TIDMAADV
Albion Development VCT PLC
LEI Code 213800FDDMBD9QLHLB38
As required by the UK Listing Authority's Disclosure and Transparency
Rule 4.2, Albion Development VCT PLC today makes public its information
relating to the Half-yearly Financial Report (which is unaudited) for
the six months to 30 June 2017. This announcement was approved by the
Board of Directors on 31 August 2017.
The full Half-yearly Financial Report (which is unaudited) for the
period to 30 June 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/AADV/30Jun2017.pdf.
Investment objective and policy
Albion Development VCT PLC's (the "Company's") investment policy is
intended to provide investors with a regular and predictable source of
dividend income combined with the prospects of long term capital growth.
This is achieved by establishing a diversified portfolio of holdings in
smaller, unquoted companies. It is intended that this will be achieved
as follows:
-- Through investment in a number of higher risk companies with greater
growth prospects in sectors such as software and computer services, and
medical technology. Against this is a balanced portfolio of more stable
investments that provide a strong income stream.
-- In neither category do portfolio companies normally have any external
borrowings with a prior charge ranking ahead of the Company.
-- Up to two-thirds of qualifying investments by cost comprise loan stock
secured with a first charge on the portfolio company's assets.
In this way, risk is spread by investing in a number of different
businesses within venture capital trust qualifying industry sectors
using a mixture of securities. The maximum amount which the Company will
invest in a single company is 15 per cent. of the Company's assets at
cost, thus ensuring a spread of investment risk. The value of an
individual investment may increase over time as a result of trading
progress and it is possible that it may grow in value to a point where
it represents a significantly higher proportion of total assets prior to
a realisation opportunity being available.
Under its Articles of Association, the Company's maximum exposure in
relation to gearing is restricted to 10 per cent. of its adjusted share
capital and reserves.
Background to the Company
The Company is a venture capital trust which raised a total of GBP33.3
million through the issue of shares between 1999 and 2004. The C shares
merged with the Ordinary shares in 2007.
A further GBP6.3 million was raised through an issue of new D shares in
2009/2010. The D shares converted to Ordinary shares on 31 March 2015 on
the basis of their respective audited net asset value per share at 31
December 2014, in line with the original prospectus. Accordingly, D
shareholders received 1.4975 Ordinary shares for each D share they
owned.
An additional GBP23.8 million has been raised for the Ordinary shares
through the Albion VCTs Top Up Offers since 2011. The funds raised will
be invested in accordance with the Company's existing investment policy.
Financial calendar
Record date for second dividend for the year 8 September 2017
Payment date for second dividend for the year 29 September 2017
Financial year end 31 December
Financial highlights
Unaudited six months ended Unaudited six months ended Audited year ended
Ordinary 30 June 2017 30 June 2016 31 December 2016
shares (pence per share) (pence per share) (pence per share)
Dividends
paid 2.0 2.5 5.0
Total
return 2.7 0.7 4.7
Net asset
value 71.3 69.3 70.7
Ordinary C shares D shares
shares (pence (pence per (pence per
per share) (ii) share) (ii) (iv) share) (ii) (v)
Total shareholder return to 30 June 2017
Total dividends paid during the period
ended:
31 December 1999(i) 1.0 - -
31 December 2000 2.9 - -
31 December 2001 3.9 - -
31 December 2002 4.2 - -
31 December 2003(iii) 4.5 0.7 -
31 December 2004 4.0 2.0 -
31 December 2005 5.2 5.9 -
31 December 2006 3.0 4.5 -
31 December 2007 5.0 5.3 -
31 December 2008 12.0 12.8 -
31 December 2009 4.0 4.3 -
31 December 2010 8.0 8.6 1.0
31 December 2011 5.0 5.4 2.5
31 December 2012 5.0 5.4 3.5
31 December 2013 5.0 5.4 5.0
31 December 2014 5.0 5.4 5.0
31 December 2015 5.0 5.4 7.5
31 December 2016 5.0 5.4 7.5
30 June 2017 2.0 2.1 3.0
Total dividends paid to 30 June 2017 89.8 78.6 35.0
Net asset value as at 30 June 2017 71.3 76.4 106.8
Total shareholder return to 30 June 2017 161.1 155.0 141.8
The Directors have declared a second dividend of 2.0 pence per Ordinary
share payable on 29 September 2017 to shareholders on the register on 8
September 2017.
