REG-Albion Venture Capital Trust PLC : Half-year Financial Report <Origin Href="QuoteRef">AAVC.L</Origin>
12/12/2017 13:55
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Albion Venture Capital Trust PLC
LEI Code: 213800JKELS32V2OK421
As required by the UK Listing Authority's Disclosure and Transparency Rule
4.2, Albion Venture Capital Trust PLC today makes public its information
relating to the Half-yearly Financial Report (which is unaudited) for the six
months to 30 September 2017. This announcement was approved by the Board of
Directors on 12 December 2017.
The full Half-yearly Financial Report (which is unaudited) for the period to
30 September 2017, will shortly be sent to shareholders. Copies of the full
Half-yearly Financial Report will be shown via the Albion Capital Group LLP
website by clicking www.albion.capital/funds/AAVC/30Sept17.pdf.
Investment objective and policy
The current investment strategy of Albion Venture Capital Trust PLC (the
"Company") is to manage the risk normally associated with investments in
smaller unquoted companies whilst maintaining an attractive yield, through
allowing investors the opportunity to participate in a balanced portfolio of
asset-based businesses. The Company's investment portfolio has been structured
to provide a balance between income and capital growth for the longer term.
Following the Patient Capital Review and the 2017 Autumn Budget, the Directors
no longer believe that a purely asset-based investment policy will be
practicable for the longer term, and will therefore be putting new proposals
to shareholders in due course.
The Company offers tax-paying investors tax benefits at the time of
investment, on payment of dividends and on the ultimate disposal of the
investment.
As defined by the Articles of Association, the Company's maximum exposure in
relation to gearing is restricted to 10 per cent. of the adjusted share
capital and reserves. The Directors do not currently have any intention to
utilise gearing for the Company.
Background to the Company
The Company is a venture capital trust which raised a total of £39.7 million
through an issue of Ordinary shares in the spring of 1996 and through an issue
of C shares in the following year. The C shares merged with the Ordinary
shares in 2001. The Company has raised a further £26.9 million under the
Albion VCTs Top Up Offers since 2011.
On 25 September 2012, the Company acquired the assets and liabilities of
Albion Prime VCT PLC ("Prime") in exchange for new shares in the Company. Each
Prime shareholder received 0.8801 shares in the Company for each Prime share
that they held at the date of the Merger.
Financial calendar
Record date for second dividend Payment date for second dividend Financial year end 5 January 2018 31 January 2018 31 March
Financial highlights
Unaudited six Unaudited six months ended 30 September 2016 (pence per share) Audited year ended 31 March 2017 (pence per share)
months ended
30 September 2017
(pence per share)
Dividends paid 2.5 2.5 5.0
Revenue return 0.8 1.0 1.9
Capital return 0.4 2.4 6.8
Net asset value 74.1 72.9 75.4
Total shareholder return to 30 September 2017 Ordinary shares (pence per share)
Total dividends paid during the year ended : 31 March 1997 2.00
31 March 1998 5.20
31 March 1999 11.05
31 March 2000 3.00
31 March 2001 8.55
31 March 2002 7.60
31 March 2003 7.70
31 March 2004 8.20
31 March 2005 9.75
31 March 2006 11.75
31 March 2007 10.00
31 March 2008 10.00
31 March 2009 10.00
31 March 2010 5.00
31 March 2011 5.00
31 March 2012 5.00
31 March 2013 5.00
31 March 2014 5.00
31 March 2015 5.00
31 March 2016 5.00
31 March 2017 5.00
Total dividends paid in the six months to 30 September 2017 2.50
Total dividends paid to 30 September 2017 147.30
Net asset value as at 30 September 2017 74.10
Total shareholder return to 30 September 2017 221.40
The financial summary above is for the Company, Albion Venture Capital Trust
PLC Ordinary shares only. Details of the financial performance of the C shares
and Albion Prime VCT PLC, which have been merged into the Company, can be
found at the end of this announcement.
