We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for streaming realtime charts, analysis tools, and prices.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Albion Development Vct Plc | LSE:AADV | London | Ordinary Share | GB0004832472 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 87.00 | 85.50 | 88.50 | 87.00 | 87.00 | 87.00 | 18,841 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Investors, Nec | 558k | -2.25M | -0.0166 | -52.41 | 117.98M |
Hot Features
Premium
TIDMAADV
Albion Development VCT PLC
LEI Code 213800FDDMBD9QLHLB38
As required by the UK Listing Authority's Disclosure Guidance and
Transparency Rules 4.1 and 6.3, Albion Development VCT PLC today makes
public its information relating to the Annual Report and Financial
Statements for the year ended 31 December 2019.
This announcement was approved for release by the Board of Directors on
27 March 2020.
This announcement has not been audited.
The Annual Report and Financial Statements for the year ended 31
December 2019 (which have been audited), will shortly be sent to
shareholders. Copies of the full Annual Report and Financial Statements
will be shown via the Albion Capital Group LLP website by clicking
https://www.globenewswire.com/Tracker?data=31xsu8U_G9PtsBqyyOdMNeNtwePrF96SNWllFG-UO8eyvfN3r-z03YzFXfEzOCqnMkGMXvRRyl1Cgk_ItpNAQmQF7E0MhTS_geQsaDUDnEFhnM1HCIu3Wb8cT6Xia-K-pn_p1PpinwF0S2_oMvWFDjaNXRsVkSlhthYUW2h9m8M=
www.albion.capital/funds/AADV/31Dec2019.pdf. The information contained
in the Annual Report and Financial Statements will include information
as required by the Disclosure Guidance and Transparency Rules, including
Rule 4.1.
Investment policy
The Company will invest in a broad portfolio of higher growth businesses
with a stronger focus on technology companies across a variety of
sectors of the UK economy. Allocation of assets will be determined by
the investment opportunities which become available but efforts will be
made to ensure that the portfolio is diversified in terms of sector and
stage of maturity of company.
Funds held pending investment or for liquidity purposes will be held as
cash on deposit or up to 8 per cent. of its assets, at the time of
investment, in liquid open-ended equity funds providing income and
capital equity exposure (where it is considered economic to do so).
Risk diversification and maximum exposures
Risk is spread by investing in a number of different businesses within
venture capital trust qualifying industry sectors using a mixture of
securities. The maximum amount which the Company will invest in a single
portfolio company is 15 per cent. of the Company's assets at cost thus
ensuring a spread of investment risk. The value of an individual
investment may increase over time as a result of trading progress and it
is possible that it may grow in value to a point where it represents a
significantly higher proportion of total assets prior to a realisation
opportunity being available.
The Company's maximum exposure in relation to gearing is restricted to
10 per cent. of the adjusted share capital and reserves.
Background to the Company
The Company is a venture capital trust which raised a total of GBP33.3
million through the issue of shares between 1999 and 2004. The C shares
merged with the Ordinary shares in 2007. A further GBP6.3 million was
raised through an issue of new D shares in 2010. The D shares converted
to Ordinary shares in 2015.
An additional GBP45.1 million has been raised for the Ordinary shares
through the Albion VCTs Top Up Offers since January 2011.
