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Albion Enterprise VCT PLC  -  AAEV   

Albion Enterprise VCT PLC: Half-year Financial Report

Released 13:16 04-Dec-2017

Albion Enterprise VCT PLC: Half-year Financial Report

Albion Enterprise VCT PLC

LEI Code 213800OVSRDHRJBMO720

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 2017. This announcement was approved by the Board of Directors on 4 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/AAEV/30Sep2017.pdf.

Investment objective

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's investment portfolio is structured to provide a balance between income and capital growth for the longer term. Stock specific risk will be reduced by the Company's policy of holding a diversified portfolio of Qualifying Investments.

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.

The Company can, prior to investing in VCT qualifying assets, invest in cash deposits, in floating rate notes or similar instruments with banks or other financial institutions with credit ratings, assigned by international credit agencies, of A or better (on acquisition) or up to 10 per cent. of its assets, at the time of investment, in liquid open-ended equity funds providing income and capital equity exposure (where it is considered economic to do so).

Financial calendar

Record date for second dividend 9 February 2018
   
Payment date for second dividend 28 February 2018
   
Financial year end 31 March

Financial highlights

  Unaudited six months ended
 30 September 2017
Unaudited six
months ended
30 September 2016
Audited
year ended
31 March 2017
  (pence per share) (pence per share) (pence per share)
Dividends paid 2.50 2.50 5.00
Revenue return - 0.53 0.64
Capital return 2.34 2.90 10.23
Net asset value 101.62 97.39 101.79

Total shareholder return to 30 September 2017: (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
31 March 2017 5.00
Dividends paid in the six months to 30 September 2017 2.50
Total dividends paid to 30 September 2017 36.35
Net asset value as at 30 September 2017 101.62
Total shareholder return to 30 September 2017 137.97

In addition to the dividends summarised above, the Directors have declared a second dividend of 2.50 pence per share, payable on 28 February 2018 to shareholders on the register on 9 February 2018.

Notes

Interim management report

Introduction
I am pleased to report a total return of 2.3 pence per share for the six months to 30 September 2017 (30 September 2016: 3.4 pence per share). These results demonstrate continued positive developments within our investment portfolio.

Investment performance and progress
During the period, some £4.0 million was invested in existing and new companies, including £950,000 in MPP Global Solutions, which provides a digital subscription management platform, £545,000 in G.Network Communications, which is rolling out a fibre optic network in central London, and £100,000 in Locum's Nest, which provides a technology solution for the management of locum doctors for the NHS. In addition, £1.2 million was invested in Egress Software Technologies, to fund further growth, while £482,000 was invested in Oviva to fund its expansion, particularly in the UK.

During the period our holding in Hilson Moran was sold, realising proceeds of £1.47 million and resulting in a three times return on the total investment.

Particularly good progress in the year was achieved by Grapeshot, which has now moved sharply into profit and which is currently growing in excess of 150% per annum. In addition, the annual professional valuation of Radnor House School (Holdings) increased, as pupil numbers at our Radnor House Sevenoaks School continue to grow.

Aridhia Informatics valuation was reduced, following slower than anticipated growth. The write-down of Egress Software Technologies valuation was technical in nature, reflecting a slightly lower valuation than anticipated on our recent investment; the company continues to show strong growth.

Results and dividends
On 30 September 2017, the net asset value was £52.5 million or 101.62 pence per share compared to £52.5 million or 101.79 pence per share on 31 March 2017. The total return before taxation was £1.2 million compared to £1.6 million for the six months to 30 September 2016. In line with the annual dividend target of 5 pence per share, the Directors declare a second dividend for the year of 2.50 pence per share payable on 28 February 2018 to shareholders on the register on 9 February 2018.

Patient Capital Review
The Patient Capital Review has been completed and the 2017 Autumn Budget has now been delivered. Whilst being strongly supportive of VCTs, the Budget has introduced a number of measures designed to re-direct investment towards higher growth innovative businesses. Whilst not fundamentally changing the way that we invest, your Board and the Manager are currently reviewing the implications of these measures, and will reflect on whether your Company's stated investment policy needs to be amended at next year's Annual General Meeting.

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 stages of investment.

Other principal risks and uncertainties are detailed in note 13 below.

