Source - GNW

Albion Development VCT PLC

As required by the UK Listing Authority's Disclosure and Transparency Rule 4.2, Albion Development VCT PLC today makes public its information relating to the Half-yearly Financial Report (which is unaudited) for the six months to 30 June 2016. This announcement was approved by the Board of Directors on 31 August 2016.

The full Half-yearly Financial Report (which is unaudited) for the period to 30 June 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/AADV.

Investment objective and policy

Albion Development VCT PLC's (the "Company's") investment policy is intended to provide investors with a regular and predictable source of dividend income combined with the prospects of long term capital growth. This is achieved by establishing a diversified portfolio of holdings in smaller, unquoted companies whilst at the same time selecting and structuring investments in such a way as to reduce the risks normally associated with investment in such companies. It is intended that this will be achieved as follows:

  • Through investment in a number of higher risk companies with greater growth prospects in sectors such as software and computer services, and medical technology.
     
  • This is balanced by investment in more stable, often asset-backed investments that provide a strong income stream. These include asset-based businesses in the leisure, healthcare, education and renewable energy sectors, as well as stable and profitable businesses in other sectors. Such investments will constitute the majority of investments by cost.
     
  • In neither category do portfolio companies normally have any external borrowings with a prior charge ranking ahead of the VCT.
     
  • Up to two-thirds of qualifying investments by cost comprise loan stock secured with a first charge on the portfolio company's assets.

Background to the Company

The Company is a venture capital trust which raised a total of £33.3 million through the issue of shares between 1999 and 2004. The C shares merged with the Ordinary shares in 2007.

A further £6.3 million was raised through an issue of new D shares in 2009/2010. The D shares converted to Ordinary shares on 31 March 2015 on the basis of their respective audited net asset value per share at 31 December 2014, in line with the original prospectus.

An additional £20.0 million has been raised for the Ordinary shares through the Albion VCTs Top Up Offers since 2011. The funds raised will be invested in accordance with the Company's existing investment policy.

Financial calendar

Record date for second dividend for the year 9 September 2016
   
Payment date for second dividend for the year 30 September 2016
   
Financial year end 31 December

Financial highlights

Ordinary sharesUnaudited six months
ended

30 June 2016
(pence per share)
Unaudited six months
ended
30 June 2015
(pence per share)
Audited year ended
31 December 2015
(pence per share)
Dividends paid 2.5 2.5 5.0
Revenue return 0.6 0.8 1.5
Capital return 0.1 2.6 1.6
Net asset value 69.3 73.7 71.1

 Ordinary
shares (pence
per share)
(ii)
C shares
(pence per
share)
(ii) (iv)
D shares
(pence per
share)
(ii) (v)
Total shareholder return to 30 June 2016      
Total dividends paid during the period ended:      
  31 December 1999(i) 1.0 - -
  31 December 2000 2.9 - -
  31 December 2001 3.9 - -
  31 December 2002 4.2 - -
  31 December 2003(iii) 4.5 0.7 -
  31 December 2004 4.0 2.0 -
  31 December 2005 5.2 5.9 -
  31 December 2006 3.0 4.5 -
  31 December 2007 5.0 5.3 -
  31 December 2008 12.0 12.8 -
  31 December 2009 4.0 4.3 -
  31 December 2010 8.0 8.6 1.0
  31 December 2011 5.0 5.4 2.5
  31 December 2012 5.0 5.4 3.5
  31 December 2013 5.0 5.4 5.0
  31 December 2014 5.0 5.4 5.0
  31 December 2015 5.0 5.4 7.5
  30 June 2016 2.5 2.7 3.7
Total dividends paid to 30 June 201685.373.828.2
Net asset value as at 30 June 2016 69.3 74.3 103.8
Total shareholder return to 30 June 2016154.6148.1 

132.0

The Directors have declared a second dividend of 2.5 pence per Ordinary share payable on 30 September 2016 to shareholders on the register as at 9 September 2016.

