments in the period ranging fromhotels, cinemas and pubs to healthcare services and high growth, technology ledbusinesses. The total amount invested and committed for investment by the Groupin the year was £7 million. Three new investments and four follow-on investmentstotalling £1.4 million have been made since the year end. The majority of recent investments are performing in accordance withexpectations, and in some cases well in excess. Such investments include the twofreehold cinemas in Brixton, London and Exeter, Grosvenor Healthcare, a providerof occupational healthcare services and Lowcosttravel, a provider of onlinetravel services. Against this, we have made a cautious provision against theinvestment in the freehold Crown Hotel in Harrogate, where the refurbishment andturnaround process is taking longer than planned. In the longer term we believethat this well established and substantial hotel has considerable prospects. Change of year end Your Board has decided to change the Company's year end from 28 February to 30June as this will reduce administration and accounting requirements and savecosts. The next accounting period end will be 30 June 2007 with two interimreporting dates of 31 August 2006 and 31 December 2006. Valuation methodology The valuation of investments has been undertaken in accordance with theInternational Private Equity and Venture Capital Valuation Guidelines andInternational Accounting Standards. New accounting standards During the year, the Company adopted new Financial Reporting Standards issued bythe Accounting Standards Board as part of the convergence process withInternational Financial Reporting Standards. The consolidated financialstatements have been prepared in accordance with International FinancialReporting Standards. The effect of these is shown in notes to this announcement. Dividends The Board has declared a first dividend for the period 2006/7 of 1.25 pence pershare (2005/6: total dividend paid of 1.00 pence per share) payable out ofrealised capital profits. Due to the extension of the Company's period end to 30June 2007, this will be the first of three dividends paid in the period. Overallthe Board expects to achieve a level of dividend payments in the period inexcess of the indications given at the time of the merger proposals. As inprevious years, dividend payments will be subject to approval by HM Revenue &Customs prior to payment. Outlook Following the significant changes undertaken in the year to 28 February 2006, inparticular the appointment of Close Venture Management Limited as the newInvestment Manager and the merger with Murray VCT PLC and Murray VCT 2 PLC, goodprogress has been made in reshaping the investment portfolio to provide a strongincome stream combined with capital protection and the prospect of increasedcapital value from a more broadly based portfolio. Against this background theBoard is positive about the future prospects of the Company. Patrick CrosthwaiteChairman27 June 2006 Consolidated Income Statement (unaudited) for the year ended 28 February 2006 ----------------------------------------------------------------------------------------------------- Year ended Year ended 28 February 2006 28 February 2005 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000-----------------------------------------------------------------------------------------------------Investment income and deposit interest 1,073 - 1,073 985 - 985Investment management fees (160) (481) (641) (146) (439) (585)Other expenses (351) (955) (1,306) (416) - (416)Non-recurring operating expenses (749) - (749) (187) (260) (447) -----------------------------------------------------------Operating (loss)/profit (187) (1,436) (1,623) 236 (699) (463) (Loss)/profit on realisation of investments - (22,850) (22,850) - 385 385 Unrealised profit/(loss) on investments - 25,354 25,354 - (5,216) (5,216) -----------------------------------------------------------(Loss)/profit before taxation (187) 1,068 881 236 (5,530) (5,294) Tax 42 - 42 (56) 56 - -----------------------------------------------------------(Loss)/profit for the year (145) 1,068 923 180 (5,474) (5,294) -----------------------------------------------------------Basic and diluted return per Ordinary share (pence) 2.03 (12.98)----------------------------------------------------------------------------------------------------- The total column of this statement represents the Group's income statement,prepared in accordance with IFRS. The supplementary revenue and capital columnsare prepared under guidance published by the Association of Investment TrustCompanies. The consolidated income statement includes the results of the subsidiaries CP1VCT PLC and CP2 VCT PLC following the merger. Gains and losses for the yearshown in the consolidated income statement include gains and losses as a resultof the hive up of investments from CP1 VCT PLC and CP2 VCT PLC to Crown PlaceVCT PLC following the merger. Consolidated Balance sheet (unaudited) as at 