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 2017/18
Your Board, in conjunction with the boards of other VCTs managed by Albion Capital Group LLP, launched a prospectus top up offer of new Ordinary shares on 6 September 2017 with an aim to raise circa £6 million out of a target of £32 million in aggregate that the Albion VCTs are seeking to raise. The proceeds will be used to provide further resources at a time when a number of attractive investment opportunities are being seen. Details of the first allotment on 17 November 2017 of £3.67 million are shown in note 10.

Outlook
We see the portfolio as being well balanced across a variety of growth sectors and with a number of businesses having the capability of significant further increase in value.

Maxwell Packe
Chairman
4 December 2017

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 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

Maxwell Packe
Chairman
4 December 2017

Portfolio of investments
The following is a summary of investments as at 30 September 2017:

Portfolio company % voting rights Cost
£'000
Cumulative movement
in value
£'000

Value
£'000
  Change in
value for the period*
£'000
Radnor House School (Holdings) Limited 9.8 3,128 3,467 6,595   668
Egress Software Technologies Limited 10.9 2,052 2,588 4,640   (481)
Grapeshot Limited 5.1 1,026 2,130 3,156   990
Bravo Inns II Limited 13.1 2,150 372 2,522   90
Mirada Medical Limited 15.1 1,055 1,253 2,308   (9)
Proveca Limited 9.6 905 1,018 1,923   24
Regenerco Renewable Energy Limited 12.5 1,261 611 1,872   111
Earnside Energy Limited 8.7 1,394 273 1,667   (27)
Alto Prodotto Wind Limited 11.1 987 544 1,531   5
The Street by Street Solar Programme Limited 8.6 891 560 1,451   68
Greenenerco Limited 28.6 942 482 1,424   12
Process Systems Enterprise Limited 4.1 406 954 1,360   9
DySIS Medical Limited 10.0 2,509 (1,350) 1,159   (11)
Zift Channel Solutions Inc. 2.5 1,053 14 1,067   14
MPP Global Solutions Limited 3.2 950 - 950   -
Oviva AG 3.7 642 160 802   161
memsstar Limited 8.8 373 326 699   264
Convertr Media Limited 6.3 700 (46) 654   (46)
MyMeds&Me Limited 3.4 418 219 637   13
Aridhia Informatics Limited 6.6 1,090 (536) 554   (394)
G.Network Communications Limited 9.1 545 - 545   -
Black Swan Data Limited 1.6 538 - 538   -
OmPrompt Holdings Limited 7.4 682 (151) 531   (1)
Bravo Inns Limited 8.4 755 (263) 492   26
Oxsensis Limited 3.3 625 (253) 372   110
Mi-Pay Group plc 6.3 1,504 (1,162) 342   (26)
Cisiv Limited 8.6 663 (322) 341   1
Abcodia Limited 5.6 764 (450) 314   (44)
Quantexa Limited 2.7 303 - 303   -
Secured by Design Limited 1.9 280 1 281   1
AVESI Limited 5.5 180 73 253   14
Panaseer Limited 2.0 180 47 227   -
Sandcroft Avenue Limited (PayAsUGym.com) 1.8 160 (21) 139   -
Dickson Financial Services Limited 8.4 84 34 118   (4)
Locum's Nest Limited 2.2 100 - 100   -
MHS 1 Limited 1.2 83 (1) 82   -
InCrowd Sports Limited 1.5 66 - 66   -
Beddlestead Limited 10.0 20 - 20   -
Total fixed asset investments   31,464 10,571 42,035   1,538

*As adjusted for additions and disposals during the period.


Total change in value of investments for the period
  1,538
Movement in loan stock accrued interest           (3)
Unrealised gains sub-total           1,535
Realised gains in current period           259
Total gains on investments as per Income statement         1,794

Fixed asset realisations Cost
£'000
Opening
carrying
value
£'000
Disposal
proceeds
£'000
Total
realised
gain/(loss)
£'000
Gain/(loss) on
opening
value
£'000
Disposals:          
Hilson Moran Holdings Limited 201 1,079 1,471 1,270 392
Relayware Limited (merger with Zift Channel Solutions Inc.) 913 911 901 (12) (10)
           
Loan stock repayments/restructuring:          
Oxsensis Limited (conversion of loan stock to equity) 85 117 122 37 5
memsstar Limited 11 189 100 89 (89)
Greenenerco Limited 17 25 25 8 -
Alto Prodotto Wind Limited 2 2 2 - -
           
