TIDMAAVC
Albion Venture Capital Trust PLC
LEI Code: 213800JKELS32V2OK421
As required by the UK Listing Authority's Disclosure and Transparency
Rule 4.2, Albion Venture Capital Trust PLC today makes public its
information relating to the Half-yearly Financial Report (which is
unaudited) for the six months to 30 September 2017. This announcement
was approved by the Board of Directors on 12 December 2017.
The full Half-yearly Financial Report (which is unaudited) for the
period to 30 September 2017, will shortly be sent to shareholders.
Copies of the full Half-yearly Financial Report will be shown via the
Albion Capital Group LLP website by clicking
www.albion.capital/funds/AAVC/30Sept17.pdf.
Investment objective and policy
The current investment strategy of Albion Venture Capital Trust PLC (the
"Company") is to manage the risk normally associated with investments in
smaller unquoted companies whilst maintaining an attractive yield,
through allowing investors the opportunity to participate in a balanced
portfolio of asset-based businesses. The Company's investment portfolio
has been structured to provide a balance between income and capital
growth for the longer term.
Following the Patient Capital Review and the 2017 Autumn Budget, the
Directors no longer believe that a purely asset-based investment policy
will be practicable for the longer term, and will therefore be putting
new proposals to shareholders in due course.
The Company offers tax-paying investors tax benefits at the time of
investment, on payment of dividends and on the ultimate disposal of the
investment.
As defined by the Articles of Association, the Company's maximum
exposure in relation to gearing is restricted to 10 per cent. of the
adjusted share capital and reserves. The Directors do not currently have
any intention to utilise gearing for the Company.
Background to the Company
The Company is a venture capital trust which raised a total of GBP39.7
million through an issue of Ordinary shares in the spring of 1996 and
through an issue of C shares in the following year. The C shares merged
with the Ordinary shares in 2001. The Company has raised a further
GBP26.9 million under the Albion VCTs Top Up Offers since 2011.
On 25 September 2012, the Company acquired the assets and liabilities of
Albion Prime VCT PLC ("Prime") in exchange for new shares in the
Company. Each Prime shareholder received 0.8801 shares in the Company
for each Prime share that they held at the date of the Merger.
Financial calendar
Record date for second dividend 5 January 2018
Payment date for second dividend 31 January 2018
Financial year end 31 March
Financial highlights
Unaudited six Unaudited six
months ended months ended Audited year ended
30 September 2017 30 September 2016 31 March 2017
(pence per share) (pence per share) (pence per share)
Dividends paid 2.5 2.5 5.0
Revenue return 0.8 1.0 1.9
Capital return 0.4 2.4 6.8
Net asset value 74.1 72.9 75.4
Ordinary shares
Total shareholder return to 30 September 2017 (pence per share)
Total dividends paid during the year ended : 31 March
1997 2.00
31 March 1998 5.20
31 March 1999 11.05
31 March 2000 3.00
31 March 2001 8.55
31 March 2002 7.60
31 March 2003 7.70
31 March 2004 8.20
31 March 2005 9.75
31 March 2006 11.75
31 March 2007 10.00
31 March 2008 10.00
31 March 2009 10.00
31 March 2010 5.00
31 March 2011 5.00
31 March 2012 5.00
31 March 2013 5.00
31 March 2014 5.00
31 March 2015 5.00
31 March 2016 5.00
31 March 2017 5.00
Total dividends paid in the six months to 30 September
2017 2.50
Total dividends paid to 30 September 2017 147.30
Net asset value as at 30 September 2017 74.10
Total shareholder return to 30 September 2017 221.40
The financial summary above is for the Company, Albion Venture Capital
Trust PLC Ordinary shares only. Details of the financial performance of
the C shares and Albion Prime VCT PLC, which have been merged into the
Company, can be found at the end of this announcement.
In addition to the dividends summarised above, the Directors have
declared a second dividend for the year ending 31 March 2018 of 2.5
pence per share, to be paid on 31 January 2018 to shareholders on the
register on 5 January 2018.
Notes
-- Dividends paid before 5 April 1999 were paid to qualifying shareholders
inclusive of the associated tax credit. The dividends for the year to 31
March 1999 were maximised in order to take advantage of this tax credit.
-- Dividends paid by the Company are normally free of income tax for
individuals aged 18 or over. Investors should not disclose any income
they receive from a VCT on their tax return unless they have acquired
more than GBP200,000 of new VCT shares in a tax year.
-- The net asset value of the Company is not its share price as quoted on
the official list of the London Stock Exchange. The share price of the
Company can be accessed via a link on the Company's webpage at
www.albion.capital/funds/AAVC under 'Trust Information'.
-- Investors are reminded that it is common for shares in VCTs to trade at a
discount to their net asset value as tax reliefs are only obtainable on
new subscription.
Interim management report
Introduction
The results for Albion Venture Capital Trust PLC (the "Company") for the
six months to 30 September 2017 showed a total return of 1.2 pence per
share. After an interim dividend of 2.5 pence per share paid on 31 July
2017, the net asset value at 30 September 2017 was 74.1 pence per share,
compared to 75.4 pence per share at 31 March 2017. Total shareholders'
funds were GBP64.7 million.