Notes
(i) Assuming subscription for Ordinary shares by the First Closing on 26 January 1999.
(ii) Excludes tax benefits upon subscription.
(iii) Those subscribing for C shares after 30 June 2003 were not entitled to the interim dividend.
(iv) The C shares were converted into Ordinary shares on 31 March 2007, with a conversion ratio of 1.0715 Ordinary shares for each C share. The net asset value per share and all dividends paid subsequent to the conversion of the C shares to the Ordinary shares are multiplied by the conversion factor of 1.0715 in respect of the C shares return, in order to give an accurate picture of the shareholder value since launch relating to the C shares.
(v) The D shares were converted into Ordinary shares on 31 March 2015, with a conversion ratio of 1.4975 Ordinary shares for each D share. The net asset value per share and all dividends paid subsequent to the conversion of the D shares to the Ordinary shares are multiplied by the conversion factor of 1.4975 in respect of the D shares return, in order to give an accurate picture of the shareholder value since launch relating to the D shares.

Interim management report

Introduction
The results for Albion Development VCT PLC for the six months to 30 June 2016 showed a total return of 0.7 pence per share.  Net asset value at 30 June 2016 was 69.3 pence per share, compared to 71.1 pence per share at 31 December 2015, reflecting the 2.5 pence per share dividend paid for the year to date. 

Performance
These muted results were driven principally by a harsher post-Brexit construction environment for Hilson Moran, slower commercial traction than hoped for at our cancer-screening business Abcodia and provisions against deferred consideration due on investments sold last year.

Elsewhere within the portfolio, however, there has been positive performance, with Exco Intouch (remote medical monitoring) moving strongly into profit, while Proveca (paediatric drugs) has now gained regulatory approval for its first medicine.  Investments in two new companies have been made during the period, both of which should result in further investment as the companies prove themselves and grow.  These are Black Swan Data, which provides corporate risk analysis and InCrowd Sports, which provides inter-active services for sporting events, where we are also backing the management behind our previous successful investment in Opta Sports Data.

Investment portfolio by sector
Set out at the bottom of this announcement is the sector diversification of the portfolio of investments as at 30 June 2016.

Risks, uncertainties and prospects
The prospective exit of the UK from the EU has had an uncertain effect on consumer and business confidence, and it would be wise to prepare for a renewed economic slowdown in the UK.  Meanwhile, global growth is muted and many countries are close to recession.  Overall investment risk, however, is mitigated through a variety of processes, including our policies of ensuring that the Company has a first charge over portfolio companies' assets wherever possible and second of aiming to achieve balance in the portfolio through the inclusion of sectors that are less exposed to the business and consumer cycles.

Other principal risks and uncertainties remain unchanged and are as detailed in note 13.

Discount management and share buy-backs
It remains the Board's primary objective to maintain sufficient resources for investment in existing and new portfolio companies and for the continued payment of dividends to shareholders. Thereafter, it is still the Board's policy to buy back shares in the market, subject to the overall constraint that such purchases are in the Company's interest. 

It is the Board's intention for such buy-backs to be in the region of a 5 per cent. discount to net asset value, so far as market conditions and liquidity permit.

Albion VCTs Top Up Offers
The Company was pleased to announce on 23 March 2016 that it had reached its £6m limit under the Albion VCTs Prospectus Top Up Offers 2015/2016 which was fully subscribed and closed.

The proceeds of the Offer are being used to provide further resources to the Company at a time when a number of attractive new investment opportunities are being seen.

Transactions with the Manager
Details of the transactions that took place with the Manager in the period can be found in note 5.

Results, dividend and prospects
As at 30 June 2016, the net asset value per Ordinary share was 69.3 pence (30 June 2015: 73.7 pence; 31 December 2015: 71.1 pence).  Dividends are paid twice yearly, the next payment being 2.5 pence per share on 30 September 2016, to those shareholders on the register at 9 September 2016.
Overall, despite these unexciting interim results, the strength of many of our businesses, and their ability to exploit sectors which continue to show growth even in a tougher broader environment, gives us cause for optimism over the medium term.

