Half-yearly report
Kings Arms Yard VCT PLC
As required by the UK Listing Authority's Disclosure and Transparency Rule 4.2,
Kings Arms Yard VCT PLC today makes public its information relating to the Half-
yearly Financial Report (which is unaudited) for the six months to 30 June
2011. This announcement was approved by the Board of Directors on 22 August
2011.
 The full Half-yearly Financial Report (which is unaudited) for the period to
30 June 2011, will shortly be sent to shareholders. Copies of the full Half-
yearly Financial Report will be shown via the Albion Ventures LLP
websitewww.albion-ventures.co.uk under the "Our Funds" section by clicking on
Kings Arms Yard VCT PLC and looking under the Financial Reports and Circulars
section for the Half-yearly Financial Report to 30 June 2011.
Investment policy
The Company is a Venture Capital Trust. Â The new investment policy, approved by
shareholders at the General Meeting held on 10 February 2011, is intended to
produce a regular and predictable dividend stream with an appreciation in
capital value as set out below.
- Â Â Â Â The Company intends to achieve its strategy by adopting an amended
investment policy for new investments which over time will rebalance the
portfolio such that approximately 50 per cent. of the portfolio comprises an
asset-based portfolio of lower risk, ungeared businesses, principally operating
in the healthcare, environmental and leisure sectors (the "Asset-Based
Portfolio"). Â The balance of the portfolio, other than funds retained for
liquidity purposes, will be invested in a portfolio of higher growth businesses
across a variety of sectors of the UK economy. Â These will range from lower
risk, income producing businesses to a limited number of higher risk technology
companies (the "Growth Portfolio").
- Â Â Â Â In neither category would portfolio companies normally have any
external borrowing with a charge ranking ahead of the VCT. Â Up to two thirds of
qualifying investments by cost will comprise loan stock secured with a first
charge on the portfolio company's assets.
- Â Â Â Â The Company's investment portfolio will thus be structured to provide
a balance between income and capital growth for the longer term. Â The Asset-
Based Portfolio is designed to provide stability and income whilst still
maintaining the potential for capital growth. Â The Growth Portfolio is intended
to provide highly diversified exposure through its portfolio of investments in
unquoted UK companies.
-Â Â Â Â Funds held pending investment or for liquidity purposes will be held as
cash on deposit or in floating rate notes or similar instruments with banks or
other financial institutions with a Moody's rating of 'A' or above.
Financial calendar
Financial year end 31 December
Interim Report date 30 June
Announcement of interim results for the six months ended 30 June  22 August 2011
2011
Financial highlights
Unaudited Unaudited Audited
six months ended six months ended year ended
 30 June 2011 30 June 2010 31 December 2010
 (pence per share) (pence per share) (pence per share)
--------------------------------------------------------------------------------
Net asset value 16.0 18.8 16.6
Dividends
Dividends paid during the
period 0.67 4.0 5.0
Cumulative dividend paid
to 30 June 2011 59.3 57.7 58.7
Total net asset value
return(1)
To shareholders of Kings
Arms Yard VCT PLC
(formerly SPARK VCT plc) 75.3 76.5 75.3
Total net asset value
return including tax
benefits(2) 95.3 96.5 95.3
Total net asset value
return to former
shareholders of:
Quester VCT 2 plc, per
100p invested in shares of
that company(3) 61.3 62.3 61.2
Total net asset value
return including tax
benefits(2) 81.3 82.3 81.2
Quester VCT 3 plc, per
100p invested in shares of
that company (4) 35.1 36.3 35.1
Total net asset value
return including tax
benefits (2) 55.1 56.3 55.1
Notes
(1)Net asset value plus cumulative dividend per share to ordinary shareholders
in the Company since the launch of the Company (then called Quester VCT plc) in
April 1996.
(2)Return after 20 per cent. income tax relief but excluding capital gains
deferral.
(3)Total return to original shareholders in Quester VCT 2 plc, launched in March
1998, which was merged with the Company (then called Quester VCT plc) in June
2005, the share exchange ratio for former shareholders in Quester VCT 2 plc
being 1.0249.
(4)Total return to original shareholders in Quester VCT 3 plc, launched in
February 2000, which was merged with the Company (then called Quester VCT plc)
in June 2005, the share exchange ratio for former shareholders in Quester VCT 3
plc being 0.9816.
Chairman's statement
Overview
I am pleased to be able to report to shareholders on the first period of trading
under our new Managers. Â Our new investment strategy was adopted at the General
Meeting on 10 February 2011 and the Managers have subsequently been active in
implementing this. Â As reported in my last statement of 19 April 2011, progress
has been made in rationalising the small quoted portfolio. Â Since then this
process has continued and the exit of MediGene AG has been completed. Â Progress
has been made toward the disposal of certain of our unquoted investments, with
the sale of Imagesound plc completing at book value after 30 June 2011. New
investments have been made in two existing businesses and in a new bio-marker
library business. Â A number of interesting investment opportunities have been
identified of which two are in progress.
The deterioration in market sentiment over recent weeks has not so far had any
significant effect on the value of our, largely unquoted, portfolio. Â The extent
to which it may affect the trading of portfolio companies, the opportunity of
realising existing investments or the opportunity for suitable new investments
is not yet clear.
Investment Performance and Progress
In the six months to 30 June 2011, total net asset value return per share has
remained at 75.3 p per share which is the same level as at 31 December 2010.