Investment performance, progress and prospects
During the period, GBP1.1 million was invested into qualifying
investments, with a further GBP1.9 million invested after the period
end. Investments in the period included GBP620,000 into two of our care
homes (Active Lives Care and Ryefield Court Care); GBP456,000 (with an
additional GBP254,000 after the period end) into G.Network
Communications, a provider of ultra high speed fibre optic broadband to
SMEs in central London; and GBP8,000 (with an additional GBP940,000
after the period end) in Beddlestead, to fund a start-up wedding venue
business. In addition St Martha's School, since renamed Mount House
School, in North London was added to the education portfolio.
Following the period end, a further new investment of GBP750,000 was
made in Women's Health (London West One) to develop a women's health
centre of excellence in Harley Street focusing on fertility which is
expected to open in the second half of next year.
During the period The Weybridge Club disposed of its health and fitness
club in Weybridge and The Crown Hotel Harrogate disposed of the Crown
Hotel in Harrogate.
The biggest change in valuations for the period was in respect of Radnor
House (Holdings) following an independent third party valuation of its
schools in Twickenham and Sevenoaks. The former continues to perform
strongly, with over 400 pupils, and the latter has seen a substantial
increase in pupils, now over 350.
Our three care homes, the 66 bedroom Shinfield View care home near
Reading (owned by Shinfield Lodge Care), the 75 bedroom Cumnor Hill
House on the outskirts of Oxford (owned by Active Lives Care), and the
60 bedroom Ryefield Court in Hillingdon (owned by Ryefield Court Care)
have now reached significant levels of occupancy to enable them to
achieve operating profitability.
Our hydro, wind and solar assets in our renewable energy portfolio
continued to generate strong cash returns. Meanwhile Earnside Energy's
anaerobic digestion plant has recently completed a substantial expansion
of its capacity.
The Holiday Inn Express at Stansted Airport, owned by Kew Green VCT
(Stansted), traded strongly but trading at The Stanwell Hotel near
Heathrow Terminal 5 was disappointing. Going forward we are looking to
decrease further our investment in the sector. Meanwhile, the Bravo Inns
and Bravo Inns II pub portfolio is continuing to expand and now
comprises 41 pubs in the North West.
We are pleased with the strong start made by G.Network Communications
and see further growth in value accruing over time from our education
and healthcare portfolios.
Split of portfolio by valuation as at 30 September 2017
Set out at the bottom of this announcement is the sector diversification
of the investment portfolio as at 30 September 2017. At that date
healthcare accounted for 36 per cent. of the Company's net assets and
renewable energy investments accounted for 18 per cent.
Board composition
As stated in the Annual Report, I have been chairman of your Company
since its launch in 1996 and I have indicated to the Board that I intend
to retire before the Annual General Meeting in August 2018. Ebbe Dinesen
has indicated that he would also like to retire, at the Annual General
Meeting in 2019.
I am now pleased to report that we have recently appointed Richard
Glover and Ann Berresford to the Board.
Richard has been involved with a number of private equity backed
companies over the years, including chief executive roles at BSM Group
through its development from a family company to a flotation on the
London Stock Exchange and subsequent sale to the RAC, and of a
professional educational services business, and chairman roles at a
property services business and a retail service group.
Ann qualified as a chartered accountant and has a background in
financial management at Clyde Petroleum and Bank of Ireland. She is
currently a non-executive director at Secure Trust Bank and the Bath
Building Society.
Patient Capital Review
The Patient Capital Review has now been completed and the 2017 Budget,
whilst being strongly supportive of VCTs, has introduced a number of
measures designed to re-direct investment towards innovative and high
growth firms. Your Board and the Manager no longer believe that a purely
asset-based investment policy will be practicable for the longer term,
and will be making proposals to shareholders in due course.
Risks and uncertainties
The outlook for the UK economy continues to be the key risk affecting
your Company. The forthcoming withdrawal from the European Union may
have an effect on the Company and its investments, although the extent
of the effect is not quantifiable at this time.
Whilst the Company's policy has historically been that its portfolio
companies should not normally have external borrowings and for the
Company normally to have a first charge over portfolio companies' assets,
changes in VCT legislation will preclude the use of secured loan stock
in future investments. Meanwhile, one of the Company's longer standing
portfolio companies is looking to refinance its VCT loan stock with bank
debt.
Other principal risks and uncertainties remain unchanged and are as
detailed in note 13.
Transactions with the Manager
Details of the transactions that took place with the Manager during the
period can be found in note 5.
There are no related party transactions or balances that require
disclosure.
Share buy-backs
It remains the Board's primary objective to maintain sufficient
resources for investment in existing and new portfolio companies and for
the continued payment of dividends to shareholders. Thereafter, it is
still the Board's policy to buy back shares in the market, subject to
the overall criterion that such purchases are in the Company's interest.
The total value bought in for the period to 30 September 2017 was
GBP226,000. In general, the Board targets such buy-backs to be in the
region of a 5 per cent. discount to the most recently announced net
asset value, so far as market conditions and liquidity permit.
Results and dividends
As at 30 September 2017, the net asset value of the Company was GBP64.7
million or 74.1 pence per share compared to GBP65.5 million or 75.4
pence per share at 31 March 2017. The revenue return before taxation
showed a modest reduction to GBP875,000, compared to GBP934,000 for the
six months to 30 September 2016, as some portfolio companies decided
(with our agreement) to defer paying interest and reinvest their profit
for further growth. The Company will pay a second dividend of 2.5 pence
per share on 31 January 2018 to shareholders on the register on 5
January 2018, making 5.0 pence per share in total for the full year, in
line with the Company's current dividend target.
