Albion Technology & General VCT PLC - Ordinary ...
Albion Technology & General VCT PLC
As required by the UK Listing Authority's Disclosure and Transparency Rules 4.1 and 6.3, Albion Technology & General VCT PLC today makes public its information relating to the Annual Report and Financial Statements for the year ended 31 December 2013.
This announcement was approved for release by the Board of Directors on 21 March 2014.
This announcement has not been audited.
You will shortly be able to view the Annual Report and Financial Statements for the year to 31 December 2013 (which have been audited) at: www.albion-ventures.co.uk by clicking on 'Our Funds' and then 'Albion Technology & General VCT PLC'. The Annual Report and Financial Statements for the year to 31 December 2013 will be available as a PDF document via a link under the 'Investor Centre' in the 'Financial Reports and Circulars' section. The information contained in the Annual Report and Financial Statements will include information as required by the Disclosure and Transparency Rules, including Rule 4.1.
Investment objective and policy
Albion Technology & General VCT PLC's investment strategy is to provide investors with a regular and predictable source of dividend income combined with the prospect of longer term capital growth.
This is achieved in two ways. Firstly, by controlling the VCT's exposure to technology risk through ensuring that many of the companies in the non-technology portfolio have property as their major asset, with no external borrowings. Secondly, by balancing the investment portfolio by sector, so that those areas such as leisure and business services, which are susceptible to changes in consumer sentiment, are complemented by sectors with more predictable long term characteristics, such as healthcare and the environment.
The Company offers investors the opportunity to participate in a balanced portfolio of technology and non-technology businesses. The Company's investment portfolio is intended to be split approximately as follows:
- 40 per cent. in unquoted UK technology-related companies; and
- 60 per cent. in unquoted UK non-technology companies.
This split is subject to the availability of good quality new investments arising within the UK technology and non-technology sectors.
Background to the Company
The Company is a venture capital trust which raised £14.3 million in December 2000 and 2002, and raised a further £35.0 million during 2006 through the launch of a C share issue. The Company has raised a further £6.2m under the Albion VCTs Top Up Offers since January 2011.
On 15 November 2013, the Company acquired the assets and liabilities of Albion Income & Growth VCT PLC ("Income & Growth") in exchange for new shares in the Company ("the Merger"). On the same day Income & Growth was placed into members' voluntary liquidation pursuant to a scheme of reconstruction under Section 110 of the Insolvency Act 1986.
All of the assets and liabilities of Income & Growth totalling £28,075,000 were transferred to the Company in exchange for the issue of 33,664,049 new Ordinary shares at an issue price of 83.38 pence per share. Each Income & Growth shareholder received 0.7813 shares in the Company for each Income & Growth share that they held at the date of the Merger.
Financial calendar
| Record date for first quarterly dividend | 10 January 2014 |
| Payment of first quarterly dividend | 31 January 2014 |
| Record date for second quarterly dividend | 11 April 2014 |
| Payment of second quarterly dividend | 30 April 2014 |
| Annual General Meeting | 19 June 2014 |
| Announcement of half-yearly results for the six months ended 30 June 2014 | August 2014 |
| Payment of third quarterly dividend (subject to Board approval) | 30 June 2014 |
| Payment of fourth quarterly dividend (subject to Board approval) | 31 October 2014 |
Financial highlights
Ordinary shares
| 161.75p | Net asset value plus dividends since launch to 31 December 2013. |
| 5.00p | Tax free dividend per share paid during the year ended 31 December 2013. |
| 85.75p | Net asset value per share as at 31 December 2013. |
| 1.25p | First quarterly dividend per share for the year to 31 December 2014 paid on 31 January 2014. |
| 1.25p | Second quarterly dividend per share for the year to 31 December 2014 payable on 30 April 2014. |
Ordinary shares
| 31 December 2013 (pence per share) | 31 December 2012 (pence per share) | |
| Dividends paid | 5.00 | 5.00 |
| Revenue return | 1.00 | 1.60 |
| Capital return | 6.90 | 2.10 |
| Effect of Merger (see note 10) | (1.05) | - |
| Net asset value | 85.75 | 84.00 |
| Total shareholder net asset value return to 31 December 2013: | |||
| Ordinary shares 31 December 2013 (pence per share) (i) | C shares 31 December 2013 (pence per share) (i)(ii) | Albion Income & Growth VCT PLC 31 December 2013 (pence per share) (i)(iii) | |
| Total dividends paid during the year ended: 31 December 2001 | 1.00 | - | - |
| 31 December 2002 | 2.00 | - | - |
| 31 December 2003 | 1.50 | - | - |
| 31 December 2004 | 7.50 | - | - |
| 30 September 2005 | - | - | 0.65 |
| 31 December 2005 | 9.00 | - | - |
| 30 September 2006 | - | - | 2.60 |
| 31 December 2006 | 8.00 | 0.50 | - |
| 30 September 2007 | - | - | 3.45 |
| 31 December 2007 | 8.00 | 2.50 | - |
| 30 September 2008 | - | - | 3.50 |
| 31 December 2008 | 16.00 | 4.50 | - |
| 30 September 2009 | - | - | 3.00 |
| 31 December 2009 | - | 1.00 | - |
| 30 September 2010 | - | - | 3.00 |
| 31 December 2010 | 8.00 | 3.00 | - |
| 30 September 2011 | - | - | 3.50 |
| 31 December 2011 | 5.00 | 3.80 | - |
| 30 September 2012 | - | - | 3.50 |
| 31 December 2012 | 5.00 | 3.90 | - |
| 30 September 2013 | - | - | 3.50 |
| 31 December 2013 | 5.00 | 3.90 | - |
| Total dividends paid to 31 December 2013 | 76.00 | 23.10 | 26.70 |
| Net asset value as at 31 December 2013 | 85.75 | 66.70 | 67.00 |
| Total shareholder net asset value return to 31 December 2013 | 161.75 | 89.80 | 93.70 |
In addition to the dividends paid above, the Board declared a first dividend for the year ending 31 December 2014, of 1.25 pence per Ordinary share paid on 31 January 2014 to shareholders on the register at 10 January 2014. The Board has declared a second dividend for the year ending 31 December 2014 of 1.25 pence per Ordinary share to be paid on 30 April 2014 to shareholders on the register at 11 April 2014.
Notes
(i) Excludes tax benefits upon subscription.
(ii) The C shares were converted into Ordinary shares on 31 March 2011, with a conversion factor of 0.7779 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 0.7779 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.
(iii) The total shareholder returns presented above are based on the dividends paid to shareholders before the merger and the pro-rata net asset value per share paid to 31 December 2013. Albion Income & Growth VCT PLC was merged with Albion Technology & General VCT PLC on 15 November 2013. The pro-forma NAV is based upon 0.7813 Albion Technology & General VCT PLC shares for every Albion Income & Growth VCT PLC share.
Chairman's statement
Introduction
The results for Albion Technology & General VCT PLC (AATG) for the year to 31 December 2013 showed a further improvement over the previous three years, with a total return of 7.90 pence per share against 3.70 pence per share for 2012 and 2.2 pence per share for 2011. The results include six weeks' trading for Albion Income & Growth VCT PLC (AAIG), the assets of which were acquired by AATG with effect from 15 November 2013.
Merger between AATG and AAIG
The key event in the year was the merger of AAIG into AATG. This created a combined VCT with assets of close to £65 million, a more balanced portfolio spread, and anticipated annual cost savings of £180,000. It is expected that the costs of the merger will be recovered in less than two years.
As a result of the merger, AAIG will no longer be producing annual accounts, and will be dissolved after all of its assets have been transferred to AATG.
In outline, shareholders in AAIG, whose year end was 30 September 2013, had a total return of 2.80 pence per share for the 12 months to 30 September 2013 (compared to 5.10 pence per share for the previous 12 months) and 4.50 pence per share for the 15 months to 31 December 2013.
Details of the unaudited results of AAIG for the year ended 30 September 2013 and the pro-forma combined AAIG and AATG results can be found at the end of this announcement.
Investment performance and progress
The year saw three exits, with a loss resulting from the sale of Prime Care (equal to a little over half of cost) being more than compensated for by the sales of Opta Sports Data and Nelson House Hospital at 3.3 times and 1.5 times cost respectively.
In the meantime, new investment activity was strong. The renewable energy portfolio was enlarged through the investment in two new "run of river" hydro-electric projects in North West Scotland, Chonais Holdings and Green Highland Renewables (Ledgowan), while investments were made in three companies involved in healthcare information technology namely Cisiv, Silent Herdsman and Aridhia Informatics. In addition, a number of investments were made to support growth in existing portfolio companies.
Companies that performed particularly strongly during the year included Radnor House School, which now has 340 pupils; Blackbay, whose mobile data solutions saw strong growth in the UK; Mirada Medical, whose medical imaging software gained market share, particularly in the US; and Memmstar, whose sales of specialist semiconductor fabrication equipment grew sharply over the period.
Against this, partial provisions were made against, inter alia, Helveta and our two largest health and fitness clubs, in the face of slower growth than anticipated.
Risks and uncertainties
Despite the renewed growth in the UK, the outlook for the Domestic and Global economies continued to be the key risk affecting your Company. The task of the Manager is to allocate resources to those sectors and investment opportunities where growth can be both resilient and sustainable. Importantly, however, investment risk is mitigated through a variety of processes including our policy of ensuring that the VCT has a first charge over portfolio companies' assets wherever possible.
A detailed analysis of the other risks and uncertainties facing the business is shown in the Strategic report below.
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. The Board's policy is to buy back shares in the market, subject to the overall constraint that such purchases are in the VCT's interest. In order to ensure that these conditions are satisfied, the Company will limit the sum available for buy-backs for the 6 month period to 30 June 2014 to £500,000. 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 Manager
Details of transactions that took place with the Manager during the year can be found in note 5 and principally relate to the management fee.