Financial calendar
Record date for first dividend 8 May 2020
Annual General Meeting Noon on 9 June 2020
Payment of first dividend 29 May 2020
Announcement of half-yearly results for the six months September 2020
ending 30 June 2020
Financial highlights
183.72p Total shareholder return per Ordinary share from launch
to 31 December 2019
--------------------------------------------------------
3.87% Total return on opening net asset value for the year
ended 31 December 2019
--------------------------------------------------------
4.50p Tax-free dividend per Ordinary share for the year
ended 31 December 2019
--------------------------------------------------------
83.47p Net asset value per Ordinary share as at 31 December
2019
--------------------------------------------------------
Financial highlights
Ordinary shares
31 December 2019 31 December 2018
pence per share pence per share
Opening net asset value 84.70 73.80
Revenue return 0.73 0.20
Capital return 2.55 14.80
---------------- ----------------
Total return 3.28 15.00
Impact from share capital movements (0.01) (0.10)
Dividends paid (4.50) (4.00)
---------------- ----------------
Net asset value 83.47 84.70
----------------------------------------- ---------------- ----------------
Total shareholder return to 31 December 2019:
Ordinary
shares C shares D shares
(pence per share) (pence per share) (i) (pence per share)(ii)
-------------------------------------------------------- ------------------ ---------------------- -----------------------
Total dividends paid during the year ended: 31 December
1999 1.00 - -
31 December 2000 2.90 - -
31 December 2001 3.95 - -
31 December 2002 4.20 - -
31 December 2003 4.50 0.75 -
31 December 2004 4.00 2.00 -
31 December 2005 5.20 5.90 -
31 December 2006 3.00 4.50 -
31 December 2007 5.00 5.36 -
31 December 2008 12.00 12.86 -
31 December 2009 4.00 4.29 -
31 December 2010 8.00 8.57 1.00
31 December 2011 5.00 5.36 2.50
31 December 2012 5.00 5.36 3.50
31 December 2013 5.00 5.36 5.00
31 December 2014 5.00 5.36 5.00
31 December 2015 5.00 5.36 7.49
31 December 2016 5.00 5.36 7.49
31 December 2017 4.00 4.29 5.99
31 December 2018 4.00 4.29 5.99
31 December 2019 4.50 4.82 6.74
------------------ ---------------------- -----------------------
Total dividends paid to 31 December 2019 100.25 89.76 50.69
Net asset value as at 31 December 2019 83.47 89.44 125.00
Total shareholder return to 31 December 2019 183.72 179.20 175.69
------------------ ---------------------- -----------------------
In addition to the dividends paid above, the Board has declared a first
dividend for the year ending 31 December 2020 of 2.25 pence per Ordinary
share payable on 29 May 2020 to shareholders on the register on 8 May
2020.
Notes
Total shareholder return for every 100 pence invested on initial
allotment. The table above excludes tax benefits upon subscription.
(i) The C shares were converted into Ordinary shares on 31 March 2007,
with a conversion ratio of 1.0715 Ordinary shares for each C share. The
net asset value per share and all dividends paid subsequent to the
conversion of the C shares to the Ordinary shares are multiplied by the
conversion factor of 1.0715 in respect of the C shares return, in order
to give an accurate picture of the shareholder value since launch
relating to the C shares.
(ii) The D shares were converted into Ordinary shares on 31 March 2015,
with a conversion ratio of 1.4975 Ordinary shares for each D share. The
net asset value per share and all dividends paid subsequent to the
conversion of the D shares to the Ordinary shares are multiplied by the
conversion factor of 1.4975 in respect of the D shares return, in order
to give an accurate picture of the shareholder value since launch
relating to the D shares.
Chairman's statement
Introduction
The Company achieved a total return for the year to 31 December 2019 of
3.28 pence per Ordinary share. These results represent a 3.9% gain on
opening net asset value. After a strong previous two years, this current
year has been more subdued. Whilst I am optimistic on the longer term
prospects of the portfolio, in the shorter term it will be affected by
the current financial crisis arising out of the Coronavirus pandemic.
Board Composition
As detailed in the Half-yearly Financial Report, the Company's longest
serving Director and Chairman, Geoffrey Vero, sadly passed away on 19
May 2019. Geoffrey's good humour and wise counsel, over many years, will
be sorely missed. Therefore, the composition of the Board has changed,
and I became Chairman effective from 8 July 2019. The Chairman of the
Audit Committee is Lyn Goleby, effective from 3 September 2019. The
Board was pleased to announce that Lord O'Shaughnessy was appointed to
the Board with effect from 8 July 2019. Biographies of each of the
directors are included on page 17 of the full Annual Report and
Financial Statements.
Investment performance and progress
We had a number of realisations during the year totalling GBP10.5
million (2018: GBP8.5 million), of which Radnor House School
(Twickenham) accounted for GBP4.1 million. The sale of Process Systems
Enterprise delivered a 10 times return on cost, and realised GBP1.3
million. We realised our holding in our two pub companies, delivering a
1.85 times return on cost. Our investment in Mi-Pay Group has been
disappointing and following the sale of its trading subsidiary after the
year end, the investment will realise a return of 0.03 on cost. The
success of Process Systems Enterprise and the failure of Mi-Pay
highlight the risks and rewards associated with investing in higher
growth businesses. Further details on realisations can be found in the
realisations table on page 22 of the full Annual Report and Financial
Statements.