David Watkins
Chairman
12 December 2017
Responsibility statement
The Directors, David Watkins, John Kerr, Jeff Warren, Ebbe Dinesen,
Richard Glover and Ann Berresford are responsible for preparing the
Half-yearly Financial Report. In preparing these condensed Financial
Statements for the period to 30 September 2017 we, the Directors of the
Company, confirm that to the best of our knowledge:
(a) the condensed set of Financial Statements, which has been prepared
in accordance with Financial Reporting Standard 104 "Interim Financial
Reporting", give a true and fair view of the assets, liabilities,
financial position and profit and loss of the Company as required by DTR
4.2.4R;
(b) the Interim management report, includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
(c) the Interim management report, includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
This Half-yearly Financial Report has not been audited or reviewed by
the Auditor.
By order of the Board
David Watkins
Chairman
12 December 2017
Portfolio of investments
The following is a summary of investments as at 30 September 2017:
Cumulative
movement Change in
% voting rights held by Albion Venture Capital Trust Accounting cost * in value Value value for the period(**)
Portfolio company PLC GBP'000 GBP'000 GBP'000 GBP'000
Shinfield Lodge Care Limited 35.3 6,425 4,270 10,695 182
Active Lives Care Limited 22.2 4,810 2,124 6,934 (103)
Kew Green VCT (Stansted) Limited 45.2 5,910 946 6,856 180
Ryefield Court Care Limited 23.6 3,880 1,966 5,846 (158)
Radnor House School (Holdings) Limited 7.1 2,380 2,422 4,802 486
Chonais River Hydro Limited 9.2 3,074 765 3,839 (2)
TCHH Limited (previously The Crown Hotel Harrogate
Limited)+ 24.1 3,277 (51) 3,226 132
The Stanwell Hotel Limited 39.2 5,069 (2,966) 2,103 (183)
Earnside Energy Limited 9.5 1,531 82 1,613 (30)
Gharagain River Hydro Limited 11.5 1,363 208 1,571 47
Bravo Inns II Limited 6.4 1,085 177 1,262 45
The Street by Street Solar Programme Limited 6.5 676 420 1,096 50
Alto Prodotto Wind Limited 7.4 662 367 1,029 4
MHS1 Limited 14.8 1,026 (2) 1,024 -
TWCL Limited 14.3 1,083 (317) 766 10
Regenerco Renewable Energy Limited 4.5 451 218 669 40
Infinite Ventures (Goathill) Limited 11.5 480 155 635 3
Bravo Inns Limited 7.6 751 (140) 611 29
Erin Solar Limited 18.6 520 (23) 497 (12)
Dragon Hydro Limited 7.3 311 169 480 7
G. Network Communications Limited 7.6 456 - 456 -
AVESI Limited 7.4 242 98 340 19
Harvest AD Limited - 307 (4) 303 (4)
G&K Smart Developments VCT Limited 42.9 276 (15) 261 4
Premier Leisure (Suffolk) Limited 9.9 175 25 200 30
Greenenerco Limited 3.9 131 68 199 1
Beddlestead Limited 8.0 16 - 16 -
Total fixed asset investments 46,367 10,962 57,329 777
+ The business and assets have been sold and the company will be
liquidated in due course.
Total change in value of investments for the period 777
Movement in loan stock accrued interest (66)
Unrealised gains sub-total 711
Realised loss in current period (23)
Total gains on investments as per Income statement 688
Loss on
Fixed asset investment realisations during the period Accounting cost* Opening carrying value Disposal proceeds Total realised gain/(loss) opening value
to 30 September 2017 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Greenenerco Limited (loan stock repaid) 2 3 3 1 -
Alto Prodotto Wind Limited (loan stock repaid) 1 1 1 - -
Kensington Health Clubs Limited (escrow adjustment) - - (23) (23) (23)
TCHH Limited (previously The Crown Hotel Harrogate
Limited)*** 968 - - (968) -
Total 971 4 (19) (990) (23)
*The cost includes the original cost from Albion Venture Capital Trust
PLC and the carried over value on merger from Albion Prime VCT PLC as at
25 September 2012.
** As adjusted for additions and disposals during the period.
***The accounting cost as shown above is after deducting realised losses
of GBP968,000 for TCHH Limited (previously The Crown Hotel Harrogate
Limited) which is still held at the Balance sheet date.
Condensed income statement
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 2017 30 September 2016 31 March 2017
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gains on investments 3 - 688 688 - 2,263 2,263 - 6,179 6,179
Investment income 4 1,187 - 1,187 1,219 - 1,219 2,381 - 2,381
Investment management fees 5 (155) (464) (619) (136) (409) (545) (283) (848) (1,131)
Other expenses (157) - (157) (149) - (149) (296) - (296)
Return on ordinary activities before tax 875 224 1,099 934 1,854 2,788 1,802 5,331 7,133
Tax (charge)/ credit on ordinary activities (162) 88 (74) (185) 81 (104) (292) 170 (122)
Return and total comprehensive income attributable
to shareholders 713 312 1,025 749 1,935 2,684 1,510 5,501 7,011
Basic and diluted return per share (pence)* 7 0.8 0.4 1.2 1.0 2.4 3.4 1.9 6.8 8.7
* excluding treasury shares
Comparative figures have been extracted from the unaudited Half-yearly
Financial Report for the six months ended 30 September 2016 and the
audited statutory accounts for the year ended 31 March 2017.
The accompanying notes form an integral part of this Half-yearly
Financial Report.
The total column of this Condensed income statement represents the
profit and loss account of the Company. The supplementary revenue and
capital columns have been prepared in accordance with The Association of
Investment Companies' Statement of Recommended Practice.