Notes
(i) Assuming subscription for Ordinary shares by the First Closing on 26
January 1999.
(ii) Excludes tax benefits upon subscription.
(iii) Those subscribing for C shares after 30 June 2003 were not
entitled to the interim dividend.
(iv) The C shares were converted into Ordinary shares on 31 March 2007,
with a conversion ratio of 1.0715 Ordinary shares for each C share. The
net asset value per share and all dividends paid subsequent to the
conversion of the C shares to the Ordinary shares are multiplied by the
conversion factor of 1.0715 in respect of the C shares return, in order
to give an accurate picture of the shareholder value since launch
relating to the C shares.
(v) The D shares were converted into Ordinary shares on 31 March 2015,
with a conversion ratio of 1.4975 Ordinary shares for each D share. The
net asset value per share and all dividends paid subsequent to the
conversion of the D shares to the Ordinary shares are multiplied by the
conversion factor of 1.4975 in respect of the D shares return, in order
to give an accurate picture of the shareholder value since launch
relating to the D shares.
Interim management report
Introduction
The results for Albion Development VCT PLC for the six months to 30 June
2017 showed a total return of 2.7 pence per share compared to a total
return of 0.7 pence per share for the same period in the previous year.
Net asset value at 30 June 2017 was 71.3 pence per share.
Investment performance and progress
The results for the six months to 30 June 2017 were a sharp improvement
on the interim period for 2016, mainly as a result of write-ups in
Egress Software Technologies and Grapeshot. Both of these companies
continue to show strong growth, with the latter now having moved into
profitability.
GBP2.3 million was invested into new and existing portfolio companies,
with new investments comprising GBP1 million into MPP Global Solutions
(a cloud subscription platform), GBP315,000 into Quantexa (analytics for
crime detection), GBP273,000 into G.Network Communications (fibre optic
broadband services in central London), and GBP110,000 into Locum's Nest
(digital access for NHS locum doctors). In addition, investment
disposals included Masters Pharmaceuticals, AMS Sciences and Blackbay,
while the business and assets of The Weybridge Club were also sold.
Investment portfolio by sector
Set out at the bottom of this announcement is the sector diversification
of the portfolio of investments as at 30 June 2017.
Risks and uncertainties
The withdrawal of the UK from the European Union is having an uncertain
effect on consumer and business confidence, and it would be wise to
prepare for a renewed economic slowdown in the UK. Meanwhile, global
growth is muted and some countries are close to recession. Overall
investment risk, however, is mitigated through a variety of processes,
including our policies of ensuring that the Company has a first charge
over portfolio companies' assets wherever possible and second of aiming
to achieve balance in the portfolio through the inclusion of sectors
that are less exposed to the business and consumer cycles.
Other principal risks and uncertainties are detailed in note 13 below.
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 constraint that such purchases are in the Company's
interest.
It is the Board's intention for such buy-backs to be in the region of a
5 per cent. discount to net asset value, so far as market conditions and
liquidity permit.
Albion VCTs Top Up Offers
The Company was pleased to announce on 30 January 2017 that it had
reached its GBP4m limit under the Albion VCTs Prospectus Top Up Offers
2016/2017 which was fully subscribed and closed.
The proceeds of the Offer are being used to provide further resources to
the Company at a time when a number of attractive new investment
opportunities are being seen.
The Company announced on 14 June 2017 that, subject to regulatory
approval, it intends to launch a prospectus top up offer of new ordinary
shares for subscription. Full details of the Offer will be contained in
a prospectus that is expected to be published in early September 2017
and will be available on the Albion Capital website
(www.albion.capital).