In addition to the dividends summarised above, the Directors have declared a
second dividend for the year ending 31 March 2018 of 2.5 pence per share, to
be paid on 31 January 2018 to shareholders on the register on 5 January 2018.
Notes
* Dividends paid before 5 April 1999 were paid to qualifying shareholders
inclusive of the associated tax credit. The dividends for the year to 31 March
1999 were maximised in order to take advantage of this tax credit.
* Dividends paid by the Company are normally free of income tax for
individuals aged 18 or over. Investors should not disclose any income they
receive from a VCT on their tax return unless they have acquired more than
£200,000 of new VCT shares in a tax year.
* The net asset value of the Company is not its share price as quoted on the
official list of the London Stock Exchange. The share price of the Company can
be accessed via a link on the Company's webpage at
www.albion.capital/funds/AAVC under 'Trust Information'.
* Investors are reminded that it is common for shares in VCTs to trade at a
discount to their net asset value as tax reliefs are only obtainable on new
subscription.
Interim management report
Introduction
The results for Albion Venture Capital Trust PLC (the "Company") for the six
months to 30 September 2017 showed a total return of 1.2 pence per share.
After an interim dividend of 2.5 pence per share paid on 31 July 2017, the net
asset value at 30 September 2017 was 74.1 pence per share, compared to 75.4
pence per share at 31 March 2017. Total shareholders' funds were £64.7
million.
Investment performance, progress and prospects
During the period, £1.1 million was invested into qualifying investments,
with a further £1.9 million invested after the period end. Investments in the
period included £620,000 into two of our care homes (Active Lives Care and
Ryefield Court Care); £456,000 (with an additional £254,000 after the period
end) into G.Network Communications, a provider of ultra high speed fibre optic
broadband to SMEs in central London; and £8,000 (with an additional £940,000
after the period end) in Beddlestead, to fund a start-up wedding venue
business. In addition St Martha's School, since renamed Mount House School, in
North London was added to the education portfolio.
Following the period end, a further new investment of £750,000 was made in
Women's Health (London West One) to develop a women's health centre of
excellence in Harley Street focusing on fertility which is expected to open in
the second half of next year.
During the period The Weybridge Club disposed of its health and fitness club
in Weybridge and The Crown Hotel Harrogate disposed of the Crown Hotel in
Harrogate.
The biggest change in valuations for the period was in respect of Radnor House
(Holdings) following an independent third party valuation of its schools in
Twickenham and Sevenoaks. The former continues to perform strongly, with over
400 pupils, and the latter has seen a substantial increase in pupils, now over
350.
Our three care homes, the 66 bedroom Shinfield View care home near Reading
(owned by Shinfield Lodge Care), the 75 bedroom Cumnor Hill House on the
outskirts of Oxford (owned by Active Lives Care), and the 60 bedroom Ryefield
Court in Hillingdon (owned by Ryefield Court Care) have now reached
significant levels of occupancy to enable them to achieve operating
profitability.
Our hydro, wind and solar assets in our renewable energy portfolio continued
to generate strong cash returns. Meanwhile Earnside Energy's anaerobic
digestion plant has recently completed a substantial expansion of its
capacity.
The Holiday Inn Express at Stansted Airport, owned by Kew Green VCT
(Stansted), traded strongly but trading at The Stanwell Hotel near Heathrow
Terminal 5 was disappointing. Going forward we are looking to decrease further
our investment in the sector. Meanwhile, the Bravo Inns and Bravo Inns II pub
portfolio is continuing to expand and now comprises 41 pubs in the North West.
We are pleased with the strong start made by G.Network Communications and see
further growth in value accruing over time from our education and healthcare
portfolios.
Split of portfolio by valuation as at 30 September 2017
Set out at the bottom of this announcement is the sector diversification of
the investment portfolio as at 30 September 2017. At that date healthcare
accounted for 36 per cent. of the Company's net assets and renewable energy
investments accounted for 18 per cent.
