TIDMCRV
RNS Number : 8446H
Craven House Capital PLC
29 November 2022
Craven House Capital
Annual Results for year ended 31 May 2022
Craven House Capital PLC
29 November 2022
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF REGULATION (EU) 596/2014 AS IT FORMS PART OF DOMESTIC LAW IN THE
UNITED KINGDOM BY VIRTUE OF THE EU (WITHDRAWAL) ACT 2018.
Craven House Capital plc
("Craven House" or the "Company")
Annual Results for year ended 31 May 2022
CRAVEN HOUSE CAPITAL PLC
CHAIRMAN'S STATEMENT
FOR THE YEARED 31 MAY 2022
Dear Shareholder
I am pleased to provide an introduction to the annual report and
financial statements for Craven House Capital Plc for the year ending
31 May 2022.
Valuations of the four portfolio companies remained unchanged during
the year. Positive progress was demonstrated by each entity during
the year as is detailed further in the Investment Manager's report
below.
Mark Pajak
Acting Chairman
CRAVEN HOUSE CAPITAL PLC
INVESTMENT MANAGER'S REPORT
FOR THE YEARED 31 MAY 2022
Statement by the Investment Manager
The Company's investment portfolio comprises minority
shareholdings in four Swedish-managed businesses operating in the
eCommerce and pharmaceutical sector.
The Company's investments are held at fair value in accordance
with the IPEVC guidelines. We have used the prior-year valuations
as a starting point for estimation of fair value and have applied
adequate consideration to current facts and circumstances in
reviewing the respective valuations. A summary of the Company's
investments is as follows with further information provided in
notes 8 and 14 below;
Investment Value at 31 Value at 31
May 2022 May 2021
Comprising:
Shares in Garimon Limited $1,600,000 $1,600,000
Shares in Rosedog Limited $1,600,000 $1,600,000
Shares in Honeydog Limited $1,600,000 $1,600,000
Shares in Bio Vitos Medical Limited $1,600,000 $1,600,000
Each investee companies demonstrated positive progress during
the financial year, however remain at 'pre-revenue' stage of
business development. Updated information on each entity is
below.
Garimon Limited - 29.9% shareholding
As at end May 2022 Garimon's assets comprised ownership of two
domains:
-- www.magazinos.com: a platform for digital magazine
distribution, with over 10,000 magazines freely available for
readers.
Severe disruption has been experienced in recent months as the
domain's servers were hosted in the Ukraine. This has set back
plans for fundraising originally planned for early 2022. Management
have taken the decision to re-locate the servers and will relaunch
the site by the end of 2022. It is anticipated that advertising
revenue will begin to be generated in early 2023. The domain will
continue to be run with very low overheads.
-- www.onebas.com - is an optimised search engine providing a
portal to music content freely circulating online. Considerable
development and investment has been made to develop this website
during 2022.
As was recently announced and is detailed further in note 17
below, the onebas.com domain was transferred out of Garimon post
year-end and into a new entity (Stormfjord Ltd). Stormfjord Ltd has
subsequently undertaken two rounds of arms-length financing, (one
for $20,000 and the other for $500,000) both of these placing a
valuation of $5,000,000 on the domain. The proceeds of this
financing have been used to upgrade the functionality and capacity
of the websites as well as launch a PR / advertising campaign
across key target markets. This PR campaign has so far launched in
Norway, Denmark and Italy with very encouraging results.
Further campaigns are schedule for the UK and Germany in
November / December 2022 and will continue into new geographies
through the course of 2023. Management's goal is to continue to
drive daily user grow which will lead to revenue generation though
advertising revenue and also via the direct sale of content.
Bio Vitos Medical Limited - 24.5% shareholding
Bio Vitos has two principal assets;
As previously disclosed, during the period Bio Vitos acquired
the licence to market a patented heart drug 'Succifer' (also
marketed as 'Inofer'), from Double Bond Pharmaceutical AB. The drug
has been demonstrated to improve iron uptake in patients with
chronic heart conditions.
Bio Vitos is also the owner of a number of dietary / Omega-3
supplement products, marketed under the 'Ocean Skin Lab' brand.
Management are in ongoing negotiations with third parties with a
view to finalising sales / distribution agreements for both of
these products.
Rosedog Limited - 29.9% shareholder
Rosedog is the owner of TV Zinos (www.tvzinos.com), a website
which offers a number of free-to-view television channels. TV Zinos
has organically grown its new-use base to over c.20,000 unique
users per month. It is therefore anticipated that advertising
revenue will begin to be generated in 2023. The domain will
continue to be run with very low overheads.
Honeydog Ltd - 29.9% shareholder
During the period Honeydog became the 25% owner of the entity
which owns the licence to manufacture and distribute the
chemotherapy drug, SI-053 / 'Temodex' which is used in the
treatment of brain tumours, offering significant increases in
survival rates. The drug is approaching the end of a period of
clinical trials, which will mark the last stage of approval
required prior to sales and marketing.
Desmond Holdings Ltd
Investment Manager to Craven House Capital Plc
CRAVEN HOUSE CAPITAL PLC
STRATEGIC REPORT
FOR THE YEARED 31 MAY 2022
The directors present the Strategic Report of Craven House
Capital plc for the year ended 31 May 2022.
Principal activity
The Investing Policy is primarily to invest in or acquire a
portfolio of companies, partnerships, joint ventures, businesses or
other assets participating in the e-Commerce sector. The
investments or acquisitions may be funded wholly by cash, the issue
of new shares or debt, or a mix thereof, as the Board deems
appropriate. The Company's equity interest in a proposed investment
may range from a minority position to 100% ownership; the proposed
investments may be either quoted or unquoted, although will likely
be unquoted in the majority of cases. The Company will specifically
target investments which the Board believes offer high growth
opportunities or steady cash flows and where the exit will be a
liquidity event, such as a trade sale or IPO.
Review of the Business in the year
A comprehensive review of the Company's performance and business
activities is included in the Investment Manager's Report above.
The Company's portfolio comprises minority stakes in four
e-commerce businesses which were acquired in March 2020. The status
of the underlying investments is disclosed in further detail in
notes 8 and 14 below. The only material movement in the Company's
balance sheet during the year was the increase in amounts owing to
Craven Industrial Holdings Plc in order to satisfy working capital
requirements.
Position of the Company's business at the end of the year
Sufficient cash remains available to the Company from its
subsidiaries and via external loan facilities to ensure it is able
to meet its liabilities as they fall due. Other than directors, the
Company has no employees and the majority of overhead expenditure
continues to comprise regulatory, accounting and audit costs.
Principal risks and uncertainties facing the business
The principal risks to the business include the ability of the
Company to successfully execute its Investing Policy and the early
/ pre-revenue stage of the development of the current portfolio of
investments. Description of these risks are further detailed in
note 14 below.