The results for the year showed net gains on investments of GBP3.1
million, against GBP12.3 million for the previous year. The key
contributors were the uplift on Proveca, which has been revalued after a
successful further funding round and the sale of Process Systems
Enterprise. Against this, there were write-downs against Zift Channel
Solutions, Convertr Media, and Aridhia, due to weaker growth than
anticipated.
A busy year resulted in GBP2.8 million invested in seven new portfolio
companies, all of which are targeted to require further investment as
the companies prove themselves and grow:
-- GBP685,000 into Cantab Research (trading as Speechmatics), a provider of
low footprint automated speech recognition software which can be deployed
in the cloud, on premise or on device across 29 languages;
-- GBP639,000 into Elliptic Enterprises, a provider of Anti Money Laundering
services to digital asset institutions;
-- GBP440,000 into Limitless Technology, a provider of a customer service
platform powered by the crowd and machine learning technology;
-- GBP409,000 into Clear Review, a provider of talent management software to
mid market enterprises;
-- GBP400,000 into Avora, which develops software to improve decision making
through augmented analytics & machine learning;
-- GBP166,000 into Imandra, a provider of automated software testing and an
enhanced learning experience for artificial neural networks; and
-- GBP76,000 into Symetrica, a designer and manufacturer of radiation
detection equipment.
A further GBP2.9 million was invested in existing portfolio companies,
including GBP745,000 into Proveca to support its development of further
paediatric drugs, GBP293,000 into InCrowd Sports to support its growth,
and GBP240,000 in Oviva to support the expansion of its geographical
footprint, as well as to further transition the company's focus on
digital diabetes therapeutics.
For a review of business and future prospects please see the Strategic
report below.
Dividends and results
The Company paid dividends totaling 4.5 pence per share during the year
ended 31 December 2019 (2018: 4.0 pence per share). The total return
after tax was GBP2.7 million compared to GBP11.2 million in the year to
31 December 2018.
The Company will pay a first dividend for the financial year ending 31
December 2020 of 2.25 pence per Ordinary share payable on 29 May 2020 to
shareholders on the register on 8 May 2020.
Management performance incentive and total expenses cap
At the General Meeting in 2019, a new management performance incentive
fee was approved with 86.8% of Shareholders voting in favour of the
changes, which also reduced the total expenses cap to 2.5%, where any
additional expenses above this are borne by the Manager.
The new performance incentive fee has not resulted in a payment this
year. The expenses cap has resulted in a saving of GBP105,000 to
shareholders. Further details of these changes can be found in the
Strategic report below.
Risks and uncertainties
The implication of the financial turmoil arising from the Coronavirus
crisis is the key risk facing the Company, including its impact on the
UK and Global economies. As well as the potential implications of the UK
leaving the European Union, our underlying portfolio companies may be
adversely affected by the Coronavirus Pandemic and recent quoted market
turmoil. The Manager is continually assessing the exposure to these
risks for each portfolio company, and appropriate actions, where
possible, are being implemented.
A detailed analysis of the other risks and uncertainties facing the
business is shown in the Strategic report below.
Share buy-backs
Given uncertainty on valuations caused by the Coronavirus and its impact
on financial markets in recent times, the Board agreed to suspend the
Company's buy back operation on 18 March 2020, until such time as the
Company can provide an updated valuation as at 31 March 2020 of the
portfolio and the Company's net asset value. The Board does not intend
to resume the Company's buyback programme until after the announcement
of the 31 March 2020 unaudited net asset value.
Albion VCTs Prospectus Top Up Offers
During the year, your Board, in conjunction with the boards of four of
the other VCTs managed by Albion Capital Group LLP, launched a
prospectus top up offer of new Ordinary shares on 22 October 2019. The
Board was pleased to announce the Offer closed on 7 January 2020, at
which time the Board elected to not exercise the over allotment facility,
having raised GBP8 million. The proceeds will be used to provide further
resources at a time when a number of attractive investment opportunities
are being seen, alongside the funds received from our successful exits
in 2019. The first allotment of shares under the Offer was on 31 January
2020. Further details can be found in note 19.
The funds raised by each Company pursuant to its Offer will be added to
the liquid resources available for investment, putting each Company into
a position to take advantage of investment opportunities over the next
two to three years. The proceeds of the Offers are being applied in
accordance with the respective Companies' investment policies. The
Company continues to participate in the Top Up Offers and also benefits
from receipts from dividend reinvestment, the net proceeds of which are
invested in new investment opportunities and to provide additional
working capital in the Company. It is important that the Company
continues to have cash available for future investments and the Top Up
Offers and dividend reinvestments are important sources of that capital.
