TIDMAATG
Albion Technology & General VCT PLC
LEI number: 213800TKJUY376H3KN16
As required by the UK Listing Authority's Disclosure and Transparency
Rule 4.2, Albion Technology & General 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 12 September 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/AATG.
Investment objective and policy
Investment objective
The Company's investment objective is to provide investors with a
regular and predictable source of dividend income combined with the
prospect of long-term capital-growth through allowing investors the
opportunity to participate in a balanced portfolio of unquoted
technology and non-technology businesses.
Investment policy
It is intended that the Company's investment portfolio will be split
approximately as follows:
-- 40 per cent. in unquoted UK technology related companies; and
-- 60 per cent. in unquoted UK non-technology companies.
This split is subject to the availability of good quality new
investments arising within the UK technology and non-technology sectors.
In neither categories listed above would portfolio companies normally
have any external borrowing with a charge ranking ahead of the Company.
Up to two thirds of investments (by cost) will comprise loan stock
secured with a first charge on the portfolio company's assets.
The Company pursues a longer term investment approach, with a view to
providing shareholders with a strong, predictable dividend flow,
combined with the prospects of capital growth. This is achieved in two
ways. First, by controlling the Company's exposure to technology risk
through ensuring that many of the companies in the non-technology
portfolio have property as their major asset, with no external
borrowings. Second, by balancing the investment portfolio by sector, so
that those areas such as leisure and business services, which are
susceptible to changes in consumer sentiment, are complemented by
sectors with more predictable long-term characteristics, such as
healthcare and the environment.
VCT qualifying investments
In addition to the above, the investment policy is designed to ensure
that the Company continues to qualify and is approved as a VCT by HM
Revenue and Customs. The maximum amount invested in any one company is
limited to any HMRC annual investment limits and, generally, no more
than 15 per cent. of the Company's assets, at cost, are invested in a
single company. It is intended that at least 80 per cent. of the
Company's funds will be invested in VCT qualifying investments.
Non-VCT qualifying investments
Funds held prior to investing in VCT qualifying assets or for liquidity
purposes will be held as cash on deposit, invested in floating rate
notes or similar instruments with banks or other financial institutions
with high credit ratings or invested in liquid open-ended equity funds
providing income and capital equity exposure (where it is considered
economic to do so). Investment in such open-ended equity funds will not
exceed 7.5 per cent. of the Company's assets at the time of investment.
Risk diversification and maximum exposures
Risk is spread by investing in a number of different businesses within
VCT qualifying industry sectors using a mixture of securities. The
maximum the Company will invest in a single company is 15 per cent. of
the Company's assets at cost. The value of an individual investment is
expected to increase over time as a result of trading progress and a
continuous assessment is made of investments' suitability for sale. It
is possible that individual holdings may grow in value to a point where
they represent a significantly higher proportion of total assets prior
to a realisation opportunity being available.
Borrowing powers
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 have any intention to utilise long-term gearing.
Background to the Company
The Company is a venture capital trust which raised GBP14.3 million in
December 2000 and 2002, and raised a further GBP35.0 million during 2006
through the launch of a C share issue. The Company has raised a further
GBP26.4m under the Albion VCTs Top-Up Offers since January 2011.
On 15 November 2013, the Company acquired the assets and liabilities of
Albion Income & Growth VCT PLC ("Income & Growth") in exchange for new
shares in the Company ("the Merger"). Each Income & Growth shareholder
received 0.7813 shares in the Company for each Income & Growth share
that they held at the date of the Merger.
