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Albion Enterprise VCT PLC  -  AAEV   

Albion Enterprise VCT PLC: Half-yearly report

Released 15:27 25-Nov-2016

Albion Enterprise VCT PLC: Half-yearly report

As required by the UK Listing Authority's Disclosure and Transparency Rule 4.2, Albion Enterprise VCT PLC today makes public its information relating to the Half-yearly Financial Report (which is unaudited) for the six months to 30 September 2016. This announcement was approved by the Board of Directors on 25 November 2016.

The full Half-yearly Financial Report (which is unaudited) for the period to 30 September 2016, will shortly be sent to shareholders. Copies of the full Half-yearly Financial Report will be shown via the Albion Ventures LLP website by clicking www.albion-ventures.co.uk/funds/AAEV.

Investment objective and policy

The investment objective of Albion Enterprise VCT PLC ("the Company") is to provide investors with a regular and predictable source of income, combined with the prospect of longer term capital growth.

The Company achieves this by investing up to 50 per cent. of the net funds raised in an asset-based portfolio of more stable businesses (the "Asset-based Portfolio"). The balance of the net funds raised, other than funds retained for liquidity purposes, are invested in a portfolio of higher growth businesses across a variety of sectors of the UK economy. These range from more stable, income producing businesses to higher risk technology companies (the "Growth Portfolio"). In neither category do portfolio companies normally have any external borrowing with a 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. Funds awaiting investment in Qualifying Investments or retained for liquidity purposes are held on deposit with banks or other financial institutions with high credit ratings assigned by international credit ratings agencies.

The Company's investment portfolio is structured to provide a balance between income and capital growth for the longer term. The Asset-based Portfolio is designed to provide stability and income whilst still maintaining the potential for capital growth. The Growth Portfolio is intended to provide diversified exposure through its portfolio of investments in unquoted UK companies. Stock specific risk will be reduced by the Company's policy of holding a diversified portfolio of Qualifying Investments.

Financial calendar

Record date for second dividend

10 February 2017
Payment date for second dividend 

28 February 2017
Financial year end

31 March

Financial highlights

  Unaudited six
months ended
30 September 2016

Unaudited six
months ended
30 September 2015

Audited
year ended
31 March 2016

  (pence per share) (pence per share) (pence per share)
Dividends paid 2.50 2.50 5.00
Revenue return 0.53 0.94 1.85
Capital return 2.90 3.16 3.48
Net asset value 97.39 97.68 96.41

Total shareholder return to 30 September 2016:

(pence per share)
Dividends paid during the year ended:  
31 March 2008 0.70
31 March 2009 1.65
31 March 2010 2.00
31 March 2011 3.00
31 March 2012 3.00
31 March 2013 3.50
31 March 2014 5.00
31 March 2015 5.00
31 March 2016 5.00
Dividends paid in the six months to 30 September 2016 2.50
Total dividends paid to 30 September 2016 31.35
Net asset value as at 30 September 2016 97.39
Total shareholder return to 30 September 2016 128.74

In addition to the dividends summarised above, the Directors have declared a second dividend of 2.50 pence per share, payable on 28 February 2017 to shareholders on the register as at 10 February 2017.

Notes

Interim management report

Introduction
I am pleased to report a total return of 3.4 pence per share for the six months to 30 September 2016 (30 September 2015: 4.1 pence per share). These results illustrate a continuing number of positive developments within our portfolio companies.

Investment progress and prospects
During the period £1.5 million was invested in existing and new companies including £190,000 into Black Swan, a company which provides predictive analytics platforms to provide market research for consumer brands; £159,000 into Oviva AG, a Zurich based company which provides a dietetics platform and associated services; £280,000 into Secured by Design, a company focused on providing research and consulting for the global automotive sector; follow on investments were made into Proveca of £99,000, following the recent approval of its first pediatric drug; and £397,000 into DySIS.

Following the period end, a further new investment of £583,000 was made into Convertr, a company which provides digital sales lead generation software.