Shareholders recently approved various changes to the Management agreement and the Management performance incentive. Details of these changes can be found on pages 24 and 25 of the Directors' report in the full Annual Report and Financial Statements.
Results and dividends
As at 31 December 2013, the net asset value was 85.75 pence per share. In line with the dividend payment dates of the Company and AAIG, the Board intends to pay quarterly dividends at the end of January, April, June and October, while targeting a similar annual level of dividend to that currently paid. On that basis, the objective will be to pay four dividends in each year of 1.25 pence per share. The Company will pay the second of four quarterly dividends for the financial year to 31 December 2014 of 1.25 pence per Ordinary share on 30 April 2014 to shareholders on the register on 11 April 2014.
Albion VCTs Top Up Offers 2013/2014
On 10 March 2014, the Company announced an increase in the size of the Albion VCTs Top Up Offers 2013/2014. In aggregate, the Albion VCTs will be aiming to raise approximately £27 million across six of the VCTs managed by Albion Ventures LLP, of which Albion Technology & General VCT PLC will be aiming to raise circa £7 million.
The funds raised by each Company pursuant to its Offer will be added to the liquid resources available for investment so as to put each Company into a position to take advantage of attractive investment opportunities over the next two to three years. Accordingly, the proceeds of the Offers will be applied in accordance with the respective Companies' investment policies. A prospectus has been published and can be obtained from www.albion-ventures.co.uk.
Board changes
Following the merger with AAIG, l am delighted to welcome Robin Archibald and Mary Anne Cordeiro to the Board. Following the merger, Lt Gen Sir Edmund Burton, after 12 years of invaluable service, stepped down from the Board, and I would like to extend our thanks on behalf of all shareholders for his wise counsel and strong commitment to shareholder value and wish him well for the future.
Outlook and prospects
Despite the muted outlook for the UK and Global economies, we believe that a number of our portfolio companies have real prospects for sustained growth and strong value creation. The results for the year have been encouraging and provide some under-pinning to this optimism. We continue to rebalance our investment portfolio to provide further emphasis on areas that we see as being more resilient, with stronger growth prospects, and look forward to the current year with some confidence.
Dr N E Cross
Chairman
21 March 2014
Strategic report
The Directors present the Strategic report of the Company for the year ended 31 December 2013 which has been prepared in accordance with the requirements of section 414A of the Companies Act 2006 (the "Act"). The purpose of this report is to inform Shareholders and provide them with sufficient information to enable them to assess the extent to which the Directors have performed their duty to promote the success of the Company in accordance with section 172 of the Act.
Investment objective and policy
The Company's investment objective is to provide investors with a regular and predictable source of dividend income combined with the prospect of long term capital growth through allowing investors the opportunity to participate in a balanced portfolio of technology and non-technology businesses. It is intended that the Company's investment portfolio will be split approximately as follows:
- 40 per cent. in unquoted UK technology related companies; and
- 60 per cent. in unquoted UK non-technology companies.
This split is subject to the availability of good quality new investments arising within the UK technology and non-technology sectors.
The Company pursues a longer term investment approach, with a view to providing shareholders with a strong, predictable dividend flow, combined with the prospects of capital growth. This is achieved in two ways. Firstly, controlling the VCT's exposure to technology risk by ensuring that many of the companies in the non-technology portfolio have property as their major asset, with no external borrowings. Secondly, by balancing the investment portfolio by sector, so that those areas such as leisure and business services, which are susceptible to changes in consumer sentiment, are complemented by sectors with more predictable long term characteristics, such as healthcare and the environment.
Current portfolio sector allocation
Based on current valuations, unquoted UK technology companies account for 31 per cent. of the portfolio (2012: 25 per cent.) against our intended objective of 40 per cent as stated above. The pie chart at the end of this announcement shows the split of the portfolio valuation by industrial or commercial sector as at 31 December 2013. Details of the principal investments made by the Company are shown in the Portfolio of investments on pages 18 to 20 of the full Annual Report and Financial Statements.
Direction of portfolio
The sector analysis of the VCT's investment portfolio shows that renewable energy now accounts for 8 per cent. of the portfolio compared to 6 per cent. at the end of the previous financial year. The renewable energy sector forms part of the UK non-technology portfolio. This remains in line with the Board's target exposure to the sector with a view to increasing this to 15 per cent. as new opportunities arise.
Although healthcare has reduced as a proportion of the whole, this is due to exits over the past year. We would anticipate the sector increasing in importance in the current period, as it is a core area that the Manager has targeted for value creation and a good potential source of recurring income.
Results and dividend policy
Set out below are the results for the Company which comprises 12 months of the Company, and 1.5 months of Albion Income & Growth VCT PLC, being the period post merger:
| Ordinary shares | |
| £'000 | |
| Net revenue return for the year ended 31 December 2013 | 464 |
| Dividend of 2.50 pence per share paid on 30 April 2013 | (1,061) |
| Dividend of 2.50 pence per share paid on 31 October 2013 | (1,055) |
| Transferred from other distributable reserve | (1,652) |
| Realised and unrealised capital gain for the year transferred to reserves | 3,188 |
| Net assets as at 31 December 2013 | 64,831 |
| Net asset value per share as at 31 December 2013 | 85.75p |
An unaudited pro-forma set of results, which calculates the return had the two Companies merged at the start of the year is set at the end of this announcement.
The Company paid dividends of 5.00 pence per Ordinary share (2012: 5.00 pence per Ordinary share) during the year ended 31 December 2013. The dividend objective of the Board is to provide Shareholders with a strong, predictable dividend flow, with a dividend target of 5 pence per share per year. In line with the dividend payment dates of the Company and Albion Income & Growth VCT PLC, the Board intends to pay quarterly dividends at the end of January, April, June and October, while targeting a similar annual level of dividend to that currently paid. On that basis, the objective will be to pay four dividends in each year of 1.25 pence per share. As shown in the Chairman's statement, the Board declared a first dividend for the year ending 31 December 2014 of 1.25 pence per Ordinary share which was paid on 31 January 2014. The Board has declared a second dividend for the year ending 31 December 2014, of 1.25 pence per Ordinary share to be paid on 30 April 2014 to shareholders on the register at 11 April 2014.
As shown in the Income statement, investment income has decreased to £1,082,000 (2012: £1,224,000). As a result, the revenue return to equity holders has decreased to £464,000 (2012: £638,000).
The capital return for the year increased to £3,188,000 (2012: £880,000). This is mainly attributable to the upward unrealised revaluations in the Company's investment portfolio and by realised gains on disposal of investments, offset by management fees charged to capital. The total return was 7.90 pence per share (2012: 3.70 pence per share).
The Balance sheet shows that the net asset value has increased over the last year to 85.75 pence per share (2012: 84.00 pence per share), primarily reflecting the 7.90 pence per share total return offset by the payment of 5.00 pence per share dividend during the year and the impact of the merger of 1.05 pence per share detailed in note 10.
The cash flow for the business has been positive for the year due to the issue of share capital, disposal of investments, cash acquired from Albion Income & Growth VCT PLC and net cash inflow from operations, offset by dividends paid, share buy-backs and new investments made.
Results for AAIG for the year to 30 September 2013
As detailed in the Chairman's statement no separate audited results for Albion Income & Growth VCT PLC will be published for the year to 30 September 2013. At the end of this announcement are the unaudited results for the year to 30 September 2013, in comparison to the previous year.
Review of business and future changes
The results for the year to 31 December 2013 are the first statutory accounts since the merger of the Company with Albion Income & Growth VCT PLC on 15 November 2013. The results show a further improvement over the previous three years with a total return of 7.90 pence per share for the year (2012: 3.70 pence per share). We believe there should be further progress in the current year.
As a result of the merger with Albion Income & Growth VCT PLC, the Company acquired the net assets of that company which were valued at just over £28 million. With two exceptions, the investments were all in companies in which the Company already had a holding. The annual cost savings of approximately £180,000 identified at the time of the Merger are expected to be achieved. Further details of the Merger can be found in note 10.
The Directors do not foresee any major changes in the activity undertaken by the Company in the current year. The Company continues with its objective to invest in unquoted companies throughout the United Kingdom with a view to providing both capital growth and a reliable dividend income to shareholders over the long term.
A detailed review of the Company's business during the year and future prospects is contained in the Chairman's statement. Details of significant events which have occurred since the end of the financial year are listed in note 22. Details of transactions with the Manager are shown in note 5.
Future prospects
The Company's performance record reflects the success of the strategy outlined above and has enabled the Company to maintain a predictable stream of dividend payments to shareholders. The Board believes that this model will continue to meet the investment objective and has the potential to continue to deliver attractive returns to shareholders. Further details on the Company's outlook and prospects can be found in the Chairman's statement.
Key performance indicators
The Directors believe that the following key performance indicators, which are typical for venture capital trusts, used in its own assessment of the Company, will provide shareholders with sufficient information to assess how effectively the Company is applying its investment policy to meet its objectives. These are:
Net asset value total return relative to FTSE All Share Index total return
The graphs on page 5 of the full Annual Report and Financial Statements shows Albion Technology & General VCT PLC's net asset value total return against the FTSE All-Share Index total return, in both instances with dividends reinvested. Details on the performance of the net asset value and return per share for the year are shown on page 10 of the full Annual Report and Financial Statements.
Net Asset Value per share and cumulative Net Asset Value total shareholder return
Net asset value increased by 2.1 per cent. to 85.75 pence per share for the year ended 31 December 2013.
Cumulative NAV total return to shareholders increased by 4.4 per cent. to 161.75 pence per share for the year ended 31 December 2013.