Financial calendar
Record date for third dividend for the year 1 December 2017
Payment of third dividend 29 December 2017
Financial year end 31 December
Financial summary
Unaudited
Unaudited six months ended Audited
six months ended 30 June 2017 30 June 2016 year ended
(pence per share) (pence per share) 31 December 2016 (pence per share)
Dividends
paid 2.0 3.8 5.0
Revenue
return 0.1 0.5 0.8
Capital
gain/(loss) 1.9 (1.6) 1.7
Net asset
value 71.5 69.2 71.6
Ordinary shares C shares Albion Income & Growth VCT PLC
(pence per share) (i) (pence per share) (i)(ii) (pence per share) (i)(iii)
Total
shareholder
return to 30
June 2017
Total
dividends
paid during
the period
ended:
31 December
2001 1.0 - -
31 December
2002 2.0 - -
31 December
2003 1.5 - -
31 December
2004 7.5 - -
31 December
2005 9.0 - 0.6
31 December
2006 8.0 0.5 2.6
31 December
2007 8.0 2.5 3.5
31 December
2008 16.0 4.5 3.5
31 December
2009 - 1.0 3.0
31 December
2010 8.0 3.0 3.0
31 December
2011 5.0 3.8 3.5
31 December
2012 5.0 3.9 3.5
31 December
2013 5.0 3.9 3.5
31 December
2014 5.0 3.9 3.9
31 December
2015 5.0 3.9 3.9
31 December
2016 5.0 3.9 3.9
30 June 2017 2.0 1.6 1.6
Total
dividends
paid to 30
June 2017 93.0 36.4 40.0
Net asset
value as at
30 June
2017 71.5 55.6 55.9
Total
shareholder
return to 30
June 2017 164.5 92.0 95.9
In addition to the dividends paid above, the Board declared a third
dividend for the year ending 31 December 2017 of 2.0 pence per Ordinary
share to be paid on 29 December 2017 to shareholders on the register on
1 December 2017.
Notes
(i) Excludes tax benefits upon subscription.
(ii) The C shares were converted into Ordinary shares on 31 March 2011.
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 0.7779 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.
(iii) Albion Income & Growth VCT PLC was merged with Albion Technology &
General VCT PLC on 15 November 2013. The net asset value per share and
all dividends paid subsequent to the merger of the Income & Growth
shares to the Ordinary shares are multiplied by the issue ratio of
0.7813 in respect of the Income & Growth shares' return, in order to
give an accurate picture of the shareholder value since launch relating
to the Income & Growth shares. Prior to the merger, Albion Income &
Growth VCT PLC had a financial year end of 30 September and as such, the
above dividends per share relate to the relevant period.
Interim management report
Introduction
The results for Albion Technology & General VCT PLC for the six months
to 30 June 2017 showed a total return of 2.0 pence per share, compared
to a loss of 1.1 pence per share for the interim period the previous
year. Net asset value at 30 June 2017 was 71.5 pence per share.
Performance and portfolio update
These interim results, on top of the total return of 2.5 pence per share
for the year ended 31 December 2016, reflect the continued progress in
repositioning the portfolio which began in 2014. The return was driven
principally by strong performance in the technology sector, which led to
material revaluations in memsstar and Oxsensis. Against this, the share
price of the AIM-quoted Mi-Pay fell during the period. The disposal
programme of the pre-2009 investments continues, with the disposal of
AMS Sciences, Blackbay and Masters Pharmaceuticals during the period.
This takes the proportion of investments made before 2009 down to 22 per
cent. of the portfolio.
Investments in four new companies have been made during the period, all
of which should result in further investment as the companies prove
themselves and grow. These are MPP Global Solutions (provider of a cloud
platform to measure and manage e-commerce), G. Network Communications
(provider of ultra-high speed fibre optic broadband to SME's in central
London), Quantexa (predictive analytics services to protect and detect
complex financial crime) and Locum's Nest (digital platform for NHS
Trusts to manage their requirements for locum doctors). Amongst our
other investments, we provided a further GBP367,000 to DySIS Medical.
Portfolio split as at 30 June 2017
Set out at the bottom of this announcement is the sector diversification
of the portfolio of investments as at 30 June 2017.
Results and dividends
As at 30 June 2017, the net asset value was 71.5 pence per share (30
June 2016: 69.2 pence per share; 31 December 2016: 71.6 pence per
share).
It was announced on 22 November 2016 that the Company's dividend target
was changing from 5.0 pence per share to 4.0 pence per share and in the
31 December 2016 Annual Report and Financial Statements that it would
move from paying quarterly dividends to semi-annual dividends.
A first dividend of 1 penny per share was paid on 31 January 2017, with
a second dividend of 1 penny per share paid on 30 June 2017. The next
payment is 2.0 pence per share on 29 December 2017, to shareholders on
the register on 1 December 2017. Thereafter, it is the Board's intention
that two dividends are payable per annum in June and December.