Board composition
As stated in the Annual Report, I have been chairman of your Company since its
launch in 1996 and I have indicated to the Board that I intend to retire
before the Annual General Meeting in August 2018. Ebbe Dinesen has indicated
that he would also like to retire, at the Annual General Meeting in 2019.
I am now pleased to report that we have recently appointed Richard Glover and
Ann Berresford to the Board.
Richard has been involved with a number of private equity backed companies
over the years, including chief executive roles at BSM Group through its
development from a family company to a flotation on the London Stock Exchange
and subsequent sale to the RAC, and of a professional educational services
business, and chairman roles at a property services business and a retail
service group.
Ann qualified as a chartered accountant and has a background in financial
management at Clyde Petroleum and Bank of Ireland. She is currently a
non-executive director at Secure Trust Bank and the Bath Building Society.
Patient Capital Review
The Patient Capital Review has now been completed and the 2017 Budget, whilst
being strongly supportive of VCTs, has introduced a number of measures
designed to re-direct investment towards innovative and high growth firms.
Your Board and the Manager no longer believe that a purely asset-based
investment policy will be practicable for the longer term, and will be making
proposals to shareholders in due course.
Risks and uncertainties
The outlook for the UK economy continues to be the key risk affecting your
Company. The forthcoming withdrawal from the European Union may have an effect
on the Company and its investments, although the extent of the effect is not
quantifiable at this time.
Whilst the Company's policy has historically been that its portfolio companies
should not normally have external borrowings and for the Company normally to
have a first charge over portfolio companies' assets, changes in VCT
legislation will preclude the use of secured loan stock in future investments.
Meanwhile, one of the Company's longer standing portfolio companies is looking
to refinance its VCT loan stock with bank debt.
Other principal risks and uncertainties remain unchanged and are as detailed
in note 13.
Transactions with the Manager
Details of the transactions that took place with the Manager during the period
can be found in note 5.
There are no related party transactions or balances that require disclosure.
Share buy-backs
It remains the Board's primary objective to maintain sufficient resources for
investment in existing and new portfolio companies and for the continued
payment of dividends to shareholders. Thereafter, it is still the Board's
policy to buy back shares in the market, subject to the overall criterion that
such purchases are in the Company's interest. The total value bought in for
the period to 30 September 2017 was £226,000. In general, the Board targets
such buy-backs to be in the region of a 5 per cent. discount to the most
recently announced net asset value, so far as market conditions and liquidity
permit.
Results and dividends
As at 30 September 2017, the net asset value of the Company was £64.7 million
or 74.1 pence per share compared to £65.5 million or 75.4 pence per share at
31 March 2017. The revenue return before taxation showed a modest reduction to
£875,000, compared to £934,000 for the six months to 30 September 2016, as
some portfolio companies decided (with our agreement) to defer paying interest
and reinvest their profit for further growth. The Company will pay a second
dividend of 2.5 pence per share on 31 January 2018 to shareholders on the
register on 5 January 2018, making 5.0 pence per share in total for the full
year, in line with the Company's current dividend target.
David Watkins
Chairman
12 December 2017
Responsibility statement
The Directors, David Watkins, John Kerr, Jeff Warren, Ebbe Dinesen, Richard
Glover and Ann Berresford are responsible for preparing the Half-yearly
Financial Report. In preparing these condensed Financial Statements for the
period to 30 September 2017 we, the Directors of the Company, confirm that to
the best of our knowledge:
(a) the condensed set of Financial Statements, which has been prepared in
accordance with Financial Reporting Standard 104 "Interim Financial
Reporting", give a true and fair view of the assets, liabilities, financial
position and profit and loss of the Company as required by DTR 4.2.4R;
(b) the Interim management report, includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first six
months and description of principal risks and uncertainties for the remaining
six months of the year); and
(c) the Interim management report, includes a fair review of the information
required by DTR 4.2.8R (disclosure of related parties' transactions and
changes therein).