Transactions with the Manager
Details of the transactions that took place with the Manager in the
period can be found in note 5. Details of related party transactions can
be found in note 11.
Board composition
After 18 years on the Board, Jonathan Thornton will be retiring at the
start of November. I would like to thank him hugely for his contribution
and counsel over many years. The Board's policy on the recruitment of
new Directors is to attract a range of backgrounds, skills and
experience. We expect to announce his replacement shortly.
Results, dividend and prospects
As at 30 June 2017, the net asset value per Ordinary share was 71.3
pence (30 June 2016: 69.3 pence; 31 December 2016: 70.7 pence). In line
with the revised dividend policy set out in the 31 December 2016 Annual
Report and Financial Statements, the annual dividend target is now 4.0
pence per share. A first dividend of 2.0 pence per share was paid on 31
May 2017. The Directors have declared a second dividend of 2.0 pence per
share payable on 29 September 2017, to shareholders on the register on 8
September 2017.
The Board is encouraged by the new investments being made and by the
prospects in a number of portfolio companies. We look forward to the
full year results with confidence.
Geoffrey Vero
Chairman
31 August 2017
Responsibility statement
The Directors, Geoffrey Vero, Ben Larkin, Jonathan Thornton and Patrick
Reeve, are responsible for the preparation of the Half-yearly Financial
Report. In preparing these condensed Financial Statements for the period
to 30 June 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
Geoffrey Vero
Chairman
31 August 2017
Portfolio of investments
The following is a summary of investments as at 30 June 2017:
% voting Cost Cumulative movement in value Value Change in value for the period*
Asset-based investments rights GBP'000 GBP'000 GBP'000 GBP'000
Radnor House School (Holdings) Limited 8.8 2,772 2,576 5,348 43
Chonais River Hydro Limited 4.6 1,705 360 2,065 3
The Street by Street Solar Programme Limited 12.4 1,291 720 2,011 90
Regenerco Renewable Energy Limited 11.9 1,204 470 1,674 14
Alto Prodotto Wind Limited 9.4 831 457 1,288 12
Earnside Energy Limited 6.8 1,089 174 1,263 (9)
Bravo Inns II Limited 6.7 1,080 179 1,259 50
Albion Investment Properties Limited 68.2 929 (75) 854 16
TWCL Limited (Previously The Weybridge Club Limited) 9.4 518 (18) 500 25
The Q Garden Company Limited 16.6 466 2 468 2
AVESI Limited 10.5 340 115 455 3
Dragon Hydro Limited 5.5 233 114 347 (5)
G.Network Communications Limited 6.1 273 - 273 -
MHS 1 Limited (Previously The Charnwood Pub Company
Limited) 3.3 231 - 231 -
Greenenerco Limited 4.0 138 70 208 (8)
Bravo Inns Limited 2.6 267 (84) 183 (2)
Premier Leisure (Suffolk) Limited 6.2 109 15 124 (6)
Erin Solar Limited 4.3 120 (5) 115 (2)
Infinite Ventures (Goathill) Limited 0.8 32 5 37 2
Beddlestead Farm Limited 10.0 10 - 10 -
Total asset-based investments 13,638 5,075 18,713 228
% voting Cost Cumulative movement in value Value Change in value for the period*
Growth investments rights GBP'000 GBP'000 GBP'000 GBP'000
Egress Software Technologies Limited 6.1 610 1,794 2,404 648
Proveca Limited 11.8 1,084 1,252 2,336 50
Grapeshot Limited 3.9 806 876 1,682 637
Mirada Medical Limited 7.8 659 645 1,304 146
Hilson Moran Holdings Limited 8.0 231 996 1,227 142
MPP Global Solutions Limited 3.4 1,000 - 1,000 -