Liquidity management
The Company aims to hold between 15 to 20 per cent. of its net asset
value in cash and liquid assets so that it is in a position to invest in
new private equity opportunities when they arise. Following shareholder
approval at the Annual General Meeting for the modification to the
investment policy, the Company is able to invest part of its liquidity
in an open-ended equity fund, delivering strong income and the potential
for capital growth without any double charging of fees, pending
deployment in suitable private equity opportunities. Investments of
GBP1,050,000 in SVS Albion OLIM UK Equity Income Fund were made after
the period end.
Risks, uncertainties and prospects
The prospective exit of the UK from the EU is having a dampening effect
on consumer and business confidence and it remains wise to prepare for a
renewed economic slowdown in the UK. Overall investment risk, however,
is mitigated through a variety of processes, including our policies of
first 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. In addition, the current
consultation entitled "Financing growth in innovative firms" may result
in changes to VCT legislation in the next budget.
Other principal risks and uncertainties remain unchanged and are as
detailed in note 13.
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. In order to ensure that this condition is satisfied, the
Company will limit the sum available for buy-backs for the 6 month
period to 31 December 2017 to GBP1m. 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 22 February 2017 that it had
reached its GBP6m limit under the Albion VCTs Prospectus Top-Up Offers
2016/2017. On 6 September 2017 the Company announced the publication of
a prospectus in relation to an offer for subscription for new Ordinary
Shares. The Company is aiming to raise circa GBP6 million out of a
target of GBP32 million in aggregate that the Albion VCTs are seeking to
raise. The Manager continues to see a number of attractive investment
opportunities into which offer proceeds can be deployed in due course. A
Securities Note, which forms part of the Prospectus, is being sent to
shareholders.
Transactions with the Manager
Details of the transactions that took place with the Manager in the
period can be found in note 5.
Outlook
The Board is encouraged by the progress made in repositioning the
investment portfolio, by the prospects in many of our portfolio
companies and in the outlook for fresh investment opportunities. We
expect further progress in the second half of the year, both in terms of
performance and in the making of new investments in growth sectors.
Dr N E Cross
Chairman
12 September 2017
Responsibility statement
The Directors, Dr. Neil Cross, Robin Archibald, Mary Anne Cordeiro,
Modwenna Rees-Mogg and Patrick Reeve, are responsible for preparing 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", gives 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
Dr N E Cross
Chairman
12 September 2017
Portfolio of investments
As at 30 June 2017
Technology % voting Cost Cumulative movement in value Value Change in value for the period*
investments rights GBP'000 GBP'000 GBP'000 GBP'000
Process
Systems
Enterprise
Limited 13.9 2,160 2,429 4,589 195
memsstar
Limited 30.1 1,157 1,266 2,423 1,274
Mirada
Medical
Limited 14.6 978 1,055 2,033 264
Oxsensis
Limited 13.9 1,696 (226) 1,470 518
Proveca
Limited 7.2 729 720 1,449 33
DySIS Medical
Limited 10.5 2,369 (1,251) 1,118 (165)
Mi-Pay Group
plc 21.6 4,163 (3,087) 1,076 (718)
MPP Global
Solutions
Limited 3.2 950 - 950 -
Relayware
Limited 2.8 895 (14) 881 (7)
sparesFinder
Limited 12.0 613 245 858 -
Grapeshot
Limited 1.9 390 400 790 299
Egress
Software
Technologies
Limited 2.0 200 588 788 212
Convertr
Media
Limited 7.0 650 - 650 -
Aridhia
Informatics
Limited 5.1 822 (186) 636 90
MyMeds&Me
Limited 2.1 260 125 385 9
Black Swan
Data
Limited 1.1 362 - 362 -
Quantexa
Limited 3.0 335 - 335 -
Panaseer
Limited 2.8 248 65 313 65
Cisiv Limited 7.4 574 (280) 294 1
Abcodia
Limited 3.2 409 (234) 175 -
Oviva AG 2.2 165 - 165 -
Palm Tree
Technology
Limited 0.5 320 (156) 164 -
OmPrompt
Holdings
Limited 2.3 210 (55) 155 (63)
Locum's Nest
Limited 3.0 135 - 135 -
InCrowd
Sports
Limited 1.9 84 - 84 -
ComOps
Limited 1.0 68 (20) 48 (8)
Sandcroft
Avenue
Limited 0.6 50 (7) 43 -
Elements
Software
Limited 3.3 19 (19) - -
Total
technology
investments 21,011 1,358 22,369 1,999
*As adjusted for additions and disposals during the period.