This Half-yearly Financial Report has not been audited or reviewed by the
Auditor.
By order of the Board
David Watkins
Chairman
12 December 2017
Portfolio of investments
The following is a summary of investments as at 30 September 2017:
Portfolio company % voting rights held by Albion Venture Capital Trust PLC Accounting cost * £'000 Cumulative movement in value £'000 Value £'000 Change in value for the period (**) £'000
Shinfield Lodge Care Limited 35.3 6,425 4,270 10,695 182
Active Lives Care Limited 22.2 4,810 2,124 6,934 (103)
Kew Green VCT (Stansted) Limited 45.2 5,910 946 6,856 180
Ryefield Court Care Limited 23.6 3,880 1,966 5,846 (158)
Radnor House School (Holdings) Limited 7.1 2,380 2,422 4,802 486
Chonais River Hydro Limited 9.2 3,074 765 3,839 (2)
TCHH Limited (previously The Crown Hotel Harrogate Limited)+ 24.1 3,277 (51) 3,226 132
The Stanwell Hotel Limited 39.2 5,069 (2,966) 2,103 (183)
Earnside Energy Limited 9.5 1,531 82 1,613 (30)
Gharagain River Hydro Limited 11.5 1,363 208 1,571 47
Bravo Inns II Limited 6.4 1,085 177 1,262 45
The Street by Street Solar Programme Limited 6.5 676 420 1,096 50
Alto Prodotto Wind Limited 7.4 662 367 1,029 4
MHS1 Limited 14.8 1,026 (2) 1,024 -
TWCL Limited 14.3 1,083 (317) 766 10
Regenerco Renewable Energy Limited 4.5 451 218 669 40
Infinite Ventures (Goathill) Limited 11.5 480 155 635 3
Bravo Inns Limited 7.6 751 (140) 611 29
Erin Solar Limited 18.6 520 (23) 497 (12)
Dragon Hydro Limited 7.3 311 169 480 7
G. Network Communications Limited 7.6 456 - 456 -
AVESI Limited 7.4 242 98 340 19
Harvest AD Limited - 307 (4) 303 (4)
G&K Smart Developments VCT Limited 42.9 276 (15) 261 4
Premier Leisure (Suffolk) Limited 9.9 175 25 200 30
Greenenerco Limited 3.9 131 68 199 1
Beddlestead Limited 8.0 16 - 16 -
Total fixed asset investments 46,367 10,962 57,329 777
+ The business and assets have been sold and the company will be liquidated in
due course.
Total change in value of investments for the period 777
Movement in loan stock accrued interest (66)
Unrealised gains sub-total 711
Realised loss in current period (23)
Total gains on investments as per Income statement 688
Fixed asset investment realisations during the period to 30 September 2017 Accounting cost* £'000 Opening carrying value £'000 Disposal proceeds £'000 Total realised gain/(loss) £'000 Loss on opening value £'000
Greenenerco Limited (loan stock repaid) 2 3 3 1 -
Alto Prodotto Wind Limited (loan stock repaid) 1 1 1 - -
Kensington Health Clubs Limited (escrow adjustment) - - (23) (23) (23)
TCHH Limited (previously The Crown Hotel Harrogate Limited)*** 968 - - (968) -
Total 971 4 (19) (990) (23)
*The cost includes the original cost from Albion Venture Capital Trust PLC and
the carried over value on merger from Albion Prime VCT PLC as at 25 September
2012.
** As adjusted for additions and disposals during the period.
***The accounting cost as shown above is after deducting realised losses of
£968,000 for TCHH Limited (previously The Crown Hotel Harrogate Limited)
which is still held at the Balance sheet date.