Relayware Limited 2.8 895 (10) 885 (7)
MyMeds&Me Limited 4.5 546 277 823 17
Aridhia Informatics Limited 6.0 976 (206) 770 109
Convertr Media Limited 6.3 583 - 583 -
OmPrompt Holdings Limited 7.3 682 (178) 504 (205)
DySIS Medical Limited 4.2 950 (502) 448 (62)
Process Systems Enterprise Limited 1.4 131 301 432 18
Black Swan Data Limited 1.2 370 - 370 -
Secured by Design Limited 2.2 330 - 330 (1)
Quantexa Limited 2.8 315 - 315 -
Panaseer Limited 2.8 248 64 312 65
Cisiv Limited 7.3 566 (275) 291 1
Abcodia Limited 4.7 604 (345) 259 -
Memsstar Limited 2.8 122 106 228 120
Oviva AG 2.1 159 - 159 (1)
Oxsensis Limited 1.4 224 (72) 152 54
Sandcroft Avenue Limited 1.7 150 (20) 130 -
Dickson Financial Services Limited 8.4 84 41 125 10
Locum's Nest Limited 2.4 110 - 110 -
InCrowd Sports Limited 1.6 72 - 72 -
CSS Group Limited 2.7 34 12 46 15
Elements Software Limited 0.6 3 (3) - -
Total growth investments 12,544 4,753 17,297 1,756
Total unquoted fixed asset investments 26,182 9,828 36,010 1,984
% voting Cost Cumulative movement in value Value Change in value for the period*
Quoted investments rights GBP'000 GBP'000 GBP'000 GBP'000
Mi-Pay Group PLC 3.5 823 (646) 177 (118)
ComOps Limited 0.2 11 (3) 8 (1)
Total quoted investments 834 (649) 185 (119)
Total fixed asset investments 27,016 9,179 36,195 1,865
* as adjusted for additions and disposals during the
period; including realised gains/(losses).
Total change in value of investments for the period 1,865
Movement in loan stock accrued interest 112
Unrealised gains sub-total 1,977
Realised gains in the current period 124
Total gains on investments as per Income statement 2,101
Realisations and loan stock repayments in the period Cost Opening value Disposal proceeds Total realised gain/(loss) Gain/(loss) on opening value
to 30 June 2017 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Disposals:
Blackbay Limited 836 1,006 1,164 328 158
Masters Pharmaceuticals Limited 316 519 524 208 5
AMS Sciences Limited 222 158 152 (70) (6)
Loan stock repayments:
Radnor House School (Holdings) Limited 88 88 88 - -
Memsstar Limited 1 57 30 29 (27)
Alto Prodotto Wind Limited 9 14 14 5 -
Greenenerco Limited 1 2 2 1 -
Escrow adjustments and other:
Escrow adjustments - - (6) (6) (6)
TWCL Limited 183 - - (183) -
Total 1,656 1,844 1,968 312 124
Condensed income statement
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 2017 30 June 2016 31 December 2016
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 - 2,101 2,101 - 324 324 - 2,911 2,911
Investment income 4 344 - 344 655 - 655 1,114 - 1,114
Investment management fees 5 (130) (390) (520) (116) (347) (463) (239) (717) (956)
Other expenses (118) - (118) (108) - (108) (210) - (210)
Profit/(loss) on ordinary activities before tax 96 1,711 1,807 431 (23) 408 665 2,194 2,859
Tax (charge)/credit on ordinary activities (8) 8 - (77) 69 (8) (116) 119 3
Profit and total comprehensive income attributable
to shareholders 88 1,719 1,807 354 46 400 549 2,313 2,862
Basic and diluted return per share (pence)* 7 0.1 2.6 2.7 0.6 0.1 0.7 0.9 3.8 4.7
* excluding treasury shares
The accompanying notes form an integral part of this Half-yearly
Financial Report.
Comparative figures have been extracted from the unaudited Half-yearly
Financial Report for the six months ended 30 June 2016 and the audited
statutory accounts for the year ended 31 December 2016.