Escrow adjustment - - (39) (39) (39)
           
Total realisations 1,229 2,323 2,582 1,353 259

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 - 1,794 1,794 - 1,697 1,697 - 5,790 5,790
                     
Investment income 4 316 - 316 560 - 560 939 - 939
                     
Investment
management fees
5 (164) (492) (656) (139) (419) (558) (292) (875) (1,167)
                     
Performance incentive fee 5 (31) (93) (124) - - - (64) (191) (255)
                     
Other expenses   (120) - (120) (116) - (116) (227) - (227)
                     
Return on
ordinary activities before taxation
  1 1,209 1,210 305 1,278 1,583 356 4,724 5,080
                     
Tax (charge)/credit on ordinary activities   - - - (59) 59 - (57) 57 -
                     
Return and total comprehensive income attributable to shareholders   1 1,209 1,210 246 1,337 1,583 299 4,781 5,080
                     
Basic and diluted return per share (pence)* 7 - 2.34 2.34 0.53 2.90 3.43 0.64 10.23 10.87

* 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   42,035 35,719 37,775
         
Current assets        
Trade and other receivables less than one year   1,673 855 232
Cash and cash equivalents   9,385 8,629 15,121
    11,058 9,484 15,353
         
Total assets   53,093 45,203 53,128
         
Payables: amounts falling due within one year        
Trade and other payables less than one year   (545) (341) (670)
Total assets less current liabilities   52,548 44,862 52,458
         
Equity attributable to equity holders        
Called up share capital 8 585 521 580
Share premium   23,706 17,564 23,225
Capital redemption reserve   104 104 104
Unrealised capital reserve   10,351 8,070 9,910
Realised capital reserve   2,052 (320) 1,284
Other distributable reserve   15,750 18,923 17,355
         
Total equity shareholders' funds   52,548 44,862 52,458
         
Basic and diluted net asset value per share (pence)*   101.62 97.39 101.79

* 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 4 December 2017 and were signed on its behalf by

Maxwell 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 2017 580 23,225 104 9,910 1,284 17,355 52,458
Return/(loss) and total comprehensive income for the period - - - 1,535 (326) 1 1,210
Transfer of previously unrealised gains on disposal of investments - - - (1,094) 1,094 - -
Issue of equity 5 491 - - - - 496
Cost of issue of equity - (10) - - - - (10)
Purchase of shares for treasury - - - - - (312) (312)
Dividends paid - - - - - (1,294) (1,294)
As at 30 September 2017 585 23,706 104 10,351 2,052 15,750 52,548
               
               
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 disposal of investments - - - (21) 21 - -
Issue of equity 3 283 - - - - 286
Cost of issue of equity - (4) - - - - (4)
Purchase of shares for treasury - - - - - (317) (317)
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 2016 518 17,285 104 6,389 24 20,150 44,470
Return/(loss) and total comprehensive income for the year              
- - - 5,016 (235) 299 5,080
Transfer of previously unrealised gains on disposal of investments - - - (1,495) 1,495 - -
Issue of equity 62 6,106 - - - - 6,168
Cost of issue of equity - (166) - - - - (166)
Purchase of shares for treasury - - - - - (689) (689)
Dividends paid - - - - - (2,405) (2,405)
As at 31 March 2017 580 23,225 104 9,910 1,284 17,355 52,458

* These reserves amount to £17,802,000 (30 September 2016: £18,603,000; 31 March 2017: £18,639,000) 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      
Investment income received 283 442 733
Dividend income received 28 10 70
Deposit interest received 2 50 76
Investment management fees paid (655) (556) (1,117)
Performance incentive fee paid (255) - -
Other cash payments (147) (128) (226)
Corporation tax paid - - (11)
Net cash flow from operating
 activities
(744) (182) (475)
       
       
Cash flow from investing activities      
Purchase of fixed asset investments (4,023) (2,135) (3,375)
Disposal of fixed asset investments 128 526 4,424
Net cash flow from investing
 activities
(3,895) (1,609) 1,049
       
Cash flow from financing activities      
Issue of share capital 287 2,743 8,271
Cost of issue of equity (2) (5) (1)
Dividends paid (1,094) (981) (2,037)
Purchase of own shares (including costs) (288) (317) (666)
Net cash flow from financing activities (1,097) 1,440 5,567
       