Condensed balance sheet
Unaudited Unaudited Audited
30 September 2017 30 September 2016 31 March 2017
Note GBP'000 GBP'000 GBP'000
Fixed asset
investments 57,329 51,672 55,473
Current assets
Trade and other
receivables
less than one
year 79 111 140
Cash and cash
equivalents 8,009 6,706 10,496
8,088 6,817 10,636
Total assets 65,417 58,489 66,109
Payables:
amounts falling
due within one
year
Trade and other
payables less
than one year (763) (613) (634)
Total assets
less current
liabilities 64,654 57,876 65,475
Equity
attributable to
equityholders
Called up share
capital 8 958 868 951
Share premium 25,182 18,881 24,630
Capital
redemption
reserve 7 7 7
Unrealised
capital
reserve 10,301 3,387 8,623
Realised capital
reserve 7,377 10,414 8,743
Other
distributable
reserve 20,829 24,319 22,521
Total equity
shareholders'
funds 64,654 57,876 65,475
Basic and
diluted net
asset value per
share (pence)* 74.1 72.9 75.4
*excluding treasury shares
Comparative figures have been extracted from the unaudited Half-yearly
Financial Report for the six months ended 30 September 2016 and the
audited statutory accounts for the year ended 31 March 2017.
The accompanying notes form an integral part of this Half-yearly
Financial Report.
These Financial Statements were approved by the Board of Directors and
authorised for issue on 12 December 2017, and were signed on its behalf
by
David Watkins
Chairman
Company number: 03142609
Condensed statement of changes in equity
Called up Capital
share Share redemption Unrealised capital Realised capital Other distributable
capital premium reserve reserve reserve* reserve* Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 April 2017 951 24,630 7 8,623 8,743 22,521 65,475
Return/(loss) and total comprehensive income
for the period - - - 711 (399) 713 1,025
Transfer of previously unrealised gains/(losses) on
realisations of investments - - - 967 (967) - -
Purchase of treasury shares - - - - - (226) (226)
Issue of equity 7 561 - - - - 568
Cost of issue of equity - (9) - - - - (9)
Net dividends paid - - - - - (2,179) (2,179)
As at 30 September 2017 958 25,182 7 10,301 7,377 20,829 64,654
As at 1 April 2016 861 18,374 7 1,128 10,737 25,848 56,955
Return/(loss) and total comprehensive income for the
period - - - 2,259 (323) 749 2,684
Purchase of treasury shares - - - - - (290) (290)
Issue of equity 7 515 - - - - 522
Cost of issue of equity - (8) - - - - (8)
Net dividends paid - - - - - (1,987) (1,987)
As at 30 September 2016 868 18,881 7 3,387 10,414 24,319 57,876
As at 1 April 2016 861 18,374 7 1,128 10,737 25,848 56,955
Return/(loss) and total comprehensive income for the
year - - - 6,165 (664) 1,510 7,011
Transfer of previously unrealised gains/(losses) on
realisations of investments - - - 1,330 (1,330) - -
Purchase of treasury shares - - - - - (873) (873)
Issue of equity 90 6,422 - - - - 6,512
Cost of issue of equity - (166) - - - - (166)
Net dividends paid - - - - - (3,964) (3,964)
As at 31 March 2017 951 24,630 7 8,623 8,743 22,521 65,475
* These reserves amount to GBP28,206,000 (30 September 2016:
GBP34,733,000; 31 March 2017: GBP31,264,000) which is considered
distributable.
Condensed statement of cash flows
Audited
Unaudited Unaudited year ended
six months ended 30 September 2017 six months ended 30 September 2016 31 March 2017
GBP'000 GBP'000 GBP'000
Cash flow from
operating
activities
Loan stock income
received 1,100 824 1,941
Deposit interest
received 2 51 69
Dividend income
received 20 - 45
Investment
management fees
paid (622) (541) (1,091)
Other cash payments (176) (175) (302)
Corporation tax
refund/(paid) 35 24 (127)
Net cash flow from
operating
activities 359 183 535
Cash flow from
investing
activities
Purchase of fixed
asset investments (1,084) (4,373) (4,521)
Disposal of fixed
asset investments 5 321 572
Net cash flow from
investing
activities (1,079) (4,052) (3,949)
Cash flow from
financing
activities
Issue of share
capital 267 2,243 7,809
Cost of issue of
equity - (3) (2)
Dividends paid (1,877) (1,705) (3,424)
Purchase of own
shares (including
costs) (157) (290) (803)
Net cash flow from
financing
activities (1,767) 245 3,580
(Decrease)/increase
in cash and cash
equivalents (2,487) (3,624) 166
Cash and cash
equivalents at
start of period 10,496 10,330 10,330
Cash and cash
equivalents at end
of period 8,009 6,706 10,496
Cash and cash
equivalents
comprise
Cash at bank and in
hand 8,009 6,706 10,496
Cash equivalents - - -
Total cash and cash
equivalents 8,009 6,706 10,496
Notes to the condensed Financial Statements
1. Basis of preparation
The condensed Financial Statements have been prepared in accordance with
the historical cost convention, modified to include the revaluation of
investments, in accordance with applicable United Kingdom law and
accounting standards, including Financial Reporting Standard 102 ("FRS
102"), Financial Reporting Standard 104 - Interim Financial Reporting
("FRS 104"), and with the 2014 Statement of Recommended Practice
"Financial Statements of Investment Trust Companies and Venture Capital
Trusts" ("SORP") issued by The Association of Investment Companies
("AIC").
