(‘Capital for Colleagues’ or the ‘Company’)
Audited Results for the year ended
CHIEF EXECUTIVE’S STATEMENT
Employee ownership is acknowledged to improve productivity and create wealth as well as having the potential for attractive commercial returns for investors.
C4C tends to be agnostic in terms of business sector and structures its investments to reflect the individual requirements and prospects of each investee company. As a result, the funding we provide is very flexible and can take the form of debt, equity or both. The premise underlying all our investments is that they should facilitate the full engagement of employees in a business. A range of loans and equity investments have been made in unquoted businesses, generating income from dividends, interest and fees. Ultimately, the Board and investors will measure success based on a long-term increase in net asset value expressed as NAV per share. Although we are patient investors, all our investments need to offer an eventual opportunity to exit or be expected to return capital while still providing an attractive dividend or profit stream.
The financial year ended
We were pleased to be nominated in two categories at the fifth annual Small Cap Awards. Firstly, as the
One new addition to the portfolio during the financial year was the holding company of
The directors were disappointed to note that, in early 2017, the largest investment in our portfolio at that time,
We reflected on the circumstances in which FJH became part of our portfolio and examined whether this led to a greater chance of failure than might otherwise have been the case. FJH was one of three early investments acquired, immediately prior to the company's flotation, from the members of an existing
This unfortunate episode gave us cause for deep reflection on our philosophy and our approach to investees. Over the last three years, we have sourced and executed our investments through a process which delivers a detailed understanding of prospective investee companies and the people who run them, prior to any investment being made. We must recognise that it is in the nature of any portfolio, however well diversified, to have an investment fail and smaller, unquoted companies can be particularly sensitive to the risk of failure. Although no investment is without risk, we are committed to minimising it and we will continue to invest in a diversified range of EOBs with the intention that the majority will become successful and sustainable, delivering meaningful returns to shareholders. The remaining two investments acquired at the same time as FJH are embracing EO and performing to expectation. Without wishing to deny the significant impact of the failure of FJH and HBA, which represented 21% of the value of the portfolio last year, it has not dimmed our enthusiasm for seeing through our strategy albeit with greater wisdom painfully gained. We responded to this setback by taking three positive actions.
1. We raised new capital. In
2. We reassessed our fixed costs to ensure that our overall costs remain in line with our asset base. Consequently, in
3. We changed the structure of the group so that we can focus solely on managing our portfolio. After the year-end, we set up a new joint venture company,
Whilst securing investment in unquoted companies, we sometimes invest in quoted businesses that demonstrate employee engagement. To date, good returns have been achieved on this portion of the company’s assets. The benefit of investing in quoted companies is that C4C can deploy its capital quickly and efficiently and the investment team can afford to bide its time when it comes to investing in unquoted businesses. With no shortage at present of good opportunities among private companies, our exposure to listed investments was nil at the end of the period.
Shareholders will be aware that we are active members of the
Social Impact
We have always been convinced of the positive social impact of employee ownership and we measure this every year with our annual impact report. During the summer, we published our third such report which is available to download from our website. Our next impact report will be published in summer 2018.
On
Goal 3 –
Ensuring healthy lives and promoting well-being for all at all ages which is essential to sustainable development. There is evidence to suggest that employee-owned businesses generate higher levels of well-being among their staff compared with conventionally-owned businesses.
Goal 8 – Decent Work and Economic Growth.
A continued lack of decent work opportunities contributes to an erosion of the basic social contract underlying democratic societies. The creation of quality jobs remains a major challenge for all economies. Employee-owned businesses offer meaningful and sustainable work to their employees.
Goal 12 – Responsible Consumption and Production.
Sustainable consumption and production is about promoting resource and energy efficiency. C4C supports several businesses which are committed to sustainability and social responsibility. Ecomerchant and Carpenter Oak, for example, are specialist suppliers of environmentally-friendly building materials.
Goal 13 – Climate Action
Climate change is now affecting every country on every continent. It is disrupting national economies and affecting lives, costing people, communities and countries dearly. C4C investee companies Anthesis and
This is the first year where we have identified the UN Sustainable Development Goals which we seek to address. In next year’s annual report and accounts, we plan to report back to shareholders on our progress in addressing these four goals.
Post Year-End Event
As mentioned above, so that we can further refine the way we do business we announced, in
Since the formation of the company, we have been a committed advocate for the wider EOB sector, raising public awareness of employee ownership and actively promoting the benefits of it through education programmes and by identifying, advising and structuring potential EOBs. We are proud of our achievements in this area, but we believe it has been a distraction from the Company's core business of investing in EOBs.