(Decrease)/increase in cash and cash equivalents (5,736) (351) 6,141
Cash and cash equivalents at start of period 15,121 8,980 8,980
Cash and cash equivalents at end of period 9,385 8,629 15,121
       
Cash and cash equivalents comprise      
Cash at bank and in hand 9,385 8,629 15,121
Cash equivalents - - -
Total cash and cash equivalents 9,385 8,629 15,121

Notes to the condensed Financial Statements

1. Basis of preparation
The condensed Financial Statements have been prepared in accordance with the historical cost convention, modified to include the revaluation of investments, in accordance with applicable United Kingdom law and accounting standards, including Financial Reporting Standard 102 ("FRS 102"), Financial Reporting Standard 104 - Interim Financial Reporting ("FRS 104"), and with the 2014 Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" ("SORP") issued by The Association of Investment Companies ("AIC").

The preparation of the Financial Statements requires management to make judgements and estimates that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The most critical estimates and judgements relate to the determination of carrying value of investments at fair value through profit and loss ("FVTPL"). The Company values investments by following the IPEVCV Guidelines and further detail on the valuation techniques used are outlined in note 2 below.

The Half-yearly Financial Report has not been audited, nor has it been reviewed by the auditor pursuant to the FRC's guidance on Review of interim financial information.

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.

Receivables and payables and cash are carried at amortised cost, in accordance with FRS 102. There are no financial liabilities other than payables.

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 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
This reserve accounts for the difference between the price paid for shares and the nominal value of the share, 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:

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.

Segmental reporting
The Directors are of the opinion that the Company is engaged in a single operating segment of business, being investment in equity or 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 1,535 1,702 5,016
Realised gains/(losses) on fixed asset investments 259 (5) 774
       
  1,794 1,697 5,790

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      
Interest from loans to portfolio companies 286 499 800
Dividends 28 10 70
Bank deposit interest 2 51 69
  316 560 939

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 164 139 292
Investment management fee charged to capital 492 419 875
Performance incentive fee charged to revenue 31 - 64
Performance incentive fee charged to capital 93 - 191
  780 558 1,422

Further details of the Management agreement under which the investment management fee and performance incentive fee are paid is given in the Strategic report on pages 11 and 12 of the Annual Report and Financial Statements for the year ended 31 March 2017.

During the period, services of a total value of £656,000 (30 September 2016: £558,000; 31 March 2017: £1,167,000) were purchased by the Company from Albion Capital Group LLP. At the financial period end, the amount due to Albion Capital Group LLP in respect of these services disclosed within payables was £328,000 (30 September 2016: £280,000; 31 March 2017: £328,000). For the period to 30 September 2017, a provisional performance incentive fee of £124,000 has been accrued, however any performance incentive fee is calculated and only payable based on year end results (30 September 2016: nil: 31 March 2017: £255,000).

Patrick Reeve is the Managing Partner of the Manager, Albion Capital Group LLP. During the period, the Company was charged £12,000 including VAT (30 September 2016: £12,000; 31 March 2017: £24,000) by Albion Capital Group LLP in respect of Patrick Reeve's services as a Director. At the financial period end, the amount due to Albion Capital Group LLP in respect of these services disclosed as payables was £6,000 (30 September 2016: £6,000; 31 March 2017: £6,000).

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 £135,000 attributable to the investments of the Company were received pursuant to these arrangements (30 September 2016: £84,000; 31 March 2017: £167,000).

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 of 2.50p per share paid on 31 August 2016     - 1,156   1,156
Dividend of 2.50p per share paid on 28 February 2017     - -   1,249
Dividend of 2.50p per share paid on 31 August 2017     1,294 -   -
      1,294 1,156   2,405

In addition to the dividends summarised above, the Board has declared a second dividend for the year ending 31 March 2018 of 2.50 pence per share which will be paid on 28 February 2018 to shareholders on the register on 9 February 2018. This is expected to amount to approximately £1,386,000.

7. Basic and diluted return per share

  Unaudited
six months ended
30 September 2017
Unaudited
six months ended
30 September 2016
Audited
year ended
31 March 2017
  Revenue Capital Total Revenue Capital Total Revenue Capital Total
                   
Return attributable to equity shares (£'000) 1 1,209 1,210 246 1,337 1,583 299 4,781 5,080
Weighted average shares in issue (excluding treasury shares) 51,809,944


46,172,950
46,759,602
Return attributable per Ordinary share (pence) (basic and diluted) - 2.34 2.34 0.53 2.90 3.43 0.64 10.23 10.87

The weighted average number of shares is calculated excluding treasury shares of 6,753,443 (30 September 2016: 6,029,443; 31 March 2017: 6,429,443).