As at 30 June 2017
% voting Cost Cumulative movement in value Value Change in value for the period*
Non-technology investments rights GBP'000 GBP'000 GBP'000 GBP'000
Radnor House School (Holdings) Limited 15.3 5,415 3,873 9,288 76
Chonais River Hydro Limited 15.7 2,169 944 3,113 201
Bravo Inns II Limited 15.1 2,639 353 2,992 111
Earnside Energy Limited 12.7 2,059 198 2,257 (17)
Bravo Inns Limited 28.8 2,411 (548) 1,863 (24)
Gharagain River Hydro Limited 18.5 1,526 265 1,791 (6)
MHS 1 Limited (Previously The Charnwood Pub Company
Limited) 22.5 1,565 (3) 1,562 (3)
TWCL Limited (Previously The Weybridge Club Limited) 25.2 1,501 (51) 1,450 71
The Street by Street Solar Programme Limited 8.1 895 436 1,331 70
Regenerco Renewable Energy Limited 7.9 822 291 1,113 9
Hilson Moran Holdings Limited 6.2 265 696 961 111
Alto Prodotto Wind Limited 6.9 683 259 942 4
The Q Garden Company Limited 33.4 934 5 939 5
Infinite Ventures (Goathill) Limited 9.6 400 119 519 24
Premier Leisure (Suffolk) Limited 25.8 454 65 519 (25)
Erin Solar Limited 15.7 440 (18) 422 (8)
Secured by Design Limited 2.7 410 - 410 -
Albion Investment Properties Limited 31.8 434 (35) 399 8
AVESI Limited 8.0 259 87 346 2
G. Network Communications Limited 7.5 337 - 337 -
Harvest AD Limited 0.0 210 (3) 207 (3)
CSS Group Limited 10.0 188 4 192 55
Greenenerco Limited 3.1 109 56 165 (6)
Dickson Financial Services Limited 6.0 60 29 89 7
Beddlestead Farm Limited 10.0 10 - 10 -
Total non-technology investments 26,195 7,022 33,217 662
Total investments 47,206 8,380 55,586 2,661
* As adjusted for additions and disposals during the period.
Total change in value of investments for the period 2,661
Movement in loan stock accrued interest 67
Unrealised gains on fixed asset investments 2,728
Realised losses on fixed asset investments (per the
table below) (346)
Total gains on investments as per income statement 2,382
Gain/(loss)
on opening
Investment realisations and loan stock repayments Cost Opening carrying value Disposal proceeds Total realised (loss)/gain value
in the period to 30 June 2017 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Disposals:
Blackbay Limited 4,213 3,652 3,699 (514) 47
AMS Sciences Limited 2,016 1,555 1,504 (512) (51)
Masters Pharmaceuticals Limited 452 681 687 235 6
Loan stock repayments:
memsstar Limited 165 606 321 156 (285)
Radnor House School (Holdings) Limited 153 153 153 - -
Alto Prodotto Wind Limited 7 11 11 4 -
Greenenerco Limited 1 2 2 1 -
Escrow adjustments and other:
TWCL Limited (Previously The Weybridge Club
Limited)+ 375 - - (375) -
Escrow Adjustments - - (63) (63) (63)
Total 7,382 6,660 6,314 (1,068) (346)
+ The accounting cost as shown above represents realised losses of
investments still held at the Balance Sheet date.