Geoffrey Vero
Chairman
31 August 2016

Responsibility statement

The Directors, Geoffrey Vero, Andy Phillipps, Jonathan Thornton and Patrick Reeve, are responsible for the preparation of the Half-yearly Financial Report. In preparing these condensed Financial Statements for the period to 30 June 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", gives a true and fair view of the assets, liabilities, financial position and profit and loss of the Company as required by DTR 4.2.4R;

(b) the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

(c) the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

This Half-yearly Financial Report has not been audited or reviewed by the Auditor.

By order of the Board

Geoffrey Vero
Chairman
31 August 2016

Portfolio of investments

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

Asset-backed investments%
voting
rights
Cost
£'000
Cumulative
movement
in value

£'000
Value
£'000
Change in
value for the
period*

£'000
Radnor House School (Holdings) Limited 8.8 2,948 1,804 4,752 (7)
Chonais River Hydro Limited 4.6 1,705 367 2,072 9
The Street by Street Solar Programme Limited 12.4 1,281 581 1,862 31
Regenerco Renewable Energy Limited 11.9 1,204 337 1,541 (23)
Alto Prodotto Wind Limited 9.4 842 454 1,296 56
Earnside Energy Limited 6.8 1,089 173 1,262 55
Bravo Inns II Limited 6.7 1,080 71 1,151 43
Albion Investment Properties Limited 48.4 929 (105) 824 14
The Weybridge Club Limited 9.4 1,601 (1,004) 597 (23)
The Q Garden Company Limited 16.6 713 (213) 500 25
AVESI Limited 10.5 340 77 417 (15)
Dragon Hydro Limited 5.5 233 114 347 4
The Charnwood Pub Company Limited 3.3 305 (74) 231 (4)
Greenenerco Limited 4.0 140 80 220 6
Bravo Inns Limited 2.6 267 (86) 181 (2)
Erin Solar Limited 4.3 120 (3) 117 -
Premier Leisure (Suffolk) Limited 6.2 109 (4) 105 -
Infinite Ventures (Goathill) Limited 0.8 32 2 34 2
Total asset-backed investments   14,9382,57117,509171

Growth investments%
voting
rights
Cost
£'000
Cumulative
movement
in value

£'000
Value
£'000
Change in
value for the
period*

£'000
Exco Intouch Limited 6.0 1,015 1,290 2,305 734
Proveca Limited 11.5 739 524 1,263 352
Mirada Medical Limited 7.8 553 468 1,021 (12)
Egress Software Technologies Limited 6.1 610 396 1,006 112
Blackbay Limited 7.4 836 156 992 (106)
Relayware Limited 3.0 895 (18) 877 (31)
Hilson Moran Holdings Limited 8.0 265 597 862 (177)
MyMeds&Me Limited 7.0 546 239 785 (65)
Grapeshot Limited 3.8 676 87 763 -
Aridhia Informatics Limited 6.0 963 (259) 704 9
OmPrompt Holdings Limited 5.1 650 19 669 4
Masters Pharmaceuticals Limited 4.2 316 308 624 (8)
Cisiv Limited 7.3 566 (2) 564 (114)
Abcodia Limited 5.1 471 (49) 422 (158)
DySIS Medical Limited 3.6 716 (315) 401 (78)
Process Systems Enterprise Limited 1.3 131 241 372 27
Black Swan Data Limited 0.7 215 - 215 -
Sandcroft Avenue Limited 1.7 150 14 164 -
memsstar Limited 2.8 124 39 163 (6)
Panaseer Limited 2.2 110 - 110 -
Oxsensis Limited 1.4 224 (125) 99 -
AMS Sciences Limited 4.2 222 (130) 92 (23)
Dickson Financial Services Limited 8.4 84 - 84 -
InCrowd Sports Limited 1.6 72 - 72 -
CSS Group Limited 2.7 34 (2) 32 5
Elements Software Limited 0.6 3 (3) - (3)
Total growth investments 11,1863,47514,661462
Total unquoted fixed asset investments 26,1246,04632,170633