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 June 2017 30 June 2016 31 December 2016
Note GBP'000 GBP'000 GBP'000
Fixed asset investments 36,195 32,509 33,798
Current assets
Trade and other
receivables less than
one year 304 348 441
Cash and cash
equivalents 12,247 10,954 10,153
12,551 11,302 10,594
Total assets 48,746 43,811 44,392
Creditors: amounts
falling due within one
year
Trade and other
payables less than one
year (440) (404) (307)
Total assets less
current liabilities 48,306 43,407 44,085
Equity attributable to
equityholders
Called up share capital 8 748 685 689
Share premium 21,923 17,634 17,886
Capital redemption
reserve 12 12 12
Unrealised capital
reserve 9,042 5,400 7,253
Realised capital
reserve 4,693 4,349 4,763
Other distributable
reserve 11,888 15,327 13,482
Total equity
shareholders' funds 48,306 43,407 44,085
Basic and diluted net
asset value per share
(pence)* 71.3 69.3 70.7
*excluding treasury shares
The accompanying notes form an integral part of this Half-yearly
Financial Report.
Comparative figures have been extracted from the unaudited Half-yearly
Financial Report for the six months ended 30 June 2016 and the audited
statutory accounts for the year ended 31 December 2016.
These Financial Statements were approved by the Board of Directors and
authorised for issue on 31 August 2017, and were signed on its behalf by
Geoffrey Vero
Chairman
Company number: 03654040
Condensed statement of changes in equity
Capital Unrealised Realised Other
Called up share Share redemption capital capital 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 January 2017 689 17,886 12 7,253 4,763 13,482 44,085
Profit/(loss) and total comprehensive income for the
period - - - 1,977 (258) 88 1,807
Transfer of previously unrealised gains on disposal
of investments - - - (188) 188 - -
Purchase of shares for treasury - - - - - (325) (325)
Issue of equity 59 4,147 - - - - 4,206
Cost of issue of equity - (110) - - - - (110)
Dividends paid - - - - - (1,357) (1,357)
As at 30 June 2017 748 21,923 12 9,042 4,693 11,888 48,306
As at 1 January 2016 600 11,652 12 4,883 4,820 16,933 38,900
Profit/(loss) and total comprehensive income for the
period - - - 493 (447) 354 400
Transfer of previously unrealised losses on disposal
of investments - - - 24 (24) - -
Purchase of shares for treasury - - - - - (388) (388)
Issue of equity 85 6,139 - - - - 6,224
Cost of issue of equity - (157) - - - - (157)
Dividends paid - - - - - (1,572) (1,572)
As at 30 June 2016 685 17,634 12 5,400 4,349 15,327 43,407
As at 1 January 2016 600 11,652 12 4,883 4,820 16,933 38,900
Profit and total comprehensive income for the period - - - 1,690 623 549 2,862
Transfer of previously unrealised losses on disposal
or write off of investments - - - 680 (680) - -
Purchase of shares for treasury - - - - - (864) (864)
Issue of equity 89 6,389 - - - - 6,478
Cost of issue of equity - (155) - - - - (155)
Dividends paid - - - - - (3,136) (3,136)
As at 31 December 2016 689 17,886 12 7,253 4,763 13,482 44,085
*These reserves amount to GBP16,581,000 (30 June 2016: GBP19,676,000; 31
December 2016: GBP18,245,000) which is considered distributable.
Condensed statement of cash flows
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 2017 30 June 2016 31 December 2016
GBP'000 GBP'000 GBP'000
Cash flow from
operating
activities
Loan stock income
received 364 483 767
Deposit interest
received 4 41 96
Dividend income
received 57 45 74
Investment
management fees
paid (496) (438) (926)
Other cash payments (131) (109) (217)
Corporation tax
received/(paid) 3 18 (20)
Net cash flow from
operating
activities (199) 40 (226)
Cash flow from
investing
activities
Purchase of fixed
asset investments (2,344) (1,025) (2,715)
Disposal of fixed
asset investments 2,107 813 3,797
Net cash flow from
investing
activities (237) (212) 1,082
Cash flow from
financing
activities
Issue of share
capital 3,882 5,820 5,820
Cost of issue of
shares (2) - -
Equity dividends
paid (1,142) (1,320) (2,631)
Purchase of own
shares (including
costs) (208) (346) (864)
Net cash flow from
financing
activities 2,530 4,154 2,325
Increase in cash and
cash equivalents 2,094 3,982 3,181
Cash and cash
equivalents at
start of period 10,153 6,972 6,972
Cash and cash
equivalents at end
of period 12,247 10,954 10,153
Cash and cash
equivalents
comprise:
Cash at bank and in
hand 12,247 10,954 10,153
Cash equivalents - - -
Total cash and cash
equivalents 12,247 10,954 10,153
Notes to the condensed Financial Statements
1. Basis of accounting
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 IPEVCV
Guidelines and further detail on the valuation techniques used are in
note 2 below.