 Net assets per share at 30 June 2011 stood at 16.0p compared to 16.6p as at 31
December 2010 since when shareholders have received a tax free dividend of
0.67p per share.
The movement in net assets is summarised in the table below:
  Bonds and net
Investments current assets Total pence per
£'000 £'000 £'000 share
--------------------------------------------------------------------------------
Net asset value at 31 December
2010 12,350 5,933 18,283 16.6
Net gains on disposal 36 Â (12) Â 24 Â 0.0
Income net of operating
expenses - (256) (256) (0.2)
Net gain on valuation of
investments 280 (13) 267 0.2
Net investments 282 Â (282) Â - Â -
------------- ---------------- -------- ----------
Net assets before dividends 12,948 Â 5,370 Â 18,318 Â 16.6
Dividends paid, less amounts
reinvested - (623) (623) (0.6)
------------- ---------------- -------- ----------
Net asset value at 30 June
2011 12,948 4,747 17,695 16.0
------------- ---------------- -------- ----------
The distribution of assets by sector as at 30 June 2011 is shown in the pie
chart attached to the end of this announcement.
Source: Albion Ventures LLP
Risks and uncertainties
The outlook for the UK and the global economies continue to be the key risk
facing your Company. Â Many of our investments operate in international markets
where the continuing concerns over debt and currencies seem certain to have an
effect on the general business environment. Â Nevertheless, a number of our
companies have strong positions in resilient markets, while the process of
rebalancing the portfolio and an increase in lower risk investments, with no
bank borrowings, is continuing.
Other risks and uncertainties remain in the Annual Report and Financial
Statement for the year ended 31 December 2010 and as detailed in note 13.
Proposed merger with Kings Arms Yard VCT 2 PLC
As announced on 16 May 2011, it is proposed that Kings Arms Yard 2 VCT PLC will
merge with your Company through a scheme of reconstruction pursuant to section
110 of the Insolvency Act 1986, which will be subject to approval as detailed in
the Company's Circular and Prospectus which will shortly be sent to
shareholders. Â If the appropriate resolutions are passed, Kings Arms Yard VCT 2
PLC will be placed in members' voluntary liquidation with all of its assets and
liabilities being transferred to the Company and Kings Arms Yard VCT 2 PLC
shareholders will receive new shares in Kings Arms Yard VCT PLC on the basis of
the relative net asset values of the two companies as adjusted for material
movements for each fund before the effective date.
Full details are to be found in the Company's Prospectus and Circular which will
soon be dispatched to all shareholders.
Related party transactions
Details of material related party transactions for the reporting period can be
found in note 10 of this Half-yearly Financial Report.
Results and dividends
We believe that the Company is moving toward a sounder footing, but it would be
premature to suggest any permanent improvement yet. Â Our overall dividend
intentions remain unchanged and we will review the prospect of a final dividend
once full year performance has been achieved.
Outlook
The performance of quoted markets has been very weak in recent weeks. Â The
extent to which this expresses, or is likely to lead to, an underlying economic
malaise is not yet clear, but there are clearly major issues to be tackled at a
macro-economic level. Â Under these conditions it is difficult to make positive
forward looking statements, but your Board is confident that the Company is
being managed in a manner that offers it the best prospect of a positive future.
Robin Field
Chairman
22 August 2011
Responsibility statement
The Directors, Robin Field, Martin Fiennes and Patrick Reeve, are responsible
for preparing the Half-yearly Financial Report. Â The Directors have chosen to
prepare this Half-yearly Financial Report for the Company in accordance with
United Kingdom Generally Accepted Accounting Practice ("UK GAAP").
In preparing these summarised financial statements for the period to 30 June
2011, we the Directors of the Company, confirm that to the best of our
knowledge:
(a) the summarised set of financial statements has been prepared in accordance
with the pronouncement on interim reporting issued by the Accounting Standards
Board;
(b) the interim management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first six
months and description of principal risks and uncertainties for the remaining
six months of the year);
(c) the summarised set of financial statements gives a true and fair view in
accordance with UK GAAP of the assets, liabilities, financial position and
profit and loss of the Company for the six months ended 30 June 2011 and comply
with UK GAAP and Companies Act 2006 and;
(d) the interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related parties' transactions and changes
therein).
The accounting policies applied to the Half-yearly Financial Report have been
consistently applied in current and prior periods and are those applied in the
Annual Report and Financial Statements for the year ended 31 December 2010.
This Half-yearly Financial Report has not been audited or reviewed by the
Auditor.