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 2017
£'000
Unaudited
30 September 2016
£'000
Audited
31 March 2017
£'000
Allotted, called up and fully paid
58,462,876 Ordinary shares of 1 penny each (30 September 2016: 52,094,810; 31 March 2017: 57,964,774)
585 521 580

Voting rights
51,709,433 shares of 1 penny each (net of treasury shares) (30 September 2016: 46,065,367; 31 March 2017: 51,535,331).

In the six months to 30 September 2017, the Company purchased 324,000 shares (30 September 2016: 359,443; 31 March 2017: 759,443) to be held in treasury with a nominal value of £3,200 (30 September 2016: £3,600; 31 March 2017: £7,600) and at a cost of £312,000 (30 September 2016: £317,000; 31 March 2017: £689,000), representing 0.6 per cent. of the shares in issue (excluding treasury shares) as at 30 September 2017.

The Company holds a total of 6,753,443 shares (30 September 2016: 6,029,443; 31 March 2017: 6,429,443) in treasury representing 11.6 per cent. of the shares in issue as at 30 September 2017.

Under the terms of the Dividend Reinvestment Scheme Circular dated 26 November 2009, the following new Ordinary shares of nominal value 1 penny each were allotted during the period to 30 September 2017:

Date of allotment Number of
shares allotted
Aggregate
nominal value
 of shares
 (£'000)
Issue price
 (pence per share)
Net
 invested
 (£'000)
Opening market price on allotment date (pence per share)
31 August 2017 203,492 2 98.28 199 97.00

Under the terms of the Albion VCTs Prospectus Top Up Offers 2016/2017, the following new Ordinary shares of nominal value 1 penny each were allotted during the period to 30 September 2017:

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)
7 April 2017 15,240 - 99.40 15 95.00
7 April 2017 16,057 - 99.90 16 95.00
7 April 2017 263,313 3 100.50 256 95.00
  294,610 3   287  

9. Commitments and contingencies
As at 30 September 2017, the Company had no financial commitments (30 September 2016: £245,000; 31 March 2017: £nil).

There are no contingencies or guarantees of the Company as at 30 September 2017 (30 September 2016: £nil, 31 March 2017: £nil).

10. Post balance sheet events
Since 30 September 2017, the Company has had the following material post balance sheet events:

The following new Ordinary shares of nominal value 1 penny per share were allotted under the Albion VCTs prospectus Top Up Offers 2017/18 after 30 September 2017:

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)
17 November 2017 1,324,563 13 99.80 1,302 95.25
17 November 2017 616,447 6 100.30 606 95.25
17 November 2017 1,796,032 18 100.80 1,765 95.25
  3,737,042 37   3,673  

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

12. Going concern
The Board's assessment of liquidity risk remains unchanged since the last Annual Report and Financial Statements for the year ended 31 March 2017, and is detailed on page 54 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.

13. Risks and uncertainties
In addition to the risks outline in the Interim management report, the Board considers that the Company faces the following principal major risks and uncertainties:

  1. Investment and performance risk

The risk of investment in poor quality assets, which could reduce the capital and income returns to shareholders, and could negatively impact on the Company's current and future valuations. By nature, smaller unquoted businesses, such as those that qualify for venture capital trust purposes, are more fragile than larger, long established businesses.

To reduce this risk, the Board places reliance upon the skills and expertise of the Manager and its track record over many years of making successful investments in this segment of the market. In addition, the Manager operates a formal and structured investment appraisal and review process, which includes an Investment Committee, comprising investment professionals from the Manager and at least one external investment professional. The Manager also invites and takes account of comments from non-executive Directors of the Company on investments discussed at the Investment Committee meetings. Investments are actively and regularly monitored by the Manager (investment managers normally sit on portfolio company boards), including the level of diversification in the portfolio, and the Board receives detailed reports on each investment as part of the Manager's report at quarterly board meetings.