The Half-Yearly 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.
Company information can be found on page 2 of the 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, the 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 are
designated 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.
Debtors and creditors 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 accruals basis using the rate of
interest agreed with the bank.
Investment management fees and 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. This is 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 or is
provided for, the fee will be allocated between other distibutable and
realised capital reserves 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
(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 the 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, or
permanent diminutions in value;
-- 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 the 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
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 2017 30 June 2016 31 December 2016
GBP'000 GBP'000 GBP'000
Unrealised gains on
fixed asset
investments 1,977 493 1,690
Realised
gains/(losses) on
fixed asset
investments 124 (169) 1,221
2,101 324 2,911
4. Investment income
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 2017 30 June 2016 31 December 2016
GBP'000 GBP'000 GBP'000
Income recognised on
investments
Loan stock interest
and other fixed
returns 285 564 949
UK dividend income 57 45 74
Bank deposit
interest 2 46 91
344 655 1,114
All of the Company's income is derived from operations based in the
United Kingdom.
5. Investment management fees
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 2017 30 June 2016 31 December 2016
GBP'000 GBP'000 GBP'000
Investment
management fee
charged to revenue 130 116 239
Investment
management fee
charged to capital 390 347 717
520 463 956
Further details of the Management agreement under which the investment
management fee is paid are given in the Strategic report on page 10 of
the Annual Report and Financial Statements for the year ended 31
December 2016.
During the period, services to a total value of GBP520,000 (30 June
2016: GBP463,000; 31 December 2016: GBP956,000) 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
GBP272,000 (30 June 2016: GBP244,000; 31 December 2016: GBP248,000).
During the period, the Company was not charged by Albion Capital Group
LLP in respect of Patrick Reeve's services as a Director (30 June 2016:
GBPnil; 31 December 2016: GBPnil).
Albion Capital Group LLP is, from time to time, eligible to receive
transaction fees and Directors' fees from portfolio companies. During
the period ended 30 June 2017, fees of GBP101,000 attributable to the
investments of the Company were paid pursuant to these arrangements (30
June 2016: GBP66,000; 31 December 2016: GBP150,000).
Albion Capital Group LLP holds 43,360 Ordinary shares in the Company.
6. Dividends
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 2017 30 June 2016 31 December 2016
GBP'000 GBP'000 GBP'000
Dividend of 2.5p per Ordinary share
paid on 31 May 2016 - 1,572 1,572
Dividend of 2.5p per Ordinary share
paid on 30 September 2016 - - 1,564
Dividend of 2.0p per Ordinary share paid on 31 May
2017 1,357 - -
1,357 1,572 3,136
The Directors have declared a dividend of 2.0 pence per Ordinary share
(total approximately GBP1,355,000), payable on 29 September 2017 to
shareholders on the register on 8 September 2017.
7. Basic and diluted return per share
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 2017 30 June 2016 31 December 2016
Ordinary
shares Revenue Capital Revenue Capital Revenue Capital
Return
attributable
to Ordinary
shares
(GBP'000) 88 1,719 354 46 549 2,313
Weighted
average
shares in
issue 66,871,021 60,228,830 61,380,295
Return per
Ordinary
share
(pence) 0.1 2.6 0.6 0.1 0.9 3.8
The weighted average number of shares is calculated excluding treasury
shares of 7,039,700 (30 June 2016: 5,834,700; 31 December 2016:
6,556,700)
There are no convertible instruments, derivatives or contingent share
agreements in issue hence there are no dilution effects to the return
per share. The basic return per share is therefore the same as the
diluted return per share.