By order of the Board
Robin Field
Chairman
22 August 2011
Portfolio of investments
The following is a summary of fixed asset investments as at 30 June 2011:
+-----------------+------+-----------+---------------+---------------+---------+
| | | | | Cumulative| |
| | | Equity %| Accounting| movement| |
| |Equity| held by| Cost(2)| in value|Valuation|
| |% held| AVL(1)| £'000| £'000| £'000|
+-----------------+------+-----------+---------------+---------------+---------+
|Unquoted | | | | | |
|investments | Â | Â | Â | Â | Â |
| | | | | | |
|Imagesound plc | | | | | |
|(3) | 11.7| 12.2| 2,848| (653)| 2,195|
| | | | | | |
|Elateral Holdings| | | | | |
|Limited | 23.4| 36.7| 1,009| 1,092| 2,101|
| | | | | | |
|UniServity | | | | | |
|Limited | 20.5| 49.2| 1,208| 436| 1,644|
| | | | | | |
|Level Four | | | | | |
|Software Holdings| | | | | |
|Limited (3) | 12.9| 24.9| 984| 144| 1,128|
| | | | | | |
|Cluster Seven | | | | | |
|Limited(3) | 9.0| 14.8| 1,569| (552)| 1,017|
| | | | | | |
|Haemostatix | | | | | |
|Limited | 13.0| 21.1| 584| 317| 901|
| | | | | | |
|Workshare Limited| 1.8| 11.3| 696| (22)| 674|
| | | | | | |
|Sift Limited (3) | 22.5| 31.4| 2,658| (2,014)| 644|
| | | | | | |
|Vivacta Limited | 8.1| 13.3| 1,572| (1,042)| 530|
| | | | | | |
|Lab M Holdings | | | | | |
|Limited | 26.4| 26.4| 690| (195)| 495|
| | | | | | |
|Atego Group | | | | | |
|Limited | 11.3| 11.3| 120| 359| 479|
| | | | | | |
|Perpetuum Limited| 7.5| 12.4| 847| (473)| 374|
| | | | | | |
|Antenova Limited | 5.3| 12.3| 1,307| (1,114)| 193|
| | | | | | |
|We7 Limited | 9.2| 13.0| 816| (702)| 114|
| | | | | | |
|Abcodia Limited | 3.1| 21.4| 110| -| 110|
| | | | | | |
|Symetrica Limited| 2.4| 3.4| 108| -| 108|
| | | | | | |
|Academia Networks| | | | | |
|Limited | 4.1| 5.8| 103| -| 103|
| | | | | | |
|TeraView Limited | 4.8| 9.6| 1,172| (1,147)| 25|
| | | | | | |
|Oxonica Limited | 1.5| 2.1| 195| (188)| 7|
| | | | | | |
|Skinkers Limited | 4.0| 5.2| 1,178| (1,178)| -|
+-----------------+------+-----------+---------------+---------------+---------+
|Total unquoted | | | | | |
|investments | Â | Â | 19,774| (6,932)| 12,842|
+-----------------+------+-----------+---------------+---------------+---------+
|Quoted | | | | | |
|investments | Â | Â | Â | Â | Â |
| | | | | | |
|Allergy | | | | | |
|Therapeutics plc | | | | | |
|(AIM) | 0.3| 0.9| 365| (307)| 58|
| | | | | | |
|Celldex | | | | | |
|Therapeutics Inc.| | | | | |
|(NASDAQ) | 0.2| 0.5| 504| (456)| 48|
+-----------------+------+-----------+---------------+---------------+---------+
|Total quoted | | | | | |
|investments | Â | Â | 869| (763)| 106|
+-----------------+------+-----------+---------------+---------------+---------+
|Total investments| Â | Â | 20,643| (7,695)| 12,948|
| | | | | | |
|Cash and other | | | | | |
|net assets | Â | Â | Â | Â | 4,747|
+-----------------+------+-----------+---------------+---------------+---------+
|Net assets | Â | Â | Â | Â | 17,695|
+-----------------+------+-----------+---------------+---------------+---------+
(1)Equity held by Albion Ventures LLP managed companies.
(2)Amounts shown as accounting cost represent the acquisition cost in the case
of investments originally made by the Company and/or the valuation attributed to
the investments acquired from Quester VCT 2 plc and Quester VCT 3 plc at the
date of the merger in 2005, plus any subsequent acquisition costs, as reduced in
certain cases by amounts written off as representing an impairment in value.
(3)Includes Loan Stock.
Summary income statement
+--------------+----+---------------------+---------------------+-----------------------+
|Â |Â | Unaudited | Unaudited | Audited |
| | | six months ended | six months ended | year ended |
| | | 30 June 2011 | 30 June 2010 | 31 December 2010 |
+--------------+----+-------+-------+-----+-------+-------+-----+-------+-------+-------+
| | |Revenue|Capital|Total|Revenue|Capital|Total|Revenue|Capital| Total|
|  |Note| £'000| £'000|£'000| £'000| £'000|£'000| £'000| £'000| £'000|
+--------------+----+-------+-------+-----+-------+-------+-----+-------+-------+-------+
|Gains/(losses)| | | | | | | | | | |
|on valuation | | | | | | | | | | |
|of investments| | | | | | | | | | |
|at fair value | | | | | | | | | | |
|through profit| | | | | | | | | | |
|and loss | Â | -| 267| 267| -| (249)|(249)| -|(2,209)|(2,209)|
| | | | | | | | | | | |
|Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â |
| | | | | | | | | | | |
|Profit on | | | | | | | | | | |
|disposals of | | | | | | | | | | |
|investments at| | | | | | | | | | |
|fair value | | | | | | | | | | |
|through profit| | | | | | | | | | |
|and loss | Â | -| 24| 24| -| 655| 655| -| 1,576| 1,576|
| | | | | | | | | | | |
|Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â |
| | | | | | | | | | | |
|Investment | | | | | | | | | | |
|income | 3| 77| -| 77| 59| -| 59| 132| -| 132|