In general, the portfolio continues to perform well, and saw an uplift following the third party valuation for Radnor House Sevenoaks, the second school within the Radnor House group. In addition, Proveca was revalued sharply following the approval of its first drug and the Exco Intouch valuation increased as profitability rises. Our two medical analytics companies, Abcodia and DySIS valuations were reduced, as a result of slower than hoped for progress. Notwithstanding this, we are confident that the portfolio as a whole will continue to provide good returns for shareholders.

Risks & uncertainties
The outlook for the UK and global economies continues to be the key risk affecting the Company, despite continued growth in the UK.  Investment risk is mitigated in a number of ways, including our policy that the portfolio should be balanced across sectors and it should include a significant level of asset backing.

Other risks and uncertainties remain unchanged and are as detailed in note 12.

Share buy-backs
It remains 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, including the maintenance of sufficient resources for investment in new and existing portfolio companies and the continued payment of dividends to shareholders.  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.

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.

Albion VCTs Prospectus Top Up Offers 2016/17
Your Board, in conjunction with the boards of other VCTs managed by Albion Ventures LLP, is intending to launch shortly a top up offer of new Ordinary shares, aiming to raise circa £4 million out of a target of £24 million in aggregate that the Albion VCTs are seeking to raise. In addition, the Board may elect to allot up to a further £2 million if there is sufficient demand and the Board deems it prudent to do so. The proceeds will be used to provide further resources at a time when a number of attractive investment opportunities are being seen. A Securities Note, which will form part of the Prospectus, will be emailed or posted to shareholders shortly.

Results and dividends
On 30 September 2016, the net asset value was £44.9 million or 97.4 pence per share compared to £44.5 million or 96.4 pence per share on 31 March 2016. The revenue return before taxation was £305,000 compared to £451,000 for the six months to 30 September 2015.  In line with the annual dividend target of 5 pence per share, the Directors declare a second dividend for the year of 2.5 pence per share payable on 28 February 2017 to shareholders on the register as at 10 February 2017. 

M G Packe
Chairman
25 November 2016

Responsibility statement

The Directors, Maxwell Packe, Lady Balfour of Burleigh, Lord St John of Bletso and Patrick Reeve, are responsible for preparing the Half-yearly Financial Report. In preparing these condensed Financial Statements for the period to 30 September 2016 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

M G Packe
Chairman
25 November 2016

Portfolio of investments

The following is a summary of investments as at 30 September 2016:

Portfolio company % voting
rights
held by the Company
Cost
£'000
Cumulative movement
in value
£'000
 

Value
£'000
  Change in
value for the period*
£'000
Asset-based investments            
Radnor House School (Holdings) Limited 9.8 3,225 2,753 5,978   805
Bravo Inns II Limited 13.1 2,150 166 2,316   43
Regenerco Renewable Energy Limited 12.5 1,261 435 1,696   79
Earnside Energy Limited 8.7 1,394 283 1,677   130
Greenenerco Limited 28.6 985 554 1,539   -
Alto Prodotto Wind Limited 11.1 999 540 1,539   12
The Street by Street Solar Programme Limited 8.6 892 431 1,323   60
Bravo Inns Limited 8.4 755 (270) 485   -
AVESI Limited 5.5 179 52 231   13
The Charnwood Pub Company Limited 1.2 83 (1) 82   (1)
Total asset-based investments   11,923 4,943 16,866   1,141
Growth investments            
             
Exco Intouch Limited 6.0 1,015 1,738 2,753   835
Mirada Medical Limited 15.1 885 906 1,791   (27)
Egress Software Technologies Limited 8.8 880 674 1,554   173
Proveca Limited 10.5 660 607 1,267   593
Process Systems Enterprise Limited 4.1 407 746 1,153   57
Relayware Limited 3.5 1,065 1 1,066   (5)
DySIS Medical Limited 7.8 2,121 (1,058) 1,063   (429)
Grapeshot Limited 5.0 859 123 982   -
Masters Pharmaceuticals Limited 7.3 553 339 892   (216)
Hilson Moran Holdings Limited 6.9 201 682 883   116
Aridhia Informatics Limited 6.6 1,060 (279) 781   11
OmPrompt Holdings Limited 5.1 650 23 673   8
Cisiv Limited 8.6 663 (3) 660   (133)
Mi-Pay Group plc 6.3 1,504 (873) 631   26
MyMeds&Me Limited 5.4 418 165 583   (68)
memmstar Limited 8.8 383 129 512   (13)
Abcodia Limited 6.1 555 (264) 291   (336)
Secured by Design Limited 1.9 280 1 281   1
Oxsensis Limited 3.8 588 (329) 259   -
Black Swan Data Limited 0.6 190 - 190   -
Sandcroft Avenue Limited (payasUgym.com) 1.8 160 - 160   (15)
Oviva AG 2.1 159 - 159   -
Dickson Financial Services Limited (Innovation Broking) 8.4 84 39 123   39
Panaseer Limited 1.6 80 - 80   -
InCrowd Sports Limited 1.5 66 - 66   -
Total growth investments   15,486 3,367 18,853   617
Total fixed asset investments   27,409 8,310 35,719   1,758