Dividend distributions
Dividends paid in respect of the year ended 31 December 2013 were 5.00 pence per share (2012: 5.00 pence per share), in line with the Boards dividend objective. Cumulative dividends paid since inception is 76.00 pence per share.
Ongoing charges
The ongoing charges ratio for the year to 31 December 2013 was 2.8 per cent. (2012: 3.1 per cent.). The ongoing charges ratio has been calculated using the Association of Investment Companies' (AIC) recommended methodology. This figure shows shareholders the total recurring annual running expenses (including investment management fees charged to capital reserve) as a percentage of the average net assets attributable to shareholders. The Directors expect the ongoing charges ratio for the year ahead to be approximately 2.8 per cent.
Maintenance of VCT qualifying status
The Company continues to comply with H.M. Revenue & Customs ("HMRC") rules in order to maintain its status under Venture Capital Trust legislation as highlighted below.
VCT Regulation
The investment policy is designed to ensure that the Company continues to qualify and is approved as a VCT by HMRC. In order to maintain its status under Venture Capital Trust legislation, a VCT must comply on a continuing basis with the provisions of Section 274 of the Income Tax Act 2007 as follows:
| (1) | The Company's income must be derived wholly or mainly from shares and securities; |
| (2) | At least 70 per cent. of the HMRC value of its investments must have been represented throughout the year by shares or securities that are classified as 'qualifying holdings'; |
| (3) | At least 30 per cent. by HMRC value of its total qualifying holdings must have been represented throughout the year by holdings of 'eligible shares'. For funds raised after 5 April 2011 the figure is 70 per cent.; |
| (4) | At no time in the year must the Company's holdings in any one company (other than another VCT) have exceeded 15 per cent. by HMRC value of its investments; |
| (5) | The Company must not have retained greater than 15 per cent. of its income earned in the year from shares and securities; |
| (6) | Eligible shares must comprise at least 10 per cent. by HMRC value of the total of the shares and securities that the Company holds in any one portfolio company; and |
| (7) | The Company's shares, throughout the year, must have been listed in the Official List of the Stock Exchange. |
These tests drive a spread of investment risk through disallowing holdings of more than 15 per cent. in any portfolio company. The tests have been carried out and independently reviewed for the year ended 31 December 2013. The Company has complied with all tests and continues to do so.
'Qualifying holdings' include shares or securities (including loans with a five year or greater maturity period) in companies which operate a 'qualifying trade' wholly or mainly in the United Kingdom. 'Qualifying trade' excludes, amongst other sectors, dealing in property or shares and securities, insurance, banking and agriculture. Details of the sectors in which the Company is invested can be found in the pie chart at the end of this announcement.
Portfolio company gross assets must not exceed £15 million immediately prior to the investment and £16 million immediately thereafter. With effect from 6 April 2012 the legislation has been amended so as to prevent any company from receiving more than £5 million in aggregate from all state-aided providers of risk capital, including VCTs, in the 12 month period up to and including the most recent such investment.
Gearing
As defined by the Articles of Association, the Company's maximum exposure in relation to gearing is restricted to 10 per cent. of the adjusted share capital and reserves. As at 31 December 2013 the Company's maximum possible exposure was £6,293,000 (2012: £3,343,000) and its actual short term and long term gearing at this date was £nil (2012: £nil). The Directors do not currently have any intention to utilise long term gearing.
Operational arrangements
The Company has delegated the investment management of the portfolio to Albion Ventures LLP, which is authorised and regulated by the Financial Conduct Authority. Albion Ventures LLP also provides company secretarial and other accounting and administrative support to the Company. Further details regarding the terms of engagement of the Manager and the way the Board has evaluated the performance of the Manager are shown on pages 24 and 25 of the full Annual Report and Financial Statements.
Discount management and share buy-back policy
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. The Board's policy is to buy back shares in the market, subject to the overall constraint that such purchases are in the VCT'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.
Further details of shares bought back during the year ended 31 December 2013 can be found in note 16 of the Financial Statements.
Social and community issues, employees and human rights
The Board recognises the requirement under section 414C of the Act to detail information about social and community issues, employees and human rights; including any policies it has in relation to these matters and effectiveness of these policies. As an externally managed investment company with no employees, the Company has no policies in these matters and as such these requirements do not apply.
Further policies
The Company has adopted a number of further policies relating to:- Environment
- Global greenhouse gas emissions
- Anti-bribery
- Diversity
and these are set out in the Directors' report on page 24 in the full Annual Report and Financial Statements.
Risk management
The Board carries out a regular review of the risk environment in which the Company operates. The principal risks and uncertainties of the Company as identified by the Board and how they are managed are as follows:
| Risk | Possible consequence | Risk management |
| 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. |
| 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. |
| 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 unquoted equity investments, convertible loan stock and debt issued at a discount 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. All other unquoted loan stock is measured at amortised cost. The values of a number of investments are also underpinned by independent third party professional valuations. |
| VCT approval risk | The Company's current approval as a venture capital trust allows investors to take advantage of tax reliefs on initial investment and ongoing tax free capital gains and dividend income. Failure to meet the qualifying requirements could result in investors losing the tax relief on initial investment and loss of tax relief on any tax-free income or capital gains received. In addition, failure to meet the qualifying requirements could result in a loss of listing of the shares. | To reduce this risk, the Board has appointed the Manager, who 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 PricewaterhouseCoopers LLP as its taxation advisor. PricewaterhouseCoopers LLP reports quarterly to the Board to independently confirm compliance with the venture capital trust legislation, to highlight areas of risk and to inform on changes in legislation. Each investment in a new portfolio company is also pre-cleared with H.M. Revenue & Customs. |
| 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. |
| 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. Modwenna Rees-Mogg, as a member of the Audit Committee, met with the internal audit Partner of PKF Littlejohn LLP in January 2014 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 Turnbull guidance are detailed on pages 31 and 32 of the full Annual Report and Financial Statements. Measures are in place to mitigate information risk in order to ensure the integrity, availability and confidentiality of information used within the business. |
| Reliance upon third parties risk | The Company is reliant upon the services of Albion Ventures LLP for the provision of investment management and administrative functions. | There are provisions within the management agreement for the change of Manager under certain circumstances (for further detail, see the management agreement paragraph on pages 24 and 25 of the full Annual Report and Financial Statements). In addition, the Manager has demonstrated to the Board that there is no undue reliance placed upon any one individual within Albion Ventures LLP. |
| 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 20 to the Financial Statements. 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. |
On behalf of the Board,
Dr. N E Cross
Chairman
21 March 2014
Responsibility statement
In preparing these financial statements for the year to 31 December 2013, the Directors of the Company, being Dr Neil Cross, Robin Archibald, Modwenna Rees-Mogg, Mary Anne Cordeiro and Patrick Reeve, confirm that to the best of their knowledge:
- summary financial information contained in this announcement and the full Annual Report and Financial Statements for the year ended 31 December 2013 for the Company has been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (UK Accounting Standards and applicable law) and give a true and fair view of the assets, liabilities, financial position and profit and loss of the Company for the year ended 31 December 2013 as required by DTR 4.1.12.R;
-the Chairman's statement and Strategic report include a fair review of the information required by DTR 4.2.7R (indication of important events during the year ended 31 December 2013 and description of principal risks and uncertainties that the Company faces); and
-the Chairman's statement and Strategic report include a fair review of the information required by DTR 4.2.8R (disclosure of related parties transactions and changes therein).
A detailed "Statement of Directors' responsibilities for the preparation of the Company's Financial Statements" is contained within the full audited Annual Report and Financial Statements.
By order of the Board
Dr N E Cross
Chairman
21 March 2014
Income statement
| Year ended 31 December 2013 | Year ended 31 December 2012 | ||||||
| Revenue | Capital | Total | Revenue | Capital | Total | ||
| Note | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Gains on investments | 3 | - | 3,787 | 3,787 | - | 1,367 | 1,367 |
| Investment income | 4 | 1,082 | - | 1,082 | 1,224 | - | 1,224 |
| Investment management fees | 5 | (247) | (743) | (990) | (215) | (644) | (859) |
| Other expenses | 6 | (247) | - | (247) | (210) | - | (210) |
| Return on ordinary activities before tax | 588 | 3,044 | 3,632 | 799 | 723 | 1,522 | |
| Tax (charge)/credit on ordinary activities | 8 | (124) | 144 | 20 | (161) | 157 | (4) |
| Return attributable to shareholders | 464 | 3,188 | 3,652 | 638 | 880 | 1,518 | |
| Basic and diluted return per share (pence)* | 11 | 1.00 | 6.90 | 7.90 | 1.60 | 2.10 | 3.70 |
* excluding treasury shares
The accompanying notes form an integral part of these Financial Statements.
The total column of this 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.
All revenue and capital items in the above statement derive from continuing operations of the Company up to 14 November 2013 and thereafter reflect the enlarged entity to 31 December 2013. This includes the assets and liabilities of Albion Income and Growth VCT PLC that were transferred to the Company on 15 November 2013.
There are no recognised gains or losses other than the results for the year disclosed above. Accordingly a statement of total recognised gains and losses is not required.
The difference between the reported profit on ordinary activities before tax and the historical profit is due to the fair value movements on investments. As a result a note on historical cost profit and losses has not been prepared.
