Final Results -9-
March 27 2009 - 3:01AM
UK Regulatory
NOTES TO THE FINANCIAL STATEMENTS
1 General information
ACP Capital Limited ("ACP" or the "Company") and its subsidiaries (together the
"Group"), while they were in investment mode, provided specialist integrated
finance and asset management solutions focused on European small and
medium-sized enterprises ("SMEs"). The Company was incorporated on 30 August
2005 and registered in Jersey under registration number 91066. The Company's
shares were admitted to trading on AIM on 6 January 2006. The consolidated
financial statements for the year ended 31 December 2008 were authorised for
issue by the Board of Directors on 26 March 2009.
At an EGM held on 17 July 2008, the Company announced that it would seek to
dispose of assets on an orderly basis and return the proceeds to shareholders by
way of distributions.
2 Basis of preparation
These financial statements have been prepared in accordance with International
Financial Reporting Standards, International Accounting Standards and
Interpretations (collectively "IFRSs") issued by the International Accounting
Standards Board ("IASB") as adopted by the European Union and with those parts
of Companies (Jersey) Law 1991 applicable to companies preparing their financial
statements under IFRSs.
The Group and Company financial statements have been presented in Sterling, the
functional currency of the Company. Some of the subsidiary entities of the Group
use a different functional currency, being the currency in the primary economic
environment in which the entity operates.
They are prepared under the historical cost convention modified to include
investments measured at fair value through profit or loss. The preparation of
financial statements in conformity with IFRS requires management to make
judgments, estimates and assumptions that affect the application of policies and
reported amounts of assets and liabilities, income and expenses. The estimates
and associated assumptions are based on the experience of the Directors and
other factors that are believed to be reasonable under the circumstances, the
results of which form the basis of making the judgments about carrying values of
assets and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
The most significant techniques for estimation are described in the accounting
policies or notes to the financial statements.
Note 3 sets out a description of the significant accounting policies of the
Group. The accounting policies are consistent with those applied in the year
ended 31 December 2008, and amended to reflect the adoption of the new
standards, amendments to standards or interpretations which are mandatory for
the first time for the financial year ended 31 December 2008.
Standards, amendments and interpretations to published standards not yet
effective
Certain new standards, amendments and interpretations to existing standards have
been published that are mandatory for the Group's accounting periods beginning
after 1 January 2009 or later periods and which the Group has decided not to
adopt early.
These are listed below and not expected to have a significant impact on the
Group's financial statements.
Amendments to IFRIC 9 and IAS 39 - Embedded Derivatives (effective for
accounting period beginning on after 30 June 2009 - still to be endorsed)
Amendments to IFRS 7 - Improving disclosures about Financial Instruments
(effective for accounting period beginning on after 1 January 2009 - still to be
endorsed)
Amendments to IAS 1 - Presentation of Financial Statements: A Revised
Presentation (effective for accounting period beginning on after 1 January 2009)
IAS 27 - Consolidated and Separate Financial Statements (effective for
accounting periods beginning on or after 1 July 2009)
IAS 32 & IAS1 - Puttable Financial Instruments and Obligations Arising on
Acquisition (effective for accounting periods beginning on or after 1 January
2009)
IFRS1 & IAS 27 - Cost of an Investment in a Subsidiary, Jointly-Controlled
Entity or Associate (effective for accounting periods beginning on or after 1
January 2009)
IAS 39 - Financial Instruments: recognition and Measurement: Eligible Hedged
Items (effective for accounting periods beginning on or after 1 July 2009)
IFRIC 13 - Customer Loyalty Programmes (effective for accounting periods
beginning on or after 1 July 2008)
IFRIC 15 - Agreements for the Construction of Real Estate (effective for
accounting periods beginning on or after 1 January 2009)
IFRIC 16 - Hedges of a Net Investment in a Foreign Operation (effective for
accounting periods beginning on or after 1 October 2008)
IFRIC 17 - Distributions of Non-Cash Assets to Owners (effective for accounting
periods beginning on or after 1 July 2009)
IFRIC 18 - Transfer of Assets from Customers (effective for accounting periods
beginning on or after 1 July 2009)
Amendment to IFRS2 - Share Based payments: Vesting Conditions and Cancellations
(effective for accounting periods beginning on or after 1 January 2009)
IFRS 3 - Business Combinations and Complementary Amendments to IAS 27
Consolidated and Separate Financial Statements (both effective for accounting
periods beginning on or after 1 July 2009)
IFRS 8 - Operating Segments (effective for accounting periods beginning on or
after 1 January 2009)
3 Significant accounting policies
The accounting policies have been consistently applied across the Group entities
for the purpose of producing these consolidated financial statements. The
significant accounting policies applied are as follows:
a) Basis of consolidation
The financial information in the Group's Financial Statements for the year ended
31 December 2008 incorporates the Financial Statements of the Company and its
subsidiaries. Subsidiaries are entities controlled by the Group. Control exists
when the company has the power, directly or indirectly, to govern the financial
and operating policies of an entity so as to obtain benefits from its
activities. In assessing control, potential voting rights that are currently
exercisable or convertible are taken into account. The financial statements of
the subsidiaries are included in the consolidated financial statements from the
date that the control commences until the date control ceases.
Intra-group balances and any unrealised gains and losses arising from
intra-group transactions are eliminated in preparing the Financial Statements of
the Group.
b) Acquisitions
Acquisitions are accounted for as a business combination, in which case, the
identifiable assets, liabilities and contingent liabilities of a subsidiary or
joint venture are measured at their estimated fair value at the date of
acquisition. The cost of acquisition is measured as the fair value of the
consideration given together with any liabilities incurred or assumed at the
date of acquisition, plus costs directly attributable to the acquisition.
The excess of the cost of acquisition over the fair value of the Group's share
of the identifiable net assets acquired is recorded as goodwill. Where the fair
value of identifiable assets, liabilities and contingent liabilities exceed the
fair value of consideration paid, the excess is credited in full to the
consolidated income statement on the acquisition date.
Where a subsidiary is acquired in stages, the identifiable assets, liabilities
and contingent liabilities are measured at their estimated fair value and
compared to the cost of acquisition at each date investment in the subsidiary
took place. If the investment has previously been carried at fair value through
profit or loss, fair value movements recognised in prior periods are reversed
through equity.
c) Investments measured at fair value through profit or loss
Investments are recognised and derecognised at trade date. All listed and
unlisted equity investments are designated as at fair value through profit or
loss and subsequently carried in the balance sheet at fair value.
The valuation technique used for each class of investment is as follows:
Equity - publicly traded equity is valued at bid price at the balance sheet
date. Non traded equity is stated at Directors' valuation having regard to
venture capital guidelines and third party reports.
Preference equity- valued as a percentage to par using the same percentage to
par of indicative bids of junior debt in the company in which the preference
equity is held.
Syndicated loans - valued based on indicative bids from market makers.
d) Loans and receivables
These assets are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. They are initially recognised
at fair value plus transaction costs that are directly attributable to their
acquisition or issue, and are subsequently carried at amortised cost using the
effective interest rate method, less provision for impairment.
Impairment provisions are recognised when there is objective evidence (such as
significant financial difficulties on the part of the counterparty or default or
significant delay in payment) that the Group will be unable to collect all of
the amounts due under the terms receivable, the amount of such provision being
the difference between the net carrying amount and the present value of the
future expected cash flows associated with the impaired receivable.
e) Available-for-sale
Non-derivative financial assets not included in the above categories are
classified as available-for-sale and comprise principally the Group's CDOs, CLOs
and SME loans. They are carried at fair value and valued based on an average of
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