*As adjusted for additions and disposals during the period.

Total change in value of investments for the period           1,758
Movement in loan stock accrued interest           (56)
Unrealised gains sub-total           1,702
Realised losses in current period           (5)
Total gains on investments as per Income statement         1,697

Fixed asset realisations Cost
£'000
Opening
carrying
value
£'000
Disposal
proceeds
£'000
Total
realised
gain/(loss)
£'000
Loss on
opening
value
£'000
Relayware Limited (loan stock repayment & part equity disposal) 304 304 304 - -
Radnor House School (Holdings) Limited (loan stock repayment) 98 98 98 - -
Hilson Moran Holdings Limited (loan stock & redemption premium repayment) 36 48 48 12 -
Greenenerco Limited (loan stock repayment) 12 17 17 5 -
The Street by Street Programme Limited (loan stock repayment) 3 4 4 1 -
Regenerco Limited (loan stock repayment) 2 3 3 1 -
AVESI Limited (loan stock repayment) 1 2 2 1 -
Alto Prodotto Wind Limited (loan stock repayment) 1 2 2 1 -
Escrow adjustments - - (5) (5) (5)
Total realisations 457 478 473 16 (5)

Condensed income statement

 

 
  Unaudited
six months ended
30 September 2016
Unaudited
six months ended
30 September 2015
Audited
year ended
31 March 2016
  Note Revenue £'000 Capital £'000 Total £'000 Revenue £'000 Capital £'000 Total £'000 Revenue £'000 Capital £'000 Total £'000
                     
Gains on investments 3 - 1,697 1,697 - 1,529 1,529 - 2,003 2,003
                     
Investment income 4 560 - 560 678 - 678 1,367 - 1,367
                     
Investment
management fees
5 (139) (419) (558) (116) (347) (463) (247) (741) (988)
                     
Other expenses   (116) - (116) (111) - (111) (209) - (209)
                     
Return on ordinary activities before taxation   305 1,278 1,583 451 1,182 1,633 911 1,262 2,173
                     
Tax (charge)/credit on ordinary activities   (59) 59 - (80) 69 (11) (159) 148 (11)
                     
Return and total comprehensive income attributable to shareholders   246 1,337 1,583 371 1,251 1,622 752 1,410 2,162
                     
Basic and diluted return per share (pence)* 7 0.53 2.90 3.43 0.94 3.16 4.10 1.85 3.48 5.33

* excluding treasury shares

Comparative figures have been extracted from the unaudited Half-yearly Financial Report for the six months ended 30 September 2015 and the audited statutory accounts for the year ended 31 March 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.

There is no other comprehensive income other than the results for the periods disclosed above. Accordingly a Statement of comprehensive income is not required.

The difference between the reported return on ordinary activities before tax and the historical profit is due to the fair value movements on investments.

