Albion Venture Capital Trust PLC : Half-year Financial Report

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LEI Code: 213800JKELS32V2OK421

As required by the UK Listing Authority's Disclosure and Transparency Rule 4.2, Albion Venture Capital Trust PLC today makes public its information relating to the Half-yearly Financial Report (which is unaudited) for the six months to 30 September 2018. This announcement was approved by the Board of Directors on 7 December 2018.

The full Half-yearly Financial Report (which is unaudited) for the period to 30 September 2018 will shortly be sent to shareholders and will be available on the Albion Capital Group LLP website by clicking .

The Company will invest in a broad portfolio of smaller, unquoted growth businesses across a variety of sectors including higher risk technology companies. Investments may take the form of equity or a mixture of equity and loans. 

Allocation of funds is determined by the investment opportunities which become available but efforts will be made to ensure that the portfolio is diversified both in terms of sector and stage of maturity of company. Funds held pending investment or for liquidity purposes will be held as cash on deposit.

The Company is a venture capital trust which raised a total of £39.7 million through an issue of Ordinary shares in the spring of 1996 and through an issue of C shares in the following year. The C shares merged with the Ordinary shares in 2001. The Company has raised a further £26.9 million under the Albion VCTs Top Up Offers since 2011.

On 25 September 2012, the Company acquired the assets and liabilities of Albion Prime VCT PLC (“Prime”) in exchange for new shares in the Company, resulting in a further £14.3 million of net assets.


The financial summary above is for the Company, Albion Venture Capital Trust PLC Ordinary shares only.  Details of the financial performance of the C shares and Albion Prime VCT PLC, which have been merged into the Company, can be found at the end of this announcement.

During the period David Watkins retired after 22 years as Chairman of the Company. I would like to put on record the thanks he is owed by all of us for his stewardship, professionalism and commitment throughout his chairmanship.

The Company’s investment portfolio will transition over time from an asset-based one to a portfolio with a greater focus on young growth companies. As at 30 September 2018, the new growth and technology investments accounted for 1% of the Company’s net assets. Further details of recent investments made under the new investment policy can be found below.

The new investments made during the period, all of which are likely to require further investment as the companies prove themselves and grow, are:

In the existing portfolio, two of our three care homes, the 66 bedroom Shinfield View care home near Reading (owned by Shinfield Lodge Care), and the 60 bedroom Ryefield Court in Hillingdon (owned by Ryefield Court Care) are trading at or near mature levels of occupancy, while the larger 75 bedroom Cumnor Hill House on the outskirts of Oxford (owned by Active Lives Care) has been continuing to grow occupancy. This has led to further uplifts in valuations in two of the three homes.

We are also pleased to report that The Evewell, a gynaecological clinic in Harley Street, has recently opened.

In the hotel and leisure sector, shortly before the period end The Stanwell Hotel received an offer for the business, leading to the significant uplift in its valuation, and it is hoped that the sale will complete early in the Company’s new financial year. The Holiday Inn Express at Stansted Airport, owned by Kew Green VCT (Stansted), has been continuing to trade satisfactorily while refurbishing its bedrooms to the latest brand standards and the development of the wedding venue at Syrencot House in Wiltshire, owned by Beddlestead, is making good progress. The Bravo Inns and Bravo Inns II pub portfolio in the North West has been trading well and now comprises 43 pubs.

In the education sector, Radnor House Twickenham continues to perform strongly at near capacity, with over 410 pupils, and Radnor House Sevenoaks now has 430 pupils, with considerable scope to grow further, leading to further uplifts in the third party valuations. Meanwhile Mount House School in North London has grown encouragingly to 190 pupils.

In the renewable energy sector, our hydro, wind and solar assets continued to perform well. Subsequent to the period end we sold our non-qualifying investment in Infinite Ventures (Goathill) for 1.6 times cost (including interest received) and entered into a contract, subject to satisfaction of some conditions precedent, for the sale of Earnside Energy, our Scottish anaerobic digestion business, which is expected to generate a return of c. 1.2 times cost (including interest received).

G.Network Communications has continued to make good progress in rolling out its fibre broadband network in central London and subsequent to the period end secured substantial additional funding from a third party investor to allow it to continue to expand, at a valuation which represented a strong premium to its opening value.

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

There are no related party transactions or balances that require disclosure.

The Directors Richard Glover, John Kerr, Ann Berresford, Ebbe Dinesen and Jeff Warren are responsible for preparing the Half-yearly Financial Report. In preparing these condensed Financial Statements for the period to 30 September 2018 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

The following is a summary of investments as at 30 September 2018:

*The cost includes the original cost from Albion Venture Capital Trust PLC and the carried over value on merger from Albion Prime VCT PLC as at 25 September 2012. ** As adjusted for additions and disposals during the period.

*The cost includes the original cost from Albion Venture Capital Trust PLC and the carried over value on merger from Albion Prime VCT PLC as at 25 September 2012.


Comparative figures have been extracted from the unaudited Half-yearly Financial Report for the six months ended 30 September 2017 and the audited statutory accounts for the year ended 31 March 2018.

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.

Comparative figures have been extracted from the unaudited Half-yearly Financial Report for the six months ended 30 September 2017 and the audited statutory accounts for the year ended 31 March 2018.