Condensed income statement
Unaudited six months ended 30 September 2017 Unaudited six months ended 30 September 2016 Audited year ended 31 March 2017
Note Revenue £'000 Capital £'000 Total £'000 Revenue £'000 Capital £'000 Total £'000 Revenue £'000 Capital £'000 Total £'000
Gains on investments 3 - 688 688 - 2,263 2,263 - 6,179 6,179
Investment income 4 1,187 - 1,187 1,219 - 1,219 2,381 - 2,381
Investment management fees 5 (155) (464) (619) (136) (409) (545) (283) (848) (1,131)
Other expenses (157) - (157) (149) - (149) (296) - (296)
Return on ordinary activities before tax 875 224 1,099 934 1,854 2,788 1,802 5,331 7,133
Tax (charge)/ credit on ordinary activities (162) 88 (74) (185) 81 (104) (292) 170 (122)
Return and total comprehensive income attributable to shareholders 713 312 1,025 749 1,935 2,684 1,510 5,501 7,011
Basic and diluted return per share (pence)* 7 0.8 0.4 1.2 1.0 2.4 3.4 1.9 6.8 8.7
* excluding treasury shares
Comparative figures have been extracted from the unaudited Half-yearly
Financial Report for the six months ended 30 September 2016 and the audited
statutory accounts for the year ended 31 March 2017.
The accompanying notes form an integral part of this Half-yearly Financial
Report.
The total column of this Condensed income statement represents the profit and
loss account of the Company. The supplementary revenue and capital columns
have been prepared in accordance with The Association of Investment Companies'
Statement of Recommended Practice.
Condensed balance sheet
Note Unaudited 30 September 2017 £'000 Unaudited 30 September 2016 £'000 Audited 31 March 2017 £'000
Fixed asset investments 57,329 51,672 55,473
Current assets
Trade and other receivables less than one year 79 111 140
Cash and cash equivalents 8,009 6,706 10,496
8,088 6,817 10,636
Total assets 65,417 58,489 66,109
Payables: amounts falling due within one year
Trade and other payables less than one year (763) (613) (634)
Total assets less current liabilities 64,654 57,876 65,475
Equity attributable to equityholders
Called up share capital 8 958 868 951
Share premium 25,182 18,881 24,630
Capital redemption reserve 7 7 7
Unrealised capital reserve 10,301 3,387 8,623
Realised capital reserve 7,377 10,414 8,743
Other distributable reserve 20,829 24,319 22,521
Total equity shareholders' funds 64,654 57,876 65,475
Basic and diluted net asset value per share (pence)* 74.1 72.9 75.4
*excluding treasury shares
Comparative figures have been extracted from the unaudited Half-yearly
Financial Report for the six months ended 30 September 2016 and the audited
statutory accounts for the year ended 31 March 2017.
The accompanying notes form an integral part of this Half-yearly Financial
Report.
These Financial Statements were approved by the Board of Directors and
authorised for issue on 12 December 2017, and were signed on its behalf by
David Watkins
Chairman
Company number: 03142609
Condensed statement of changes in equity
Called up Share Capital Unrealised capital Realised capital Other distributable Total
share capital premium redemption reserve reserve* reserve*
reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000
As at 1 April 2017 951 24,630 7 8,623 8,743 22,521 65,475
Return/(loss) and total comprehensive income for the period - - - 711 (399) 713 1,025
Transfer of previously unrealised gains/(losses) on realisations of investments - - - 967 (967) - -
Purchase of treasury shares - - - - - (226) (226)
Issue of equity 7 561 - - - - 568
Cost of issue of equity - (9) - - - - (9)
Net dividends paid - - - - - (2,179) (2,179)
As at 30 September 2017 958 25,182 7 10,301 7,377 20,829 64,654
As at 1 April 2016 861 18,374 7 1,128 10,737 25,848 56,955
Return/(loss) and total comprehensive income for the period - - - 2,259 (323) 749 2,684
Purchase of treasury shares - - - - - (290) (290)
Issue of equity 7 515 - - - - 522
Cost of issue of equity - (8) - - - - (8)
Net dividends paid - - - - - (1,987) (1,987)
As at 30 September 2016 868 18,881 7 3,387 10,414 24,319 57,876
As at 1 April 2016 861 18,374 7 1,128 10,737 25,848 56,955
Return/(loss) and total comprehensive income for the year - - - 6,165 (664) 1,510 7,011
Transfer of previously unrealised gains/(losses) on realisations of investments - - - 1,330 (1,330) - -
Purchase of treasury shares - - - - - (873) (873)
Issue of equity 90 6,422 - - - - 6,512
Cost of issue of equity - (166) - - - - (166)
Net dividends paid - - - - - (3,964) (3,964)
As at 31 March 2017 951 24,630 7 8,623 8,743 22,521 65,475
* These reserves amount to £28,206,000 (30 September 2016: £34,733,000; 31
March 2017: £31,264,000) which is considered distributable.