Condensed balance sheet

 


Note
Unaudited
30 September
2016
£'000
Unaudited
30 September
2015
£'000
Audited
31 March
2016
£'000
         
Fixed asset investments   35,719 31,697 32,971
         
Current assets        
Trade and other receivables less than one year   855 670 2,880
Cash and cash equivalents   8,629 7,481 8,980
    9,484 8,151 11,860
         
Total assets   45,203 39,848 44,831
         
Creditors: amounts falling due within one year        
Trade and other payables less than one year   (341) (372) (361)
Total assets less current liabilities   44,862 39,476 44,470
         
Equity attributable to equityholders        
Called up share capital 8 521 457 518
Share premium   17,564 11,455 17,285
Capital redemption reserve   104 104 104
Unrealised capital reserve   8,070 5,588 6,389
Realised capital reserve   (320) 666 24
Other distributable reserve   18,923 21,206 20,150
         
Total equity shareholders' funds   44,862 39,476 44,470
         
Basic and diluted net asset value per share (pence)*   97.39 97.68 96.41

* excluding treasury shares

Comparative figures have been extracted from the unaudited Half-yearly Financial Report for the six months ended 30 September 2015 and the audited statutory accounts for the year ended 31 March 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 25 November 2016 and were signed on its behalf by

M G Packe
Chairman
Company number:  05990732

Condensed statement of changes in equity

 
Called up share capital
 £'000
Share premium
£'000


Capital redemption reserve
£'000

Unrealised capital reserve
£'000
Realised capital reserve*
£'000
Other distributable
reserve*
£'000
Total
£'000
As at 1 April 2016 518 17,285 104 6,389 24 20,150 44,470
Return/(loss) and total comprehensive income for the period - - - 1,702 (365) 246 1,583
Transfer of previously unrealised gains on disposals of investments - - - (21) 21 - -
Purchase of shares for treasury - - - - - (317) (317)
Issue of equity 3 283 - - - - 286
Cost of issue of equity - (4) - - - - (4)
Equity dividends paid - - - - - (1,156) (1,156)
As at 30 September 2016 521 17,564 104 8,070 (320) 18,923 44,862
               
               
As at 1 April 2015 409 6,969 104 4,189 814 22,177 34,662
Return/(loss) and total comprehensive income for the period - - - 1,522 (271) 371 1,622
Transfer of previously unrealised gains on disposal of investments - - - (123) 123 - -
Purchase of shares for treasury - - - - - (343) (343)
Issue of equity 48 4,624 - - - - 4,672
Cost of issue of equity - (138) - - - - (138)
Equity dividends paid - - - - - (999) (999)
As at 30 September 2015 457 11,455 104 5,588 666 21,206 39,476
               
As at 1 April 2015 409 6,969 104 4,189 814 22,177 34,662
Return/(loss) and total comprehensive income for the year - - - 2,047 (637) 752 2,162
Transfer of previously unrealised losses on disposal of investments - - - 153 (153) - -
Purchase of shares for treasury - - - - - (692) (692)
Issue of equity 109 10,610 - - - - 10,719
Cost of issue of equity - (294) - - - - (294)
Equity dividends paid - - - - - (2,087) (2,087)
As at 31 March 2016 518 17,285 104 6,389 24 20,150 44,470

* Included within the aggregate of these reserves is an amount of £18,603,000 (30 September 2015: £21,872,000; 31 March 2016: £20,174,000) which is considered distributable.

Condensed statement of cash flows

  Unaudited
six months ended
30 September 2016
£'000
Unaudited
six months ended
30 September 2015
£'000
Audited
year ended
31 March 2016
£'000
Cash flow from operating activities      
Loan stock income received 442 572 1,098
Dividend income received 10 50 117
Deposit interest received 50 42 84
Investment management fees paid (556) (433) (927)
Other cash payments (128) (122) (208)
Corporation tax refund - 35 8
Net cash flow from operating

  activities
(182) 144 172
       
       
Cash flow from investing activities      
Purchase of fixed asset investments (2,135) (1,594) (2,941)
Disposal of fixed asset investments 526 739 1,114
Net cash flow from investing

  activities
(1,609) (855) (1,827)
       
Cash flow from financing activities      
Issue of ordinary share capital 2,743 3,748 7,499
Cost of issue of equity (5) (2) (7)
Dividends paid (981) (861) (1,786)
Purchase of own shares (including costs) (317) (314) (692)
Net cash flow from financing activities 1,440 2,571 5,014
       
(Decrease)/increase in cash and cash equivalents (351) 1,860 3,359
Cash and cash equivalents at start of period 8,980 5,621 5,621
Cash and cash equivalents at end of period 8,629 7,481 8,980
       
Cash and cash equivalents comprise      
Cash at bank and in hand 8,629 7,481 8,980
Cash equivalents - - -
Total cash and cash equivalents 8,629 7,481 8,980

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 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.