Balance sheet
| 31 December 2013 | 31 December 2012 | ||
| Note | £'000 | £'000 | |
| Fixed asset investments | 12 | 61,637 | 33,055 |
| Current assets | |||
| Trade and other debtors | 14 | 350 | 21 |
| Current asset investments | 14 | 147 | 65 |
| Cash at bank and in hand | 18 | 3,226 | 1,656 |
| 3,723 | 1,742 | ||
| Creditors: amounts falling due within one year | 15 | (529) | (338) |
| Net current assets | 3,194 | 1,404 | |
| Net assets | 64,831 | 34,459 | |
| Capital and reserves | |||
| Called up share capital | 16 | 799 | 454 |
| Share premium | 30,031 | 346 | |
| Capital redemption reserve | 21 | 6 | |
| Unrealised capital reserve | (4,166) | (6,678) | |
| Realised capital reserve | 10,792 | 9,435 | |
| Other distributable reserve | 27,354 | 30,896 | |
| Total equity shareholders' funds | 64,831 | 34,459 | |
| Basic and diluted net asset value per share (pence)* | 17 | 85.75 | 84.00 |
The accompanying notes form an integral part of these Financial Statements.
These Financial Statements were approved by the Board of Directors, and were authorised for issue on 21 March 2014 and were signed on its behalf by
Dr. N E Cross
Chairman
Company number: 04114310
Reconciliation of movements in shareholders' funds
| 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 2013 | 454 | 346 | 6 | (6,678) | 9,435 | 30,896 | 34,459 |
| Return for the period | - | - | - | 3,082 | 106 | 464 | 3,652 |
| Transfer of previously unrealised gains on sale of investments | - | - | - | (570) | 570 | - | - |
| Purchase of shares for cancellation | (15) | - | 15 | - | - | (1,209) | (1,209) |
| Issue of equity (net of costs) | 24 | 2,058 | - | - | - | - | 2,082 |
| Shares issued to acquire net assets of Albion Income & Growth VCT PLC (net of issue costs) ** | 336 | 27,627 | - | - | - | - | 27,963 |
| Transfer from other distributable reserve to realised capital reserve*** | - | - | - | - | 681 | (681) | - |
| Dividends paid | - | - | - | - | - | (2,116) | (2,116) |
| As at 31 December 2013 | 799 | 30,031 | 21 | (4,166) | 10,792 | 27,354 | 64,831 |
| As at 1 January 2012 | 21,862 | 959 | 4,473 | (8,001) | 9,246 | 5,008 | 33,547 |
| Return/(loss) for the period | - | - | - | 1,440 | (560) | 638 | 1,518 |
| Transfer of previously unrealised gains on sale of investments | - | - | - | (117) | 117 | - | - |
| Purchase of shares for cancellation | (1) | - | 1 | - | - | (49) | (49) |
| Purchase of own shares for treasury | - | - | - | - | - | (453) | (453) |
| Cancellation of treasury shares | (54) | - | 54 | - | - | - | - |
| Issue of deferred share** | 4,073 | - | (4,073) | - | - | - | - |
| Reduction in share capital and cancellation of deferred share, capital redemption and share premium reserves**** | (26,369) | (1,598) | (449) | - | - | 28,416 | - |
| Issue of equity (net of costs) | 943 | 986 | - | - | - | - | 1,929 |
| Transfer from other distributable reserve to realised capital reserve*** | - | - | - | - | 632 | (632) | - |
| Dividends paid | - | - | - | - | - | (2,033) | (2,033) |
| As at 31 December 2012 | 454 | 346 | 6 | (6,678) | 9,435 | 30,896 | 34,459 |
* Included within these reserves is an amount of £33,980,000 (2012: £33,653,000) which is considered distributable.
** The assets and liabilities transferred through the acquisition of Albion Income & Growth VCT PLC are shown in note 10. In addition, £106,000 of the merger costs attributable to Albion Technology & General VCT PLC has been deducted from the share premium account in so far as they relate to the issue of new shares.
*** A transfer of £681,000 representing gross realised losses on disposal of investments during the year ended 31 December 2013 (2012: £632,000 gross realised losses) has been made from the other distributable reserve to the realised capital reserve.
**** The reduction in the nominal value of shares from 50 pence to 1 penny, the cancellation of the deferred share, capital redemption and share premium reserves (as approved by shareholders at the General Meeting held on 22 June 2012 and by order of the Court dated 11 July 2012) has increased the value of the other distributable reserve.
Cash flow statement
| Year ended 31 December 2013 | Year ended 31 December 2012 | ||
| Note | £'000 | £'000 | |
| Operating activities | |||
| Loan stock income received | 1,159 | 1,225 | |
| Deposit interest received | 30 | 19 | |
| Dividend income received | 15 | - | |
| Investment management fees paid | (887) | (847) | |
| Other cash payments | (210) | (216) | |
| Net cash flow from operating activities | 19 | 107 | 181 |
| Taxation | |||
| UK corporation tax (paid)/recovered | (2) | (9) | |
| Capital expenditure and financial investments | |||
| Purchase of fixed asset investments | (3,082) | (2,338) | |
| Disposal of fixed asset investments | 3,778 | 1,685 | |
| Disposal of current asset investments | - | 1,295 | |
| Net cash flow from investing activities | 696 | 642 | |
| Equity dividends paid (net of costs of issuing shares under the Dividend Reinvestment Scheme) | (1,912) | (1,854) | |
| Net cash flow before financing | (1,111) | (1,040) | |
| Financing | |||
| Issue of share capital (net of issue costs) | 1,877 | 1,751 | |
| Purchase of own shares (including costs) | 16 | (1,209) | (502) |
| Cash acquired from Albion Income & Growth VCT PLC | 2,273 | - | |
| Costs of Merger (paid on behalf of the Company and Albion Income & Growth VCT PLC) | (260) | - | |
| Net cash flow from financing | 2,681 | 1,249 | |
| Cash flow in the year | 18 | 1,570 | 209 |
Notes to the Financial Statements
1. Accounting convention
The 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 and with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" ("SORP") issued by The Association of Investment Companies ("AIC") in January 2009. Accounting policies have been applied consistently in current and prior periods.
2. Accounting policies
Fixed and current asset investments
Unquoted equity investments, debt issued at a discount and convertible bonds
In accordance with FRS 26 "Financial Instruments Recognition and Measurement", quoted and unquoted equity, debt issued at a discount and convertible bonds are designated as fair value through profit or loss ("FVTPL"). Investments listed on recognised exchanges are valued at the closing bid prices at the end of the accounting period. Unquoted investments' fair value is determined by the Directors in accordance with the December 2012 International Private Equity and Venture Capital Valuation Guidelines (IPEVCV guidelines).
Fair value movements on equity investments and gains and losses arising on the disposal of investments are reflected in the capital column of the Income statement in accordance with the AIC SORP. Realised gains or losses on the sale of investments will be reflected in the realised capital reserve, and unrealised gains or losses arising from the revaluation of investments will be reflected in the unrealised capital reserve.
Warrants and unquoted equity derived instruments
Warrants and unquoted equity derived instruments are only valued if there is additional value to the Company in exercising or converting as at the balance sheet date. Otherwise these instruments are held at nil value. The valuation techniques used are those used for the underlying equity investment.
Unquoted loan stock
Unquoted loan stock (excluding convertible bonds and debt issued at a discount) are classified as loans and receivables as permitted by FRS 26 and measured at amortised cost using the Effective Interest Rate method less impairment. Movements in amortised cost relating to interest income are reflected in the revenue column of the Income statement, and hence are reflected in the other distributable reserve, and movements in respect of capital provisions are reflected in the capital column of the Income statement and are reflected in the realised capital reserve following sale, or in the unrealised capital reserve on movements arising from revaluations of the fair value of the security.
For all unquoted loan stock, whether fully performing, past due or impaired, the Board considers that the fair value is equal to or greater than the security value of these assets. For unquoted loan stock, the amount of the impairment is the difference between the asset's cost and the present value of estimated future cash flows, discounted at the original effective interest rate. The future cash flows are estimated based on the fair value of the security less the estimated selling costs.
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.
In accordance with the exemptions under FRS 9 "Associates and joint ventures", 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.
Current asset investments
Contractual future contingent receipts on the disposal of fixed asset investments are designated at fair value through profit or loss and are subsequently measured at fair value.
Dividend income is not recognised as part of the fair value movement of an investment, but is recognised separately as investment income through the revenue reserve when a share becomes ex-dividend.
Loan stock accrued interest is recognised in the Balance sheet as part of the carrying value of the loans and receivables at the end of each reporting period.
Acquisition of assets and liabilities from Albion Income & Growth VCT PLC
On 15 November 2013 the Company acquired the assets and liabilities of Albion Income & Growth VCT PLC. The income and costs for the period up to 14 November 2013 and the comparable period for last year reflect the activities of the Company before the acquisition and after that date reflect those of the Company as enlarged by the acquisition. Further information is contained in note 10.
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 on a time apportionment basis using an effective interest rate over the life of the financial instrument. Income which is not capable of being received within a reasonable period of time is reflected in the capital value of the investment.
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 the 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, the 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 16 "Current tax". Taxation associated with capital expenses is applied in accordance with the SORP. In accordance with FRS 19 "Deferred tax", deferred taxation is provided in full on timing differences that result in an obligation at the Balance sheet date to pay more tax or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the Financial Statements. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered. Deferred tax assets and liabilities are not discounted.
The Directors have considered the requirements of FRS 19 and do not believe that any provision for deferred tax should be made.
Reserves
Share premium account
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;
- 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 have been combined as a single reserve named other distributable reserve.
This reserve accounts for movements from the revenue column of the Income statement, the payment of dividends, the buy-back of shares and other non capital realised movements.
Dividends
In accordance with FRS 21 "Events after the balance sheet date", dividends by the Company are accounted for in the period in which the dividend is declared.