| | | | | | | | | | | |
|Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â |
| | | | | | | | | | | |
|Recoverable | | | | | | | | | | |
|VAT | Â | -| -| -| 49| -| 49| 49| -| 49|
| | | | | | | | | | | |
|Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â |
| | | | | | | | | | | |
|Investment | | | | | | | | | | |
|management | | | | | | | | | | |
|fees | Â | (181)| -|(181)| (243)| -|(243)| (412)| -| (412)|
| | | | | | | | | | | |
|Â | Â | Â | Â | Â | Â | Â | Â | Â | Â | Â |
| | | | | | | | | | | |
|Other expenses| Â | (152)| -|(152)| (170)| -|(170)| (350)| -| (350)|
| | +-------+-------+-----+-------+-------+-----+-------+-------+-------+
|(Loss)/profit | | | | | | | | | | |
|on ordinary | | | | | | | | | | |
|activities | | | | | | | | | | |
|before tax | Â | (256)| 291| 35| (305)| 406| 101| (581)| (633)|(1,214)|
| | | | | | | | | | | |
|Tax on | | | | | | | | | | |
|ordinary | | | | | | | | | | |
|activities | Â | -| -| -| -| -| -| -| -| -|
+--------------+----+-------+-------+-----+-------+-------+-----+-------+-------+-------+
|(Loss)/profit | | | | | | | | | | |
|on ordinary | | | | | | | | | | |
|activities | | | | | | | | | | |
|after tax | Â | (256)| 291| 35| (305)| 406| 101| (581)| (633)|(1,214)|
+--------------+----+-------+-------+-----+-------+-------+-----+-------+-------+-------+
|Basic and | | | | | | | | | | |
|diluted | | | | | | | | | | |
|Â (loss)/return| | | | | | | | | | |
|per share | | | | | | | | | | |
|(pence) | 5| (0.2)| 0.3| 0.1| (0.3)| 0.4| 0.1| (0.5)| (0.6)| (1.1)|
+--------------+----+-------+-------+-----+-------+-------+-----+-------+-------+-------+
Comparative figures have been extracted from the unaudited Half-yearly Financial
Report for the six months ended 30 June 2010 and the audited statutory accounts
for the year ended 31 December 2010.
The accompanying notes form an integral part of this Half-yearly Financial
Report.
The total column of this Summary income statement represents the profit and loss
account of the Company. Â The supplementary revenue and capital columns have been
prepared in accordance with The Association of Investment Companies' Statement
of Recommended Practice. Â All revenue and capital items in the above statement
derive from continuing operations. Â The Company has only one class of business
and derives its income from investments made in shares and securities and from
bank deposits.
There are no recognised gains or losses other than the results for the periods
disclosed above. Â Accordingly a Statement of total recognised gains and losses
is not required. Â The difference between the reported loss on ordinary
activities before tax and the historical cost profit/(loss) is due to the fair
value movements on investments. As a result a note on historical cost profit and
losses has not been prepared.
Summary balance sheet
+------------------------------------------------------------------------------+
| Unaudited Unaudited Audited|
| 30 June 2011 30 June 2010 31 December 2010|
|  Note £'000  £'000  £'000|
+------------------------------------------------------------------------------+
|Fixed asset investments  12,948  14,154  12,350|
| -------------- -------------- -----------------+
|Â Â Â Â Â Â Â |
| |
|Current assets       |
| |
|Trade and other debtors  472  761  686|
| |
|Current asset investments  989  3,722  3,230|
| |
|Cash at bank and in hand 8 3,367 Â 2,428 Â 2,216|
| -------------- -------------- -----------------+
|Â Â 4,828 Â 6,911 Â 6,132
| |
|Â Â Â Â Â Â Â |
| |
|Creditors: amounts falling |
|due within one year  (81)  (364)  (199)|
| -------------- -------------- -----------------+
|Â Â Â Â Â Â Â |
| |
|Net current assets  4,747  6,547  5,933|
| -------------- -------------- -----------------+
|Â Â Â Â Â Â Â |
| |
|Net assets  17,695  20,701  18,283|
| -------------- -------------- -----------------+
|Â Â Â Â Â Â Â |
| |
|Capital and reserves       |
| |
|Called-up share capital 6 5,521 Â 5,519 Â 5,519|
| |
|Share premium  155  150  150|
| |
|Capital redemption reserve  765  765  765|
| |
|Special reserve  18,222  21,524  20,524|
| |
|Investment holding losses  (7,709)  (7,431)  (9,574)|
| |
|Profit and loss account  741  174  899|
| -------------- -------------- -----------------+
|Â Â Â Â Â Â Â |
| |
|Total equity shareholders' |
|funds  17,695  20,701  18,283|
| -------------- -------------- -----------------+
|Â Â Â Â Â Â Â |
| |
|Basic and diluted net |
|asset value per share |
|(pence) Â 16.0 Â 18.8 Â 16.6|
+------------------------------------------------------------------------------+
Comparative figures have been extracted from the unaudited Half-yearly Financial
Report for the six months ended 30 June 2010 and the audited statutory accounts
for the year ended 31 December 2010.
The accompanying notes form an integral part of this Half-yearly Financial
Report.