Corporate governance
The directors place a high degree of importance on ensuring that
high standards of Corporate Governance are maintained and have
therefore chosen to apply the framework as provided by the Quoted
Companies Alliance Corporate Governance Code for small and medium
size companies (2018) (the 'QCA Code').
Section 172(1) statement
The directors have acted in a way that they have considered, in
good faith, to be most likely to promote the success of Craven
House Capital Plc for the benefit of its members, and in doing so
had regard, amongst other matters to:
-- the likely consequences of any decision in the long-term;
-- the Company has no employees;
-- the need to foster the Company's business relationships with
suppliers, customers and others;
-- the impact of the Company's operations on the community and the environment;
-- the desirability of the Company's maintaining a reputation
for high standards of business conduct;
-- and to act fairly between members of the Company
The directors also took into account the views and interests of
a wider set of stakeholders, the Government and non-government
organisations.
Section 172(1) statement - continued
Considering the broad range of interests in the Company is an
important part of the way the Board makes decisions; however, in
balancing those different perspectives, it won't always be possible
to deliver everyone's desired outcome.
How does the Board engage with stakeholders?
The Board engages with its stakeholders in a number of
pre-planned ways, these include; review meetings with our brokers
and advisors, shareholders have the ability to email the Company
directly and the Board will reply to questions within the
regulatory limits, the Company issues both RNS Reach and RNS
communications on a regular basis and the Company's web site is
continuously updated to inform our stakeholders. The Company's
annual report is also an opportunity to update our
stakeholders.
The Board has also adopted a code of conduct and follows
specific guidance on all governance requirements which are
regularly reviewed with its advisors to ensure full compliance.
The Board considers and discusses information from across the
organisation to help it understand the impact of its operations,
and the interests and views of our key stakeholders.
As a result of these activities, the Board has an overview of
engagement with stakeholders, and other relevant factors, which
enables the directors to comply with their legal duty under section
172 of the Companies Act 2006.
Due to the nature of the Company, no decisions were made by the
directors during the reporting period which required them to have
regard to the matters set out in section 172 of the Companies Act
2006.
Mr M J Pajak - Director of behalf of the Board
CRAVEN HOUSE CAPITAL PLC
REPORT OF THE DIRECTORS
FOR THE YEARED 31 MAY 2022
The directors present their annual report with the audited
financial statements of the Company for the year ended 31 May
2022.
DIVIDS
No dividends have been declared for the year ended 31 May
2022.
EVENTS SINCE THE OF THE YEAR
Information relating to events since the end of the year is
given in the note 17 to the financial statements.
DIRECTORS
The directors who held office during the year were:
Mr M J Pajak;
Mr B S Bindra; and
Mr C P Morrison.
Directors' remuneration and details of service contracts are
given in note 3 to the financial statements.
POLITICAL AND CHARITABLE CONTRIBUTIONS
No charitable or political donations were made during the
year.
FINANCIAL RISK MANAGEMENT POLICIES
Information on the use of financial instruments by the Company
and its management of financial risk is disclosed in note 14 to the
financial statements.
FUTURE DEVELOPMENTS
In the coming year the Company will continue to execute its
investment strategy. Details of post year end transactions are
disclosed in note 17.
SIGNIFICANT SHAREHOLDERS
Shareholders with holdings of more than 3% of the Company as of
the date of this report are as follows;
Jim Nominees Ltd - 7.9%
Vidacos Nominees Ltd - 16.9%
Interactive Brokers LLC - 11.7%
WB Nominees Ltd - 22.8%
HSBC Global Custody Nominee (UK) Ltd - 8.4%
DIRECTOR SHAREHOLDINGS
Shareholdings in the Company by directors as of the date of this
report are as follows;
Mr M J Pajak indirect holdings (via Desmond Holdings Ltd) -
272,705 ordinary shares of $1.00
Mr B S Bindra - 14,440 ordinary shares of $1.00
Mr C P Morrison - 7,356 ordinary shares of $1.00
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have elected to prepare the financial statements in accordance with
International Financial Reporting Standards, UK adopted
international standards and applicable law. Under company law the
directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of
affairs of the Company, and of the profit or loss for that period.
In preparing these financial statements, the directors are required
to:
- select suitable accounting policies and then apply them consistently;
- make judgements and accounting estimates that are reasonable
and prudent;
- state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in
the financial statements;
- prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the Company will continue
in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of the accounts and the other
information included in annual reports may differ from legislation
in other jurisdictions.
The Company is compliant with AIM Rule 26 regarding the
Company's website.
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS
So far as the directors are aware, there is no relevant audit
information (as defined by Section 418 of the Companies Act 2006)
of which the Company's auditors are unaware, and each director has
taken all the steps that he or she ought to have taken as a
director in order to make himself or herself aware of any relevant
audit information and to establish that the Company's auditors are
aware of that information.
AUDITOR
A resolution for the re-appointment of Edwards Veeder (UK)
Limited, Chartered Accountants & Business Advisors will be
proposed in accordance with Section 489 of the Companies Act 2006
at the forthcoming Annual General Meeting.
Mr M J Pajak - Director of behalf of the Board
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF
CRAVEN HOUSE CAPITAL PLC
Opinion
We have audited the financial statements of Craven House Capital
Plc (the 'company') for the year ended 31 May 2022 which comprise
the statement of comprehensive income, the statement of financial
position, the statement of changes in equity, the statement of cash
flows and the related notes to the financial statements, including
a summary of significant accounting policies. The financial
reporting framework that has been applied in their preparation is
applicable law and UK adopted international standards.
In our opinion, the financial statements:
-- give a true and fair view of the state of the company's
affairs as at 31 May 2022 and of its loss for the
year then ended;
-- have been properly prepared in accordance with UK adopted
international standards; and
-- have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our
responsibilities are described below. We have fulfilled our ethical
responsibilities under, and are independent of the company in
accordance with, UK ethical requirements including the FRC Ethical
Standard. We believe that the audit evidence we have obtained is a
sufficient and appropriate basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
directors' use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
company's ability to continue as a going concern for a period of at
least twelve months from when the financial statements are
authorised for issue.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report
.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Key audit matters Description How the scope of our audit
of risk addressed the risk
Investment valuation
For the financial year The company's Our audit work included but
ended 31 May 2022, assessment of was not restricted to:
investments the valuation
measured at fair value of investments * We reviewed the high level controls in operation in
amounted to $6,400,000 measured at fair relation to investment valuations;
which represents 99% of value requires
total assets. significant judgement.
------------------------- -----------------------------------------------------------
Key audit Description How the scope of our
matters of risk audit addressed the
risk
Investment
valuation
(continued) * We considered if the company's valuation policy is in
There is a line with The International Private Equity and
The risk that Venture Capital Valuation (IPEV) guidelines and UK
valuation the adopted international standards;
of application
investments of an
is inappropriate
considered valuation * We reviewed and critically challenged the
a key methodology reasonableness of the assumptions applied in the
audit and/or the investment managers' valuation memo for the financial
matter as use of year ended 31 May 2022;
investments inappropriate
represent assumptions
significant could result
balances on in the
the valuation of
statement investments
of being
financial materially
position. misstated as
at 31 May
2022.