3. Gains on investments
| Year ended 31 December 2013 £'000 | Year ended 31 December 2012 £'000 | |
| Unrealised gains on fixed asset investments held at fair value through profit or loss | 2,405 | 1,363 |
| Unrealised reversals of impairments on fixed asset investments held at amortised cost | 649 | 12 |
| Unrealised gains on fixed asset investments sub-total | 3,054 | 1,375 |
| Unrealised gains on current assets held at fair value through profit or loss | 28 | 65 |
| Unrealised gains sub-total | 3,082 | 1,440 |
| Realised gains/(losses) on fixed asset investments held at fair value through profit or loss | 796 | (136) |
| Realised( losses)/gains on fixed asset investments held at amortised cost | (91) | - |
| Realised gains/(losses) on fixed asset investments sub-total | 705 | (136) |
| Realised gains on current asset investments held at fair value through profit or loss | - | 63 |
| Realised gains/(losses)sub-total | 705 | (73) |
| 3,787 | 1,367 |
Investments measured at amortised cost are unquoted loan stock investments as described in note 2.
4. Investment income
| Year ended 31 December 2013 £'000 | Year ended 31 December 2012 £'000 | |
| Income recognised on investments held at fair value through profit or loss | ||
| Dividend income | 17 | - |
| Income from convertible bonds and discounted debt | 109 | 135 |
| 126 | 135 | |
| Income recognised on investments held at amortised cost | ||
| Return on loan stock investments | 926 | 1,076 |
| Bank deposit interest | 30 | 13 |
| 956 | 1,089 | |
| 1,082 | 1,224 |
Interest income earned on impaired investments at 31 December 2013 amounted to £328,000 (2012: £496,000). These investments are all held at amortised cost.
5. Investment management fees
| Year ended 31 December 2013 £'000 | Year ended 31 December 2012 £'000 | |
| Investment management fee charged to revenue | 247 | 215 |
| Investment management fee charged to capital | 743 | 644 |
| 990 | 859 |
Further details of the Management agreement under which the investment management fee is paid are given in the Directors' report on pages 24 and 25 of the full Annual Report and Financial Statements.
During the year, services of a total value of £990,000 (2012: £859,000) were purchased by the Company from Albion Ventures LLP in respect of management fees. At the financial year end, the amount due to Albion Ventures LLP in respect of these services disclosed as accruals was £403,000 (2012: £216,000).
Patrick Reeve is the Managing Partner of the Manager, Albion Ventures LLP. During the year, the Company was charged by Albion Ventures LLP £18,000 (including VAT) in respect of his services as a Director (2012: £19,000). At the year end, the amount due to Albion Ventures LLP in respect of these services disclosed as accruals was £5,300 (2012: £3,500).
Albion Ventures LLP, the Manager, holds 1,012 Ordinary shares as a result of fractional entitlements arising from the conversion of C shares into Ordinary shares on 31 March 2011.
Albion Ventures LLP is, from time to time, eligible to receive transaction fees and Directors' fees from portfolio companies. During the year ended 31 December 2013, fees of £142,000 attributable to the investments of the Company were received pursuant to these arrangements (2012: £155,000). Albion Ventures LLP received 1,346 Ordinary shares as a result of fractional entitlements arising from the merger of Albion Income & Growth VCT PLC into the Company on 15 November 2013. During the year, these shares were sold and the proceeds retained for the benefit of the Company.
During the year the Company raised new funds through the Albion VCTs Top Up Offers 2012/2013 as described in note 16. The total cost of the issue of these shares was 3.0 per cent. of the sums subscribed. Of these costs, an amount of £3,186 (2012: £7,403) was paid to the Manager, Albion Ventures LLP in respect of receiving agent services. There were no sums outstanding in respect of receiving agent services at the year end.
6. Other expenses
| Year ended 31 December 2013 £'000 | Year ended 31 December 2012 £'000 | |
| Directors' fees (including VAT and NIC) | 80 | 78 |
| Other administrative expenses | 32 | 89 |
| Merger costs | 80 | - |
| Tax services | 19 | 19 |
| Auditor's remuneration for statutory audit services (excluding VAT) | 36 | 24 |
| 247 | 210 |
Auditor's remuneration for statutory audit services includes £17,000 in relation to auditor review of the investment valuations in advance of the merger of Albion Income & Growth VCT PLC with Albion Technology & General VCT PLC on 15 November 2013.
7. Directors' fees
The amounts paid to and on behalf of the Directors during the year are as follows:
| Year ended 31 December 2013 £'000 | Year ended 31 December 2012 £'000 | |
| Directors' fees | 71 | 70 |
| National insurance and/or VAT | 9 | 8 |
| 80 | 78 |
Further information regarding Directors' remuneration can be found in the Directors' remuneration report on pages 33 and 34 of the full Annual Report and Financial Statements.
8. Tax credit/(charge) on ordinary activities
| Year ended 31 December 2013 £'000 | Year ended 31 December 2012 £'000 | |
| UK corporation tax charge in respect of current year | - | (31) |
| UK corporation tax credit in respect of prior years | 20 | 27 |
| 20 | (4) |
Factors affecting the tax charge:
| Year ended 31 December 2013 £'000 | Year ended 31 December 2012 £'000 | |
| Return on ordinary activities before taxation | 3,629 | 1,522 |
| Tax charge on profit at the small companies rate | (726) | (304) |
| Factors affecting the charge: | ||
| Non-taxable gains | 757 | 273 |
| Income not taxable | 3 | - |
| Items not deductible | (16) | - |
| Excess management expenses | (18) | - |
| Consortium relief in respect of prior years | 20 | 27 |
| 20 | (4) |
The tax charge for the year shown in the Income statement is lower than the small companies rate of corporation tax in the UK of 20 per cent. (2012: 20 per cent.). The differences are explained above.
Consortium relief is recognised in the accounts in the period in which the claim is submitted to HMRC and is shown as tax in respect of prior year.
Notes
| (i) | Venture Capital Trusts are not subject to corporation tax on capital gains. |
| (ii) | Tax relief on expenses charged to capital has been determined by allocating tax relief to expenses by reference to the applicable corporation tax rate and allocating the relief between revenue and capital in accordance with the SORP. |
| (iii) | The Company has excess trading losses of £94,000 (2012: £Nil) that are available for offset against future profits. A deferred tax asset of £18,800 (2012: £Nil) has not been recognised in respect of these losses. |
9. Dividends
| Year ended 31 December 2013 £'000 | Year ended 31 December 2012 £'000 | |
| Ordinary shares' dividend of 2.50p per share paid on 30 April 2012 | - | 1,018 |
| Ordinary shares' dividend of 2.50p per share paid on 31 October 2012 | - | 1,015 |
| Ordinary shares' dividend of 2.50p per share paid on 30 April 2013 | 1,061 | - |
| Ordinary shares' dividend of 2.50p per share paid on 31 October 2013 | 1,055 | - |
| 2,116 | 2,033 |
In addition to the dividends summarised above, the Board declared a first dividend for the year ending 31 December 2014 of 1.25 pence per Ordinary share. This dividend was paid on 31 January 2014 to shareholders on the register as at 10 January 2014. The total dividend was £945,000. The Board has declared a second dividend for the year ending 31 December 2014 of 1.25 pence per Ordinary share. The dividend will be paid on 30 April 2014 to shareholders on the register as at 11 April 2014. The total dividend will be approximately £960,000.
10. Acquisition of the assets and liabilities of Albion Income & Growth VCT PLC
On 15 November 2013, the following assets and liabilities of Albion Income & Growth VCT PLC ("Income & Growth") were transferred to the Company in exchange for the issue to Income & Growth shareholders of 33,664,049 shares in the Company, at an issue price of 83.38 pence per share:
| £'000 | ||
| Fixed asset investments | 25,948 | |
| Debtors | 117 | |
| Cash at bank and in hand | 2,273 | |
| Current asset investments | 54 | |
| Creditors | (163) | |
| Merger costs | (154) | |
| 28,075 |
Shareholders should note that under accounting standards, the calculation of the net asset value per share uses the total shares in issue (less treasury shares), whereas the calculation of the total return uses the weighted average shares in issue during the period. Due to the amount of shares issued during the year as a result of the merger with Income & Growth, the difference between the total shares in issue (less treasury shares) and the weighted average share in issue during the period has resulted in the total return per share being 1.05 pence higher than if the shares in issue (less treasury shares) had been applied to the movement in the Balance sheet since merger. This difference in the number of shares for each respective calculation will converge over time.
On 15 November 2013, Income & Growth was placed into members' voluntary liquidation pursuant to a scheme of reconstruction under section 110 of the Insolvency Act 1986.
The net asset value ("NAV") per share of each fund used for the purposes of conversion at the calculation date of 14 November 2013 were 83.38 pence per share and 65.15 pence per share for the Company and Income & Growth respectively. The conversion ratio for each Income & Growth share was 0.7813 Albion Technology & General VCT PLC share for each Income & Growth share.
11. Basic and diluted return per share
| Year ended 31 December 2013 | Year ended 31 December 2012 | |||||
| Revenue | Capital | Total | Revenue | Capital | Total | |
| Return attributable to equity shares (£'000) | 464 | 3,188 | 3,652 | 638 | 880 | 1,518 |
| Weighted average shares in issue (excluding treasury shares) | 46,363,621 | 40,576,647 | ||||
| Return attributable per equity share (pence) | 1.00 | 6.90 | 7.90 | 1.60 | 2.10 | 3.70 |
The weighted average number of shares is calculated excluding treasury shares of 4,341,070 (2012: 4,341,070).
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.