These financial statements were approved by the Board of Directors, and
authorised for issue on 22 August 2011 and were signed on its behalf by
Robin Field
Chairman
Company number: 3139019
Summary reconciliation of movements in shareholders' funds
+-------------+--------+--------+-----------+-------+----------+-------+-------+
| | | | | | | Profit| |
| | Called-| Share| Capital| |Investment| and| |
| |up share| premium| redemption|Special| holding| loss| |
| Â | capital| account| reserve|reserve| losses|account| Total|
| | | | | | | | |
|  | £'000| £'000| £'000| £'000| £'000| £'000| £'000|
+-------------+--------+--------+-----------+-------+----------+-------+-------+
|1 January | | | | | | | |
|2011 | | | | | | | |
|(audited) | 5,519| 150| 765| 20,524| (9,574)| 899| 18,283|
| | | | | | | | |
|Realisation | | | | | | | |
|of prior | | | | | | | |
|years' net | | | | | | | |
|Â Â recognised| | | | | | | |
|losses on | | | | | | | |
|Â | | | | | | | |
|Â investments | -| -| -| -| 1,598|(1,598)| -|
| | | | | | | | |
|Transfer from| | | | | | | |
|special | | | | | | | |
|reserve to | | | | | | | |
|Â Â profit and| | | | | | | |
|loss account | -| -| -|(2,302)| -| 2,302| -|
| | | | | | | | |
|Investment | | | | | | | |
|holding gain | | | | | | | |
|on | | | | | | | |
|Â Â valuation | | | | | | | |
|of | | | | | | | |
|investments | -| -| -| -| 267| (267)| -|
| | | | | | | | |
|Issue of | | | | | | | |
|equity (net | | | | | | | |
|of costs) | 2| 5| -| -| -| -| 7|
| | | | | | | | |
|Loss on | | | | | | | |
|ordinary | | | | | | | |
|activities | | | | | | | |
|after | | | | | | | |
|Â Â taxation | -| -| -| -| -| 35| 35|
| | | | | | | | |
|Dividends | | | | | | | |
|paid | -| -| -| -| -| (630)| (630)|
+-------------+--------+--------+-----------+-------+----------+-------+-------+
|As at 30 June| | | | | | | |
|2011 | | | | | | | |
|(unaudited) | 5,521| 155| 765| 18,222| (7,709)| 741| 17,695|
+-------------+--------+--------+-----------+-------+----------+-------+-------+
|1 January | | | | | | | |
|2010 | | | | | | | |
|(audited) | 5,519| 150| 765| 22,685| (7,941)| 3,852| 25,030|
| | | | | | | | |
|Realisation | | | | | | | |
|of prior | | | | | | | |
|years' net | | | | | | | |
|Â Â recognised| | | | | | | |
|losses on | | | | | | | |
|Â | | | | | | | |
|Â investments | -| -| -| -| 759| (759)| -|
| | | | | | | | |
|Transfer from| | | | | | | |
|special | | | | | | | |
|reserve to | | | | | | | |
|Â Â profit and| | | | | | | |
|loss account | -| -| -|(1,161)| -| 1,161| -|
| | | | | | | | |
|Investment | | | | | | | |
|holding loss | | | | | | | |
|on | | | | | | | |
|Â Â valuation | | | | | | | |
|of | | | | | | | |
|investments | -| -| -| -| (249)| 249| -|
| | | | | | | | |
|Profit on | | | | | | | |
|ordinary | | | | | | | |
|activities | | | | | | | |
|Â Â after | | | | | | | |
|taxation | -| -| -| -| -| 101| 101|
| | | | | | | | |
|Dividends | | | | | | | |
|paid | -| -| -| -| -|(4,430)|(4,430)|
+-------------+--------+--------+-----------+-------+----------+-------+-------+
|As at 30 June| | | | | | | |
|2010 | | | | | | | |
|(unaudited) | 5,519| 150| 765| 21,524| (7,431)| 174| 20,701|
+-------------+--------+--------+-----------+-------+----------+-------+-------+
|1 January | | | | | | | |
|2010 | | | | | | | |
|(audited) | 5,519| 150| 765| 22,685| (7,941)| 3,852| 25,030|
| | | | | | | | |
|Realisation | | | | | | | |
|of prior | | | | | | | |
|years' net | | | | | | | |
|Â Â recognised| | | | | | | |
|losses on | | | | | | | |
|Â | | | | | | | |
|Â investments | -| -| -| -| 576| (576)| -|
| | | | | | | | |
|Transfer from| | | | | | | |
|special | | | | | | | |
|reserve to | | | | | | | |
|Â Â profit and| | | | | | | |
|loss account | -| -| -|(2,161)| -| 2,161| -|
| | | | | | | | |
|Investment | | | | | | | |
|holding loss | | | | | | | |
|on | | | | | | | |
|Â Â valuation | | | | | | | |
|of | | | | | | | |
|investments | -| -| -| -| (2,209)|(2,209)| -|
| | | | | | | | |
|Loss on | | | | | | | |
|ordinary | | | | | | | |
|activities | | | | | | | |
|after | | | | | | | |
|Â Â taxation | -| -| -| -| -|(1,214)|(1,214)|
| | | | | | | | |
|Dividends | | | | | | | |
|paid | -| -| -| -| -|(5,533)|(5,533)|
+-------------+--------+--------+-----------+-------+----------+-------+-------+
|As at 31 | | | | | | | |
|December | | | | | | | |
|2010 | | | | | | | |
|(audited) | 5,519| 150| 765| 20,524| (9,574)| 899| 18,283|
+-------------+--------+--------+-----------+-------+----------+-------+-------+
The total distributable reserves are £11,254,000 (30 June 2010: £14,267,000; 31
December 2010: £11,849,000), comprising the special reserve and the profit and
loss account, less net investment holdings losses.