-------------- ----------------------------------------------------------------------
Investment Our audit work included
ownership but was not restricted
and to:
existence There is a
risk that * Shareholder registers were reviewed to confirm the
The the company shares were held by the company;
ownership does not
and own the
existence rights to the
of investments * Shareholder and purchase agreements were reviewed to
investments or that establish ownership;
are the
considered investments
a key audit do not
matter as exist at the * Checked the ownership title of investments held in
investments year ended the associate company
represent 31 May 2022.
99% of
total
assets
on the
statement
of
financial
position.
-------------- ----------------------------------------------------------------------
Management Our audit work included
override but was not restricted
of controls to
There is a
We are risk that * We have considered the controls in place, remained
required to management alert for material and unusual items and tested a
consider may override sample of journals to assess the risk.
how the controls
management to suit
biases their
could objectives.
affect the
results
of the
company.
-------------- ----------------------------------------------------------------------
This is not a complete list of all risks identified by our audit.
Our application of materiality
We apply the concept of materiality both in planning and performing
our audit and in evaluating the effect of misstatements. We consider
materiality to be the magnitude by which misstatements, including
omissions could influence the economic decisions of reasonable users
that are taken on the basis of the financial statements. Importantly,
misstatements below these levels will not necessarily be evaluated
as material, as we also take into account the nature of identified
misstatements, and the particular circumstances of their occurrence,
when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined the materiality
for the financial statements as a whole to be $97,000 which is based
on 1.5% of total assets. We considered this as an appropriate benchmark.
We set performance materiality as 80% of the overall Financial Statement
materiality.
We report to the Audit Committee all identified unadjusted errors
in excess of $4,850 which is set at 5% of planning materiality. Errors
below that threshold would also be reported if, in our opinion as
auditor, disclosure was required on qualitative grounds.
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the company
and its environment, including controls and assessing the risks of
material misstatements.
We carried out a full scope audit of the company's financial statements.
This included specific audit procedures where the extent of our audit
work was based on our assessment of the risks of material misstatement.
All audit work to respond to the risks of material misstatement were
performed directly by the audit engagement team. We set out the key
audit matters that had the greatest impact on our audit strategy and
scope within the key audit matters section.
Other information
The other information comprises the information included in the Chairman's
Statement, the Investment Manager's Report, the Strategic Report and
the Report of the Directors. The directors are responsible for the
other information. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance conclusion
thereon.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise appears
to be materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine whether
there is a material misstatement in the financial statements or a
material misstatement of the other information. If, based on the work
we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the
audit:
* the information given in the Strategic Report and the
Report of the Directors for the financial year for
which the financial statements are prepared is
consistent with the financial statements; and
* the Strategic Report and the Report of the Directors
have been prepared in accordance with applicable
legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and
its environment obtained in the course of the audit, we have not identified
material misstatements in the Strategic Report or the Report of the
Directors.
We have nothing to report in respect of the following matters in relation
to which the Companies Act 2006 requires us to report to you if, in
our opinion:
* adequate accounting records have not been kept, or
returns adequate for our audit have not been received
from branches not visited by us; or
* the financial statements are not in agreement with
the accounting records and returns; or
* certain disclosures of directors' remuneration
specified by law are not made; or
* we have not received all the information and
explanations we require for our audit.
Responsibilities of directors
As explained more fully in the Statement of Directors' Responsibilities
set out on page 8 the directors are responsible for the preparation
of the financial statements and for being satisfied that they give
a true and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, the directors are responsible
for assessing the company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either
intend to liquidate the company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor's report that
includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of
these financial statements.
Irregularities, including fraud, are instances of non-compliance with
laws and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of
detecting irregularities, including fraud is detailed below:
* Enquiries with management, about any known or
suspected instances of non-compliance with laws and
regulations and fraud.
* Auditing the risk of management of override controls,
including through testing journal entries and other
adjustments for appropriateness.
* Challenging assumptions and judgments made by
management in their significant accounting estimates.
Because of the field in which the client operates, we identified that
employment law, LSE listing rules and compliance with the Companies
Act 2006 are most likely to have a material impact on the financial
statements.
The group is subject to many other laws and regulations where consequences
of non-compliance could have material effect on amounts or disclosures
in the financial statements, for instance through the imposition of
fines. We identified the following areas as most likely to have such
an effect: The Listing Rules in certain aspects of company legislation
recognising the financial and regulated nature of the Company's activities
and its legal form. Auditing standards limit required audit procedure
to identify non-compliance with these laws and regulations to inquiry
of the directors and other management and inspection of regulatory
and legal correspondence, if any. Through these procedures, we did
not become aware of actual or suspected non-compliance.
Owing to the inherent limitations of an audit, there's an unavoidable
risk that some material misstatements in the financial statements
may not be detected, even though the audit is properly planned and
performed in accordance with ISAs (UK). For instance, the further
removed non-compliances from the events and transactions reflected
in the financial statements, the less likely the auditor is to become
aware of it or to recognise the non-compliance.
A further description of our responsibilities for the audit of the
financial statements is located on the Financial Reporting Council's
website at: https://www.frc.org.uk/auditorsresponsibilities . This
description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the company's
members those matters we are required to state to them in an auditor's
report and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than
the company and the company's members as a body, for our audit work,
for this report, or for the opinions we have formed.
Lee Lederberg
Senior Statutory Auditor
for and on behalf of Edwards Veeder (UK) Limited
Chartered Accountants & Statutory Audit Firm
Ground Floor, 4 Broadgate,
Broadway Business Park,
Chadderton,
Greater Manchester,
United Kiingdom,
OL9 9XA
CRAVEN HOUSE CAPITAL PLC
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 MAY 2022
2022 2021
Notes $'000 $'000
CONTINUING OPERATIONS
Changes in fair value - (1,600)
Administrative expenses (180) (208)
Exceptional costs 4 - (623)
--------- ----------
(180) (2,431)
OPERATING LOSS
(56) -
Interest expense
LOSS BEFORE INCOME TAX 5 (236) (2,431)
Income tax 6 - -
--------- ----------
LOSS FOR THE YEAR AND TOTAL
COMPREHENSIVE INCOME (236) (2,431)
========= ==========
Loss per share expressed
in cents per share:
Basic and diluted 7 (6.11) (62.92)
The notes on pages 18 to 35 form part of the financial
statements.