Quoted investments%
voting
rights
Cost
£'000
Cumulative
movement
in value

£'000
Value
£'000
Change in
value for the
period*

£'000
Mi-Pay Group PLC 3.5 823 (499) 324 (59)
ComOps Limited 0.2 11 4 15 4
Total quoted investments   834(495)339(55)
 
Total fixed asset investments   26,9585,55132,509578
        
Total change in value of investments   578
Movement in accrued loan stock interest    (85)
Unrealised gains sub-total     493
Realised losses in the current period     (169)
Total gains on investments as per Income statement  324

* as adjusted for additions and disposals during the period

Investment realisations in the period to 30 June 2016Cost
£'000
Opening
value

£'000
Disposal
proceeds

£'000
Total
realized
(loss)/gain

£'000
Loss on
opening
value

£'000
Silent Herdsman Holdings Limited 389 350 348 (41) (2)
Relayware Limited (loan stock repayment & equity part disposal) 256 256 256 - -
Hilson Moran Holdings Limited (loan stock repayment) 27 37 37 10 -
The Street by Street Solar Programme Limited
(loan stock repayment)
10 15 15 5 -
AVESI Limited
(loan stock repayment)
1 1 1 - -
Alto Prodotto Wind Limited
(loan stock repayment)
1 1 1 - -
Escrow adjustments - - (167) (167) (167)
Total684660491(193)(169)

Condensed income statement
  

  Unaudited
six months ended
30 June 2016
Unaudited
six months ended
30 June 2015
Audited
year ended
31 December 2015
 NoteRevenue
£'000
Capital
£'000
Total
£'000
Revenue
£'000
Capital
£'000
Total
£'000
Revenue
£'000
Capital
£'000
Total
£'000
                   
Gains on investments 3 -324324 - 1,550 1,550 - 1,367 1,367
Investment income 4 655-655 690 - 690 1,335 - 1,335
Investment management fees 5 (116)(347)(463) (104) (313) (417) (215) (646) (861)
Other expenses   (108)-(108) (100) - (100) (202) - (202)
Return/(loss) on ordinary activities before tax   431(23)408 486 1,237 1,723 918 721 1,639
Tax (charge)/credit on ordinary activities   (77)69(8) (85) 62 (23) (149) 129 (20)
Return attributable to shareholders   35446400 401 1,299 1,700 769 850 1,619
Basic and diluted return per Ordinary share (pence)* 7 0.60.10.7 0.8 2.6 3.4 1.5 1.6 3.1

  
* excluding treasury shares
  
Comparative figures have been extracted from the unaudited Half-yearly Financial Report for the six months ended 30 June 2015 and the audited statutory accounts for the year ended 31 December 2015.

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/(loss) on ordinary activities before tax and the historical profit/(loss) is due to the fair value movements on investments. 

Condensed balance sheet

  NoteUnaudited
30 June 2016
£'000
Unaudited
30 June 2015
£'000
Audited
31 December 2015
£'000
Fixed assets        
Investments   32,509 32,495 31,565
         
Current assets        
Trade and other receivables less than one year   348 674 685
Cash and cash equivalents   10,954 6,916 6,972
    11,302 7,590 7,657
         
Total assets   43,811 40,085 39,222
         
Creditors: amounts falling due within one year        
Trade and other payables less than one year   (404) (317) (322)
Net assets   43,407 39,768 38,900
         
Equity attributable to equityholders        
Called up share capital 8 685 588 600
Share premium   17,634 10,815 11,652
Capital redemption reserve   12 12 12
Unrealised capital reserve   5,400 3,297 4,883
Realised capital reserve   4,349 4,456 4,820
Other distributable reserve   15,327 20,600 16,933
Total equity shareholders' funds   43,407 39,768 38,900
         