Annual General Meeting
As a Board, we have been deliberating the potential impact of the
Coronavirus outbreak on the arrangements for our upcoming Annual General
Meeting ("AGM"). These arrangements will evolve and we will keep
shareholders updated of any changes on our Manager's website at
www.albion.capital/funds/AADV.
We are required by law to hold an AGM within six months of our financial
year end and lengthy postponement or adjournment is not possible in this
case. Our AGM will therefore be held at noon on 9 June 2020, at the
offices of Albion Capital Group LLP, 1 Benjamin Street, London, EC1M
5QL. We are putting in place contingency arrangements which mean that
the meeting is unlikely to follow the same format as in previous years
but will still meet the minimum legal requirements for an AGM. As a
result, there will be no presentation from the Manager or from a
portfolio company, and we will not be providing lunch after the AGM.
Full details of the business to be conducted at the Annual General
Meeting are given in the Notice of the Meeting on pages 64 and 65 of the
full Annual Report and Financial Statements.
This year, we would strongly encourage shareholders to consider whether
attendance in person is necessary, especially given the public health
advice. Shareholders' views are important, and the Board encourages
shareholders' to vote on the resolutions within the Notice of Annual
General Meeting on pages 64 and 65 of the full Annual Report and
Financial Statements using the proxy form enclosed with this Annual
Report and Financial Statements, or electronically at
www.investorcentre.co.uk/eproxy. The Board has carefully considered the
business to be approved at the Annual General Meeting and recommends
shareholders to vote in favour of all the resolutions being proposed. We
encourage shareholders to submit their votes by proxy, rather than
attending in person. If circumstances improve and you have submitted a
proxy, you can still attend the meeting.
We always welcome questions from our shareholders at the AGM but this
year, we request that shareholders submit their questions to the Board
before the AGM, and the Board will ensure a summary of responses are
published on the Managers website at www.albion.capital/funds/AADV.
You can submit questions up until noon on 8 June 2020 in the following
ways:
-- By email: send your questions to AADVchair@albion.capital
-- By telephone: contact Shareholder relations on 020 7601 1850
Fraud warning
We note over recent months an increase in the number of shareholders
being contacted in connection with increasingly sophisticated but
fraudulent financial scams. This is often by a phone call or an email
which normally originates from outside of the UK, often claiming or
appearing to come from a corporate finance firm and typically offering
to buy your VCT shares at an inflated price. If you are contacted, we
recommend that you do not respond with any personal information and say
you are not interested.
The Manager maintains a page on their website in relation to fraud
advice at www.albion.capital/investor-centre/fraud-advice. Details of
how to sell shares through reputable channels can also be found here.
If you are in any doubt, we recommend that you seek financial advice
before taking any action. You can also call Shareholder relations on 020
7601 1850, or email info@albion.capital, if you wish to check whether
any claims made are genuine.
Outlook and prospects
This has been another strong year for exits, with disposals of both
technology and asset based businesses. The year also saw an active
investment programme in ambitious innovative growth companies. The
current healthcare and financial crisis creates uncertainty for everyone,
and the Company's investment portfolio is not exempt from this.
Nevertheless, we remain confident that the spread and quality of the
portfolio will continue to drive longer term value for Shareholders.
Ben Larkin
Chairman
27 March 2020
Strategic report
Investment policy
The Company will invest in a broad portfolio of higher growth businesses
with a stronger focus on technology companies across a variety of
sectors of the UK economy. Allocation of assets will be determined by
the investment opportunities which become available but efforts will be
made to ensure that the portfolio is diversified in terms of sector and
stage of maturity of company.
The full investment policy can be found above.
Current portfolio sector allocation
The pie charts at the end of this announcement show the split of the
portfolio valuation as at 31 December 2019 by: sector; stage of
investment; and number of employees. Details of the principal
investments made by the Company are shown in the Portfolio of
investments on pages 20 and 21 of the full Annual Report and Financial
Statements.
Direction of portfolio
There is a continuing focus on growing the technology and healthcare
sectors, which is resulting in a decrease of asset-based investment as a
percentage of the portfolio over time. This year, with the sale of our
final two pub investments, and one of our schools, we can see the
asset-based investments continuing to reduce as a percentage of the
portfolio.