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 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 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 from investments is included in revenue in the period in which the dividend is paid or approved by the portfolio company.

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 expected 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 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:

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 share, less issue costs and transfers to the Other distributable reserve.

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:

Other distributable reserve
The Special reserve, Treasury share reserve and the Revenue reserve were combined in 2013 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 buyback 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.

3.  Gains on investments

 
Unaudited

six months ended
30 September 2016
£'000

Unaudited
six months ended
30 September 2015
£'000
Audited
year ended
31 March 2016
£'000
Unrealised gains on fixed asset investments 1,702 1,522 2,047
Realised (losses)/gains on fixed asset investments (5) 7 (44)
       
  1,697 1,529 2,003


4.  Investment income

 
Unaudited

six months ended
30 September 2016
£'000

Unaudited
six months ended
30 September 2015
£'000
Audited
year ended
31 March 2016
£'000
Income recognised on investments      
Loan stock interest and other fixed returns  499 587 1,166
UK dividend income 10 50 117
Bank deposit interest 51 41 84
  560 678 1,367

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 2016
£'000

Unaudited
six months ended
30 September 2015
£'000
Audited
year ended
31 March 2016
£'000
Investment management fee charged to revenue 139 116 247
Investment management fee charged to capital 419 347 741
  558 463 988

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 2016.

During the period, services of a total value of £558,000 (30 September 2015: £463,000; 31 March 2016: £988,000) were purchased by the Company from Albion Ventures LLP.  At the financial period end, the amount due to Albion Ventures LLP in respect of these services disclosed within creditors was £280,000 (30 September 2015: £247,000; 31 March 2016: £278,000).

Patrick Reeve is the Managing Partner of the Manager, Albion Ventures LLP. During the period, the Company was charged £12,000 including VAT (30 September 2015: £10,800; 31 March 2016: £21,600) by Albion Ventures LLP in respect of Patrick Reeve's services as a Director.  At the financial period end, the amount due to Albion Ventures LLP in respect of these services disclosed as creditors was £6,000 (30 September 2015: £5,400; 31 March 2016: £5,400).

Albion Ventures LLP is, from time to time, eligible to receive transaction fees and Directors' fees from portfolio companies.  During the period to 30 September 2016, fees of £84,000 attributable to the investments of the Company were received pursuant to these arrangements (30 September 2015: £82,000; 31 March 2016: £162,000).

6.  Dividends

      Unaudited
six months ended
30 September 2016
£'000
Unaudited
six months ended
30 September 2015
£'000
  Audited
year ended
31 March 2016
£'000
Dividend of 2.50p per share paid on 28 August 2015     - 999   999
Dividend of 2.50p per share paid on 29 February 2016     - -   1,088
Dividend of 2.50p per share paid on 31 August 2016     1,156 -   -
      1,156 999   2,087

In addition to the dividends summarised above, the Board has declared a second dividend for the year ending 31 March 2017 of 2.50 pence per share which will be paid on 28 February 2017 to shareholders on the register as at 10 February 2017. This is expected to amount to approximately £1,152,000.

7.  Basic and diluted return per share

  Unaudited
six months ended
30 September 2016
Unaudited
six months ended
30 September 2015
Audited
year ended
31 March 2016
  Revenue Capital Total Revenue Capital Total Revenue Capital Total
                   
Return attributable to equity shares (£'000) 246 1,337 1,583 371 1,251 1,622 911 1,262 2,173
Weighted average shares in issue (excluding treasury shares) 46,172,950
39,600,517
40,534,139
Return attributable per Ordinary share (pence) (basic and diluted) 0.53 2.90 3.43 0.94 3.16 4.10 1.85 3.48 5.33

The weighted average number of shares is calculated excluding treasury shares of 6,029,443 (30 September 2015: 5,288,000; 31 March 2016: 5,670,000).

