Last checked at 3 Jun 2011 07:00
For immediate release: 03 June 2011
Kingswalk Investments Limited Audited results for the year ended 31 December 2010
Kingswalk Investments Limited (AIM: KWI), the strategic investment company, today announces its audited results for the year ended 31 December 2010.
DIRECTORS' REPORT
Introduction
We are pleased to present the results of Kingswalk Investments Limited ("Kingswalk" or the "Company") to shareholders for the year ended 31 December 2010.
BackgroundFollowing the Company's reorganisation in 2009, 2010 was the year in which theplatform was created to allow the Company to take in new funds for investmentand carry out its investment strategy as approved by its shareholders at the2010 annual general meeting ("2010 AGM"). During the period under review, theCompany made one investment in a Dutch security equipment installation andmaintenance firm operating in Rotterdam and, in January 2011, the Companysuccessfully raised £0.8 million in new equity funds and made its secondmaterial investment, in a UK-based management and corporate consultancy. TheCompany's management is now actively reviewing potential investmentopportunities and expects to be able to make significant investments during
therest of 2011.Fundraising and investmentsIn January 2011, the Company raised £800,000 before expenses through the issueof 40,000,000 new ordinary shares of 1 pence each in the capital of the Company("Subscription Shares") via a subscription at 2 pence per Subscription Share toexisting and new shareholders. In line with the Company's broad investmentstrategy, the directors intend to invest the net proceeds in private and quotedcompanies across a wide range of sectors, including financial services, supportservices and resources. The expected investment size is likely to be between £50,000 and £250,000 and the Company anticipates undertaking a more activeinvestment style, with the aim of recycling funds invested at the earliestopportunity.At the year end, the Company had two investments, a legacy holding in an AIMquoted company and the new 49.9% investment in Vermeesch Installaties BV("Vermeesch"), the Rotterdam-based security equipment installation andmaintenance firm which was completed in September. In the year ended 31December 2010, Vermeesch recorded turnover of €860,000 (2009: €932,000). Theboard of Kingswalk ("Board") intend to assist Vermeesch to grow and potentiallyuse it as a consolidation vehicle in its highly fragmented sector.In January 2011, the Company acquired the entire issued share capital ofCombined Management Services Limited ("CMS"). CMS is a UK based management andcorporate consultancy providing corporate solutions to private and quotedcompanies. Set up in 2005, CMS generated turnover of more than £500,000 in theyear ended 31 December 2010 and profits of approximately £10,000 in the sameperiod. The Board intends to provide growth capital to CMS to allow it to takeon additional high quality professionals, including additional corporatelawyers, corporate financiers and qualifed accountants to satisfy the strongdemand that its offering is generating. A key part of Kingswalk's strategy ofinvesting in CMS is to provide access to investment opportunities in small capand growth companies for the Company. The Company is pleased to report thattrading in CMS during the first four months of 2011 has been strong, with anumber of new clients and corporate transaction mandates secured.
Financial Review
The Company's reported loss for the year was reduced significantly to £141,887from £259,916 the previous year. Administration costs for 2010 were reduced byalmost 25% to £149,965 (2009: £195,639) and the net loss on the carrying valueof the quoted investment was £3,382 (2009: £64,277).The value of net assets at the year end improved to £134,231 (2009: £76,118),primarily as a result of the investment in Vermeesch. At the year end, theCompany had cash balances of £681 (2009: £26,816) and £25,000 debt (2009: £0).The fundraising carried out in January 2011 allowed the Company to repay allcreditors and debts post the year end.
During the year, the Company issued 10,666,666 new ordinary shares of 1 pence each ("Ordinary Shares") to end the year with 53,173,673 Ordinary Shares in issue (2009: 42,505,007). 4,666,666 of these Ordinary Shares were issued as consideration for the investment in Vermeesch and 6,000,000 Ordinary Shares were issued to repay loans taken out during 2010.