28 February 2006 --------------------------------------------------------------------------- Restated * 28 February 2006 28 February 2005 £'000 £'000---------------------------------------------------------------------------Non-current assets Investments 30,969 16,403 Current assets Trade and other receivables 1,496 1,638Cash and cash equivalents 4,846 214 --------------------------------- 6,342 1,852 Total assets 37,311 18,255 Current liabilities Trade and other payables (694) (737) Net current assets 5,648 1,115 ---------------------------------Total assets less current liabilities 36,617 17,518 Non-current liabilities Provision for bank guarantees (1,662) (171) ---------------------------------Total liabilities (2,356) (908) ---------------------------------Net assets 34,955 17,347 ---------------------------------Equity attributable to equity holders Ordinary share capital 8,610 3,995 Share premium 14,422 - Revaluation reserve - (15,287) Capital redemption reserve 250 250 Own shares held (1,908) - Retained earnings 13,581 28,389 ---------------------------------Total Equity 34,955 17,347 ---------------------------------Net asset value per Ordinary share (pence) 43.0 43.4(excluding treasury shares) --------------------------------------------------------------------------- * Comparative figures for the year ended 28 February 2005 have been restated inaccordance with IAS 10 in respect of dividends as disclosed in the notes to thisannouncement. The consolidated financial statements have been prepared under InternationalFinancial Reporting Standards ('IFRS'). Applicable accounting policies andtransition statements as required by IFRS 1: First time adoption, are includedin the notes to this announcement. Company Balance sheet (unaudited) as at 28 February 2006 --------------------------------------------------------------------------- Restated * 28 February 2006 28 February 2005 £'000 £'000---------------------------------------------------------------------------Fixed asset investments 30,969 16,403Investments in subsidiary undertakings 17,506 - --------------------------------- 48,475 16,403 Current assets Debtors 806 1,638Cash at bank 1,327 214 --------------------------------- 2,133 1,852 Total assets 50,608 18,255 Creditors: amounts falling due within one year (15,066) (737) ---------------------------------Total assets less current liabilities 35,542 17,518 Provision for liabilities and charges (587) (171) ---------------------------------Total liabilities (15,653) (908) ---------------------------------Net assets 34,955 17,347 ---------------------------------Capital and reserves Called up share capital 8,610 3,995 Share premium 14,422 - Revaluation reserve - (15,287) Capital redemption reserve 250 250 Own shares held (1,908) - Retained earnings 13,581 28,389 ---------------------------------Equity shareholders funds 34,955 17,347 ---------------------------------Net asset value per Ordinary share (pence) 43.0 43.4(excluding treasury shares) --------------------------------------------------------------------------- * Comparative figures for the year ended 28 February 2005 have been restated inaccordance with FRS 21 in respect of dividends as disclosed in the notes to thisannouncement. Consolidated Statement of Changes in Equity (unaudited) for the year ended 28 February 2006 --------------------------------------------------------------------------------------------------------------- Share Capital Own Share premium Revaluation redemption shares Retained capital account reserve reserve held earnings Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 28 February 2005 (restated) 3,995 - (15,287) 250 - 28,389 17,347Adjustment in respect of IAS 39 - - - - - (44) (44)Reclassification of revaluation reserve - - 15,287 - - (15,287) - ----------------------------------------------------------------------------------At 1 March 2005 (restated and adjusted) 3,995 - - 250 - 13,058 17,303Net profit for the year - - - - - 923 923 Costs of treasury shares repurchased - - - - (1,908) - (1,908)Shares issued in year 4,615 14,422 - - - - 19,037Dividends paid in year - - - - - (400) (400) ----------------------------------------------------------------------------------At 28 February 2006 8,610 14,422 - 250 (1,908) 13,581 34,955 ================================================================================== At 1 March 2004 (restated) 4,128 - (13,031) 117 32,752 23,966 Net profit for the year - - (5,216) - - (78) (5,294) Nominal value of shares repurchased for cancellation (133) - - 133 - - - Cost of shares repurchased for cancellation - - - - - (505) (505) Tax effect of transfer of losses to profit and loss account - - (433) - - 433 - Transfer of realised losses to profit and loss account - - 3,393 - - (3,393) - Dividends paid in year - - - - - (820) (820) ----------------------------------------------------------------------------------At 28 February 2005 (restated) 3,995 - (15,287) 250 - 28,389 17,347 ==================================================================================--------------------------------------------------------------------------------------------------------------- Consolidated Cashflow Statement (unaudited) for the year ended 28 February 2006 -------------------------------------------------------------------------------- Year ended Year ended 28 February 2006 28 February 2005 £'000 £'000--------------------------------------------------------------------------------Cash flows from operating activities Investment income received 1,087 1,262Deposit interest received 30 15Other income - 21Investment management fees paid (694) (691)Secretarial fees paid (91) (57)Other cash payments (1,324) (174) ---------------------------------Cash (expended by)/ generated from operations (992) 376 Tax recovered 90 - ---------------------------------Net cash (used in)/from operating activities (902) 376 Cash flows from investing activities Purchase of investments (2,169) (10,830)Sales of investments 6,349 11,201 ---------------------------------Net cash flows from investing activities 4,180 371 Cash flows from financing activities Equity dividends paid (400) (820)Cash acquired from subsidiaries at date of merger 3,791 -Repurchase of Ordinary shares (140) (366)Purchase of Ordinary shares for treasury (1,897) - ---------------------------------Net cash flows from/(used in) financing activities 1,354 (1,186) Increase/(decrease) in cash and cash equivalents 4,632 (439) Cash and cash equivalents at 28 February 2005 214 653 ---------------------------------Cash and cash equivalents at 28 February 2006 4,846 214-------------------------------------------------------------------------------- The consolidated financial statements have been prepared under InternationalFinancial Reporting Standards ('IFRS'). Applicable accounting policies andtransition statements as required by IFRS 1: First time adoption, are includedin the notes to this announcement. Explanation of material adjustments to the cash flow statement for the yearended 28 February 2006: Tax recovered of £90,000 is classified as operating cashflow under IFRS. This item was included within taxation under UK GAAP. Dividendspaid to Ordinary shareholders are classified as financing activities, whereasunder UK GAAP, they were included in the separate categories of equity dividendspaid. There are no other material differences between the cash flow presented underIFRS and the cash flow statement presented under UK GAAP. Transition statements (unaudited) The consolidated financial statements are the first to be prepared under IFRS.The Group has applied the exemption under IFRS 1 allowed on transition at 1March 2005, from restating the results previously reported, to comply with IAS39. The statement below shows the effect of IAS 10 on the comparatives for theprior and current year. -------------------------------------------------------------------------------------Reconciliation of consolidated equity as at 1 March 2004 Effect of IFRS Previous transition at 1 March Notes GAAP to IFRS 2004 £'000 £'000 £'000Non-current assets Investments 21,587 - 21,587 ------------------------------------Current assets Trade and other receivables 1,970 - 1,970Cash and cash equivalents 653 - 653 ------------------------------------ 2,623 - 2,623 ------------------------------------ Total assets 24,210 - 24,210 ------------------------------------Current liabilities Trade and other payables 1 (1,070) 826 (244) ------------------------------------Total assets less current liabilities 23,140 826 23,966 ------------------------------------Represented by: Share capital 4,128 - 4,128Revaluation reserve (13,031) - (13,031)Capital redemption reserve 117 - 117Profit and loss account 2 31,926 826 32,752 ------------------------------------Total equity 23,140 826 23,966 ------------------------------------ pence pence penceNet asset value per Ordinary share 56.1 2.0 58.1------------------------------------------------------------------------------------- Notes to the reconciliation of equity at 1 March 2004:1. Under previous UK GAAP dividends paid by the Company were recognised in theperiod in which net revenue to which those dividends related was accounted for.Under IFRS dividends are recognised when there is a contractual obligation forthe payment of dividend to the shareholders. Therefore, the creditor for thefinal dividend proposed in relation to the year ended 28 February 2004 has beenreversed, reducing creditors by £826,000. 