Condensed statement of cash flows
Unaudited six months ended 30 September 2017 £'000 Unaudited six months ended 30 September 2016 £'000 Audited year ended 31 March 2017 £'000
Cash flow from operating activities
Loan stock income received 1,100 824 1,941
Deposit interest received 2 51 69
Dividend income received 20 - 45
Investment management fees paid (622) (541) (1,091)
Other cash payments (176) (175) (302)
Corporation tax refund/(paid) 35 24 (127)
Net cash flow from operating activities 359 183 535
Cash flow from investing activities
Purchase of fixed asset investments (1,084) (4,373) (4,521)
Disposal of fixed asset investments 5 321 572
Net cash flow from investing activities (1,079) (4,052) (3,949)
Cash flow from financing activities
Issue of share capital 267 2,243 7,809
Cost of issue of equity - (3) (2)
Dividends paid (1,877) (1,705) (3,424)
Purchase of own shares (including costs) (157) (290) (803)
Net cash flow from financing activities (1,767) 245 3,580
(Decrease)/increase in cash and cash equivalents (2,487) (3,624) 166
Cash and cash equivalents at start of period 10,496 10,330 10,330
Cash and cash equivalents at end of period 8,009 6,706 10,496
Cash and cash equivalents comprise
Cash at bank and in hand 8,009 6,706 10,496
Cash equivalents - - -
Total cash and cash equivalents 8,009 6,706 10,496
Notes to the condensed Financial Statements
1. Basis of preparation
The condensed Financial Statements have been prepared in accordance with the
historical cost convention, modified to include the revaluation of
investments, in accordance with applicable United Kingdom law and accounting
standards, including Financial Reporting Standard 102 ("FRS 102"), Financial
Reporting Standard 104 - Interim Financial Reporting ("FRS 104"), and with the
2014 Statement of Recommended Practice "Financial Statements of Investment
Trust Companies and Venture Capital Trusts" ("SORP") issued by The Association
of Investment Companies ("AIC").
The preparation of the Financial Statements requires management to make
judgements and estimates that affect the application of policies and reported
amounts of assets, liabilities, income and expenses. The most critical
estimates and judgements relate to the determination of carrying value of
investments at fair value through profit and loss ("FVTPL"). The Company
values investments by following the International Private Equity and Venture
Capital Valuation ("IPEVCV") Guidelines and further detail on the valuation
techniques used are outlined below.
The Half-yearly Financial Report has not been audited, nor has it been
reviewed by the auditor pursuant to the FRC's guidance on Review of interim
financial information.
Information about the Company can be found on page 2 of the full Half-yearly
Financial Report.
2. Accounting policies
Fixed asset investments
The Company's business is investing in financial assets with a view to
profiting from their total return in the form of income and capital growth.
This portfolio of financial assets is managed and its performance evaluated on
a fair value basis, in accordance with a documented investment policy, and
information about the portfolio is provided internally on that basis to the
Board.
In accordance with the requirements of FRS 102, those undertakings in which
the Company holds more than 20 per cent. of the equity as part of an
investment portfolio are not accounted for using the equity method. In these
circumstances the investment is measured at FVTPL.