Basic and diluted net asset value per Ordinary share (pence)*   69.3 73.7 71.1

  
 *excluding treasury shares

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

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 31 August 2016, and were signed on its behalf by

Geoffrey Vero
Chairman

Company number: 03654040

Condensed statement of changes in equity

 Called up
share

capital
Share
premium
Capital
redemption
reserve
Unrealised
capital
reserve
Realised
capital
reserve*
Other
distributable
reserve*
Total
 £'000£'000£'000£'000£'000£'000£'000
As at 1 January 2016 60011,652124,8834,82016,93338,900
Return/(loss) and total comprehensive income for the period ---493(447)354400
Transfer of previously unrealised losses on disposal of investments ---24(24)--
Purchase of shares for treasury -----(388)(388)
Issue of equity 856,139----6,224
Cost of issue of equity -(157)----(157)
Dividends paid -----(1,572)(1,572)
As at 30 June 2016 68517,634125,4004,34915,32743,407
As at 1 January 2015 482 5,560 12 1,954 4,500 21,927 34,435
Return/(loss) and total comprehensive income for the period - - - 1,495 (196) 401 1,700
Transfer of previously unrealised gains on disposal of investments - - - (152) 152 - -
Purchase of shares for treasury - - - - - (360) (360)
Issue of equity 106 5,418 - - - (33) 5,491
Cost of issue of equity - (163) - - - - (163)
Dividends paid - - - - - (1,335) (1,335)
As at 30 June 2015 588 10,815 12 3,297 4,456 20,600 39,768
As at 1 January 2015 482 5,560 12 1,954 4,500 21,927 34,435
Return/(loss) and total comprehensive income for the period - - - 1,971 (1,121) 769 1,619
Transfer of unrealised losses on disposal of investments - - - 958 (958) - -
Purchase of shares for treasury - - - - - (649) (649)
Issue of equity 118 6,275 - - - (33) 6,360
Cost of issue of equity - (183) - - - - (183)
Transfer from other distributable reserve to realised capital reserve - - - - 2,399 (2,399) -
Dividends paid - - - - - (2,682) (2,682)
As at 31 December 2015 600 11,652 12 4,883 4,820 16,933 38,900

*Included within these reserves is an amount of £19,676,000 (30 June 2015: £25,056,000; 31 December 2015: £21,753,000) which is considered distributable.

Condensed statement of cash flows

  Unaudited
six months ended
30 June 2016
£'000
Unaudited
six months
ended
30 June 2015
£'000
Audited
year ended
31 December
2015
£'000
Cash flow from operating activities      
Loan stock income received 483 478 1,076
Deposit interest received 41 31 64
Dividend income received 45 61 82
Investment management fees paid (438) (387) (835)
Other cash payments (109) (127) (213)
Corporation tax received 18 - -
Net cash flow from operating activities40 56 174
       
Cash flow from investing activities     
Purchase of fixed asset investments (1,025) (2,371) (3,995)
Disposal of fixed asset investments 813 1,521 3,302
Net cash flow from investing activities(212) (850) (693)
      
Cash flow from financing activities     
Issue of share capital 5,820 4,578 5,807
Cost of issue of shares - (13) (17)
Equity dividends paid (1,320) (1,151) (2,295)
Purchase of own shares (including costs) (346) (349) (649)
Net cash flow from financing activities4,154 3,065 2,846
       
Increase in cash and cash equivalents3,982 2,271 2,327
Cash and cash equivalents at start of period 6,972 4,645 4,645
Cash and cash equivalents at end of period10,954 6,916 6,972
      
Cash and cash equivalents comprise:     
Cash at bank and in hand 10,954 6,916 6,972
Cash equivalents - - -
Total cash and cash equivalents10,954 6,916 6,972

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, the undertakings in which the Company holds more than 20 per cent. of the equity as part of an investment portfolio are not accounted for using the equity method. In these circumstances the investment is measured at FVTPL.