12. Fixed asset investments
| 31 December 2013 £'000 | 31 December 2012 £'000 | |
| Investments held at fair value through profit or loss | ||
| Unquoted equity and preference shares | 25,093 | 11,624 |
| Discounted debt and convertible loan stock | 10,609 | 5,257 |
| 35,702 | 16,881 | |
| Investments held at amortised cost | ||
| Unquoted loan stock | 25,935 | 16,174 |
| 61,637 | 33,055 |
| 31 December 2013 £'000 | 31 December 2012 £'000 | |
| Opening valuation | 33,055 | 30,980 |
| Purchases at cost | 3,001 | 2,515 |
| Transfer on Merger | 25,948 | - |
| Disposal proceeds | (4,001) | (1,677) |
| Realised gains/(losses) | 705 | (136) |
| Movement in loan stock accrued income | (125) | (3) |
| Unrealised gains | 3,054 | 1,375 |
| Closing valuation | 61,637 | 33,055 |
| Movement in loan stock accrued income | ||
| Opening accumulated movement in loan stock accrued income | 276 | 279 |
| Movement in loan stock accrued income | (125) | (3) |
| Closing accumulated movement in loan stock accrued income | 151 | 276 |
| Movement in unrealised losses | ||
| Opening accumulated unrealised losses | (6,790) | (8,281) |
| Transfer of previously unrealised (losses)/gains to realised reserve on disposal of investments | (570) | 116 |
| Movement in unrealised gains | 3,054 | 1,375 |
| Closing accumulated unrealised losses | (4,306) | (6,790) |
| Historic cost basis | ||
| Opening book cost | 39,569 | 38,982 |
| Purchases at cost | 3,001 | 2,515 |
| Transfer on Merger | 25,948 | - |
| Sales at cost | (2,725) | (1,927) |
| Closing book cost | 65,793 | 39,569 |
Purchases and disposals detailed above do not agree to the Cash flow statement due to restructuring of investments, conversion of convertible loan stock and settlement debtors and creditors.
The Directors believe that the carrying value of loan stock measured at amortised cost is not materially different to fair value. The Company does not hold any assets as the result of the enforcement of security during the period, and believes that the carrying values for both impaired and past due assets are covered by the value of security held for these loan stock investments.
Unquoted equity investments and convertible and discounted debt are valued at fair value in accordance with the IPEVCV guidelines as follows:
| Valuation methodology | 31 December 2013 £'000 | 31 December 2012 £'000 |
| Cost and price of recent investment (reviewed for impairment) | 6,501 | 2,054 |
| Net asset value supported by third party or desktop valuation | 8,636 | 2,341 |
| Earnings multiple | 6,266 | 4,565 |
| Revenue multiple | 11,238 | 6,864 |
| Agreed offer or agreed new investment price | 3,061 | 1,057 |
| 35,702 | 16,881 |
Full valuations are prepared by independent RICS qualified surveyors in full compliance with the RICS Red Book. Desk-top reviews are carried out by similarly RICS qualified surveyors by updating previously prepared full valuations for current trading and market indices.
Fair value investments had the following movements between valuation methodologies between 31 December 2012 and 31 December 2013:
| Change in valuationmethodology (2012 to 2013) | Value as at 31 December 2013 £'000 | Explanatory note |
| Revenue multiple to agreed new investment price | 2,019 | Agreed new investment price |
| Cost and price of recent investment (reviewed for impairment) to net asset value supported by third party valuation | 405 | More recent information available |
The valuation will be the most appropriate valuation methodology for an investment within its market, with regard to the financial health of the investment and the December 2012 IPEVCV Guidelines. The Directors believe that, within these parameters, there are no other possible methods of valuation which would be reasonable as at 31 December 2013.
The amended FRS 29 'Financial Instruments: Disclosures' requires the Company to disclose the inputs to the valuation methods applied to its investments measured at fair value through profit or loss in a fair value hierarchy according to the following definitions:
| Fair value hierarchy | Definition |
| Level 1 | Unadjusted quoted (bid) prices applied |
| Level 2 | Inputs to valuation are from observable sources and are directly or indirectly derived from prices |
| Level 3 | Inputs to valuations not based on observable market data |
All of the Company's fixed asset investments as at 31 December 2013 which are valued at fair value through profit or loss, are valued according to Level 3 methods (2012: Level 3).
Investments held at fair value through profit or loss (Level 3) had the following movements in the year to 31 December 2013:
| 31 December 2013 | 31 December 2012 | |||||
| Equity | Convertible and discounted bonds | Total | Equity | Convertible and discounted bonds | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Opening balance | 11,624 | 5,257 | 16,881 | 10,659 | 3,546 | 14,205 |
| Additions | 2,125 | 2,104 | 4,229 | 826 | 1,260 | 2,086 |
| Transfer on Merger | 9,849 | 4,261 | 14,110 | - | - | - |
| Disposals | (1,023) | (1,705) | (2,728) | (614) | (23) | (637) |
| Accrued loan stock interest | - | (36) | (36) | - | - | - |
| Realised gains/(losses) | 234 | 562 | 796 | 210 | (346) | (136) |
| Debt/equity swap and representation of convertible bond and debt | 135 | (90) | 45 | 643 | (643) | - |
| Unrealised gains/(losses) on equity investments | 2,149 | 256 | 2,405 | (100) | 1,463 | 1,363 |
| Closing balance | 25,093 | 10,609 | 35,702 | 11,624 | 5,257 | 16,881 |
FRS 29 requires the Directors to consider the impact of changing one or more of the inputs used as part of the valuation process to reasonable possible alternative assumptions. The valuation methodology applied to 51 per cent. of the equity, discounted debt and convertible bond investments (by valuation) is based on third-party independent evidence, recent investment price and agreed offer price. The Directors believe that changes to reasonable possible alternative assumptions for the valuation of the portfolio could result in an increase in the valuation of investments by £1,613,000 or a decrease in the valuation of investments by £1,735,000.
13. Significant interests
The principal activity of the Company is to select and hold a portfolio of investments in unquoted securities. Although the Company, through the Manager, will, in some cases, be represented on the board of the portfolio company, it will not take a controlling interest or become involved in the management. The size and structure of the companies with unquoted securities may result in certain holdings in the portfolio representing a participating interest without there being any partnership, joint venture or management consortium agreement. The Company has interests of greater than 20 per cent. of the nominal value of any class of the allotted shares in the portfolio companies as at 31 December 2013 as described below:
| Company | Country of incorporation | Principal activity | % class and share type | % total voting rights |
| Albion Investment Properties Limited | Great Britain | Owner of residential property | 22.6% A Ordinary | 22.6% |
| AMS Sciences Limited | Great Britain | Provides metabolism data | 41.7% Ordinary | 41.7% |
| Blackbay Limited | Great Britain | Mobile data solutions | 67.1% A Ordinary | 23.5% |
| Bravo Inns Limited | Great Britain | Own and operates pubs | 28.8% Ordinary | 28.8% |
| Chichester Holdings Limited | Great Britain | Drinks distribution to the travel sector | 35.9% C Ordinary | 37.6% |
| Consolidated PR Limited | Great Britain | Public relations agency | 50.0% A Ordinary | 21.7% |
| Helveta Limited | Great Britain | Software for timber industry | 30.3% Ordinary | 30.3% |
| Mi-Pay Limited | Great Britain | Mobile payment processing | 31.2% Ordinary | 31.2% |
| Orchard Portman Hospital Limited | Great Britain | A psychiatric hospital | 24.0% Ordinary | 24% |
| Premier Leisure (Suffolk) Limited | Great Britain | Owner of commercial property | 25.8% Ordinary | 25.8% |
| Rostima Holdings Limited | Great Britain | Software company for marine and aviation industries | 29.3% Ordinary | 29.3% |
| The Charnwood Pub Company Limited | Great Britain | Own and operates pubs | 22.5% Ordinary | 22.5% |
| The Dunedin Pub Company VCT Limited | Great Britain | Owns and operates a pub | 25.8% Ordinary | 25.8% |
| The Q Garden Company Limited | Great Britain | Garden centre operator | 33.4% A Ordinary | 33.4% |
| The Weybridge Club Limited | Great Britain | Owns and operates a health club | 25.2% Ordinary | 25.2% |
The investments listed above are held as part of an investment portfolio and therefore, as permitted by FRS 9, they are measured at fair value and not accounted for using the equity method.
14. Current assets
| Trade and other debtors | 31 December 2013 | 31 December 2012 |
| £'000 | £'000 | |
| Prepayments and accrued income | 17 | 15 |
| Other debtors | 333 | 6 |
| 350 | 21 |
The Directors consider that the carrying amount of debtors is not materially different to their fair value.
| 31 December 2013 | 31 December 2012 | |
| Current asset investments | £'000 | £'000 |
| Contingent future receipts from the disposal of fixed asset investments | 147 | 65 |
The fair value hierarchy applied to contingent future receipts on disposal of fixed asset investments is Level 3. These receipts may not crystallise within 12 months.
15. Creditors: amounts falling due within one year
| 31 December 2013 | 31 December 2012 | |
| £'000 | £'000 | |
| Trade creditors | 19 | 6 |
| Accruals and deferred income | 483 | 280 |
| UK corporation tax payable | 11 | 23 |
| Other creditors | 16 | 29 |
| 529 | 338 |
The Directors consider that the carrying amount of creditors is not materially different to their fair value.
16. Called up share capital
| 31 December 2013 £'000 | 31 December 2012 £'000 | |
| Allotted, called up and fully paid | ||
| 79,945,976 Ordinary shares of 1 penny each (2012: 45,365,688 Ordinary shares) | 799 | 454 |
| Voting rights | ||
| 75,604,906 Ordinary shares of 1 penny each (net of treasury shares) (2012: 41,024,618 Ordinary shares (net of treasury shares)). | ||
During the period the Company purchased 1,591,723 Ordinary shares for cancellation (2012: 75,936) at a cost of £1,209,000 including stamp duty (2012: £49,000), representing 2 per cent. of its issued share capital as at 31 December 2013. The shares purchased for cancellation were funded by the other distributable reserve.
The Company did not purchase any shares for treasury during the period to 31 December 2013 (2012: 650,070 at a cost of £453,000). The Company did not cancel any shares from treasury during the period to 31 December 2013 (2012: 599,372) leaving a balance of 4,341,070 Ordinary shares in treasury (2012: 4,341,070) which represents 5.4 per cent. of the issued share capital as at 31 December 2013.