Therefore, we decided to establish a new joint venture company, CCAP, which will assume responsibility for the non-investment EOB activities previously undertaken by C4C. In particular, CCAP will be responsible for educating businesses about the benefits of Employee Ownership (including succession planning), identifying potential investee companies for C4C and for advising those companies on the structure and presentation of their investment case to C4C. CCAP will also monitor and advise our existing investee companies and source potential new investors for us.
C4C owns 34 per cent of CCAP, with
The establishment of CCAP frees C4C to focus on its core activity of providing capital to EOBs. We will use this capital to drive future growth in the EOB sector and to benefit from that growth. Streamlining our operations in this way is also in line with C4C’s previously stated intention of reducing its central, largely fixed overheads.
Financial Results
In the twelve months ended
The Directors do not recommend the payment of a dividend.
Outlook
As we build on our leading position in the EOB sector, we remain committed to the continued expansion of our portfolio so that we can generate attractive returns for our shareholders. Despite the setback mentioned above, we continue to move forward with our strategy, most notably where we convert certain existing loans into equity. As a well-established presence in the market, we enjoy good access to numerous potential investee companies in varying sectors and of various sizes, which we believe can deliver the returns we require. The Directors are confident that the EOB sector will keep expanding and that EOBs will continue to deliver strong performance. Having raised new funds during the year, we expect to continue to make investments into EOBs. A broad strategic objective is to make larger investments into bigger businesses so that more workers can enjoy the benefits of employee ownership. With the steps we have taken, we believe that we are well placed to capitalise on the significant growth potential of the EOB sector. Statistics demonstrate that the EOB sector is becoming increasingly important to our economy, with an increasing proportion of
Chief Executive
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED
2017 2016
GBP 000’s GBP 000’s
Revenue 372 560
Realised (loss) / gains on investments (5) 157
Unrealised revaluation gains on investments 317 71
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684 788
Administrative expenses (530) (630)
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OPERATING PROFIT 154 158
Impairment of investments and loans (1,321) -
Finance income - -
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(LOSS) / PROFIT BEFORE TAX (1,167) 158
Tax credit / (charge) 120 (130)
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RETAINED (LOSS) / PROFIT AFTER TAX FOR THE YEAR (1,047) 28
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RETAINED (LOSS) / PROFIT ATTRIBUTABLE TO
Owners of the company for the year (1,047) 28
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TOTAL COMPREHENSIVE INCOME
ATTRIBUTABLE TO:
Owners of the company for the year (1,047) 28
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(Loss)/ profit per share
Basic and diluted (9.02)p 0.32p
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GROUP AND COMPANY STATEMENT OF FINANCIAL POSITION AT
Group Company
2017 2016 2017 2016
GBP 000’s GBP 000’s GBP 000’s GBP 000’s
ASSETS
NON-CURRENT
ASSETS
Investments
held at fair 4,592 3,427 4,592 3,427
value through
profit or loss
Loans and 535 1,081 535 1,081
receivables
---------------- ---------------- ------------- -------------
5,127 4,508 5,127 4,508
--------------- --------------- -------------- --------------
CURRENT ASSETS
Trade and 276 654 280 658
other
receivables
Cash and cash 1,283 279 1,283 279
equivalents
--------------- --------------- -------------- --------------
1,559 933 1,563 937
-------------- -------------- --------------- ---------------
TOTAL ASSETS 6,686 5,441 6,690 5,445
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EQUITY AND
LIABILITIES
EQUITY
Called up 6,154 3,850 6,154 3,850
share capital
Share premium 1,097 1,036 1,097 1,036
Retained (683) 364 (678) 369
(loss) /
profit
--------------- --------------- ------------ ------------
TOTAL EQUITY 6,568 5,250 6,573 5,255
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CURRENT
LIABILITIES
Trade and 110 89 109 88
other payables
-------------- -------------- ------------- -------------
110 89 109 88
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CREDITORS:
AMOUNTS
FALLING DUE IN
MORE THAN ONE
YEAR
Provisions for 8 102 8 102
liabilities
-------------- ------------- ------------- -------------
TOTAL EQUITY 6,686 5,441 6,690 5,445
AND
LIABILITIES
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The financial statements were approved and authorised for issue by the Board of Directors on
The Directors of the Company are responsible for the contents of this announcement.
For further information, please visit www.capitalforcolleagues.com or contact:
CAPITAL FOR COLLEAGUES PLC 0161 464 3260Richard Bailey , ChairmanJohn Eckersley , Chief Executive PETERHOUSE CORPORATE FINANCE LIMITED 020 7469 0930Mark Anwyl Duncan Vasey
The Company’s joint venture,
Market Abuse Regulation (MAR) Disclosure
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement via a