CRAVEN HOUSE CAPITAL PLC Company Number 05123368
STATEMENT OF FINANCIAL POSITION
AS AT 31 MAY 2022
2022 2021
Notes $'000 $'000
ASSETS
NON-CURRENT ASSETS
Investments at fair
value through
profit or loss 8 6,400 6,400
-------- --------
6,400 6,400
-------- --------
CURRENT ASSETS
Trade and other receivables 9 43 38
Cash and cash equivalents 10 1 5
-------- --------
44 43
-------- --------
TOTAL ASSETS 6,444 6,443
======== ========
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 11 3,802 3,802
Share premium 11,153 11,153
Accumulated deficit (9,824) (9,588)
-------- --------
TOTAL EQUITY 5,131 5,367
-------- --------
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 12 76 87
NON-CURRENT LIABILITES
Other payables 13 1,237 989
TOTAL LIABILITIES 1,313 1,076
-------- --------
TOTAL EQUITY AND LIABILITIES 6,444 6,443
======== ========
Approved and authorised for issue by the Board on
......................2022 and signed on its behalf by:
.................................................................
Mr M J Pajak - Director
The notes on pages 18 to 35 form part of the financial
statements.
CRAVEN HOUSE CAPITAL PLC
STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 MAY 2022
The notes on pages 18 to 35 form part of the financial statements.
Called Share Accumulated
up share premium deficit Total
capital $'000 $'000 $'000
$'000
Balance at 1 June
2020 3,802 11,153 (7,157) 7,798
Changes in equity
Issue of share capital - - - -
---------- ---------- -------------- --------
Transactions with owners 3,802 11,153 (7,157) 7,798
---------- ---------- -------------- --------
Loss for the year - - (2,431) (2,431)
Balance at 31 May
2021 3,802 11,153 (9,588) 5,367
---------- ---------- -------------- --------
Changes in equity
Issue of share capital - - - -
---------- ---------- -------------- --------
Transactions with owners 3,802 11,153 (9,588) 5,367
---------- ---------- -------------- --------
Loss for the year - - (236) (236)
---------- ---------- -------------- --------
Balance at 31 May
2022 3,802 11,153 (9,824) 5,131
---------- ---------- -------------- --------
CRAVEN HOUSE CAPITAL PLC
STATEMENT OF CASH FLOWS
FOR THE YEARED 31 MAY 2022
2022 2021
Notes $'000 $'000
Cash flows from operating activities
Loss before income tax (236) (2,431)
Adjustments for non-cash items
Fair value movement arising on investments - 1,600
(Increase)/decrease in trade and
other receivables (5) 8
Decrease in trade and other payables (11) (167)
Interest expense 56 -
Net cash outflow from operating
activities (196) (990)
Cash flows from financing activities
Loans received 192 989
Net cash inflow from financing
activities 192 989
------ --------
Net decrease in cash and cash equivalents (4) (1)
Cash and cash equivalents at the
beginning
of the year 10 5 6
Cash and cash equivalents at the
end of the year 10 1 5
====== ========
The notes on pages 18 to 35 form part of the financial statements.
CRAVEN HOUSE CAPITAL PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 31 MAY 2022
1. ACCOUNTING POLICIES
Basis of preparation
These financial statements have been prepared in accordance with International
Financial Reporting Standards and IFRIC interpretations and with those
parts of the Companies Act 2006 applicable to companies reporting under
UK adopted international standards.
Craven House Capital plc is a public company incorporated in the United
Kingdom under the Companies Act 2006. The address of the registered office
is given on the company information page. The Company is listed on the
AIM Market of the London Stock Exchange (ticker: CRV).
The directors have considered the definition of an investment entity in
IFRS 10 as well as the associated application guidance. The directors
consider that the Company has met the definition of an investment entity.
The significant judgments and assumptions made by the directors in determining
that the Company is an investment entity are that; it has obtained funds
from investors (its shareholders) and is providing those investors with
investment management services; it commits to its investors that its business
purpose is to invest funds solely for returns from capital appreciation,
investment income, or both; and it measures and evaluates the performance
of substantially all of its investments on a fair value basis.
The main accounting implications for the preparation of the accounts as
an investment entity are that the accounts are not prepared on a consolidated
basis. Instead the Company's investments in its subsidiaries are accounted
for at fair value through its profit and loss account.
The financial statements have been prepared under the historical cost
convention, except to the extent varied below for fair value adjustments
required by accounting standards, and in accordance with applicable UK
adopted international standards. The principal accounting policies are
set out below.
The financial statements are presented in US dollars which is the Company's
functional currency. Amounts are rounded to the nearest thousand, unless
otherwise stated.
Going concern
The Company's business activities, together with the factors likely to
affect its future development, performance and position are set out in
the Investment Manager's Report. The financial statements include the
Company's objectives, policies and processes for managing its capital;
its financial risk management objectives; details of its financial instruments;
and its exposures to credit risk and liquidity risk. The directors believe
that the Company is well placed to manage its business risks successfully.
The directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable future.
Thus they continue to adopt the going concern basis of accounting in preparing
the annual financial statements.
The Company maintains minimal cash reserves, however in addition to the
cash on the Company's statement of financial position, sufficient cash
is available to the Company via credit facilities to ensure it is able
to meet its liabilities as they fall due and there is therefore no risk
to the going concern status of the Company.
There are currently no commitments to provide support to any subsidiary,
however the Company may elect to provide capital to its subsidiaries at
any time to further its stated Investing Policy.
1. ACCOUNTING POLICIES - continued
The Company has applied for the first time certain amendments to
the standards
Amendments to IFRS 4: Insurance Contracts - deferral of IFRS 9
(effective for annual periods beginning on or after 1 January 2021,
endorsed by the European Union on 15 December 2020).
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16:
Interest Rate Benchmark Reform - Phase 2 (effective for annual
periods beginning on or after 1 January 2021, endorsed by the
European Union on 13 January 2021).
Amendments to IFRS 3: Business Combinations; IAS 16: Property,
Plant and Equipment; IAS 37: Provisions, Contingent Liabilities and
Contingent Assets; and Annual Improvements 2018-2020 (effective for
annual periods beginning on or after 1 January 2022, endorsed by
the European Union on 28 June 2021).
Amendments to IFRS 16 Leases: Covid-19- Related Rent Concessions
beyond 30 June 2021 (effective for annual periods beginning on or
after 1 April 202, endorsed by the European Union on 30 August
2021).
None of these amendments have had an effect on the Company's
financial position and performance.
The following new and revised standards and interpretations have
not been adopted by the Company, whether endorsed by the European
Union or not
Amendments to IFRS 17 Insurance Contracts (effective for annual
periods beginning on or after 1 January 2023, endorsed by the
European Union on 19 November 2021).
Amendments to IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors: Definition of Accounting Estimates (effective
for annual periods beginning on or after 1 January 2023, endorsed
by the European Union on 2 March 2022).