2. Adjustment 1 above leads to an increase of £826,000 in retained earnings. Transition statements (unaudited) (continued) -------------------------------------------------------------------------------------Reconciliation of consolidated equity as at 28 February 2005 (end of last period presented under previous UK GAAP) Effect of IFRS Previous transition at 1 March Notes GAAP to IFRS 2005 £'000 £'000 £'000Non-current assets Investments 16,403 - 16,403 ------------------------------------Current assets Trade and other receivables 1,638 - 1,638Cash and cash equivalents 214 - 214 ------------------------------------ 1,852 - 1,852 ------------------------------------ Total assets 18,255 - 18,255 ------------------------------------Current liabilities Trade and other payables 1 (1,137) 400 (737) ------------------------------------Total assets less current liabilities 17,118 400 17,518 ------------------------------------Non-current liabilities Provision for bank guarantees (171) - (171) ------------------------------------Total liabilities (1,308) 400 (908) ------------------------------------Net assets 16,947 400 17,347 ------------------------------------Equity: Share capital 3,995 - 3,995Revaluation reserve (15,287) - (15,287)Capital redemption reserve 250 - 250Retained earnings 2 27,989 400 28,389 ------------------------------------Total equity 16,947 400 17,347 ------------------------------------ pence pence penceNet asset value per Ordinary share 42.4 1.0 43.4------------------------------------------------------------------------------------- Notes to the reconciliation of equity at 28 February 2005: 1. Under previous UK GAAP dividends paid by the Company were recognised in theperiod in which net revenue to which those dividends related was accounted for.Under IFRS dividends are recognised when there is a contractual obligation forthe payment of dividend to the shareholders. Therefore, the creditor for thefinal dividend proposed in relation to the year ended 28 February 2005 has beenremoved, reducing creditors by £400,000. 2. Adjustment 1 above leads to an increase of £400,000 in retained earnings. Notes to the announcement 1. Details about the Investment ManagerCrown Place VCT PLC is managed by Close Venture Management Limited. CloseVenture Management Limited is a subsidiary of Close Brothers Group plc and isauthorised and regulated by the Financial Services Authority. 2. Statutory accountsThe financial information set out in the announcement does not constitute theCompany's statutory accounts for the years ended 28 February 2006 and 28February 2005, as defined in Section 240 of the Companies Act 1985. Statutory accounts for the year ended 28 February 2005 have been delivered tothe Registrar of Companies. The Auditors have reported on those accounts; theirreport was unqualified and did not contain statements under section 237(2) or(3) of the Companies Act 1985. This financial information has been restated inorder to comply with the new Financial Reporting Standards as detailed below. Statutory accounts for the year ended 28 February 2006 have not yet beenapproved, audited or filed with the Registrar of Companies. Whilst financial information included in this preliminary announcement has beencomputed in accordance with International Financial Reporting Standards('IFRS'), this announcement does not itself contain sufficient information tocomply with IFRSs. The Company expects to publish full financial statements thatcomply with IFRSs within the next two weeks. 3. Changes in accounting policiesThis financial information is prepared on the basis of the accounting policiesin the latest statutory accounts with the exception of changes as detailed inthe transition statements above and in the notes below. Group accounting policiesBasis of accountingThe consolidated financial statements have been prepared in accordance withInternational Financial Reporting Standards ('IFRS'). The disclosures requiredby IFRS 1 concerning the transition from UK GAAP to IFRS are given in theannouncement above. In the case of IAS 32 and 39, the Group applied theexemption under IFRS 1 on transition at 1 March 2005 from restating comparativefigures. The consolidated financial statements have also been prepared in accordance withIFRSs adopted for use in the European Union and therefore comply with theArticles of EU IAS Regulation and with the Statement of Recommended Practice:Financial Statements of Investment Trust Companies ('SORP') issued by theAssociation of Investment Trust Companies ('AITC') in January 2003 and revisedin December 2005. Basis of consolidationThe consolidated financial statements incorporate the financial statements ofthe Company for the year ended 28 February 2006 and the entities controlled bythe Company (its subsidiaries) from the date of merger. Where necessary, adjustments are made to the financial statements of thesubsidiaries to bring the accounting policies into line with those used by theGroup. All intra-group transactions and balances are eliminated on consolidation. As permitted by Section 230 of the Companies Act 1985, the Company has notpresented its own profit and loss account. The amount of the Company's profitfor the financial year dealt within the accounts for the Group is £1,225,000(2005: £472,000). Segmental reportingThe Directors are of the opinion that the Group is engaged in a single segmentof business, being investment business. The Group invests in smaller companiesprincipally based in the UK. Business