Investment Policy
The Company's investment policy is the policy that was approved by itsshareholders at the 2010 AGM. This policy allows the Company to invest in abroad range of listed and unlisted businesses. The Company's investment policyallows the Board to evaluate potential investments from a wide variety ofindustry sectors and the Company will seek investments in sectors where thereis potential for growth. This is likely to include sectors such as financialservices, support services, resources and property, amongst others, where theDirectors believe significant value resides. The Company will primarily focuson European and US-based businesses but will also consider investments in othergeographical areas if appropriate. Over the last 12 months, the Company'smanagement and advisers have appraised a number of companies in detail with aview to making investments and have undertaken extensive due diligenceexercises in respect of a number of these. The Company made one new investmentin September 2010 and another in January 2011. Both investee companies aretrading in line with management's expectations.The Company does not seek to limit the size of the investment or the size ofthe entities in which it invests and does not limit the percentage ownershipthat it may hold in any one company at any time. Accordingly, the Company'sinvestment policy permits the Company to make investments of up to, andincluding, 100% of businesses.The Company will not seek to have a fixed number of investments or seek todiversify the investments over particular sectors or particular indexes,however it is envisaged that the total number of investments at any given timewill not exceed 30 investments. The Company will instead generally focus ondiversifying the relative risks of investments. The Company does not intend atthis stage to gear its investments but may consider doing so in the future ifsuitable funding arises.The Company will generally be a passive investor in the entities in which itinvests but if the Board or the Company's consultants are able to add value tothe investee entity then the Company may take a more active stance. TheCompany's investment decisions will be based upon research prepared andpresented to the Board by its appointed advisory panel of research consultantsand advisers.Annual General Meeting
The Company's Annual General Meeting ("AGM") is be held at its registered office, being Roseneath, The Grange, St Peter Port, Guernsey, GY1 3SJ on 29 June 2011 at 12:00 noon. The notice of AGM, together with a form of proxy for use at the AGM has today been sent to shareholders.
Outlook
Overall trading conditions remain challenging across the wider economy andisolated macro-level events understandably impact on investment decisions.Notwithstanding this, the Directors believe that now is the right time to beinvesting in small growth companies that need access to investment which is notbeing provided by the lending banks or institutional investors. We're pleasedwith the encouraging trading reported in CMS and this investment is expected toprovide the Company with significant numbers of investment opportunities. Withthe continued support of the Company's shareholders, the Directors intend tomake further investments during the course of 2011 to take advantage of thecurrent stage of the economic cycle.
INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2010
For the year ended For the year ended 31 December 2010 31 December 2009 Note Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ LOSSES ON INVESTMENTS Net losses on investmentsat fair value through profit and loss - (3,382) (3,382) - (64,277) (64,277) _______ _______ _________ ________ _________ ________ - (3,382) (3,382) - (64,277) (64,277) _______ _______ _________ ________ _________ ________ INCOME 1(b) Management charge 6,460 - 6,460 - - -Loan waiver 5,000 - 5,000 - - - _______ ______ _________ ________ _________ _______ 11,460 - 11,460 - - - _______ ______ _________ ________ _________ _______ EXPENDITURE 1(e) Directors' fees 19,787 - 19,787 4,226 - 4,226Administration fees 45,191 - 45,191 75,089 - 75,089Professional fees 46,661 - 46,661 48,774 - 48,774Consultancy fees - 20,547 20,547 - 44,998 44,998Audit fee 8,000 - 8,000 13,370 - 13,370Interest expense 1,229 - 1,229 3,333 - 3,333Regulatory andregistration fees 8,550 - 8,550 5,849 - 5,849 _______ ______ _______ _______ ________ _______ 129,418 20,547 149,965 150,641 44,998 195,639 ________ ______ _______ _______ ________ _______ LOSS ON ORDINARY ACTIVITIES FOR THE FINANCIAL YEAR (117,958) (23,929) (141,887) (150,641) (109,275) (259,916) Loss per share: - basic (pence per share) 2 (0.26) (0.05) (0.31) (0.64) (0.46) (1.10)
All revenue and capital items in the above statement derive from continuing operations.
No operations were acquired or discontinued during the year.
The Company had no recognised gains or losses other than those shown in the Income Statement.