Amendments to IAS 1 Presentation of Financial Statements and
IFRS Practice Statement 2: Disclosure of Accounting policies
(effective for annual periods beginning on or after 1 January 2023,
endorsed by the European Union on 2 March 2022).
Amendments to IFRS 17 Insurance Contracts: Initial Application
of IFRS 17 and IFRS 9 - Comparative Information (effective for
annual periods beginning on or after 1 January 2023, not yet
endorsed by the European Union).
Amendments to IAS 12 Income Taxes: Deferred Tax related to
Assets and Liabilities arising from a Single Transaction (effective
for annual periods beginning on or after 1 January 2023, not yet
endorsed by the European Union).
Amendments to IAS1 Presentation of Financial Statements:
Classification of Liabilities as Current or Non-current (effective
for annual periods beginning on or after 1 January 2023, not yet
endorsed by the European Union).
The Company has assessed the impact of the adoption of these
standards and interpretations on its financial statements on
initial adoption and do not expect these standards to have a
material impact.
1. ACCOUNTING POLICIES - continued
Financial assets
Purchases or sales of financial assets are recognised at the
date of the transaction. Where appropriate criteria are met, the
Company makes use of the option of measuring non current
investments upon initial recognition as financial assets at fair
value through profit or loss. These criteria include that the fixed
asset investment should meet the Company's published Investing
Policy and form part of the Company's managed portfolio or similar
investments. Such financial assets are carried at fair value and
movements in fair value are recognised through profit and loss. For
quoted securities, fair value is either the bid price or the last
traded price, depending on the convention of the exchange on which
the investment is quoted.
Impairment of financial assets
A financial asset not classified at fair value through profit or
loss is assessed at each reporting date to determine whether there
is objective evidence that it is impaired. A financial asset is
impaired if objective evidence indicates that a loss event has
occurred after the initial recognition of the asset, and that the
loss event had a negative effect on the estimated future cash flows
of that asset that can be estimated reliably.
The new impairment model requires forward looking information,
which is based on assumptions for the future movement of different
economic drivers and how these drivers will affect each other. It
also requires management to assign probability to various
categories of receivables. Probability of default constitutes a key
input in measuring an ECL and entails considerable judgment; it is
an estimate of the likelihood of default over a given time horizon,
the calculation of which includes historical data, assumptions and
expectation of future conditions.
The directors have determined that the application of IFRS 9's
impairment requirements does not have a material impact on the
financial statements.
ACCOUNTING POLICIES - continued
Measurement
Financial assets at fair value through profit or loss are
initially recognised at fair value. Transaction costs are expensed
through profit and loss. Subsequent to initial recognition, all
financial assets at fair value through profit or loss are measured
at fair value in accordance with International Private Equity and
Venture Capital Valuation ("IPEVCV") guidelines, as the Company's
business is to invest in financial assets with a view to profiting
from their total return in the form of capital growth and income.
Gains and losses arising from changes in the fair value of the
financial assets at fair value through profit or loss are presented
in the year in which they arise.
Valuation of investments
A number of the Company's assets are measured at fair value for
financial reporting purposes. The Investment Manager determines the
appropriate valuation techniques and inputs for fair value
measurements.
In estimating the fair value of an asset, the Investment Manager
uses market-observable data to the extent it is available. The
Investment Manager reports its findings to the Board of Directors
of the Company every quarter to explain the cause of fluctuations
in the fair value of the assets.
Information about the valuation techniques and inputs used in
determining the fair value of various assets and liabilities are
disclosed in notes 8 and 14.
Financial instruments that are measured subsequent to initial
recognition at fair value are grouped into Levels 1 to 3 based on
the degree to which the fair value is observable:
Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities;
Level 2 fair value measurements for those derived from inputs
other than quoted prices included within Level 1 that are
observable for the assets or liability, either directly or
indirectly; and Level 3 fair value measurements are those derived
from inputs that are not based on observable market data.
a) Quoted investments
Where investments are quoted on recognised stock markets and an
active market in the shares exists, the company values those
investments at closing mid-market price on the reporting date.
Where an active market does not exist those quoted investments are
valued by the application of an appropriate valuation methodology
as if the relevant investment was unquoted.
b) Unquoted investments
In estimating the fair value for an unquoted investment, the
Company applies a methodology that is appropriate in light of the
nature, facts and circumstances of the investment and its
materiality in the context of the total investment portfolio using
reasonable data, market inputs, assumptions and estimates. Any
changes in the above data, market inputs, assumptions and estimates
will affect the fair value of an investment.
Financial liabilities and equity
Financial liabilities are recognised when the Company becomes
party to the contractual provisions of the financial instrument and
are measured initially at fair value adjusted for transaction
costs. Financial liabilities are measured subsequently at amortised
cost using the effective interest method.
An equity instrument is any contract that evidences a residual
interest in the assets of the Company after deducting all its
liabilities.
In accordance with IFRIC 19, when a financial liability is
extinguished by the issue of equity, the equity instrument issued
is measured at fair value and any difference between the financial
liability extinguished and the measurement of the equity instrument
is recognised in profit and loss.
1. ACCOUNTING POLICIES - continued
Current and deferred tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
income statement because it excludes items of income or expense
that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Company's
liability for current tax is calculated using tax rates that have
enacted by the statement of financial position date.
Deferred tax is recognised in respect of all timing differences
that have originated but not reversed at the statement of financial
position date where transactions or events that result in an
obligation to pay more tax in the future or a right to pay less tax
in the future have occurred at the statement of financial position
date. Timing differences between the Company's taxable profits and
its results as stated in the financial information that arises from
the inclusion of gains and losses in tax assessments in periods
different from those in which they are recognised in the financial
information.
A deferred tax asset is only recognised for an unused tax loss
carried forward if it is considered probable that there will be
sufficient future taxable profits against which the loss can be
utilised.
Foreign currencies
In preparing the financial statements of the Company,
transactions in currencies other than the entity's functional
currency are recorded at the rates of exchange prevailing at the
dates of the transactions. At each statement of financial position
date, monetary items denominated in foreign currencies are
retranslated at the rates prevailing at the date when the fair
value was determined. Non-monetary items that are measured in terms
of historical cost in a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the
period in which they arise except for exchange differences on
monetary items receivable from or payable to a foreign operation
for which settlement is neither planned nor likely to occur; which
form part of the net investment in a foreign operation and which
are recognised in the foreign currency translation reserve.
For the purposes of presenting US dollar financial statements,
the assets and liabilities of the Company's foreign operations are
expressed using exchange rates prevailing at the statement of
financial position date. Income and expense items are translated at
the average exchange rate for the period, unless exchange rates
fluctuated significantly during that period, in which case the
exchange rates at the dates of the transactions are used. Exchange
differences arising, if any, are classified as equity and
recognised in a foreign currency translation reserve.
Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the directors. The directors, who
are responsible for allocating resources and assessing performance
of the operating segments, have been identified as the senior
management that make strategic decisions.
Critical accounting estimates and judgements
Preparation of financial statements in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. The estimates
and associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making
judgements about carrying values of assets and liabilities that are
not readily apparent from other sources. Further information
regarding the assumptions relied upon and sensitivity analysis
around these assumptions is provided in note 14 below.
In particular, significant areas of estimation, uncertainty and
critical judgements in applying accounting policies that have the
most significant effect on the amount recognised in the financial
statements relate to the valuation of investments.
1. ACCOUNTING POLICIES - continued
Critical accounting estimates and judgements - continued
The Company has made a number of investments in the form of
equity instruments in private companies operating in emerging
markets. The investee companies are generally at a key stage in
their development and operating in an environment of uncertainty in
capital markets. Should planned development prove successful, the
value of the Company's investment is likely to increase, although
there can be no guarantee that this will be the case. Should
planned development prove unsuccessful, there is a material risk
that the Company's investments may be impaired. The carrying
amounts of investments are therefore highly sensitive to the
assumption that the strategies of these investee companies will be
successfully executed.
The directors have also determined that the Company meets IFRS
10's definition of an investment company and that the functional
currency is appropriate given that underlying transactions, events
and conditions that are most likely to impact on the Company's
performance are more closely linked to the US dollar than GB
sterling.
Share capital and share premium
Share capital represents the nominal (par) value of shares that
have been issued.
Share premium includes any premium received on issue of share
capital. Any transaction costs associated with the issuing of
shares are deducted from share premium.
2. SEGMENTAL REPORTING
The operating segment has been determined and reviewed by the
directors to be used to make strategic decisions. The directors
consider there to be a single business segment being that of
investing activities, therefore there is only one reportable
segment.
3. EMPLOYEES AND DIRECTORS
2022 2021
$'000 $'000
Wages and salaries - directors' remuneration - -
====== ======
The average monthly number of employees (including directors)
during the year was as follows:
2022 2021
Directors 3 3
===== =====
The Company has no employees other than the directors.
3. EMPLOYEES AND DIRECTORS - continued
The service contracts of the directors who served during the
year are as follows:
Basic annual fee
Mr M J Pajak $nil
Mr B S Bindra $5,000**
Mr C P Morrison $5,000**
** Payable in new ordinary shares of the company at $1.00 per
share and issued on a bi-annual basis.
Desmond Holdings Ltd is the Company's Investment Manager. The
directors are the key management of the Company. There were no
directors (2021: none) to whom retirement benefits were accruing
under money purchase schemes.
4. EXCEPTIONAL COSTS
Exceptional costs represent one-off legal expenses incurred
during the prior year of $623,076.
5. LOSS BEFORE INCOME TAX
The loss before income tax is stated after charging:
2022 2021
$'000 $'000
Rental charges - 17
Fees payable to the Company's auditor
for the audit of the Company's annual
accounts 17 17
6. INCOME TAX
Analysis of charge in the year
2022 2021
$'000 $'000
Current tax: - -
Deferred tax - -
Tax on loss on ordinary activities - -
====== ======
2022 2021
$'000 $'000
Loss on ordinary activities before
tax (236) (2,431)
====== ========
Analysis of charge in the year
2022 2021
$'000 $'000
Loss on ordinary activities multiplied
by the Company's rate of corporation
tax in the UK of 19% (2021: 19%) (45) (462)
Effects of:
Investment valuation - 304
Losses carried forward 45 158
------- --------
Current tax charge for the year - -
as above
======= ========
At 31 May 2022, the Company had UK tax losses of $5,488,630
(2021: $5,978,254) available to be carried forward and utilised
against future taxable profits. A deferred tax asset of $1,251,839
(2021: $1,135,868) has not been recognised due to uncertainties
over the timing of when taxable profits will arise.
7. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the period.
Diluted earnings per share has not been disclosed as the
inclusion of the unexercised warrants would be non-dilutive.
7. EARNINGS PER SHARE - continued
Reconciliations are set out below.
2022
Earnings Weighted average Per-share amount
$'000 number of shares cents
Basic EPS
Earning attributable
to ordinary shareholders (236) 3,863,590 (6.11)
2021
Earnings Weighted average Per-share amount
$'000 number of shares cents
Basic EPS
Earning attributable
to ordinary shareholders (2,431) 3,863,590 (62.92)
8. INVESTMENTS
Investments at fair value through profit or loss
The Company adopted the valuation methodology prescribed in the
IPEVCV guidelines to value its investments at fair value through
profit and loss.
The Company had the following holdings at 31 May 2022:
Principal Place Ownership
Name Holding of Business Interest
Garimon Limited Direct UK / Sweden 29.9%
Honeydog Limited Direct UK / Sweden 29.9%
Rosedog Limited Direct UK / Sweden 29.9%
Bio Vitos Medical Limited Direct UK / Sweden 24.5%
8. INVESTMENTS -continued
Investments at fair value through profit or loss
Quoted Unquoted
equity investments equity investments
$'000 $'000 Total
$'000
At 1 June 2020 - 8,000 8,000
Fair value movement - (1,600) (1,600)
------------------ -------------------- ----------
At 31 May 2021 - 6,400 6,400
------------------ -------------------- ----------
Fair value movement - - -
--------------------- -------------------- ----------
At 31 May 2022 - 6,400 6,400
------------------ -------------------- ----------
The value of Investments at 31 May 2022 represents the Company's
acquisitions during 2020 of interests in the above-named four UK
entities. These are all unquoted investments and have therefore
been measured on a Level 3 basis as no observable market data is
available. Further information on each investment holding is as
follows;
Shares in Garimon Limited are valued at $1,600,000 representing
a 29.9% holding. The valuation of this shareholding is supported by
arms-length financing which occurred during and after the end of
the period and represents the best indication of the fair value at
the year end. Garimon Limited is the owner of "Magazinos.com", an
on-line media magazine and periodical content provision service,
and www.onebas.com , an optimised search engine providing a portal
to music content freely circulating online.
Shares in Honeydog Limited are valued at $1,600,000 representing
a 29.9% holding, unchanged from the prior year. The prior year
valuation was used as a starting point for estimation of fair value
and the directors have applied consideration to current facts and
circumstances in reviewing the May 2022 valuation. Honeydog Limited
is the 25% owner of the entity which owns the licence to
manufacture and distribute the chemotherapy drug, Temodex, which is
used in the treatment of brain tumours.
Shares in Rosedog Limited are valued at $1,600,000 representing
a 29.9% holding, unchanged from the prior year. The prior year
valuation was used as a starting point for estimation of fair value
and the directors have applied consideration to current facts and
circumstances in reviewing the May 2022 valuation. Rosedog Limited
is the owner of TV Zinos (www.tvzinos.com), a website which offers
a number of free-to-view television channels.