Upon initial recognition (using trade date accounting) investments are designated by the Company as FVTPL and are included at their initial fair value, which is cost (excluding expenses incidental to the acquisition which are written off to the income statement).

Subsequently, the investments are valued at 'fair value', which is measured as follows:

  • Investments listed on recognised exchanges are valued at their bid prices at the end of the accounting period or otherwise at fair value based on published price quotations;
     
  • Unquoted investments, where there is not an active market, are valued using an appropriate valuation technique in accordance with the IPEVCV Guidelines. Indicators of fair value are derived using established methodologies including earnings multiples, the level of third party offers received, prices of recent investment rounds, net assets and industry valuation benchmarks. Where the Company has an investment in an early stage enterprise, the price of a recent investment round is often the most appropriate approach to determining fair value. In situations where a period of time has elapsed since the date of the most recent transaction, consideration is given to the circumstances of the portfolio company since that date in determining fair value.  This includes consideration of whether there is any evidence of deterioration or strong definable evidence of an increase in value. In the absence of these indicators, the investment in question is valued at the amount reported at the previous reporting date. Examples of events or changes that could indicate a diminution include:
     
    • the performance and/or prospects of the underlying business are significantly below the expectations on which the investment was based;
    • a significant adverse change either in the portfolio company's business or in the technological, market, economic, legal or regulatory environment in which the business operates; or
    • market conditions have deteriorated, which may be indicated by a fall in the share prices of quoted businesses operating in the same or related sectors.

Investments are recognised as financial assets on legal completion of the investment contract and are de-recognised on legal completion of the sale of an investment.

Dividend income is not recognised as part of the fair value movement of an investment, but is recognised separately as investment income through the other distributable reserve when a share becomes ex-dividend.

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

Investment income
Unquoted equity income
Dividend income is included in revenue when the investment is quoted ex-dividend.

Unquoted loan stock and other preferred income
Fixed returns on non-equity shares and debt securities are recognised when the Company's right to receive payment and expect settlement is established. Where interest is rolled up and/or payable at redemption then it is recognised as income unless there is reasonable doubt as to its receipt.

Bank interest income
Interest income is recognised on an accruals basis using the rate of interest agreed with the bank.

Investment management fees and expenses

All expenses have been accounted for on an accruals basis. Expenses are charged through the other distributable reserve except the following which are charged through the realised capital reserve:

  • 75 per cent. of management fees are allocated to realised capital reserve. This is in line with the Board's expectation that over the long term 75 per cent. of the Company's investment returns will be in the form of capital gains; and
     
  • expenses which are incidental to the purchase or disposal of an investment are charged through the realised capital reserve.

Performance incentive fee
In the event that a performance incentive fee crystallises or is provided for, the fee will be allocated between revenue 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 reserve
This reserve accounts for the difference between the price paid for shares and the nominal value of the shares, 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:

  • gains and losses compared to cost on the realisation of investments, or permanent diminutions in value;
  • expenses, together with the related taxation effect, charged in accordance with the above policies; and
  • dividends paid to equity holders.

Other distributable reserve
The special reserve, treasury share reserve and the revenue reserve were combined in 2012 to form a single reserve named other distributable reserve.

This reserve accounts for the 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.

3.         Gains on investments

 Unaudited
six months ended
30 June 2016
£'000
Unaudited
six months ended
30 June 2015
£'000
Audited
year ended
31 December
2015
£'000
Unrealised gains on fixed asset investments 493 1,495 1,971
Realised (losses)/gains on fixed asset investments (169) 55 (604)
 324 1,550 1,367

4.         Investment income

    
  Unaudited
six months
ended
30 June 2016
£'000

Unaudited
six months ended
30 June 2015
£'000
Audited
year ended
31 December 2015
£'000
Income recognised on investments      
Loan stock interest 564 596 1,186
UK dividend income 45 61 82
Bank deposit interest 46 33 67
  655 690 1,335

All of the Company's income is derived from operations based in the United Kingdom.