The preparation of the Financial Statements requires management to make
judgements and estimates that affect the application of policies and
reported amounts of assets, liabilities, income and expenses. The most
critical estimates and judgements relate to the determination of
carrying value of investments at fair value through profit and loss
("FVTPL"). The Company values investments by following the International
Private Equity and Venture Capital Valuation ("IPEVCV") Guidelines and
further detail on the valuation techniques used are outlined below.
The Half-yearly Financial Report has not been audited, nor has it been
reviewed by the auditor pursuant to the FRC's guidance on Review of
interim financial information.
Information about the Company can be found on page 2 of the full
Half-yearly Financial Report.
2. Accounting policies
Fixed asset investments
The Company's business is investing in financial assets with a view to
profiting from their total return in the form of income and capital
growth. This portfolio of financial assets is managed and its
performance evaluated on a fair value basis, in accordance with a
documented investment policy, and information about the portfolio is
provided internally on that basis to the Board.
In accordance with the requirements of FRS 102, those undertakings in
which the Company holds more than 20 per cent. of the equity as part of
an investment portfolio are not accounted for using the equity method.
In these circumstances the investment is measured at FVTPL.
Upon initial recognition (using trade date accounting) investments,
including loan stock, are classified by the Company as FVTPL and are
included at their initial fair value, which is cost (excluding expenses
incidental to the acquisition which are written off to the income
statement).
Subsequently, the investments are valued at 'fair value', which is
measured as follows:
-- Investments listed on recognised exchanges are valued at their bid prices
at the end of the accounting period or otherwise at fair value based on
published price quotations;
-- Unquoted investments, where there is not an active market, are valued
using an appropriate valuation technique in accordance with the IPEVCV
Guidelines. Indicators of fair value are derived using established
methodologies including earnings multiples, the level of third party
offers received, prices of recent investment rounds, net assets and
industry valuation benchmarks. Where the Company has an investment in an
early stage enterprise, the price of a recent investment round is often
the most appropriate approach to determining fair value. In situations
where a period of time has elapsed since the date of the most recent
transaction, consideration is given to the circumstances of the portfolio
company since that date in determining fair value. This includes
consideration of whether there is any evidence of deterioration or strong
definable evidence of an increase in value. In the absence of these
indicators, the investment in question is valued at the amount reported
at the previous reporting date. Examples of events or changes that could
indicate a diminution include:
-- the performance and/or prospects of the underlying business are
significantly below the expectations on which the investment was based;
-- a significant adverse change either in the portfolio company's business
or in the technological, market, economic, legal or regulatory
environment in which the business operates; or
-- market conditions have deteriorated, which may be indicated by a fall in
the share prices of quoted businesses operating in the same or related
sectors.
Investments are recognised as financial assets on legal completion of
the investment contract and are de-recognised on legal completion of the
sale of an investment.
Dividend income is not recognised as part of the fair value movement of
an investment, but is recognised separately as investment income through
the other distributable reserve when a share becomes ex-dividend.
Receivables and payables and cash are carried at amortised cost, in
accordance with FRS 102. There are no financial liabilities other than
creditors.
Investment income
Equity income
Dividend income is included in revenue when the investment is quoted
ex-dividend.
Unquoted loan stock and other preferred income
Fixed returns on non-equity shares and debt securities are recognised
when the Company's right to receive payment and expect settlement is
established. Where interest is rolled up and/or payable at redemption
then it is recognised as income unless there is reasonable doubt as to
its receipt.
Bank interest income
Interest income is recognised on an accrual basis using the rate of
interest agreed with the bank.
Investment management fees and other expenses
All expenses have been accounted for on an accruals basis. Expenses are
charged through the other distributable reserve except the following
which are charged through the realised capital reserve:
-- 75 per cent. of management fees are allocated to the capital account to
the extent that these relate to an enhancement in the value of the
investments and in line with the Board's expectation that over the long
term 75 per cent. of the Company's investment returns will be in the form
of capital gains; and
-- expenses which are incidental to the purchase or disposal of an
investment are charged through the realised capital reserve.
Performance incentive fee
In the event that a performance incentive fee crystallises, the fee will
be allocated between revenue and realised capital reserve based upon the
proportion to which the calculation of the fee is attributable to
revenue and capital returns.
Taxation
Taxation is applied on a current basis in accordance with FRS 102.
Current tax is tax payable (refundable) in respect of the taxable profit
(tax loss) for the current period or past reporting periods using the
tax rates and laws that have been enacted or substantively enacted at
the financial reporting date. Taxation associated with capital expenses
is applied in accordance with the SORP.
Deferred tax is provided in full on all timing differences at the
reporting date. Timing differences are differences between taxable
profits and total comprehensive income as stated in the financial
statements that arise from the inclusion of income and expenses in tax
assessments in periods different from those in which they are recognised
in financial statements. As a VCT the Company has an exemption from tax
on capital gains. The Company intends to continue meeting the conditions
required to obtain approval as a VCT in the foreseeable future. The
Company therefore, should have no material deferred tax timing
differences arising in respect of the revaluation or disposal of
investments and the Company has not provided for any deferred tax.
Reserves
Share premium
This reserve accounts for the difference between the price paid for
shares and the nominal value of the shares, less issue costs.
Capital redemption reserve
This reserve accounts for amounts by which the issued share capital is
diminished through the repurchase and cancellation of the Company's own
shares.