8. Ordinary share capital
Unaudited Unaudited Audited
30 June 2017 30 June 2016 31 December 2016
Allotted, called up and fully paid shares of 1 penny
each
Number of shares 74,804,925 68,502,563 68,883,574
Nominal value of allotted shares (GBP'000) 748 685 689
Voting rights (number of shares net of treasury shares) 67,765,225 62,667,863 62,326,874
During the period to 30 June 2017 the Company purchased
483,000 Ordinary shares (nominal value of GBP4,830)
for treasury at a cost of GBP325,000. The total number
of Ordinary shares held in treasury as at 30 June
2017 was 7,039,700 (30 June 2016: 5,834,700; 31 December
2016: 6,556,700) representing 9.4 per cent. of the
Ordinary shares in issue as at 30 June 2017.
Under the terms of the Dividend Reinvestment Scheme
Circular dated 27 August 2008, the following new Ordinary
shares, of nominal value 1 penny each, were allotted:
Aggregate nominal Issue price
Number of shares amount of shares (pence per Net invested Opening market price on allotment date (pence per
Date of allotment issued (GBP'000) share) (GBP'000) share)
31 May 2017 298,848 3 72.0 214 68.5
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 June 2017:
Net
Aggregate nominal Issue price consideration
Number of shares amount of shares (pence per received Opening market price on allotment date (pence per
Date of allotment issued (GBP'000) share) (GBP'000) share)
31 January 2017 1,203,858 12 70.4 831 64.8
31 January 2017 621,281 6 70.7 428 64.8
31 January 2017 3,549,732 36 71.1 2,448 64.8
7 April 2017 20,981 - 72.2 15 67.5
7 April 2017 26,227 - 72.6 18 67.5
7 April 2017 200,424 2 72.9 142 67.5
5,622,503 56 3,882
9. Commitments and contingencies
As at 30 June 2017, the Company had the following financial commitments
in respect of investments:
-- Investment of GBP14,000 in Aridhia Informatics Limited.
There were no contingencies or guarantees of the Company as at 30 June
2017 (30 June 2016: GBPnil; 31 December 2016: GBPnil).
10. Post balance sheet events
Since 30 June 2017, the Company has completed the following
transactions:
-- Investment of GBP812,000 in Egress Software Technologies Limited;
-- Investment of GBP273,000 in G.Network Communications Limited;
-- Investment of GBP239,000 in Black Swan Data Limited;
-- Investment of GBP45,000 in Abcodia Limited;
-- Investment of GBP14,000 in Aridhia Informatics Limited; and
-- Investment of GBP10,000 in Beddlestead Farm Limited.
11. Related party transactions
Other than transactions with the Manager as disclosed in note 5, there
are no other related party transactions or balances requiring
disclosure.
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
December 2016 and is detailed on page 52 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
In addition to the risks outlined in the Interim management report, the
Board considers that the Company faces the following major 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. 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.
3. 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.
4. 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 and has a policy of
not normally permitting any external bank borrowings within portfolio
companies. At any given time, the Company has sufficient cash resources
to meet its operating requirements, including share buy-backs and follow
on investments.
5. 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, which is designed to limit
the discount at which the Ordinary shares trade to around 5 per cent to
net asset value, by providing a purchaser through the Company in absence
of market purchasers. 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 June 2017 and 30
June 2016 and is unaudited. The information for the year ended 31
December 2016, 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/AADV, where the Report can be
accessed from the 'Financial Reports and Circulars' section.
Investment portfolio by sector (PDF):
http://hugin.info/141803/R/2130583/813980.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 Development VCT PLC - Ordinary Shares via Globenewswire
http://www.closeventures.co.uk
(END) Dow Jones Newswires
August 31, 2017 09:23 ET (13:23 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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