Upon initial recognition (using trade date accounting) investments, including
loan stock, are classified by the Company as FVTPL and are included at their
initial fair value, which is cost (excluding expenses incidental to the
acquisition which are written off to the income statement).
Subsequently, the investments are valued at 'fair value', which is measured as
follows:
* Investments listed on recognised exchanges are valued at their bid prices at
the end of the accounting period or otherwise at fair value based on published
price quotations;
* Unquoted investments, where there is not an active market, are valued using
an appropriate valuation technique in accordance with the IPEVCV Guidelines.
Indicators of fair value are derived using established methodologies including
earnings multiples, the level of third party offers received, prices of recent
investment rounds, net assets and industry valuation benchmarks. Where the
Company has an investment in an early stage enterprise, the price of a recent
investment round is often the most appropriate approach to determining fair
value. In situations where a period of time has elapsed since the date of the
most recent transaction, consideration is given to the circumstances of the
portfolio company since that date in determining fair value. This includes
consideration of whether there is any evidence of deterioration or strong
definable evidence of an increase in value. In the absence of these
indicators, the investment in question is valued at the amount reported at the
previous reporting date. Examples of events or changes that could indicate a
diminution include:
* the performance and/or prospects of the underlying business are
significantly below the expectations on which the investment was based;
* a significant adverse change either in the portfolio company's business or
in the technological, market, economic, legal or regulatory environment in
which the business operates; or
* market conditions have deteriorated, which may be indicated by a fall in
the share prices of quoted businesses operating in the same or related
sectors.
Investments are recognised as financial assets on legal completion of the
investment contract and are de-recognised on legal completion of the sale of
an investment.
Dividend income is not recognised as part of the fair value movement of an
investment, but is recognised separately as investment income through the
other distributable reserve when a share becomes ex-dividend.
Receivables and payables and cash are carried at amortised cost, in accordance
with FRS 102. There are no financial liabilities other than creditors.
Investment income
Equity income
Dividend income is included in revenue when the investment is quoted
ex-dividend.
Unquoted loan stock and other preferred income
Fixed returns on non-equity shares and debt securities are recognised when the
Company's right to receive payment and expect settlement is established. Where
interest is rolled up and/or payable at redemption then it is recognised as
income unless there is reasonable doubt as to its receipt.
Bank interest income
Interest income is recognised on an accrual basis using the rate of interest
agreed with the bank.
Investment management fees and other expenses
All expenses have been accounted for on an accruals basis. Expenses are
charged through the other distributable reserve except the following which are
charged through the realised capital reserve:
* 75 per cent. of management fees are allocated to the capital account to the
extent that these relate to an enhancement in the value of the investments and
in line with the Board's expectation that over the long term 75 per cent. of
the Company's investment returns will be in the form of capital gains; and
* expenses which are incidental to the purchase or disposal of an investment
are charged through the realised capital reserve.
Performance incentive fee
In the event that a performance incentive fee crystallises, the fee will be
allocated between revenue and realised capital reserve based upon the
proportion to which the calculation of the fee is attributable to revenue and
capital returns.
Taxation
Taxation is applied on a current basis in accordance with FRS 102. Current tax
is tax payable (refundable) in respect of the taxable profit (tax loss) for
the current period or past reporting periods using the tax rates and laws that
have been enacted or substantively enacted at the financial reporting date.
Taxation associated with capital expenses is applied in accordance with the
SORP.
Deferred tax is provided in full on all timing differences at the reporting
date. Timing differences are differences between taxable profits and total
comprehensive income as stated in the financial statements that arise from the
inclusion of income and expenses in tax assessments in periods different from
those in which they are recognised in financial statements. As a VCT the
Company has an exemption from tax on capital gains. The Company intends to
continue meeting the conditions required to obtain approval as a VCT in the
foreseeable future. The Company therefore, should have no material deferred
tax timing differences arising in respect of the revaluation or disposal of
investments and the Company has not provided for any deferred tax.
Reserves
Share premium
This reserve accounts for the difference between the price paid for shares and
the nominal value of the shares, less issue costs.