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 7 December 2018, and were signed on its behalf by

* These reserves amount to £23,234,000 (30 September 2017: £28,206,000; 31 March 2018: £25,546,000) which is considered distributable.

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

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

Information about the Company can be found on page 2 of the full Half-yearly Financial Report.

In accordance with the requirements of FRS 102, those undertakings in which the Company holds more than 20 per cent. of the equity as part of an investment portfolio are not accounted for using the equity method. In these circumstances the investment is measured at FVTPL.

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

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

●    Investments listed on recognised exchanges are valued at their bid prices at the end of the accounting period or otherwise at fair value based on published price quotations;

●    Unquoted investments, where there is not an active market, are valued using an appropriate valuation technique in accordance with the IPEVCV Guidelines. Indicators of fair value are derived using established methodologies including earnings multiples, the level of third party offers received, prices of recent investment rounds, net assets and industry valuation benchmarks. Where the Company has an investment in an early stage enterprise, the price of a recent investment round is often the most appropriate approach to determining fair value. In situations where a period of time has elapsed since the date of the most recent transaction, consideration is given to the circumstances of the portfolio company since that date in determining fair value. This includes consideration of whether there is any evidence of deterioration or strong definable evidence of an increase in value. In the absence of these indicators, the investment in question is valued at the amount reported at the previous reporting date. Examples of events or changes that could indicate a diminution include:

●    the performance and/or prospects of the underlying business are significantly below the expectations on which the investment was based;●    a significant adverse change either in the portfolio company’s business or in the technological, market, economic, legal or regulatory environment in which the business operates; or●    market conditions have deteriorated, which may be indicated by a fall in the share prices of quoted businesses operating in the same or related sectors.

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

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

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

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.

This reserve accounts for movements from the revenue column of the Income statement, the payment of dividends, the buy-back of shares and other non-capital realised movements.

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

Further details of the Management agreement under which the investment management fee is paid are given in the Strategic report on page 13 of the Annual Report and Financial Statements for the year ended 31 March 2018.

During the period, services of a total value of £632,000 in management fees and £26,000 in administration fees (30 September 2017: £619,000 in management fees and £25,000 in administration fees; 31 March 2018: £1,238,000 in management fees and £50,000 in administration fees), were purchased by the Company from Albion Capital Group LLP. At the financial period end, the amount due to Albion Capital Group LLP in respect of these services was £332,000 (30 September 2017: £320,000; 31 March 2018: £325,000).

Albion Capital Group LLP, its partners and staff hold a total of 362,693 shares in the Company as at 30 September 2018.

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 2018, fees of £55,000 attributable to the investments of the Company were received pursuant to these arrangements (30 September 2017: £98,000; 31 March 2018: £169,000).

The weighted average number of shares is calculated excluding treasury shares of 10,630,188 (30 September 2017: 8,581,188; 31 March 2018: 9,730,188).

There are no convertible instruments, derivatives or contingent share agreements in issue, and therefore no dilution affecting the return per share. The basic return per share is therefore the same as the diluted return per share.

During the period to 30 September 2018 the Company purchased 900,000 Ordinary shares (nominal value of £9,000) to be held in treasury (30 September 2017: 318,000; 31 March 2018: 1,467,000) at a cost of £650,000 (30 September 2017: £226,000; 31 March 2018: £1,019,000) representing 0.9% of the shares in issue as at 30 September 2018.

The total number of Ordinary shares held in treasury as at 30 September 2018 was 10,630,188 (30 September 2017: 8,581,188; 31 March 2018: 9,730,188) representing 11.0% of the share capital as at 30 September 2018.

Under the terms of the Dividend Reinvestment Scheme Circular dated 10 July 2008, the following new Ordinary shares of nominal value 1 penny per share were allotted during the period:

As at 30 September 2018, the Company had the following financial commitments (30 September 2017 and 31 March 2018: nil):

There are no contingencies or guarantees of the Company as at 30 September 2018 (30 September 2017 and 31 March 2018: nil).

Since 30 September 2018 the Company has had the following post balance sheet event:

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

The Board’s assessment of liquidity risk remains unchanged since the last Annual Report and Financial Statements for the year ended 31 March 2018, and is detailed on page 62 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.

The principal risks and uncertainties of the Company as identified by the Board and how they are managed are as follows:

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 matters 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.

2. Valuation riskThe 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 all investments are at cost or price of recent investment (reviewed for impairment) or supported by independent third party professional valuations.

3. 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 confirm independently 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 or our professional advisers.

4. 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.

5. 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. 

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.

6. 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 instruments in portfolio companies. At any given time, the Company has sufficient cash resources to meet its operating requirements, including share buy-backs and follow on investments.

7. Market value of Ordinary sharesThe 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 buy-backs cannot be applied, for example when the Company is subject to a close period, or if it were to exhaust any buyback authorities. 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.

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 2018 and 30 September 2017, and is unaudited. The information for the year ended 31 March 2018 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 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.

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 , where the Report can be accessed as a PDF document in the ‘Financial Reports and Circulars’ section.



More news and information about Albion Venture Capital Trust PLC

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Globe Newswire: 04:14 GMT Friday 7th December 2018

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