Summary cash flow statement
+------------------------------------------------------------------------------+
| Unaudited Unaudited Audited|
| six months six months year ended|
| ended ended 31 December|
| 30 June 2011 30 June 2010 2010|
|  Note £'000  £'000  £'000|
+------------------------------------------------------------------------------+
|Net cash flow from |
|operating activities 7 (254) Â (445) Â (524)|
| ----------------- ----------------- ---------------+
|Â Â Â Â Â Â Â |
| |
|Taxation       |
| |
|UK corporation tax |
|recovered/(paid) Â - Â - Â -|
| |
|Â Â Â Â Â Â Â |
| |
|Financial investments       |
| |
|Purchase of fixed |
|asset investments  (452)  (168)  (536)|
| |
|Purchase of current |
|asset investments  (985)  -  -|
| |
|Disposal of fixed |
|asset investments  326  1,266  2,139|
| |
|Disposal of current |
|asset investments  3,235  2,988  3,480|
| |
|Amounts recovered from |
|investments previously |
|written off  -  27  -|
| ----------------- ----------------- ---------------+
|Â Â Â Â Â Â Â |
| |
|Net cash flow from |
|investing activities  2,124  4,113  5,083|
| |
|Â Â Â Â Â Â Â |
| |
|Equity dividends paid |
|(net of costs of |
|issuing shares under |
|the Dividend |
|Reinvestment Scheme) Â (718) Â (4,430) Â (5,533)|
| ----------------- ----------------- ---------------+
|Â Â Â Â Â Â Â |
| |
|Net cash flow before |
|financing  1,152  (762)  (974)|
| ----------------- ----------------- ---------------+
|Â Â Â Â Â Â Â |
| |
|Financing       |
| |
|Costs of issue of |
|share capital  (1)  -  -|
| ----------------- ----------------- ---------------+
|Â Â Â Â Â Â Â |
| |
|Net cash flow from |
|financing  (1)  -  -|
| ----------------- ----------------- ---------------+
|Â Â Â Â Â Â Â |
| |
|Cash flow in the |
|period 8 1,151 Â (762) Â (974)|
| ----------------- ----------------- ---------------+
|Â Â Â Â Â Â Â |
+------------------------------------------------------------------------------+
The accompanying notes form an integral part of this Half-yearly Financial
Report.
Notes to the unaudited summarised financial statements
1. Accounting convention
The Financial Statements have been prepared in accordance with the historical
cost convention, except for the measurement of fair value of investments, and in
accordance with applicable UK 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. Â Accounting policies have been
applied consistently in current and prior periods. The accounts are prepared on
a going concern basis.
2. Accounting policies
Fixed asset investments
The Company's business is investing in financial assets with a view to profiting
from their total return in the form of income and capital growth. Â This
portfolio of financial assets is managed and its performance evaluated on a fair
value basis, in accordance with a documented investment policy, and information
about the portfolio is provided internally on that basis to the Board.
Upon initial recognition (using trade date accounting) investments are
designated by the Company as 'at fair value through profit or loss' and are
included at their initial fair value, which is cost (excluding expenses
incidental to the acquisition which are written off to the profit and loss
account).
Subsequently, the investments are valued at 'fair value', which is measured as
follows:
-Â Â Â Â Investments listed on recognised exchanges are valued at their bid
prices at the end of the accounting period or otherwise at fair value based on
published price quotations;
-Â Â Â Â Unquoted investments, where there is not an active market, are valued
using an appropriate valuation technique in accordance with the International
Private Equity and Venture Capital Valuation guidelines. Â Indicators of fair
value are derived using established methodologies including earnings multiples,
prices of recent investment rounds, net assets and industry valuation
benchmarks. Â Where the Company has an investment in an early stage enterprise,
the price of a recent investment round is often the most appropriate approach to
determining fair value. Â In situations where a period of time has elapsed since
the date of the most recent transaction, consideration is given to the
circumstances of the investee company since that date in determining fair value.
 This includes consideration of whether there is any evidence of deterioration
or strong definable evidence of an increase in value. Â In the absence of these
indicators, the investment in question is valued at the amount reported at the
previous reporting date. Â Examples of events or changes that could indicate a
diminution include:
-Â Â Â Â the performance and/or prospects of the underlying business are
significantly below the expectations on which the investment was based;
-Â Â Â Â a significant adverse change either in the investee company's business
or in the technological, market, economic, legal or regulatory environment in
which the business operates; or
-Â Â Â Â market conditions have deteriorated, which may be indicated by a fall
in the share prices of quoted businesses operating in the same or related
sectors.
It is not the Company's policy to exercise control or significant influence over
investee companies. Â Therefore, in accordance with the exemptions under FRS 9
"Associates and Joint Ventures", those undertakings in which the Company holds
more than 20 per cent., but less than 50 per cent., of the equity of an
investment company, and the investment company is not a subsidiary, are not
regarded as associated undertakings.
Current asset investments
In accordance with FRS 26, units held in funds used for cash management are
designated as fair value through profit and loss. Â These investments are
classified as current asset investments as they are investments held for the
short term and comparative classification in the Balance sheet and Cash flow
statements have been represented accordingly.
Gains and losses on Investments
Gains and losses arising from changes in the fair value of the investments are
included in the Income statement for the year as a Capital item and are
allocated to Investment holding losses.