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/(losses) on investments 3 - 2,382 2,382 - (1,023) (1,023) - 2,419 2,419
Investment income 4 493 - 493 881 - 881 1,570 - 1,570
Investment management fees 5 (197) (591) (788) (183) (549) (732) (369) (1,108) (1,477)
Other expenses (152) - (152) (139) - (139) (284) - (284)
Profit/(loss) on ordinary activities before tax 144 1,791 1,935 559 (1,572) (1,013) 917 1,311 2,228
Tax (charge)/credit on ordinary activities (18) 18 - (102) 102 - (166) 167 1
Profit/(loss) and total comprehensive income attributable
to shareholders 126 1,809 1,935 457 (1,470) (1,013) 751 1,478 2,229
Basic and diluted return/(loss) per share (pence)* 7 0.1 1.9 2.0 0.5 (1.6) (1.1) 0.8 1.7 2.5
* excluding treasury shares
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 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 June 2017 30 June 2016 31 December 2016
Note GBP'000 GBP'000 GBP'000
Fixed asset investments 55,586 53,517 57,021
Current assets
Trade and other receivables less than one year 667 896 1,096
Cash and cash equivalents 13,882 8,987 6,752
14,549 9,883 7,848
Total assets 70,135 63,400 64,869
Creditors: amounts falling due within one year
Trade and other payables less than one year (566) (484) (443)
Total assets less current liabilities 69,569 62,916 64,426
Equity attributable to equity holders
Called up share capital 8 1,094 1,004 1,007
Share premium 52,587 46,423 46,585
Capital redemption reserve 28 28 28
Unrealised capital reserve 8,075 (872) 4,625
Realised capital reserve 8,017 12,207 9,658
Other distributable reserve (232) 4,126 2,523
Total equity shareholders' funds 69,569 62,916 64,426
Basic and diluted net asset value per share
(pence)* 71.5 69.2 71.6
* excluding treasury shares
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 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 September 2017 and were signed on its behalf
by
Dr N E Cross
Chairman
Company number: 04114310
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
At 1 January 2017 1,007 46,585 28 4,625 9,658 2,523 64,426
Profit/(loss) and total comprehensive income for the
period - - - 2,728 (919) 126 1,935
Transfer of previously unrealised losses on disposal
of investments - - - 722 (722) - -
Purchase of own shares for treasury - - - - - (1,003) (1,003)
Issue of equity 87 6,176 - - - - 6,263
Cost of issue of equity - (174) - - - - (174)
Dividends paid - - - - - (1,878) (1,878)
At 30 June 2017 1,094 52,587 28 8,075 8,017 (232) 69,569
At 1 January 2016 919 40,171 28 (424) 13,229 7,868 61,791
(Loss)/profit and total comprehensive income for the
period - - - (479) (991) 457 (1,013)
Transfer of previously unrealised losses on disposal
of investments - - - 31 (31) - -
Purchase of own shares for treasury - - - - - (874) (874)
Issue of equity 85 6,411 - - - - 6,496
Cost of issue of equity - (159) - - - - (159)
Dividends paid - - - - - (3,325) (3,325)
At 30 June 2016 1,004 46,423 28 (872) 12,207 4,126 62,916
At 1 January 2016 919 40,171 28 (424) 13,229 7,868 61,791
Profit/(loss) and total comprehensive income for the
period - - - 1,937 (459) 751 2,229
Transfer of previously unrealised losses on disposal
of investments - - - 3,112 (3,112) - -
Purchase of own shares for treasury - - - - - (1,638) (1,638)
Issue of equity 88 6,574 - - - - 6,662
Cost of issue of equity - (160) - - - - (160)
Dividends paid - - - - - (4,458) (4,458)
At 31 December 2016 1,007 46,585 28 4,625 9,658 2,523 64,426
*These reserves amount to GBP7,785,000 (30 June 2016: GBP15,461,000; 31
December 2016: GBP12,181,000) which is considered distributable.