BALANCE SHEET 31 DECEMBER 2010
Note 31 December 2010 31 December 2009 £ £ £ £ FIXED ASSETS Investments at fair value through profit and loss 226,181
86,962
CURRENT ASSETS Other debtors and prepayments 7,735 1,725 Cash and cash equivalents 681 26,816 _____ ______ 8,416 28,541 CREDITORS - AMOUNTS FALLING DUE WITHIN ONE YEAR Loans payable (25,000) - Other creditors and accruals 4 (75,366) (39,385)
(100,366) (39,385) NET CURRENT LIABILITIES (91,950) (10,844) TOTAL ASSETS LESS CURRENT LIABILITIES 134,231 76,118 CAPITAL AND RESERVES CALLED UP SHARE CAPITAL 6 531,717 425,050 SHARE PREMIUM ACCOUNT 4,348,205 4,254,872 RESERVES (4,745,691) (4,603,804) EQUITY SHAREHOLDERS' FUNDS 134,231 76,118 Net asset value per share 3 (pence per share) 0.25 0.18
CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2010
For the year ended For the year ended Notes 31 December 2010 31 December 2009 Net cash outflow from operating activities 5(a) (113,534) (251,742) Capital expenditure and financial investment 5(b) (2,601) 100,000 ________ ________ Cash outflow before financing (116,135) (151,742) Financing 5(c) 90,000 177,678 (Decrease) / Increase in cash for the year 5(d) (26,135) 25,936
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Called up Share Share Premium Reserves Capital Account Revenue Capital Total £ £ £ £ £ Balance at 1 January 2009 132,372 4,254,872 (734,062) (3,609,826) (4,343,888) Net loss for the year - - (150,641) (109,275) (259,916)
Issue of shares in the year 292,678 - - -
- _______ ________ _______ ________ ________ Balance at 1 January 2010 425,050 4,254,872 (884,703) (3,719,101) (4,603,804) Net loss for the year - - (117,958) (23,929) (141,887)
Issue of shares in the year 106,667 93,333 - -
- _______ ________ ________ ________ _________
Balance at 31 December 2010 531,717 4,348,205 (1,002,661) (3,743,030) (4,745,691)
Included in the revenue reserve carried forward is £33,680 in relation to share options.
Notes to the Financial Statements 31 December 2010
1 ACCOUNTING POLICIES
(a) CONVENTION
The financial statements have been prepared under the historical costconvention, modified to include the revaluation of investments and inaccordance with applicable United Kingdom accounting standards and thedirectors have chosen to adopt the Statement of Recommended Practice "FinancialStatements of Investment Trust Companies and Venture Capital Trusts" issued byThe Association of Investment Trust Companies in January 2009. The principalaccounting policies which the Directors have adopted within that convention
areset out below.(b) INCOMEDividends receivable from equity investments are recognised on the ex-dividenddate. Dividends receivable from equity investments where no ex-dividend date isquoted are recognised when the Company's right to receive payment isestablished. Interest receivable on cash deposits is accounted for using theeffective interest rate method.
(c) FOREIGN CURRENCY
The Directors have considered and will continue to consider the primaryeconomic environment of the Company and have considered and will continue toconsider the currency in which the original finance was raised and ultimatelywhat currency would be returned to investors on a break up basis. Thedirectors have also considered the currency to which the underlying investmentsare exposed. On balance, the directors believe sterling best represents thefunctional currency of the Company. Sterling is also the presentationalcurrency.Assets and liabilities denominated in currencies other than sterling (whererelevant) have been translated into sterling at the rates of exchange ruling atthe balance sheet date. Transactions were made during the period under reviewin Euros as well as Sterling and those transactions in Euros have beentranslated at the rates of exchange ruling at the date of each transaction.
(d) FINANCIAL INSTRUMENTS
The Company's financial instruments fall into the categories discussed belowwith the allocation depending to an extent on the purpose for which theinstrument was acquired. Unless otherwise indicated, the carrying amounts ofthe Company's financial instruments are a reasonable approximation of theirfair values.
(i) Investments held at fair value through profit and loss
Classification
All investments are classified as "fair value through profit and loss". These financial assets are designated by the Board of Directors at fair value through profit or loss at inception.