5.         Investment management fees

  Unaudited
six months ended
30 June 2016
£'000
 

Unaudited
six months ended
30 June 2015
£'000
Audited
year ended
31 December 2015
£'000
Investment management fee charged to revenue 116 104 215
Investment management fee charged to capital 347 313 646
  463 417 861
       

Further details of the Management agreement under which the investment management fee is paid are given in the Strategic report on page 10 of the Annual Report and Financial Statements for the year ended 31 December 2015.

During the period, services to a total value of £463,000 (30 June 2015: £417,000; 31 December 2015: £861,000) 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 was £244,000 (30 June 2015: £224,000; 31 December 2015: £219,000).

During the period, the Company was not charged by Albion Ventures LLP in respect of Patrick Reeve's services as a Director (30 June 2015: £nil; 31 December 2015: £nil).

Albion Ventures LLP is, from time to time, eligible to receive transaction fees and Directors' fees from portfolio companies. During the period ended 30 June 2016, fees of £66,000 attributable to the investments of the Company were received pursuant to these arrangements (30 June 2015: £99,000; 31 December 2015: £179,000).

Albion Ventures LLP holds 23,624 Ordinary shares in the Company.

6.         Dividends

  Unaudited
six months ended
30 June 2016
Unaudited
six months ended
30 June 2015
Audited
year ended
31 December 2015
  £'000 £'000 £'000
Dividend of 2.5p per Ordinary share
paid on 29 May 2015
- 1,335 1,335
Dividend of 2.5p per Ordinary share
paid on 30 September 2015
- - 1,347
Dividend of 2.5p per Ordinary share paid on 31 May 2016 1,572 - -
  1,572 1,335 2,682

The Directors have declared a dividend of 2.5 pence per Ordinary share (total approximately £1,567,000), payable on 30 September 2016 to shareholders on the register as at 9 September 2016.

7.         Basic and diluted return per share

Ordinary sharesUnaudited
six months ended
30 June 2016
Unaudited
six months ended
30 June 2015
Audited
year ended
31 December 2015
 RevenueCapital Revenue Capital Revenue Capital
Return attributable to Ordinary shares (£'000) 35446 401 1,299  

769
 

850
Weighted average shares in issue 60,228,830 50,822,604 52,626,429
Return per Ordinary share (pence) 0.60.1 0.8 2.6 1.5 1.6

The weighted average number of shares is calculated excluding treasury shares of 5,834,700 (30 June 2015: 4,835,700; 31 December 2015: 5,257,700)

There are no convertible instruments, derivatives or contingent share agreements in issue for Albion Development VCT PLC 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.        

Ordinary share capitalUnaudited
30 June 2016
Unaudited
30 June 2015
Audited
31 December 2015
Allotted, called up and fully paid shares of 1 penny each
Number of shares 68,502,563 58,773,551
59,965,643
Nominal value of allotted shares (£'000) 685 588 600
Voting rights (number of shares net of treasury shares) 62,667,863 53,937,851 54,707,943




During the period to 30 June 2016 the Company purchased 577,000 Ordinary shares for treasury at a cost of £388,000. The total number of Ordinary shares held in treasury as at 30 June 2016 was 5,834,700 (30 June 2015: 4,835,700; 31 December 2015: 5,257,700) representing 8.5 per cent. of the Ordinary shares in issue as at 30 June 2016.