Condensed statement of cash flows
Audited
Unaudited Unaudited year ended
six months ended 30 June 2017 six months ended 30 June 2016 31 December 2016
GBP'000 GBP'000 GBP'000
Cash flow from
operating
activities
Loan stock income
received 492 729 1,185
Deposit interest
received 3 37 80
Dividend income
received 57 50 76
Investment
management fees
paid (722) (696) (1,413)
Other cash payments (170) (131) (281)
Corporation tax
received/(paid) 2 - (32)
Net cash flow from
operating
activities (338) (11) (385)
Cash flow from
investing
activities
Purchase of fixed
asset investments (2,555) (1,855) (3,821)
Disposal of fixed
asset investments 6,745 1,196 3,044
Net cash flow from
investing
activities 4,190 (659) (777)
Cash flow from
financing
activities
Issue of ordinary
share capital 5,817 5,869 5,869
Cost of issue of
equity (2) (3) (8)
Dividends paid (1,602) (2,852) (3,818)
Purchase of own
shares (including
costs) (935) (866) (1,638)
Net cash flow from
financing
activities 3,278 2,148 405
Increase/(decrease)
in cash and cash
equivalents 7,130 1,478 (757)
Cash and cash
equivalents at
start of period 6,752 7,509 7,509
Cash and cash
equivalents at end
of period 13,882 8,987 6,752
Cash and cash
equivalents
comprise:
Cash at bank and in
hand 13,882 8,987 6,752
Cash equivalents - - -
Total cash and cash
equivalents 13,882 8,987 6,752
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 IPEVCV
Guidelines and further detail on the valuation techniques used are
outlined in note 2 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.
Company information 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 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 realised capital
reserve. 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
Any performance incentive fee will be allocated between other
distributable 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
(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 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 account
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.
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.
3. Gains/(losses) on investments
Audited
Unaudited Unaudited year ended
six months ended 30 June 2017 six months ended 30 June 2016 31 December 2016
GBP'000 GBP'000 GBP'000
Unrealised
gains/(losses)
on fixed asset
investments 2,728 (479) 1,937
Realised
(losses)/gains
on fixed asset
investments (346) (544) 482
2,382 (1,023) 2,419
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 434 788 1,417
UK dividend income 57 50 76
Bank deposit interest 2 43 77
493 881 1,570
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 197 183 369
Investment management fee charged to capital 591 549 1,108
788 732 1,477
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
December 2016.
During the period, services for a total value of GBP788,000 (30 June
2016: GBP732,000; 31 December 2016: GBP1,477,000) 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
GBP439,000 (30 June 2016: GBP384,000; 31 December 2016: GBP373,000). The
total annual running costs of the Company are capped at an amount equal
to 2.75 per cent. of the Company's net assets, with any excess being met
by Albion by way of a reduction in management fees. During the period,
the management fee was reduced by GBP88,000 as a result of this cap (30
June 2016: GBP35,000; 31 December 2016: GBP94,000).
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
and 31 December 2016: nil).
Albion Capital Group LLP, the Manager, holds 23,452 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 June 2017, fees of GBP131,000 attributable to the
investments of the Company were received pursuant to these arrangements
(30 June 2016: GBP88,000; 31 December 2016: GBP197,000).
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 1.25p per Ordinary share paid on 29 January
2016 - 1,045 1,045
Dividend of 1.25p per Ordinary share paid on 29 April
2016 - 1,146 1,146
Dividend of 1.25p per Ordinary share paid on 30 June
2016 - 1,135 1,135
Dividend of 1.25p per Ordinary share paid on 31 October
2016 - - 1,132
Dividend of 1.0p per Ordinary share paid on 31 January
2017 900 - -
Dividend of 1.0p per Ordinary share paid on 30 June
2017 978 - -
1,878 3,325 4,458
The Directors have declared a dividend of 2.0 pence per Ordinary share
(total approximately GBP1,945,000) payable on 29 December 2017, to
shareholders on the register on 1 December 2017.
7. Basic and diluted return/(loss) per share
Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 2017 30 June 2016 31 December 2016
Revenue Capital Revenue Capital Revenue Capital
Return/(loss)
attributable
to equity
shares
(GBP'000) 126 1,809 457 (1,470) 751 1,478
Weighted
average
shares in
issue 95,774,724 88,695,736 89,594,274
Return/(loss)
per Ordinary
share
(pence) 0.1 1.9 0.5 (1.6) 0.8 1.7
The weighted average number of shares is calculated excluding treasury
shares of 12,192,070 (30 June 2016: 9,532,070; 31 December 2016:
10,705,070)
There are no convertible instruments, derivatives or contingent share
agreements in issue, and therefore no dilution effecting the
return/(loss) per share. The basic return/(loss) per share is therefore
the same as the diluted return/(loss) per share.