Financial assets designated at fair value through profit and loss at inceptionare those that are managed and their performance evaluated on a fair valuebasis in accordance with the Company's documented investment strategy. TheCompany's policy is for the Board of Directors to evaluate the information about these financial assets on a fair value basis together with other relatedfinancial information.Recognition
Purchases and sales of investments are recognised on the trade date or the dateon which the Company commits to purchase or sell the investment. Investmentsare derecognised when the rights to receive cash flows from the investmentshave expired or the Company has transferred substantially all risks and rewardsof ownership.Measurement
Financial assets at fair value through profit and loss are initially recognised at fair value. Transaction costs are expensed in the income statement. Subsequent to initial recognition, all financial assets at fair value through
profit or loss are measured at fair value. Gains and losses arising from changes in the fair value of the 'financial assets at fair value through profitor loss' category are presented in the Income Statement in the period in whichthey arise.Fair value estimation
Quoted investments are valued at bid price.
Unquoted investments are valued by the Board according to the valuationprinciples of the European Private Equity and Venture Capital Association asset out in the International Private Equity and Venture Capital ValuationGuidelines (Published June 2005, amended October 2006). As at 31 December 2010,the Company's unquoted investment was valued at £165,000 (2009: £nil), this isat cost which the directors consider to be the Fair Value at 31 December 2010.
Because of the inherent uncertainty associated with the valuation of such investments and the absence of a liquid market, these fair values may differ from the realisable values, and differences could be material.
Realised gains or losses on the disposal of investments are taken to the capital reserve - realised. Unrealised gains or losses on revaluation of investments are taken to the capital reserve - unrealised.
(ii) Receivables
These assets are non-derivative financial assets with fixed or determinablepayments that are not quoted in an active market. They consist of loansreceivable, other debtors and cash and cash equivalents, but also incorporateother types of contractual monetary assets. They are initially recognised atfair value plus transaction costs that are directly attributable to theacquisition or issue and subsequently carried at amortised cost using theeffective interest rate method, less provision for impairment. The effect ofdiscounting on these financial instruments is not considered to be material.Impairment provisions are recognised when there is objective evidence (such assignificant financial difficulties on the part of the counterparty or defaultor significant delay in payment) that the Company will be unable to collect allof the amounts due under the terms receivable, the amount of such a provisionbeing the difference between the net carrying amount and the present value ofthe future expected cash flows associated with the impaired receivable.
(iii) Financial liabilities measured at amortised cost
These include;
other creditors and accruals which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method; and
loans payable which are initially recognised at fair value net of attributabletransaction costs incurred. Such interest bearing liabilities are subsequentlymeasured at amortised cost using the effective interest rate method.Other creditors and accruals primarily comprise amounts outstanding for ongoingcosts. The Company has a financial risk management procedure in place to ensureall payables are paid within the credit timeframe.
(iv) Share capital
Financial instruments issued by the Company are treated as equity only to the extent that they do not meet the definition of a financial liability.
(v) Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
(vi) Effective interest rate method
The effective interest method is a method of calculating the amortised cost ofa financial asset or financial liability and of allocating the interest incomeor interest expense over the relevant period. The effective interest rate isthe rate that exactly discounts estimated future cash payments or receiptsthroughout the expected life of the financial instrument, or, whenappropriate, a shorter period, to the net carrying amount of the financialasset or financial liability. When calculating the effective interest rate,the Company estimates cash flows considering all contractual terms of thefinancial instruments but does not consider future credit losses. The calculation includes all fees paid or received between parties to the contractthat are an integral part of the effective interest rate, including transactioncosts and all other premiums or discounts.
(e) EXPENDITURE
All expenses are accounted for on an accruals basis. Expenses that are directlyattributable to the management of investments are allocated directly to capitalin the Income Statement. With the Directors' long term target for returns oninvestments being entirely capital gain there is no requirement to apportionthese expenses between revenue and capital.
(f) SHARE BASED PAYMENTS
The Company makes equity-settled share-based payments to certain consultants.Share based payments are measured at fair value as at the date of grant. Thefair value determined at grant date is expensed on a straight line basis overthe period the service was received. Further details of how the fair value ofshare based payments is determined are shown in note 13.
(g) GOING CONCERN
The directors have reviewed the current budgets and cash flow projections for a period of more than 12 months from the date of this report and, taking into account the Company's current cash balances and available facilities, the directors have prepared the financial statements on the going concern basis.
(h) FINANCE COSTS
Finance costs incurred by the Company are allocated as either a revenue or capital expense. In the year under review, all interest costs were incurred in relation to the ongoing costs of the Company and not in relation to the investments held by the Company.