There are no convertible instruments, derivatives or contingent share agreements in issue for the Company, hence there are no dilution effects to the return per share. The basic return per share is therefore the same as the diluted return per share.

8.  Called up share capital

  Unaudited
30 September 2016
£'000
Unaudited
30 September 2015
£'000
Audited
31 March 2016
£'000
Allotted, called up and fully paid
52,094,810 Ordinary shares of 1 penny each (30 September 2015: 45,702,613; 31 March 2016: 51,796,503)
521 457 518

Voting rights
46,065,367 shares of 1 penny each (net of treasury shares) (30 September 2015: 40,414,613; 31 March 2016: 46,126,503).

In the six months to 30 September 2016, the Company purchased 359,443 shares (30 September 2015: 381,000; 31 March 2016: 763,000) to be held in treasury at a cost of £317,000 (30 September 2015: £343,000; 31 March 2016: £692,000), representing 0.7 per cent. of the shares in issue (excluding treasury shares) as at 30 September 2016.

The Company holds a total of 6,029,443 shares (30 September 2015: 5,288,000; 31 March 2016: 5,670,000) in treasury representing 11.6 per cent. of the shares in issue as at 30 September 2016.

Under the terms of the Dividend Reinvestment Scheme Circular dated 26 November 2009, the following Ordinary shares of nominal value 1 penny each were allotted during the period to 30 September 2016:

Date of allotment Number of
shares allotted
Aggregate
nominal value
 of shares
 (£'000)
Issue price
 (pence per share)
Net
 consideration
 received
 (£'000)
Opening market price on allotment date (pence per share)
31 August 2016 184,698 2 94.66 173 88.50

Under the terms of the Albion VCTs Prospectus Top Up Offers 2015/2016, the following Ordinary shares of nominal value 1 penny each were allotted during the period to 30 September 2016:

Date of allotment Number of
shares allotted
Aggregate
nominal value
 of shares
 (£'000)
Issue price
 (pence per share)
Net
 consideration
 received
 (£'000)
Opening market price on allotment date (pence per share)
6 April 2016 53,319 0.5 97.70 51 91.50
6 April 2016 7,296 - 98.20 7 91.50
6 April 2016 52,994 0.5 98.70 51 91.50
  113,609 1   109  

9.  Commitments and contingencies
As at 30 September 2016, the Company had the following financial commitments totalling £245,000 (30 September 2015: £285,000; 31 March 2016: £319,000), which are expected to be invested during the next 12 months:

There are no contingencies or guarantees of the Company as at 30 September 2016 (30 September 2015: £nil, 31 March 2016: £nil).

10.  Post balance sheet events
Since 30 September 2016, the Company has had the following post balance sheet events:

On 4 November 2016 the Company announced its intention to launch a prospectus in relation to an offer for subscription for new Ordinary shares subject to obtaining regulatory approval. The Company is aiming to raise circa £4 million out of a target of £24 million in aggregate that the Albion VCTs are seeking to raise. A Securities Note, which forms part of the Prospectus, will be sent to shareholders shortly.

11.  Related party transactions
Other than transactions with the Manager as described in Note 5, there are no other related party transactions.

12.  Risks and uncertainties
The Board considers that the Company faces the following principal risks and uncertainties:

1. Economic 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.

To reduce this risk, in addition to investing equity in portfolio companies, the Company often invests in secured loan stock and has a policy of not normally permitting any external bank borrowings within portfolio companies. Additionally, the Manager has been rebalancing the sector exposure of the portfolio with a view to reducing reliance on consumer led sectors.

2. VCT approval risk
The Company's current approval as a venture capital trust allows investors to take advantage of tax reliefs on initial investment and ongoing tax free capital gains and dividend income. Failure to meet the qualifying requirements could result in investors losing the tax relief on initial investment and loss of tax relief on any tax-free income or capital gains received. In addition, failure to meet the qualifying requirements could result in a loss of listing of the shares.

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. Philip Hare & Associates LLP reports quarterly to the Board to independently confirm compliance with the venture capital trust legislation, to highlight areas of risk and to inform on changes in legislation. Each investment in a new portfolio company is also pre-cleared with H.M. Revenue & Customs.

