REG-Albion Development VCT PLC: Half-yearly report <Origin Href="QuoteRef">AADV.L</Origin>
31/08/2017 14:30
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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 £33.3 million
through the issue of shares between 1999 and 2004. The C shares merged with
the Ordinary shares in 2007.
A further £6.3 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 £23.8 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
Ordinary shares Unaudited six months ended 30 June 2017 (pence per share) Unaudited six months ended 30 June 2016 (pence per share) Audited year ended 31 December 2016 (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.
£2.3 million was invested into new and existing portfolio companies, with new
investments comprising £1 million into MPP Global Solutions (a cloud
subscription platform), £315,000 into Quantexa (analytics for crime
detection), £273,000 into G.Network Communications (fibre optic broadband
services in central London), and £110,000 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
£4m 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:
Asset-based investments % voting rights Cost £'000 Cumulative movement in value £'000 Value £'000 Change in value for the period* £'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
Growth investments % voting rights Cost £'000 Cumulative movement in value £'000 Value £'000 Change in value for the period* £'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
Quoted investments % voting rights Cost £'000 Cumulative movement in value £'000 Value £'000 Change in value for the period* £'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 to 30 June 2017 Cost £'000 Opening value £'000 Disposal proceeds £'000 Total realised gain/(loss) £'000 Gain/(loss) on opening value £'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 six months ended 30 June 2017 Unaudited six months ended 30 June 2016 Audited year ended 31 December 2016
Note Revenue £'000 Capital £'000 Total £'000 Revenue £'000 Capital £'000 Total £'000 Revenue £'000 Capital £'000 Total £'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
Note Unaudited 30 June 2017 £'000 Unaudited 30 June 2016 £'000 Audited 31 December 2016 £'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
Called up share capital Share premium Capital redemption reserve Unrealised capital reserve Realised capital reserve* Other distributable reserve* Total
£'000 £'000 £'000 £'000 £'000 £'000 £'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 £16,581,000 (30 June 2016: £19,676,000; 31
December 2016: £18,245,000) which is considered distributable.
Condensed statement of cash flows
Unaudited six months ended 30 June 2017 £'000 Unaudited six months ended 30 June 2016 £'000 Audited year ended 31 December 2016 £'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
* dRecent news on Albion Development VCT
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