Unrealised capital reserve
Increases and decreases in the valuation of investments held at the year
end against cost are included in this reserve.
Realised capital reserve
The following are disclosed in this reserve:
-- gains and losses compared to cost on the realisation of investments;
-- expenses, together with the related taxation effect, charged in
accordance with the above policies; and
-- dividends paid to equity holders where paid out by capital.
Other distributable reserve
The Special reserve, Treasury share reserve and the Revenue reserve were
combined in 2012 to form a single reserve named other distributable
reserve.
This reserve accounts for movements from the revenue column of the
Income statement, the payment of dividends, the buy-back of shares and
other non-capital realised movements.
Dividends
Dividends by the Company are accounted for in the period in which the
dividend is paid or approved at the Annual General Meeting.
Segmental reporting
The Directors are of the opinion that the Company is engaged in a single
operating segment of business, being investment in equity and debt. The
Company invests in smaller companies principally based in the UK.
3. Gains on investments
Audited
Unaudited Unaudited year ended
six months ended 30 September 2017 six months ended 30 September 2016 31 March 2017
GBP'000 GBP'000 GBP'000
Unrealised
gains on fixed
asset
investments 711 2,259 6,165
Realised
(losses)/gains
on fixed asset
investments (23) 4 14
688 2,263 6,179
4. Investment income
Audited
Unaudited Unaudited year ended
six months ended 30 September 2017 six months ended 30 September 2016 31 March 2017
GBP'000 GBP'000 GBP'000
Income
recognised
on
investments
Loan stock
interest 1,165 1,165 2,277
Dividend
income 20 7 45
Bank deposit
interest 2 47 59
1,187 1,219 2,381
All of the Company's income is derived from operations based in the
United Kingdom.
5. Investment management fees
Audited
Unaudited Unaudited year ended
six months ended 30 September 2017 six months ended 30 September 2016 31 March 2017
GBP'000 GBP'000 GBP'000
Investment
management
fee charged
to revenue 155 136 283
Investment
management
fee charged
to capital 464 409 848
619 545 1,131
Further details of the Management agreement under which the investment
management fee is paid are given in the Strategic report on page 11 of
the Annual Report and Financial Statements for the year ended 31 March
2017.
During the period, services of a total value of GBP619,000 in management
fees and GBP25,000 in administration fees (30 September 2016: GBP545,000
in management fees and GBP24,000 in administration fees; 31 March 2017:
GBP1,131,000 in management fees and GBP49,000 in administration fees),
were purchased by the Company from Albion Capital Group LLP. At the
financial period end, the amount due to Albion Capital Group LLP in
respect of these services was GBP320,000 (30 September 2016: GBP287,000;
31 March 2017: GBP323,000).
Albion Capital Group LLP, the Manager, holds 25,957 Ordinary shares in
the Company.
Albion Capital Group LLP is, from time to time, eligible to receive
transaction fees and monitoring fees from portfolio companies. During
the period to 30 September 2017, fees of GBP98,000 attributable to the
investments of the Company were received pursuant to these arrangements
(30 September 2016: GBP63,000; 31 March 2017: GBP100,000).
6. Dividends
Audited
Unaudited Unaudited year ended
six months ended 30 September 2017 six months ended 30 September 2016 31 March 2017
GBP'000 GBP'000 GBP'000
Dividend paid on 29 July 2016 - 2.5 pence per
share - 1,987 1,987
Dividend paid on 30 December 2016 - 2.5 pence per
share - - 1,986
Dividend paid on 31 July 2017 - 2.5 pence per
share 2,179 - -
Unclaimed dividends - - (9)
2,179 1,987 3,964
The Directors have declared a second dividend for the year ending 31
March 2018 of 2.5 pence per share (total approximately GBP2,181,000),
payable on 31 January 2018 to shareholders on the register on 5 January
2018.
7. Basic and diluted return per share
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 2017 30 September 2016 31 March 2017
Revenue Capital Revenue Capital Revenue Capital
Return
attributable to
Ordinary shares
(GBP'000) 713 312 749 1,935 1,510 5,501
Weighted average
shares in
issue 87,269,018 79,499,061 80,525,974
Return per
Ordinary share
(pence) 0.8 0.4 1.0 2.4 1.9 6.8
The weighted number of shares is calculated excluding treasury shares of
8,581,188 (30 September 2016: 7,391,188; 31 March 2017: 8,263,188).
There are no convertible instruments, derivatives or contingent share
agreements in issue, and therefore no dilution affecting the return per
share. The basic return per share is therefore the same as the diluted
return per share.
8. Called up share capital
Unaudited 30 Unaudited 30 Audited
September 2017 September 2016 31 March 2017
Allotted, called up and fully paid shares of 1 penny
each
Number of shares 95,825,075 86,818,875 95,056,427
Nominal value of allotted shares (GBP'000) 958 868 951
Voting rights (number of shares net of treasury shares) 87,243,887 79,427,687 86,793,239
During the period to 30 September 2017 the Company purchased 318,000
Ordinary shares (nominal value of GBP3,180) to be held in treasury (30
September 2016: 436,748; 31 March 2017: 1,308,748) at a cost of
GBP226,000 (30 September 2016: GBP290,000; 31 March 2017: GBP873,000)
representing 0.3% of the shares in issue as at 30 September 2017.
The total number of Ordinary shares held in treasury as at 30 September
2017 was 8,581,188 (30 September 2016: 7,391,188; 31 March 2017:
8,263,188) representing 9.0% of the share capital as at 30 September
2017.