3. Investment risk
This is the risk of investment in poor quality assets which reduces the capital and income returns to shareholders, and negatively impacts on the Company's reputation. 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 strong track record for investing in this segment of the market. In addition, the Manager operates a formal and structured investment 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) and the Board receives detailed reports on each investment as part of the Manager's report at quarterly board meetings.

4. Valuation risk
The Company's investment valuation methodology is reliant on the accuracy and completeness of information that is issued by portfolio companies. In particular, the Directors may not be aware of or take into account certain events or circumstances which occur after the information issued by such companies is reported.

As described in note 2 of the Financial Statements, the investments held by the Company are classified at fair value through profit or loss and valued in accordance with the International Private Equity and Venture Capital Valuation Guidelines. These guidelines set out recommendations, intended to represent current best practice on the valuation of venture capital investments. These investments are valued on the basis of forward looking estimates and judgements about the business itself, its market and the environment in which it operates, together with the state of the mergers and acquisitions market, stock market conditions and other factors. In making these judgements the valuation takes into account all known material facts up to the date of approval of the Financial Statements by the Board. The values of a number of investments are also supported by independent third party professional valuations and the Board critically reviews key valuations on a quarterly basis.

5. 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 businesses. 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 via 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 Manager 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.        

6. Internal control risk
Failures in key controls, within the Board or 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 Audit Committee meets with the Manager's Internal Auditor, PKF Littlejohn LLP, when required, receiving a report regarding the last formal internal audit performed on the Manager, and providing the opportunity for the Audit Committee to ask specific and detailed questions. Patrick Reeve on behalf of the Board, met with the internal audit Partner of PKF Littlejohn LLP in January 2016 to discuss the most recent Internal Audit Report on the Manager. The Manager has a comprehensive business continuity plan in place in the event that operational continuity is threatened. Further details regarding the Board's management and review of the Company's internal controls through the implementation of the Guidance on Risk Management, Internal Control and Related Financial and Business Reporting are detailed on page 29 of the Annual Report and Financial Statements for the year ended 31 March 2016.

Measures are in place to mitigate information risk in order to ensure the integrity, availability and confidentiality of information used within the business.

7. Reliance upon third parties risk
The Company is reliant upon the services of Albion Ventures LLP for the provision of investment management and administrative functions.

There are provisions within the Management agreement for the change of Manager under certain circumstances (for further detail, see the Management agreement paragraph on page 11 of the Annual Report and Financial Statements for the year ended 31 March 2016). In addition, the Manager has demonstrated to the Board that there is no undue reliance placed upon any one individual within Albion Ventures LLP.

8. Financial Risk
By its nature, as a venture capital trust, the Company is exposed to investment risk (which comprises investment price risk and cash flow interest rate risk), credit risk and liquidity risk.

The Company's policies for managing these risks and its financial instruments are outlined in full in note 18 of the Annual Report and Financial Statements for the year ended 31 March 2016.

All of the Company's income and expenditure is denominated in sterling and hence the Company has no foreign currency risk. The Company is financed through equity and does not have any borrowings. The Company does not use derivative financial instruments for speculative purposes.

13.  Going concern
The Board's assessment of liquidity risk remains unchanged since the last Annual Report and Financial Statements for the year ended 31 March 2016, and is detailed on page 53 of those accounts.  The Company has adequate cash and liquid resources and has no borrowing.  The portfolio of investments is diversified in terms of sector, and the major cash outflows of the Company (namely investments, share buy-backs and dividends) 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.

14.  Other information
The information set out in this Half-yearly Financial Report does not constitute the Company's statutory accounts within the terms of section 435 of the Companies Act 2006 for the periods ended 30 September 2016 and 30 September 2015, and is unaudited.  The information for the year ended 31 March 2016 does not constitute statutory accounts within the terms of section 435 of the Companies Act 2006 but is derived from the statutory accounts for the financial year, which were unqualified and have been delivered to the Registrar of Companies.  The Auditor reported on those accounts; their report was unqualified and did not contain statements 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-ventures.co.uk/funds/AAEV.




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 Enterprise VCT PLC via Globenewswire


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Albion Enterprise VCT PLC: Half-yearly report - RNS