Capital redemption reserve
This reserve accounts for amounts by which the issued share capital is
diminished through the repurchase and cancellation of the Company's own
shares.
Unrealised capital reserve
Increases and decreases in the valuation of investments held at the year end
against cost are included in this reserve.
Realised capital reserve
The following are disclosed in this reserve:
* gains and losses compared to cost on the realisation of investments;
* expenses, together with the related taxation effect, charged in accordance
with the above policies; and
* dividends paid to equity holders where paid out by capital.
Other distributable reserve
The Special reserve, Treasury share reserve and the Revenue reserve were
combined in 2012 to form a single reserve named other distributable reserve.
This reserve accounts for movements from the revenue column of the Income
statement, the payment of dividends, the buy-back of shares and other
non-capital realised movements.
Dividends
Dividends by the Company are accounted for in the period in which the dividend
is paid or approved at the Annual General Meeting.
Segmental reporting
The Directors are of the opinion that the Company is engaged in a single
operating segment of business, being investment in equity and debt. The
Company invests in smaller companies principally based in the UK.
3. Gains on investments
Unaudited six months ended 30 September 2017 £'000 Unaudited six months ended 30 September 2016 £'000 Audited year ended 31 March 2017 £'000
Unrealised gains on fixed asset investments 711 2,259 6,165
Realised (losses)/gains on fixed asset investments (23) 4 14
688 2,263 6,179
4. Investment income
Unaudited six months ended 30 September 2017 £'000 Unaudited six months ended 30 September 2016 £'000 Audited year ended 31 March 2017 £'000
Income recognised on investments
Loan stock interest 1,165 1,165 2,277
Dividend income 20 7 45
Bank deposit interest 2 47 59
1,187 1,219 2,381
All of the Company's income is derived from operations based in the United
Kingdom.
5. Investment management fees
Unaudited six months ended 30 September 2017 £'000 Unaudited six months ended 30 September 2016 £'000 Audited year ended 31 March 2017 £'000
Investment management fee charged to revenue 155 136 283
Investment management fee charged to capital 464 409 848
619 545 1,131
Further details of the Management agreement under which the investment
management fee is paid are given in the Strategic report on page 11 of the
Annual Report and Financial Statements for the year ended 31 March 2017.
During the period, services of a total value of £619,000 in management fees
and £25,000 in administration fees (30 September 2016: £545,000 in
management fees and £24,000 in administration fees; 31 March 2017:
£1,131,000 in management fees and £49,000 in administration fees), were
purchased by the Company from Albion Capital Group LLP. At the financial
period end, the amount due to Albion Capital Group LLP in respect of these
services was £320,000 (30 September 2016: £287,000; 31 March 2017:
£323,000).
Albion Capital Group LLP, the Manager, holds 25,957 Ordinary shares in the
Company.
Albion Capital Group LLP is, from time to time, eligible to receive
transaction fees and monitoring fees from portfolio companies. During the
period to 30 September 2017, fees of £98,000 attributable to the investments
of the Company were received pursuant to these arrangements (30 September
2016: £63,000; 31 March 2017: £100,000).
6. Dividends
Unaudited six months ended 30 September 2017 £'000 Unaudited six months ended 30 September 2016 £'000 Audited year ended 31 March 2017 £'000
Dividend paid on 29 July 2016 - 2.5 pence per share - 1,987 1,987
Dividend paid on 30 December 2016 - 2.5 pence per share - - 1,986
Dividend paid on 31 July 2017 - 2.5 pence per share 2,179 - -
Unclaimed dividends - - (9)
2,179 1,987 3,964
The Directors have declared a second dividend for the year ending 31 March
2018 of 2.5 pence per share (total approximately £2,181,000), payable on 31
January 2018 to shareholders on the register on 5 January 2018.
7. Recent news on Albion Venture Capital Trust
See all newsREG - Official List - Suspension-Albion Venture Capital Trust PLC
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