combinationsThe acquisition of subsidiaries is accounted for using the purchase method. Thecost of the acquisition is measured at the aggregate of the fair values, at thedate of exchange, of assets given, liabilities incurred or assumed and equityinstruments issued by the Group in exchange for control of the subsidiaries,plus any costs directly attributable to the business combination. Thesubsidiary's identifiable assets, liabilities and contingent liabilities thatmeet the conditions for recognition under IFRS 3 are recognised at their fairvalue at the acquisition date. InvestmentsIn accordance with IAS 39 "Financial Instruments: Recognition and Measurement",equity investments are designated as fair value through profit or loss("FVTPL"). Investments listed on recognised exchanges are valued at the closing bid pricesat the end of the accounting period. Unquoted investments' fair value is determined by the Directors in accordancewith the International Private Equity and Venture Capital Valuation Guidelines.Fair value movements on equity investments and gains and losses arising ondisposal of investments are reflected in the capital column of the incomestatement in accordance with the AITC SORP. Unquoted loan stock is classified as loans and receivables in accordance withIAS 39 and carried at amortised cost using the Effective Interest Rate ("EIR")method. Movements in the amortised cost relating to interest income arereflected in the revenue column of the income statement and movements in respectof capital provisions are reflected in the capital column of the incomestatement. Loan stock accrued interest is recognised in the balance sheet aspart of the carrying value of the loans and receivables at the end of eachreporting period. Investments are recognised as financial assets on legal completion of theinvestment contract and are de-recognised on legal completion of the sale of aninvestment. It is not the Group's policy to exercise control or significant influence overinvestee companies. Therefore in accordance with the exemptions under IAS 27those undertakings in which the Company holds more than 20% of the equity arenot regarded as associated undertakings. DividendsIn accordance with IAS 10, "Events after the balance sheet date", interimdividends are not accounted for until paid and final dividends are accounted forwhen approved by shareholders at an Annual General Meeting. Issue costsIssue costs associated with the allotment of share capital have been deductedfrom the share premium account in accordance with IAS 32. Company accounting policies Change in accounting policiesWith effect from 1 March 2005, the Company adopted the new Financial ReportingStandards ("FRS") 21-26, that have been issued by the Accounting Standards Boardas part of the convergence process between United Kingdom Generally AcceptedAccounting Practice and International Financial Reporting Standards ("IFRS"). Inthe case of FRS 25 and 26, the Company applied the exemption on transition at 1March 2005 from restating comparative figures. InvestmentsIn accordance with FRS 26 "Financial Instruments Measurement", equityinvestments are designated as fair value through profit or loss ("FVTPL").Unquoted investments' fair value is determined by the Directors in accordancewith the International Private Equity and Venture Capital Valuation Guidelines. Unquoted loan stock is classified as loans and receivables in accordance withFRS 26 and carried at amortised cost using the Effective Interest Rate ("EIR")method. Movements in the amortised cost relating to interest income arereflected in the revenue column of the income statement and movements in respectof capital provisions are reflected in the capital column of the incomestatement. Loan stock accrued interest is recognised in the Balance Sheet aspart of the carrying value of the loans and receivables at the end of eachreporting period. Investments listed on recognised exchanges are valued at the closing bid pricesat the end of the accounting period. Investments are recognised as financial assets on legal completion of theinvestment contract and are de-recognised on legal completion of the sale of aninvestment. It is not the Company's policy to exercise control or significant influence overinvestee companies. Therefore in accordance with the exemptions under FRS 9,those undertakings in which the Company holds more than 20% of the equity arenot regarded as associated undertakings. DividendsIn accordance with FRS 21, "Events after the balance sheet date", interimdividends are not accounted for until paid and final dividends are accounted forwhen approved by shareholders at an Annual General Meeting. Comparative figureshave been restated as detailed in the transition statements above. Issue costsIssue costs associated with the allotment of share capital have been deductedfrom the share premium account in accordance with FRS 25. This information is provided by RNS The company news service from the London Stock Exchange