Investment income
Dividends receivable on quoted equity shares are recognised into account on the
ex-dividend date. Â Income receivable on unquoted equity and non-equity shares
and loan notes is recognised when the Company's right to receive payment and
expect settlement is established. Â Fixed returns on non-equity shares and debt
securities are recognised on a time apportionment basis (including amortisation
of any premium or discount to redemption) so as to reflect the effective
interest rate, provided there is no reasonable doubt that payment will be
received in due course. Â Income from fixed interest securities and deposit
interest is included on an effective interest rate basis.
Expenses
All expenses, including expenses incidental to the acquisition or disposal of an
investment, are accounted for on an accruals basis and are charged wholly to the
profit and loss account. Â Costs associated with the issue of shares are charged
to the share premium account. Â Costs associated with the buy back of shares are
charged to the special reserve.
All other expenses, including management fees, are presented within the Revenue
column of the Income statement.
Taxation
Corporation tax is applied to profits chargeable to corporation tax, if any, at
the applicable rate for the period. Â The Company has not provided for deferred
tax on any capital gains or losses arising on the revaluation or disposal of
investments as these items are not subject to tax whilst the Company maintains
its Venture Capital Trust status. Â The Company intends to continue to meet the
conditions required for it to hold approved Venture Capital Trust status for the
foreseeable future. Â Deferred tax assets in respect of surplus management
expenses are only recognised to the extent that such assets are likely to be
recoverable against future taxable profits of the Company.
Foreign exchange
The currency of the primary economic environment in which the Company operates
(the functional currency) is pounds sterling ("Sterling"), which is also the
presentational currency of the Company. Â Transactions involving currencies other
than Sterling are recorded at the exchange rate ruling on the transaction date.
 At each Balance sheet date, monetary items and non-monetary assets and
liabilities that are measured at fair value, which are denominated in foreign
currencies, are retranslated at the closing rates of exchange. Â Exchange
differences arising on settlement of monetary items and from retranslating at
the Balance sheet date of investments and other financial instruments measured
at fair value through profit or loss, and other monetary items, are included in
the Profit and loss account. Â Exchange differences relating to investments and
other financial instruments measured at fair value are subsequently included in
the transfer to the Investment holding losses.
Dividends
Dividends payable to equity shareholders are recognised when they are paid, or
have been approved by shareholders at an Annual General Meeting.
3.    Investment income
 Unaudited Unaudited  Audited
six months ended six months ended year ended
30 June 2011 30 June 2010 31 December 2010
£'000  £'000  £'000
--------------------------------------------------------------------------------
Interest recognised on
investments held at fair
value through profit or
loss
Interest on listed fixed
interest securities - Â 3 Â 3
Interest on loans to
venture capital investee
companies 42 Â 38 Â 91
Other income 10 Â 12 Â 22
------------------ ------------------ -----------------
 52  53  116
Interest recognised on
investments held at
amortised cost
Bank deposit interest 25 Â 6 Â 16
------------------ ------------------ -----------------
 77  59  132
------------------ ------------------ -----------------
4.    Dividends
 Unaudited Unaudited  Audited
six months ended six months ended year ended
30 June 2011 30 June 2010 31 December 2010
£'000  £'000  £'000
--------------------------------------------------------------------------------
Final dividend of 4 pence
per share paid on
  11 June 2010 in
respect of the year ended
  31 December 2009 -  4,430  4,430
Interim dividend of 1
penny per share paid on
  24 September 2010 in
respect of the year ended
  31 December 2010 -  -  1,103
Final dividend of 0.67
pence per share paid on
  24 June 2011 in
respect of the year ended
  31 December 2010 739  -  -
Dividends recovered (109) Â - Â -
------------------ ------------------ -----------------
 630  4,430  5,533
------------------ ------------------ -----------------
5.    Basic and diluted return per share
Return per share has been calculated on 110,371,963 Ordinary shares (30 June
2010 and 31 December 2010: 110,370,135) being the weighted average number of
shares in issue for the period.
6.    Share Capital
 Unaudited Unaudited Audited
30 June 2011 30 June 2010 31 December 2010
£'000  £'000  £'000
--------------------------------------------------------------------------------
Authorised:
200,000,000 Ordinary shares of 5
pence each (30 June 2010 and 31
December 2010: 200,000,000) 10,000 Â 10,000 Â 10,000
-------------- -------------- -----------------
Allotted, issued and fully paid:
110,417,392 Ordinary shares of 5
pence each (30 June 2010 and 31
December 2010: 110,370,135) 5,521 Â 5,519 Â 5,519
-------------- -------------- -----------------
During the period from 1 January to 30 June 2011, the Company issued the
following New Ordinary shares of 5 pence each under the terms of the Dividend
Reinvestment Scheme Circular dated 19 April 2011:
Mid market price
Number of Issue price on issue date Net proceeds
Date of allotment shares issued (pence per share) (pence per share) £'000
--------------------------------------------------------------------------------
24 June 2011 47,257 15.93 7.75 8
No shares were bought back by the Company during the period ended 30 June 2011.