2 LOSS PER SHARE
The calculation of basic loss per share is based on the net loss on ordinaryactivities after tax for the year and on 45,018,249 shares (2009: 23,730,924)being the weighted average number of shares in issue during the year.FRS 22: "Earnings Per Share" defines dilution as a reduction in earnings pershare or as an increase in loss per share. When calculating the diluted lossper share for the year the loss decreased. Accordingly the diluted loss pershare is not disclosed as per FRS 22. The Company has 800,000 share options and1,500,000 warrants over ordinary shares in issue which could potentially dilutebasic earnings per share in the future.
3 NET ASSET VALUE PER SHARE
The calculation of net asset value per share is based on the net assets of £ 134,231 (2009: £76,118) and on the ordinary shares in issue of 53,171,673 (2009: 42,505,007) at the balance sheet date.
4 OTHER CREDITORS AND ACCRUALS
31 December 2010 31 December 2009 £ £ Audit fees 10,000 12,000Consultancy fees 13,333 6,604Professional fees 6,625 -Nomad fees 3,100 8,250Registrar fees 1,525 4,984Administration fees 38,933 7,522Sundry creditors 1,850 22 ______ ______ 75,366 39,385
5 NOTES ON THE CASH FLOW STATEMENT
(a) Reconciliation of revenue loss to net cash outflow from operating ativities 31 December 2010 31 December 2009 £ £ Net revenue loss on ordinary activities for the year (117,958) (150,641)Loan Waiver (5,000) Expenses charged to capital (20,547) (44,998)(Increase) / decrease in debtors (6,010)
(1,725)
Increase / (decrease) in creditors 35,981
(54,378)
_______ _______
Net cash outflow from operating activities (113,534) (251,742)
(b) Capital expenditure and financial investment
31 December 2010 31 December 2009 £ £ Receipts from sale of investments 22,399 100,000Acquisition of investment (25,000) - ______ _______Net cash flow for capital expenditure and financial investment (2,601) 100,000 (c) Financing 31 December 2010 31 December 2009 £ £Loans payable repaid - (115,000)New loan received 30,000 -Issue of equity share capital 60,000
292,678
______
_______
Net cash inflow from financing 90,000
177,678
(d) Reconciliation of net cash flow to movement in net funds
31 December 2010 31 December 2009 £ £ (Decrease) / Increase in cash for the year (26,135)
25,936
Cash inflow from (increase) / decrease in debt finance (25,000)
115,000
_______ _______Change in net debt resulting from cash flows (51,135)
140,936
net (debt) / funds at 1 January 2010 26,816
(114,120)
_______
_______
Net funds / (debt) at 31 December 2010 (24,319) 26,816 Loan (e) Analysis of net debt At 1 January Cashflow waiver At 31 December 2010 2010 £ £ £ £ Cash and cash equivalents 26,816 (26,135) - 681 Loan payable - (30,000) 5,000 (25,000) ______ _______ ______ _______ 26,816 (56,135) 5,000 (24,319)
6 CALLED UP SHARE CAPITAL
31 December 2010 31 December 2009 £
£
Authorised 200,000,000 ordinary shares of £0.01 each 2,000,000 500,000 Allotted and fully paid 53,171,673 ordinary shares of £0.01 each (2009: 42,505,007) 531,717 425,050 On 29 September 2010, the Company issued and allotted 10,666,666 new ordinaryshares of 1 pence each ("Ordinary Shares"). 6,000,000 of the new OrdinaryShares were issued fully paid at par in settlement of £60,000 of convertibleloans owed by the Company and 4,666,666 of the new Ordinary Shares were issuedfully paid at 3p per Ordinary Share as consideration for the investment inVermeesch.
On 24 January 2011, the Company issued and allotted 40,000,000 new Ordinary Shares fully paid at 2p per Ordinary Shares to raise new funds for the Company totalling £800,000.
The Company's Report and Accounts for the year ended 31 December 2010 will be posted to shareholders today and the full report is available to view and download from the Company's website at www.kingswalkinvestments.com.
For further information please contact:
Kingswalk Investments Limited Paul Everitt
+44 (0)14 8173 2888
Daniel Stewart & Company Plc Oliver Rigby +44 (0)20 7776 6550GTH Communications
Toby Hall / Christian Pickel
+44 (0)20 3103 3900
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