8. 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 109,439,903 100,426,980 100,671,234
Nominal value of allotted shares (GBP'000) 1,094 1,004 1,007
Voting rights (number of shares net of treasury
shares) 97,247,833 90,894,910 89,966,164
During the period to 30 June 2017 the Company purchased 1,487,000
Ordinary shares (nominal value of GBP14,870) for treasury at a cost of
GBP1,003,000 including stamp duty. The total number of Ordinary shares
held in treasury as at 30 June 2017 was 12,192,070 (30 June 2016:
9,532,070; 31 December 2016: 10,705,070) at a nominal value of
GBP121,921 representing 11.1 per cent. of the Ordinary shares in issue
as at 30 June 2017.
Under the terms of the dividend reinvestment scheme, the following
Ordinary shares of nominal value 1 penny each were allotted during the
period to 30 June 2017:
Aggregate
nominal value Net
Date of Number of of shares Issue price invested Opening market price on allotment date (pence per
allotment shares allotted (GBP'000) (pence per share) (GBP'000) share)
31 January
2017 193,189 2 68.75 131 61.50
30 June
2017 200,714 2 71.10 141 68.50
393,903 4 272
Under the terms of the Albion VCTs Prospectus Top-Up Offers 2016/2017,
the following Ordinary shares of nominal value 1 penny each were
allotted during the period to 30 June 2017:
Aggregate Net
nominal value consideration
Date of Number of of shares Issue price received Opening market price on allotment date (pence per
allotment shares allotted (GBP'000) (pence per share) (GBP'000) share)
31 January
2017 1,063,482 11 70.2 732 61.50
31 January
2017 377,120 4 70.6 260 61.50
31 January
2017 3,856,902 39 70.9 2,652 61.50
28 March
2017 2,800,677 28 72.8 1,978 64.50
7 April
2017 19,619 - 72.1 14 68.00
7 April
2017 22,126 - 72.5 15 68.00
7 April
2017 234,840 2 72.8 166 68.00
8,374,766 84 5,817
9. Commitments and contingencies
As at 30 June 2017, the Company had the following financial commitment
in respect of investments:
- Aridhia Informatics Limited; GBP11,000
There are no contingencies or guarantees of the Company as at 30 June
2017 (30 June 2016 and 31 December 2016: nil).
10. Post balance sheet events
Since 30 June 2017, the Company has completed the following material
transactions:
- Investment of GBP1,050,000 in SVS Albion OLIM UK Equity Income Fund;
- Investment of GBP337,000 in G. Network Communications Limited;
- Investment of GBP266,000 in Egress Software Technologies Limited;
- Investment of GBP233,000 in Black Swan Data Limited;
- Investment of GBP130,000 in Convertr Media Limited;
- Investment of GBP30,000 in Abcodia Limited;
- Investment of GBP11,000 in Aridhia Informatics Limited;
- Investment of GBP10,000 in Beddlestead Farm Limited.
On 6 September 2017 the Company announced the publication of a
prospectus in relation to an offer for subscription for new Ordinary
Shares. The Company is aiming to raise circa GBP6 million out of a
target of GBP32 million in aggregate that the Albion VCTs are seeking to
raise. A Securities Note, which forms part of the Prospectus, is being
sent to shareholders.
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
December 2016 and is detailed on pages 55 and 56 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 current economic 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.
1. 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.
1. 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.
1. 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.
1. 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.
1. 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 buyback 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 buyback cannot be applied, for
example when the Company is subject to a close period, or if it were to
exhaust its buyback 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/AATG, where the Report can be
accessed via a link in the 'Financial Reports and Circulars' section.
Portfolio split as at 30 June 2017:
http://hugin.info/141704/R/2133109/815895.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 Technology & General VCT PLC - Ordinary Shares via
Globenewswire
http://www.closeventures.co.uk
(END) Dow Jones Newswires
September 12, 2017 05:28 ET (09:28 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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