8. INVESTMENTS - continued
Shares in Bio Vitos Medical Limited are valued at $1,600,000 representing
a 24.5% holding, unchanged from the prior year. The prior year valuation
was used as a starting point for estimation of fair value and the
directors have applied consideration to current facts and circumstances
in reviewing the May 2022 valuation. Bio Vitos has a portfolio of
over 40 different Omega-3 supplements in addition to its range of
collagen products marketed under the "Ocean Skin Lab" brand. During
the period, Bio Vitos acquired the licence to market a patented
heart drug 'Succifer' (also marketed as 'Inofer'), from Double Bond
Pharmaceutical AB. The drug has been demonstrated to improve iron
uptake in patients with chronic heart conditions.
The businesses of all of the above portfolio investments are presently
loss-making although their cost bases are low and there is minimal
committed future expenditure, meaning that the extent and timing
of the Company's further investment in the businesses are highly
controllable. The Company and the incumbent management teams of
the investee companies will continue to work together with the aim
that these businesses become financially self-sustaining and generating
surpluses within the short- to medium-term and to crystallise additional
capital value for shareholders through strategic, third-party partnerships.
9. TRADE AND OTHER RECEIVABLES
2022 2021
$'000 $'000
Current:
Prepayments and accrued income 43 38
------ ------
43 38
====== ======
10. CASH AND CASH EQUIVALENTS 2022 2021
$'000 $'000
Cash at bank 5 6
====== ======
The amounts disclosed in the statement of cash flows in respect
of cash and cash equivalents are in respect of the following statement
of financial position amounts:
Year ended 31 May 2022
31.5.22 1.6.21
$'000 $'000
Cash and cash equivalents 1 5
Year ended 31 May 2021
31.5.21 1.6.20
$'000 $'000
Cash and cash equivalents 5 6
======== =======
11. CALLED UP SHARE CAPITAL
Allotted, called up and
fully paid
Equity Nominal 2022 2021
shares
Number: Class: Value: $'000 $'000
3,863,590 (2021:
3,863,590) Ordinary $1.00 3,802 3,802
3,802 3,802
======== ======
The aggregate nominal values of shares include exchange
differences arising from the translation of shares at historic
rates and the translation at the rate prevailing at the date of the
change in functional currency.
12. TRADE AND OTHER PAYABLES
2022 2021
$'000 $'000
Current:
Trade payables 46 56
Accruals and deferred income 30 31
76 87
====== ======
13. OTHER PAYABLES
2022 2021
$'000 $'000
Non-current:
Other payables 1,237 989
1,237 989
====== ======
14. FINANCIAL INSTRUMENTS
Financial risk management objectives and policies
Management has adopted certain policies on financial risk management
with the objective of:
i. ensuring that appropriate funding strategies are adopted to meet
the Company's short-term and long-term funding requirements taking
into consideration the cost of funding, gearing levels and cash
flow projections;
ii. ensuring that appropriate strategies are also adopted to manage
related interest and currency risk funding; and
iii. ensuring that credit risks on receivables are properly managed.
Financial instrument by category
The accounting policies for financial instruments have been applied
to the line items below:
Financial assets at fair value through profit or loss
Financial instruments that are measured subsequent to initial recognition
at fair value are grouped into Levels 1 to 3 based on the degree
to which the fair value is observable:
Level 1 fair value measurements are those derived from quoted prices
(unadjusted) in active markets for identical assets or liabilities;
Level 2 fair value measurements for those derived from inputs other
than quoted prices included within Level 1 that are observable for
the assets or liability, either directly or indirectly; and
Level 3 fair value measurements are those derived from inputs that
are not based on observable market data.
Unquoted equity investments held at fair value through profit or
loss are valued in accordance with the IPEVCV guidelines as follows;
2022 2021
Investment valuation methodology $'000 $'000
Price of Recent Investment
(adjusted for current facts
and circumstances) (level
3) 6,400 6,400
6,400 6,400
======== =======
14. FINANCIAL INSTRUMENTS - continued
IFRS 13 and IFRS 7 requires the directors to consider the impact
of changing one or more of the inputs used as part of the valuation
process to reasonable possible alternative assumptions.
The Level 3 valuations listed above include inputs based on non-observable
market data as outlined in note 8 above. The Investment Manager
has derived a fair value for these investments based on the value
of the underlying net assets of the respective investments and
/ or has considered prospective enterprise values for these investments
from the perspective of a market participant.
The directors have considered a number of reasonable possible alternative
assumptions regarding the value of the Level 3 investments. IFRS
13 requires an entity to disclose quantitative information about
the significant unobservable inputs used.
A summary of the unobservable inputs, judgements and estimates
made in relation to the Level 3 investments is as follows:
As of the year end, the valuation the Company's minority shareholdings
in each its investee companies has been valued on a Price of Recent
Investment basis, adjusted for current facts and circumstances
which the directors consider represents the best indication of
the fair value at the year end. All five of these businesses are
presently loss-making although their cost bases are low and there
is minimal committed future expenditure, meaning that the extent
and timing of the Company's further investment in the businesses
are highly controllable.
However, each business operates in a competitive market place and
there can be no guarantee that any of the investee companies will
ultimately be successful and that the future carrying value of
these companies will not need to be impaired. In the worst-case
scenario of any one investment having to be fully impaired, this
would result in a decrease of valuation of the investment of $1,600,000.
14 . FINANCIAL INSTRUMENTS - continued
The valuation method applied to each equity investment is that which
is considered most appropriate with regard to the stage of development
of the investee business and the IPEVCV guidelines.
All other financial instruments, including cash and cash equivalents,
trade and other receivables, trade and other payables and loans
and borrowings, are measured at amortised cost.
Due to their short-term nature, the carrying values of cash and
cash equivalents, trade and other receivables, trade and other payables
and loans and borrowings approximates their fair value.
Credit risk
The Company's credit risk is primarily attributable to other receivables.
Management has a credit policy in place and the exposure to credit
risks is monitored on an ongoing basis. In respect of other receivables,
individual credit evaluations are performed whenever necessary.
The Company's maximum exposure to credit risk is represented by
loans, both those held as unquoted investments and included in other
receivables, and cash balances. The Company monitors the financial
position of borrowing entities on an ongoing basis and is satisfied
with the quality of the debt. Investment of surplus cash balances
are reviewed on an annual basis by the Company and it is satisfied
with the choice of institution. The directors have assessed the
amounts owed to connected parties for impairment in accordance with
IFRS 9 and concluded that there is no material impact.
Interest rate risk
The Company currently operates with positive cash and cash equivalents
as a result of issuing share capital in anticipation of future funding
requirements. As the Company has no borrowings from the bank and
the amount of deposits in the bank are not significant, the exposure
to interest rate risk is not significant to the Company.