  1. VCT approval risk

The Company must comply with section 274 of the Income Tax Act 2007 which enables its investors to take advantage of tax relief on their investment and on future returns. Breach of any of the rules enabling the Company to hold VCT status could result in the loss of that status.

To reduce this risk, the Board has appointed the Manager, which has a team with significant experience in venture capital trust management, used to operating within the requirements of the venture capital trust legislation. In addition, to provide further formal reassurance, the Board has appointed Philip Hare & Associates LLP as its taxation adviser, who report quarterly to the Board to independently confirm compliance with the venture capital trust legislation, to highlight areas of risk and to inform on changes in legislation. Each investment in a new portfolio company is also pre-cleared with H.M. Revenue & Customs.

  1. Regulatory and compliance risk

The Company is listed on The London Stock Exchange and is required to comply with the rules of the UK Listing Authority, as well as with the Companies Act, Accounting Standards and other legislation. Failure to comply with these regulations could result in a delisting of the Company's shares, or other penalties under the Companies Act or from financial reporting oversight bodies.

Board members and the Manager have experience of operating at senior levels within or advising quoted companies. In addition, the Board and the Manager receive regular updates on new regulation from its auditor, lawyers and other professional bodies. The Company is subject to compliance checks through the Manager's Compliance Officer. The Manager reports monthly to its Board on any issues arising from compliance or regulation. These controls are also reviewed as part of the quarterly Board meetings, and also as part of the review work undertaken by the Manager's Compliance Officer. The report on controls is also evaluated by the internal auditors.

  1. Operational and internal control risk

The Company relies on a number of third parties, in particular the Manager, for the provision of investment management and administrative functions. Failures in key systems and controls within the Manager's business could put assets of the Company at risk or result in reduced or inaccurate information being passed to the Board or to shareholders.

The Company and its operations are subject to a series of rigorous internal controls and review procedures exercised throughout the year. The Audit Committee reviews the Internal Audit Reports prepared by the Manager's internal auditors, PKF Littlejohn LLP. On an annual basis, the Audit Committee chairman meets with the internal audit Partner to provide an opportunity to ask specific detailed questions in order to satisfy itself that the Manager has strong systems and controls in place including those in relation to business continuity and cyber security. In addition, the Board regularly reviews the performance of its key service providers, particularly the Manager, to ensure they continue to have the necessary expertise and resources to deliver the Company's investment objective and policies. The Manager and other service providers have also demonstrated to the Board that there is no undue reliance placed upon any one individual within Albion Capital Group LLP.

  1. Economic and political risk

Changes in economic conditions, including, for example, interest rates, rates of inflation, industry conditions, competition, political and diplomatic events and other factors could substantially and adversely affect the Company's prospects in a number of ways.

The Company invests in a diversified portfolio of companies across a number of industry sectors and in addition often invests a mixture of equity and secured loan stock in portfolio companies and has a policy of not normally permitting any external bank borrowings within portfolio companies. At any given time, the Company has sufficient cash resources to meet its operating requirements, including share buybacks and follow on investments.

  1. Market value of Ordinary shares

The market value of Ordinary shares can fluctuate. The market value of an Ordinary share, as well as being affected by its net asset value and prospective net asset value, also takes into account its dividend yield and prevailing interest rates. As such, the market value of an Ordinary share may vary considerably from its underlying net asset value. The market prices of shares in quoted investment companies can, therefore, be at a discount or premium to the net asset value at different times, depending on supply and demand, market conditions, general investor sentiment and other factors. Accordingly the market price of the Ordinary shares may not fully reflect their underlying net asset value.

The Company operates a share buyback policy, which is designed to limit the discount at which the Ordinary shares trade to around 5 per cent to net asset value, by providing a purchaser through the Company in absence of market purchasers. From time to time buybacks cannot be applied, for example when the Company is subject to a close period, or if it were to exhaust its buyback authorities, which are renewed each year. New Ordinary shares are issued at sufficient premium to net asset value to cover the costs of issue and to avoid asset value dilution to existing investors.

14. Other information
The information set out in this Half-yearly Financial Report does not constitute the Company's statutory accounts within the terms of section 435 of the Companies Act 2006 for the periods ended 30 September 2017 and 30 September 2016, and is unaudited. The information for the year ended 31 March 2017 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 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.capital/funds/AAEV, where the Report can be accessed from the 'Financial Reports and Circulars' section.




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-year Financial Report - RNS