7.    Reconciliation of profit/(loss) on ordinary activities before taxation
to net cash flow from operating activities
  Audited
Unaudited Unaudited year ended
six months ended six months ended 31 December
30 June 2011 30 June 2010 2010
£'000  £'000  £'000
--------------------------------------------------------------------------------
Profit/(loss) on ordinary
activities before tax 35 Â 101 Â (1,214)
(Gain)/loss on investments
at fair value through
profit or loss (291) Â (406) Â 633
Decrease/(increase) in
debtors 28 Â (304) Â 58
(Decrease)/increase in
creditors (26) Â 164 Â (1)
------------------ ------------------ ----------------
Net cash flow from
operating activities (254) Â (445) Â (524)
------------------ ------------------ ----------------
8.    Analysis of change in cash during the period
 Unaudited Unaudited Audited
six months ended six months ended year ended
30 June 2011 30 June 2010 31 December 2010
£'000  £'000  £'000
----------------------------------------------------------------------------
Opening cash balances 2,216 Â 3,190 Â 3,190
Net cash flow 1,151 Â (762) Â (974)
------------------ ------------------ -----------------
Closing cash balances 3,367 Â 2,428 Â 2,216
------------------ ------------------ -----------------
9.    Post balance sheet events
    Since 30 June 2011, the Company has completed the following material
transactions:
-    Disposal of Imagesound plc for £2,195,000 in July 2011.
    -    Investment in Atego Group Limited of £264,000 in August 2011;
10.    Related party disclosures
The Manager, Albion Ventures LLP, is considered to be a related party by virtue
of the fact that Patrick Reeve, a Director of the Company, is also the Managing
Partner of the Manager. Â The Manager is party to a management agreement with the
Company (details disclosed on pages 35 and 36 of the Annual Report and Financial
Statements for the year ended 31 December 2010). Â Albion Ventures LLP has agreed
to waive its management and administration fees for the first year to 31
December 2011. Â Patrick Reeve has agreed to waive his entitlement to Directors'
fees for all accounting periods until further notice.
During the period, the previous Manager, SPARK Venture Management Limited,
continued to be entitled to the management and administration fees under the
terms of the Termination Agreement and fees totalling £217,000 (30 June 2010:
£277,000; 31 December 2010: £480,000) were paid by the Company to SPARK Venture
Management Limited.
At the financial period end, an amount of less than £1,000 (31 December 2010:
£6,000) reflected prepayments to SPARK Venture Management Limited.  At 30 June
2010, an amount of £41,000 was included in accruals in respect of fees due to
SPARK Venture Management Limited.
    There are no other related party transactions or balances requiring
disclosure.
11.    Going concern
The Board's assessment of liquidity risk remains unchanged since the Annual
Report and Financial Statements for the year ended 31 December 2010 and is
detailed on page 18 of those accounts.
The Company has significant cash and liquid resources, and the major cash
outflows of the Company (namely investments and dividends) are within the
Company's control. Â Accordingly, after making diligent enquiries the Directors
have a reasonable expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future. Â For this reason,
the Directors have adopted the going concern basis in preparing the accounts in
accordance with "Going Concern and Liquidity Risk: Guidance for Directors of UK
Companies 2009", published by the Financial Reporting Council.
12.    Risks and uncertainties
The Board considers that the Company faces the following major risks and
uncertainties:
1. 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 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 investee company boards) and the Board receives
detailed reports on each investment as part of the Manager's report at quarterly
board meetings.
2. Venture Capital Trust 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 Grant Thornton UK
LLP as its taxation advisors. Grant Thornton UK LLP report 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.
3. 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 quoted businesses. In addition, the Board and the Manager receive regular
updates on new regulation from its auditors, lawyers and other professional
bodies.
4. 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 will meet with the Manager's internal auditors Littlejohn
LLP at least once a year, 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. 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 page 24 of the Annual Report and Financial
Statements for the year ended 31 December 2010. Â Measures are in place to
mitigate information risk in order to ensure the integrity, availability and
confidentiality of information used within the business.
5. 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 investment management
agreement details in note 4 of the Annual Report and Financial Statements for
the year ended 31 December 2010). In addition, the Manager has demonstrated to
the Board that there is no undue reliance placed upon any one individual within
Albion Ventures LLP.
6. Financial risks
By its nature, as a venture capital trust, the Company is exposed to investment
risk (which comprises investment price risk and cash flow interest rate risk),
credit risk and liquidity risk. The Company's policies for managing these risks
and its financial instruments are outlined in full in note 19 to the Annual
Report and Financial Statements for the year ended 31 December 2010.
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.
13.    Other information
The information set out in this Half-yearly Financial Report does not constitute
the Company's statutory accounts within the terms of section 434 of the
Companies Act 2006 for the periods ended 30 June 2011 and 30 June 2010, and is
unaudited. Â The information for the year ended 31 December 2010 does not
constitute statutory accounts within the terms of section 434 of the Companies
Act 2006 and is derived from the statutory accounts for that financial year,
which have been delivered to the Registrar of Companies. Â The Auditor reported
on those accounts; their report was unqualified and did not contain a statement
under s498 (2) or (3) of the Companies Act 2006.
14.    Publication
This Half-yearly Financial Report is being sent to shareholders and copies will
be made available to the public at the registered office of the Company,
Companies House, the National Storage Mechanism and also electronically
atwww.albion-ventures.co.uk under the 'Our Funds' section by clicking on Kings
Arms Yard VCT PLC, and looking in the Financial Reports and Circulars section
for the Half-yearly Financial Report to 30 June 2011.
Distribution of assets by sector at 30 June 2011:
http://hugin.info/145558/R/1540235/470882.pdf
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Kings Arms Yard VCT PLC via Thomson Reuters ONE
[HUG#1540235]
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