The Company issued 33,664,049 Ordinary shares to former shareholders of Albion Income & Growth VCT PLC, at an issue price of 83.38p, as part of the Merger explained in note 10.
Under the terms of the dividend reinvestment scheme, the following Ordinary shares of nominal value 1 penny each were allotted during the year:
| Date of allotment | Number of Ordinary shares allotted | Aggregate nominal value of shares (£'000) | Issue price (pence per share) | Net consideration received (£'000) | Opening market price per share on allotment date (pence per share) |
| 30 April 2013 | 135,236 | 1 | 81.50 | 101 | 77.00 |
| 31 October 2013 | 130,937 | 1 | 82.10 | 105 | 77.00 |
| 266,173 | 2 | 206 |
Under the terms of the Albion VCTs Top Up Offers 2012/2013, the following Ordinary shares of nominal value 1 penny each were allotted during the year:
| 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 per share on allotment date (pence per share) |
| 5 April 2013 | 1,601,492 | 16 | 86.60 | 1,345 | 74.00 |
| 12 June 2013 | 640,297 | 6 | 85.60 | 532 | 77.00 |
| 2,241,789 | 22 | 1,877 |
The Albion VCTs Top Up Offers 2012/2013 closed on 12 June 2013. In aggregate, the Company raised a total of £2.1 million.
17. Basic and diluted net asset value per share
| 31 December 2013 | 31 December 2012 | |
| (pence per share) | (pence per share) | |
| Basic and diluted net asset value per Ordinary share | 85.75 | 84.00 |
The basic and diluted net asset values per share at the year end are calculated in accordance with the Articles of Association and are based upon total shares in issue (less treasury shares) of 75,604,906 Ordinary shares (2012: 41,024,618 Ordinary shares) at 31 December 2013.
18. Analysis of changes in cash during the year
| Year ended 31 December 2013 £'000 | Year ended 31 December 2012 £'000 | |
| Opening cash balances | 1,656 | 1,447 |
| Net cash flow | 1,570 | 209 |
| Closing cash balances | 3,226 | 1,656 |
19. Reconciliation of net return on ordinary activities before taxation to net cash flow from operating activities
| Year ended 31 December 2013 £'000 | Year ended 31 December 2012 £'000 | |
| Revenue return on ordinary activities before taxation | 588 | 800 |
| Investment management fee charged to capital | (743) | (643) |
| Movement in accrued amortised loan stock interest | 125 | 3 |
| (Increase) in debtors | (1) | (5) |
| Increase in creditors | 138 | 26 |
| Net cash flow from operating activities | 107 | 181 |
20. Capital and financial instruments risk management
The Company's capital comprises Ordinary shares as described in note 16. The Company is permitted to buy back its own shares for cancellation or treasury purposes and this is described in more detail in the Chairman's statement.
The Company's financial instruments comprise equity and loan stock investments in unquoted companies, cash balances and debtors and creditors which arise from its operations. The main purpose of these financial instruments is to generate cashflow and revenue and capital appreciation for the Company's operations. The Company has no gearing or other financial liabilities apart from short term creditors. The Company does not use any derivatives for the management of its Balance sheet.
The principal risks arising from the Company's operations are:
- Investment (or market) risk (which comprises investment price and cash flow interest rate risk);
- credit risk; and
- liquidity risk.
The Board regularly reviews and agrees policies for managing each of these risks. There have been no changes in the nature of the risks that the Company has faced during the past year, and apart from where noted below, there have been no changes in the objectives, policies or processes for managing risks during the past year. The key risks are summarised below.
Investment risk
As a venture capital trust, it is the Company's specific nature to evaluate and control the investment risk of its portfolio in unquoted investments, details of which are shown on pages 18 to 20 of the full Annual Report and Financial Statements. Investment risk is the exposure of the Company to the revaluation and devaluation of investments. The main driver of investment risk is the operational and financial performance of the portfolio company and the dynamics of market quoted comparators. The Manager receives management accounts from portfolio companies, and members of the investment management team often sit on the boards of unquoted portfolio companies; this enables the close identification, monitoring and management of investment risk.
The Manager and the Board formally review investment risk (which includes market price risk), both at the time of initial investment and at quarterly Board meetings.
The Board monitors the prices at which sales of investments are made to ensure that profits to the Company are maximised, and that valuations of investments retained within the portfolio appear sufficiently prudent and realistic compared to prices being achieved in the market for sales of unquoted investments.
The maximum investment risk as at the Balance sheet date is the value of the fixed and current asset investment portfolio which is £61,784,000 (2012: £33,120,000). Fixed and current asset investments form 95 per cent. of the net asset value as at 31 December 2013 (2012: 96 per cent.).
More details regarding the classification of fixed and current asset investments are shown in notes 12 and 14.
Investment price risk
Investment price risk is the risk that the fair value of future investment cash flows will fluctuate due to factors specific to an investment instrument or to a market in similar instruments. To mitigate the investment price risk for the Company as a whole, the strategy of the Company is to invest in a broad spread of industries with up to two-thirds of the unquoted investments comprising debt securities, which, owing to the structure of their yield and the fact that they are usually secured, have a lower level of price volatility than equity. Details of the industries in which investments have been made are contained in the Portfolio of investments section on pages 18 to 20 of the full Annual Report and Financial Statement and in the Strategic report.
Valuations are based on the most appropriate valuation methodology for an investment within its market, with regard to the financial health of the investment and the IPEVCV Guidelines.
As required under FRS 29 "Financial Instruments: Disclosures", the Board is required to illustrate by way of a sensitivity analysis the degree of exposure to market risk. The Board considers that the value of the fixed and current asset investment portfolio is sensitive to a 10 per cent. change based on the current economic climate. The impact of a 10 per cent. change has been selected as this is considered reasonable given the current level of volatility observed both on a historical basis and future expectations.
The sensitivity of a 10 per cent. increase or decrease in the valuation of the fixed and current asset investments (keeping all other variables constant) would increase or decrease the net asset value and return for the year by £6,178,000 (2012: £3,312,000).
Cash flow interest rate risk
It is the Company's policy to accept a degree of interest rate risk on its financial assets through the effect of interest rate changes. On the basis of the Company's analysis, it is estimated that a rise of one percentage point in all interest rates would have increased total return before tax for the year by approximately £21,000 (2012: £16,000). Furthermore, it is considered that a fall of interest rates below current levels during the year would have been very unlikely.
The weighted average interest rate applied to the Company's unquoted loan stock during the year was approximately 4.5 per cent. (2012: 5.3 per cent.). The weighted average period to maturity for the unquoted loan stock is approximately 2.7 years (2012: 2.5 years).
The Company's financial assets and liabilities as at 31 December 2013, all denominated in pounds sterling, consist of the following:
| 31 December 2013 | 31 December 2012 | |||||||
| Fixed rate £'000 | Floating rate £'000 | Non-interest bearing £'000 | Total £'000 | Fixed rate £'000 | Floating rate £'000 | Non-interest bearing £'000 | Total £'000 | |
| Unquoted equity | - | - | 25,093 | 25,093 | - | - | 11,624 | 11,624 |
| Unquoted loan stock* | 31,532 | - | 5,012 | 36,544 | 17,913 | 348 | 3,170 | 21,431 |
| Debtors** | - | - | 337 | 337 | - | - | 8 | 8 |
| Current asset investments | - | - | 147 | 147 | - | - | 65 | 65 |
| Current liabilities** | - | - | (518) | (518) | - | - | (315) | (315) |
| Cash | 589 | 2,637 | - | 3,226 | 1,249 | 407 | - | 1,656 |
| Total | 32,121 | 2,637 | 30,071 | 64,829 | 19,162 | 755 | 14,552 | 34,469 |
*Including convertible loan stock and debt issued at a discount.
**The debtors and current liabilities do not reconcile to the balance sheet as prepayments and tax payable are not included in the above table.
Credit risk
Credit risk is the risk that the counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company. The Company is exposed to credit risk through its debtors, investment in unquoted loan stock, and through the holding of cash on deposit with banks.
The Manager evaluates credit risk on loan stock prior to investment, and as part of its ongoing monitoring of investments. In doing this, it takes into account the extent and quality of any security held. Typically loan stock instruments have a first fixed charge or a fixed and floating charge over the assets of the portfolio company in order to mitigate the gross credit risk. The Manager receives management accounts from portfolio companies, and members of the investment management team sit on the boards of unquoted portfolio companies; this enables the close identification, monitoring and management of investment specific credit risk.
The Manager and the Board formally review credit risk (including debtors) and other risks, both at the time of initial investment and at quarterly Board meetings.
The Company's total gross credit risk as at 31 December 2013 was limited to £36,544,000 (2012: £21,431,000) of unquoted loan stock instruments (all are secured on the assets of the portfolio company) and £3,226,000 (2012: £1,656,000) cash deposits with banks.
As at the balance sheet date, the cash held by the Company is held with Lloyds Bank plc, Scottish Widows Bank plc (part of Lloyds Banking Group), Barclays Bank plc and National Westminster Bank plc. Credit risk on cash transactions is mitigated by transacting with counterparties that are regulated entities subject to prudential supervision, with high credit ratings assigned by international credit-rating agencies.
The Company has an informal policy of limiting counterparty banking and floating rate note exposure to a maximum of 20 per cent. of net asset value for any one counterparty.
The credit profile of unquoted loan stock is described under liquidity risk below.