Under the terms of the Dividend Reinvestment Scheme Circular dated 10
July 2008, the following new Ordinary shares of nominal value 1 penny
per share were allotted during the period:
Number
of
Date of shares Aggregate nominal value of shares Issue price Net invested Opening-market price on allotment date
allotment allotted (GBP'000) (pence per share) (GBP'000) (pence per share)
31 July
2017 402,670 4 72.9 292 71.0
Under the terms of the Albion VCTs Prospectus Top Up Offers 2016/2017,
the following new Ordinary shares of nominal value 1 penny each were
allotted during the period to 30 September 2017:
Number
of
Date of shares Aggregate nominal value of shares Issue price Net consideration received Opening market price on allotment date
allotment allotted (GBP'000) (pence per share) (GBP'000) (pence per share)
7 April
2017 284,008 3 75.3 207 68.0
7 April
2017 29,427 - 74.9 22 68.0
7 April
2017 52,543 1 74.5 38 68.0
365,978 4 267
The offer was fully subscribed and closed on 9 February 2017 after
reaching its GBP6 million limit.
9. Commitments and contingencies
As at 30 September 2017, the Company had no financial commitments (30
September 2016: GBP140,000; 31 March 2017: nil).
There are no contingencies or guarantees of the Company as at 30
September 2017 (30 September 2016 and 31 March 2017: nil).
10. Post balance sheet events
Since 30 September 2017 the Company has had the following material post
balance sheet events:
-- Investment of GBP940,000 in Beddlestead Limited;
-- Investment of GBP750,000 in Women's Health (London West One) Limited; and
-- Investment of GBP254,000 in G. Network Communications Limited.
11. Related party transactions
Other than transactions with the Manager as described in Note 5, there
are no other related party transactions.
12. Going concern
The Board's assessment of liquidity risk remains unchanged since the
last Annual Report and Financial Statements for the year ended 31 March
2017, and is detailed on page 53 of those accounts.
The Company has adequate cash and liquid resources. The portfolio of
investments is diversified in terms of sector, and the major cash
outflows of the Company (namely investments, dividends and share
buy-backs) are within the Company's control. Accordingly, after making
diligent enquiries, the Directors have a reasonable expectation that the
Company has adequate resources to continue in operational existence for
the foreseeable future. For this reason, the Directors have adopted the
going concern basis in preparing this Half-yearly Financial Report and
this is in accordance with the Guidance on Risk Management, Internal
Control and Related Financial and Business Reporting issued by the
Financial Reporting Council in September 2014.
13. Risks and uncertainties
The Board considers that the Company faces the following principal risks
and uncertainties:
1. Investment and performance risk
The risk of investment in poor quality assets, which could reduce the
capital and income returns to shareholders, and could negatively impact
on the Company's current and future valuations. By nature, smaller
unquoted businesses, such as those that qualify for venture capital
trust purposes, are more fragile than larger, long established
businesses.
To reduce this risk, the Board places reliance upon the skills and
expertise of the Manager and its track record over many years of making
successful investments in this segment of the market. In addition, the
Manager operates a formal and structured investment appraisal and review
process, which includes an Investment Committee, comprising investment
professionals from the Manager and at least one external investment
professional. The Manager also invites and takes account of comments
from non-executive Directors of the Company on investments discussed at
the Investment Committee meetings. Investments are actively and
regularly monitored by the Manager (investment managers normally sit on
portfolio company boards), including the level of diversification in the
portfolio, and the Board receives detailed reports on each investment as
part of the Manager's report at quarterly board meetings.
2. Valuation risk
The Company's investment valuation methodology is reliant on the
accuracy and completeness of information that is issued by portfolio
companies. In particular, the Directors may not be aware of or take into
account certain events or circumstances which occur after the
information issued by such companies is reported.
As described in note 2 of the Financial Statements, the investments held
by the Company are classified at fair value through profit or loss and
valued in accordance with the International Private Equity and Venture
Capital Valuation Guidelines. These guidelines set out recommendations,
intended to represent current best practice on the valuation of venture
capital investments. These investments are valued on the basis of
forward looking estimates and judgements about the business itself, its
market and the environment in which it operates, together with the state
of the mergers and acquisitions market, stock market conditions and
other factors. In making these judgements the valuation takes into
account all known material facts up to the date of approval of the
Financial Statements by the Board. The values of all investments are at
cost (reviewed for impairment) or supported by independent third party
professional valuations.
3. VCT approval risk
The Company must comply with section 274 of the Income Tax Act 2007
which enables its investors to take advantage of tax relief on their
investment and on future returns. Breach of any of the rules enabling
the Company to hold VCT status could result in the loss of that status.
To reduce this risk, the Board has appointed the Manager, which has a
team with significant experience in venture capital trust management,
used to operating within the requirements of the venture capital trust
legislation. In addition, to provide further formal reassurance, the
Board has appointed Philip Hare & Associates LLP as its taxation adviser,
who report quarterly to the Board to independently confirm compliance
with the venture capital trust legislation, to highlight areas of risk
and to inform on changes in legislation. Each investment in a new
portfolio company is also pre-cleared with H.M. Revenue & Customs.
4. Regulatory and compliance risk
The Company is listed on The London Stock Exchange and is required to
comply with the rules of the UK Listing Authority, as well as with the
Companies Act, Accounting Standards and other legislation. Failure to
comply with these regulations could result in a delisting of the
Company's shares, or other penalties under the Companies Act or from
financial reporting oversight bodies.