Liquidity risk
The Company manages its liquidity requirements by the use of both
short-term and long-term cash flow forecasts. The Company's policy
to ensure facilities are available as required is to issue equity
share capital in accordance with agreed settlement terms with vendors
or professional firms, and are typically due within one year unless
otherwise stated.
The Company maintains minimal cash reserves, however in addition
to the cash on the Company's statement of financial position, sufficient
cash is available to the Company via credit facilities to ensure
it is able to meet its liabilities as they fall due.
14 . FINANCIAL INSTRUMENTS - continued
The table below summarises the maturity profile of the Company's
financial liabilities based on contractual discounted payments.
Less 3 to
On than 12 More than
Demand 3 months months 12 Months Total
Year ended 31
May 2022 $'000 $'000 $'000 $'000 $'000
Trade payables 46 - - - 46
Other payables - - - 1,237 1,237
Accruals and deferred
income 30 - - - 30
76 - - 1,237 1,313
------- --------- ------- ---------- ------
Year ended 31 May
2021
Trade payables 56 - - - 56
Other payables - - - 989 989
Accruals and deferred
income 31 - - - 31
87 - - 989 1,076
------- --------- ------- ---------- ------
Price risks
The Company's securities are susceptible to price risk arising
from uncertainties about future value of its investments. This
price risk is the risk that the fair value of future cash flows
will fluctuate because of changes in market prices, whether those
changes are caused by factors specific to the individual investment
or financial instrument or its holder or factors affecting all
similar financial instruments or investments traded in the
market.
During the year under review, the Company did not hedge against
movements in the value of its investments. A 10% increase/decrease
in the fair value of investments would result in a $640,000 (2021:
$640,000 increase/decrease in the net asset value).
While investments in companies whose business operations are
based in emerging markets may offer the opportunity for significant
capital gains, such investments also involve a degree of business
and financial risk, in particular for unquoted investments.
Generally, the Company is prepared to hold unquoted investments
for a medium to long time frame, in particular if an admission to
trading on a stock exchange has not yet been planned. Sale of
securities in unquoted investments may result in a discount to the
book value.
Currency risks
The Company is exposed to foreign currency risk on its
investments held at fair value and adverse movements in foreign
exchange rates will reduce the values of these investments. There
is no systematic hedging in foreign currencies against such
possible losses on translation/realisation.
Foreign exchange volatility is significantly reduced following
the transition to US Dollar as the Company's currency exposures are
now more closely matched to its functional and reporting currency.
The Company's exposure to other foreign currency changes is not
deemed to be material as the Company's investments are US Dollar
based.
14. FINANCIAL INSTRUMENTS - continued
Capital management
The Company's financial strategy is to utilise its resources to
further grow its portfolio. The Company keeps investors and the
market informed of its progress with its portfolio through periodic
announcements and raises additional equity finance at appropriate
times. The Company regularly reviews and manages its capital
structure for the portfolio companies to maintain a balance between
the higher shareholder returns that might be possible with certain
levels of borrowing for the portfolio and the advantages and
security afforded by a sound capital position, and makes
adjustments to the capital structure of the portfolio in the light
of changes in economic conditions. Although the Company has
utilised loans from shareholders to acquire investments, it is the
Company's policy as far as possible to finance its investing
activities with equity and not to have gearing in its
portfolio.
At the statement of financial position date the capital
structure of the Company consisted of cash and cash equivalents and
equity comprising issued capital and reserves.
The table below sets out the Company's classification of each
class of financial assets/liabilities, their fair values (where
appropriate) and under which valuation method they are valued:
Total carrying
amount and
Level Level Level Fair
1 2 3
Notes $'000 $'000 $'000 Value
$'000
31 May 2022
Loans and receivables
Trade and other receivables 9 - - 43 43
Cash and cash equivalents 10 1 - - 1
--------- --------- --------- ----------------
1 - 43 44
Liabilities at amortised
cost
--------- --------- --------- ----------------
Trade and other payables 12&13 - - (1,313) (1,313)
--------- --------- --------- ----------------
Fair value through
profit and loss
Investments 8 - - 6,400 6,400
1 - 5,130 5,131
--------- --------- --------- ----------------
31 May 2021
Loans and receivables
Trade and other receivables 9 - - 38 38
Cash and cash equivalents 10 5 - - 5
--------- --------- --------- ----------------
5 - 38 43
Liabilities at amortised
cost
--------- -------------- --------- ----------------
Trade and other payables 12&13 - - (1,076) (1,076)
Fair value through
profit and loss
Investments 8 - - 6,400 6,400
5 - 5,362 5,367
--------- -------------- --------- ----------------
15. RELATED PARTY DISCLOSURES
During the year, Craven Industrial Holdings Plc made loans to
and incurred costs on behalf of the Company.
Loan interest charged for the year at 5% amounted to $55,615
(2021: GBPnil).
At the year end, a balance of $1,236,190 (2021: GBP989,320) was
due from the Company to Craven Industrial Holdings Plc.
Despite the common director in Mr M J Pajak, the board of Craven
House Capital Plc do not believe that Craven House Capital Plc or
Craven Industrial Holdings Plc are able to exert control or
influence over each other and neither are accustomed to act in
accordance with instructions from the other.
Directors and key management
All key management personnel are directors and appropriate
disclosure with respect to them is made in note 3 of the financial
statements. There are no other contracts of significance in which
any director has or had during the year a material interest.
16. ULTIMATE CONTROLLING PARTY
The directors consider that there is no ultimate controlling
party.
17. EVENTS AFTER THE REPORTING PERIOD
On 15 November 2022, the Company announced that the management
of Garimon had transferred out the domain name www.onebas.com to a
separate entity, Stormfjord Ltd and that Stormfjord had raised
$0.52m in cash at a valuation of $5m. Craven House did not
participate in the fundraising and as a result, its shareholding in
Stormfjord is 26.2%.
The www.onebas.com domain was transferred out of Garimon in
order to facilitate further fundraising activity focused on the
domain. Craven House continues to own 29.9% of Garimon which owns
the domain www.magazinos.com .
The Annual Results for year ended 31 May 2022 will be available
to download from the Company's website at:
http://www.cravenhousecapital.com
Ends
For further information please contact:
Craven House Capital Plc Tel: 0203 286 8130
Mark Pajak
www.Cravenhousecapital.com
SI Capital Tel: 01483 413500
Broker
Nick Emerson
www.sicapital.co.uk
SPARK Advisory Partners Limited Tel: 0203 368 3550
Nominated Adviser
Matt Davis
www.Sparkadvisorypartners.com
About Craven House Capital:
The Company's Investing Policy is primarily to invest in or
acquire a portfolio of companies, partnerships, joint ventures,
businesses or other assets participating in the e-Commerce
sector.
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END
FR UWUWRUSUAUAA
(END) Dow Jones Newswires
November 29, 2022 02:00 ET (07:00 GMT)
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