The cost, impairment and carrying value of impaired loan stocks in the Ordinary share portfolio held at amortised cost at 31 December 2013 and 31 December 2012 are as follows:
| 31 December 2013 | 31 December 2012 | |||||
| Cost £'000 | Impairment £'000 | Carrying value £'000 | Cost £'000 | Impairment £'000 | Carrying value £'000 | |
| Impaired loan stock | 12,766 | (2,860) | 9,906 | 10,845 | (3,487) | 7,358 |
Impaired loan stock instruments have a first fixed charge or a fixed and floating charge over the assets of the portfolio company and the Board deem the security value to be the carrying value.
Liquidity risk
Liquid assets are held as cash on current account, on deposit, in bonds or short term money market account. Under the terms of its Articles, the Company has the ability to borrow up to 10 per cent. of its adjusted capital and reserves of the latest published audited Balance sheet, which amounts to £6,293,000 as at 31 December 2013 (2012: £3,343,000).
The Company has no committed borrowing facilities as at 31 December 2013 (2012: £nil). The Company had cash balances of £3,226,000 (2012: £1,656,000). The main cash outflows are for new investments, share buy-backs and dividend payments, which are within the control of the Company. The Manager formally reviews the cash requirements of the Company on a monthly basis, and the Board on a quarterly basis as part of its review of management accounts and forecasts. All the Company's financial liabilities are short term in nature and total £529,000 as at 31 December 2013 (2012: £338,000).
The carrying value of loan stock investments at 31 December 2013, as analysed by expected maturity dates was as follows:
| Redemption date | Fully performing loan stock £'000 | Impaired loan stock £'000 | Past due loan stock £'000 | Total £'000 |
| Less than one year | 5,325 | 7,828 | 3,756 | 16,909 |
| 1-2 years | 3,866 | 1,531 | 2,148 | 7,545 |
| 2-3 years | 3,338 | 260 | 740 | 4,338 |
| 3-5 years | 4,133 | 287 | 40 | 4,460 |
| +5 years | 2,534 | - | 758 | 3,292 |
| Total | 19,196 | 9,906 | 7,442 | 36,544 |
Loan stock can be past due as a result of interest or capital not being paid in accordance with contractual terms.
Loan stock categorised as past due includes:
- Loan stock with a carrying value of £758,000, which has interest overdue for 9 months, yielded 8.6 per cent. on cost;
- Loan stock with a carrying value of £1,748,000 had loan stock interest past due of 12 months (through not paying all of its contractual interest). This investment has yielded 5.8 per cent. on cost during the year;
- Loan stock with a carrying value of £4,532,000 had loan stock interest past due of up to 2 years;
- Loan stock with a carrying value of £404,000 yielding 14.6 per cent. which has capital past due of 3 years.
The carrying value of loan stock investments at 31 December 2012, as analysed by expected maturity dates, was as follows:
| Redemption date | Fully performing loan stock £'000 | Impaired loan stock £'000 | Past due loan stock £'000 | Total £'000 |
| Less than one year | 1,318 | 4,324 | 1,870 | 7,512 |
| 1-2 years | 2,051 | 2,490 | 567 | 5,108 |
| 2-3 years | 955 | 96 | 779 | 1,830 |
| 3-5 years | 3,403 | 448 | 1,536 | 5,387 |
| +5 years | 1,460 | - | 134 | 1,594 |
| Total | 9,187 | 7,358 | 4,886 | 21,431 |
In view of the factors identified above, the Board considers that the Company is subject to low liquidity risk.
Fair values of financial assets and financial liabilities
All the Company's financial assets and liabilities as at 31 December 2013 are stated at fair value as determined by the Directors, with the exception of loans and receivables included within investments, debtors and creditors and cash which are carried at amortised cost, in accordance with FRS 26. The Directors believe that the current carrying value of loan stock is not materially different to the fair value. There are no financial liabilities other than creditors. The Company's financial liabilities are all non-interest bearing. It is the Directors' opinion that the book value of the financial liabilities is not materially different to the fair value and all are payable within one year.
21. Commitments and contingencies
The Company had the following financial commitments in respect of investments:
- Chonais Holdings Limited; £645,000
- Green Highland Renewables (Ledgowan) Limited: £560,000
- Relayware Limited; £254,000
- Proveca Limited; £112,000
- MyMeds&Me Limited; £110,000
- Mi-Pay Limited; £58,000
- The Street by Street Solar Programme Limited; £32,000
- Abcodia Limited; £15,000
22. Post balance sheet events
Since 31 December 2013 the Company has had the following post balance sheet events:
- Investment of £200,000 in Egress Software Technologies Limited;
- Investment of £135,000 in Grapeshot Limited;
- Investment of £58,000 in M-Pay Limited;
- Investment of £54,000 in Orchard Portman Hospital Limited;
- Investment of £47,000 in Rostima Holdings Limited;
- Investment of £32,000 in The Street by Street Solar Programme Limited;
- Investment of £25,000 in Sandcroft Avenue Limited;
- Investment of £15,000 in Abcodia Limited;
- Investment of £14,000 in Mirada Medical Limited
On 6 November 2013 the Company announced the launch of the Albion VCTs Top Up Offers 2013/2014. In aggregate, the Albion
VCTs will be aiming to raise up to £27 million across six of the VCTs managed by Albion Ventures LLP, of which Albion Technology & General VCT PLC will be aiming to raise approximately £7 million. The maximum amount raised by each of the Albion VCTs will be 10 per cent. of its issued share capital over any one 12 month period, and including any shares issued under Dividend
Reinvestment Schemes.
The funds raised by each Company pursuant to its Offer will be added to the liquid resources available for investment so as to put each Company into a position to take advantage of attractive investment opportunities over the next two to three years. Accordingly, the proceeds of the Offers will be applied in accordance with the respective Companies' investment policies. A prospectus has been published and can be obtained from www.albion-ventures.co.uk.
The following Ordinary shares of nominal value 1 penny were allotted under the Offers after 31 December 2013:
| Date of allotment | Number of Ordinary shares allotted | Aggregate nominal value of shares (£'000) | Issue price (pence per share) | Net consideration received (£'000) | Opening market price per share on allotment date (pence per share) |
| 31 January 2014 | 605,375 | 6 | 84.60 | 499 | 77.50 |
| 31 January 2014 | 495,432 | 5 | 84.10 | 409 | 77.50 |
| 31 January 2014 | 18,007 | 0 | 83.30 | 15 | 77.50 |
| 1,118,814 | 11 | 923 |
Under the terms of the dividend reinvestment scheme, the following Ordinary shares of nominal value 1 penny each were allotted after 31 December 2013:
| Date of allotment | Number of Ordinary shares allotted | Aggregate nominal value of shares (£'000) | Issue price (pence per share) | Net consideration received (£'000) | Opening market price per share on allotment date (pence per share) |
| 31 January 2014 | 110,409 | 1 | 82.13 | 84 | 77.50 |
23. Related Party Transactions
There are no related party transactions or balances requiring disclosure.
24. Other information
The information set out in this announcement does not constitute the Company's statutory accounts within the terms of section 434 of the Companies Act 2006 for the years ended 31 December 2013 and 31 December 2012, and is derived from the statutory accounts for those financial years, which have been, or in the case of the accounts for the year ended 31 December 2013, which will be, delivered to the Registrar of Companies. The Auditor reported on those accounts; the reports were unqualified and did not contain a statement under s498 (2) or (3) of the Companies Act 2006.
The Company's Annual General Meeting will be held at The City of London Club, 19 Old Broad Street, London, EC2N 1DS on 19 June 2014 at 11.00am.
25. Publication
The full audited Annual Report and Financial Statements are 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 under the 'Our Funds' section, by clicking on 'Albion Technology & General VCT PLC', where the Report can be accessed as a PDF document via a link under the 'Investor Centre' in the 'Financial Reports and Circulars' section
Unaudited proforma information for Albion Income & Growth VCT PLC
As detailed in the Chairman's statement and Strategic report, no separate audited results for Albion Income & Growth VCT PLC will be published for the year to 30 September 2013.
Therefore, set out below are the unaudited results for the period, in comparison to the previous year.
| Albion Income & Growth VCT PLC Year ended 30 September 2013 | Albion Income & Growth VCT PLC Year ended 30 September 2012 | |||||
| Revenue | Capital | Total | Revenue | Capital | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Gains on investments | - | 1,060 | 1,060 | - | 1,994 | 1,994 |
| Investment income | 982 | - | 982 | 1,052 | - | 1,052 |
| Investment management fees | (174) | (523) | (697) | (171) | (515) | (686) |
| Other expenses | (200) | - | (200) | (249) | - | (249) |
| Return on ordinary activities before tax | 608 | 537 | 1,145 | 632 | 1,479 | 2,111 |
| Tax (charge)/credit on ordinary activities | (94) | 117 | 23 | (107) | 124 | 17 |
| Return attributable to shareholders | 514 | 654 | 1,168 | 525 | 1,603 | 2,128 |
| Basic and diluted return per share (pence)* | 1.20 | 1.60 | 2.80 | 1.30 | 3.80 | 5.10 |
* excluding treasury shares
Set out below is a set of unaudited pro-forma results, had the two Companies merged at the start of the year:
| Unaudited AAIG 10.5 months to 14 November 2013 | Audited AATG 12 months to December 2013 | Unaudited Pro-forma Combined to 31 December 2013 | |
| £'000 | £'000 | £'000 | |
| Gains on investments | 454 | 3,787 | 4,241 |
| Investment income | 833 | 1,082 | 1,915 |
| Investment management fee | (610) | (990) | (1,600) |
| Other expenses | (177) | (247) | (424) |
| Return before tax | 500 | 3,632 | 4,132 |
| Tax credit | 30 | 20 | 50 |
| Dividends paid | (1,496) | (2,116) | (3,612) |
| Transfer (from)/to reserves | (966) | 1,536 | 570 |
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Albion Technology & General VCT PLC - Ordinary Shares via Globenewswire
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