Board members and the Manager have experience of operating at senior
levels within or advising quoted companies. In addition, the Board and
the Manager receive regular updates on new regulation from its auditor,
lawyers and other professional bodies. The Company is subject to
compliance checks through the Manager's Compliance Officer. The Manager
reports monthly to its Board on any issues arising from compliance or
regulation. These controls are also reviewed as part of the quarterly
Board meetings, and also as part of the review work undertaken by the
Manager's Compliance Officer. The report on controls is also evaluated
by the internal auditors.
5. Operational and internal control risk
The Company relies on a number of third parties, in particular the
Manager, for the provision of investment management and administrative
functions. Failures in key systems and controls within the Manager's
business could put assets of the Company at risk or result in reduced or
inaccurate information being passed to the Board or to shareholders.
The Company and its operations are subject to a series of rigorous
internal controls and review procedures exercised throughout the
year.The Audit Committee reviews the Internal Audit Reports prepared by
the Manager's internal auditors, PKF Littlejohn LLP. On an annual basis,
the Audit Committee chairman meets with the internal audit Partner to
provide an opportunity to ask specific detailed questions in order to
satisfy itself that the Manager has strong systems and controls in place
including those in relation to business continuity.
In addition, the Board regularly reviews the performance of its key
service providers, particularly the Manager, to ensure they continue to
have the necessary expertise and resources to deliver the Company's
investment objective and policies. The Manager and other service
providers have also demonstrated to the Board that there is no undue
reliance placed upon any one individual within Albion Capital Group LLP.
6. Economic and political risk
Changes in economic conditions, including, for example, interest rates,
rates of inflation, industry conditions, competition, political and
diplomatic events and other factors could substantially and adversely
affect the Company's prospects in a number of ways.
The Company invests in a diversified portfolio of companies across a
number of industry sectors and in addition often invests a mixture of
equity and secured loan stock in portfolio companies. Whilst the
Company's policy has historically been that its portfolio companies
should not normally have external borrowings and for the Company
normally to have a first charge over portfolio companies' assets,
changes in VCT legislation will preclude the use of secured loan stock
in future investments. At any given time, the Company has sufficient
cash resources to meet its operating requirements, including share
buy-backs and follow on investments.
7. Market value of Ordinary shares
The market value of Ordinary shares can fluctuate. The market value of
an Ordinary share, as well as being affected by its net asset value and
prospective net asset value, also takes into account its dividend yield
and prevailing interest rates. As such, the market value of an Ordinary
share may vary considerably from its underlying net asset value. The
market prices of shares in quoted investment companies can, therefore,
be at a discount or premium to the net asset value at different times,
depending on supply and demand, market conditions, general investor
sentiment and other factors. Accordingly the market price of the
Ordinary shares may not fully reflect their underlying net asset value.
The Company operates a share buy-back policy and the Board targets such
buy-backs to be in the region of a 5 per cent. discount to the most
recently announced net asset value, so far as market conditions and
liquidity permit. From time to time buy-backs cannot be applied, for
example when the Company is subject to a close period, or if it were to
exhaust its buy-back authorities, which are renewed each year. New
Ordinary shares are issued at sufficient premium to net asset value to
cover the costs of issue and to avoid asset value dilution to existing
investors.
14. Other information
The information set out in this Half-yearly Financial Report does not
constitute the Company's statutory accounts within the terms of section
435 of the Companies Act 2006 for the periods ended 30 September 2017
and 30 September 2016, and is unaudited. The information for the year
ended 31 March 2017 does not constitute statutory accounts within the
terms of section 435 of the Companies Act 2006 but is derived from the
audited statutory accounts for the financial year, which have been
delivered to the Registrar of Companies. The Auditor reported on those
accounts; their report was unqualified and did not contain a statement
under s498 (2) or (3) of the Companies Act 2006.
15. Publication
This Half-yearly Financial Report is being sent to shareholders and
copies will be made available to the public at the registered office of
the Company, Companies House, the National Storage Mechanism and also
electronically at www.albion.capital/funds/AAVC, where the Report can be
accessed as a PDF document in the 'Financial Reports and Circulars'
section.
Dividend history for Albion Venture Capital Trust PLC 'C Shares' and
Albion Prime VCT PLC
Proforma(ii)
C shares(i) Albion Prime VCT PLC
Total shareholder return to 30 September 2017 (pence per share) (pence per share)
Total dividends paid to the year ended 31 March 2017 133.25 68.75
Total dividends paid in the six months to 30 September
2017 2.50 2.20
Total dividends paid to 30 September 2017 135.75 70.95
Proforma net asset value as at 30 September 2017 74.10 65.22
Total proforma shareholder return to 30 September
2017 209.85 136.17
Notes
1. The Ordinary Shares and the C Shares merged on an equal basis.
2. The proforma shareholder returns presented above are based on the
dividends paid to shareholders before the merger and the pro-rata net
asset value per share and pro-rata dividends per share paid to 30
September 2017. This pro-forma is based upon 0.8801 Albion Venture
Capital Trust PLC shares for every Albion Prime VCT PLC share which
merged with Albion Venture Capital Trust PLC on 25 September 2012.
Split of portfolio by valuation as at 30 September 2017:
http://hugin.info/141809/R/2155316/828160.pdf
This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Albion Venture Capital Trust PLC via Globenewswire
http://www.closeventures.co.uk
(END) Dow Jones Newswires
December 12, 2017 08:51 ET (13:51 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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