Under the terms of the Dividend Reinvestment Scheme Circular dated 27 August 2008, the following Ordinary shares, of nominal value 1 penny each, were allotted:


Date of
allotment
Number of
shares issued
Aggregate
nominal
amount of
shares (£'000)
Issue price
(pence per
share)
Net consideration
received


(£'000)
Opening
market price
on allotment
date (pence
per share)
31 May 2016 366,881 4 68.60 247 68.0


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 June 2016:

Date of
allotment
Number of
shares issued
Aggregate
nominal
amount of
shares
(£'000)
Issue price
(pence per
share)
Net consideration
received
(£'000)
Opening
market price
on allotment
date (pence
per share)
29 January 2016 2,807,295 28 72.8 2,003 68.3
29 January 2016 1,581,367 16 73.2 1,129 68.3
31 March 2016 3,604,114 36 73.3 2,562 68.0
6 April 2016 103,435 1 72.6 73 68.0
6 April 2016 12,554 - 73.0 9 68.0
6 April 2016 61,274 1 73.3 44 68.0
  8,170,039 82   5,820  
           

9.         Commitments and contingencies

As at 30 June 2016, the Company had the following financial commitments in respect of investments:

  • DySIS Medical Limited; £87,000
  • Proveca Limited; £48,000

There are no contingencies or guarantees of the Company as at 30 June 2016 (30 June 2015; £nil: 31 December 2015: £nil).

10.       Post balance sheet events

Since 30 June 2016, the Company has completed the following transactions:

  • Investment of £330,000 in Secured by Design Limited;
  • Investment of £159,000 in Oviva AG;
  • Investment of £100,000 in Proveca Limited; and
  • Investment of £87,000 in DySIS Medical Limited;

11.       Related party transactions

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

12.       Going concern
The Board's assessment of liquidity risk remains unchanged since the last Annual Report and Financial Statements for the year ended 31 December 2015 and is detailed on page 53 of those accounts. The Company has adequate cash and liquid resources. The portfolio of investments is diversified in terms of sector and the major cash outflows of the Company (namely investments, dividends and share buy-backs) are within the Company's control. Accordingly, after making diligent enquiries, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason, the Directors have adopted the going concern basis in preparing this Half-yearly Financial Report and this is in accordance with the Guidance on Risk Management, Internal Control and Related Financial and Business Reporting issued by the Financial Reporting Council in September 2014.

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

1. 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. 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.

3. 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 designated 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 judgments 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 judgments 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 underpinned by independent third party professional valuations and the Board critically reviews key valuations on a quarterly basis.

4. 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 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 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.

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 evaluated by Internal Audit during its reports.

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. Jonathan Thornton, as Chairman of the Audit Committee, 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 pages 29 and 30 of the Annual Report and Financial Statements for the year ended 31 December 2015.

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

7. 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 19 of the Annual Report and Financial Statements for the year ended 31 December 2015.

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.

8. Reputational risk
Arises from broader performance and ethical issues, including investment in businesses and sectors that are inconsistent with the values of the Board and the VCT or, the Boards of portfolio companies take actions which similarly are inconsistent with the values of the VCT.

The Board clearly articulates to the Investment Manager its broader aims and standards including those sectors which are consistent with the values of the Board. The Board regularly reviews the performance and investment strategy of the Investment Manager. The Investment Manager periodically attends Board meetings of the VCT's portfolio companies and across the portfolio receives periodic management information and is alert to potential threats to reputation.

14.       Other information
The information set out in this Half-yearly Financial Report does not constitute the Company's statutory accounts within the terms of section 435 of the Companies Act 2006 for the periods ended 30 June 2016 and 30 June 2015 and is unaudited. The information for the year ended 31 December 2015, does not constitute statutory accounts within the terms of section 435 of the Companies Act 2006 but is derived from the audited statutory accounts for the financial year, which were unqualified and which have been delivered to the Registrar of Companies. The Auditor reported on those accounts; their report was unqualified and did not contain a statement under s498 (2) or (3) of the Companies Act 2006.

15.       Publication
This Half-yearly Financial Report is being sent to shareholders and copies will be made available to the public at the registered office of the Company, Companies House, the National Storage Mechanism and also electronically at www.albion-ventures.co.uk/funds/AADV, where the Report can be accessed as a PDF document in the 'Financial Reports and Circulars' section.




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The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Albion Development VCT PLC - Ordinary Shares via Globenewswire