The current portfolio is well balanced in terms of sector, with
IT/software at 30%, healthcare at 19%, and renewable energy at 13%. Due
to our successful realisations in the final quarter of 2019, the cash
balance has increased to 26 per cent. of the portfolio. We are now well
placed to take advantage of our growing pipeline.
Results and dividend policy
Ordinary
shares
GBP'000
Net revenue return for the year 593
Net capital gain for the year 2,080
-----------
Total return for the year ended 31 December 2019 2,673
Dividend of 2.25 pence per share paid on 31 May 2019 (1,880)
Dividend of 2.25 pence per share paid on 30 September
2019 (1,885)
Unclaimed dividends 5
-----------
Transferred from reserves (1,087)
-----------
Net assets as at 31 December 2019 69,683
-----------
Net asset value per share as at 31 December 2019 (pence) 83.47
------------------------------------------------------------- -----------
The Company paid dividends totalling 4.50 pence per Ordinary share
(2018: 4.00 pence per Ordinary share). As described in the Chairman's
statement, the Board has declared a first dividend for the year ending
31 December 2020 of 2.25 pence per Ordinary share payable on 29 May 2020
to shareholders on the register on 8 May 2020.
As shown in the Income statement below, the total investment income
increased to GBP1,294,000 (2018: GBP881,000). This is substantially due
to the repayment of the G Network loan stock, including the interest
that had been rolled during this time. The investment in the OUEIF has
also generated the payment of substantial dividends. The revenue return
to equity holders has therefore increased to GBP593,000 (2018:
GBP181,000).
The after tax capital return for the year was GBP2,080,000 (2018:
GBP11,037,000). This is mainly attributable to the successful sale of
Process Systems Enterprise, which delivered a 10 times return on cost,
and Proveca, which experienced a significant uplift in its valuation
following an external funding round. This was partly offset by the
reductions in Zift Channel Solutions, Convertr Media and Aridhia. We
remain confident that the portfolio will deliver over the longer term,
and after two excellent years and some very strong realisations from our
mature assets, we still consider the Company to have performed well.
The total return was 3.28 pence per share (2018: 15.00 pence per share).
The Balance sheet below shows that the net asset value has marginally
decreased over the year to 83.47 pence per share (2018: 84.70 pence per
share), as a result of the dividends paid in the year totalling 4.50
pence per share.
There was a net cash inflow for the Company of GBP5,340,000 for the year
(2018: net outflow of GBP1,766,000), mainly resulting from the issue of
Ordinary shares under the Albion VCTs Top Up Offers , as well as the
sale of Radnor House (Twickenham), the Bravo pub portfolio and Process
Systems Enterprise. This has been offset by the investment in current
and fixed assets, dividends paid, operating activities and the buy-back
of shares.
Review of business and future changes
The results for the year to 31 December 2019 show total shareholder
return of 183.72 pence per Ordinary share since launch (2018: 180.50
pence per share).
Following changes to the VCT regulations in 2017, the asset-based
investments are decreasing as a proportion of the portfolio. As a result,
revenue returns will begin to decrease in the coming years, with the
future returns coming from capital gains.
A detailed review of the Company's business during the year is contained
in the Chairman's statement above.
Details of significant events which have occurred since the end of the
financial year are listed in note 19. Details of transactions with the
Manager are shown in note 5.
Future prospects
As detailed in the Chairman's statement, since the Company's year end,
the world has spiralled into a healthcare emergency and it is unlikely
that any investment company will remain unaffected. Although it is too
early to gauge the full economic consequences, the Board believes that
the Company's portfolio is well balanced across sectors and risk classes
and has the potential to deliver returns to shareholders over the long
term.
Key performance indicators ("KPIs") and Alternative Performance Measures
("APMs")
The Directors believe that the following KPIs and APMs, 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. The Directors are satisfied that the results shown in
the following KPIs and APMs give a good indication that the Company is
achieving its investment objective and policy. These are:
1. Total shareholder return relative to FTSE All-Share Index total
return
The graph on page 4 of the full Annual Report and Financial Statements
shows the total shareholder 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 in the Chairman's statement.
2. Net asset value per share and total shareholder return
Total shareholder return is net asset value plus cumulative dividends
paid since launch to 31 December 2019.
Total return to shareholders increased by 3.8% on opening net asset
value to 183.72 pence per Ordinary share for the year ended 31 December
2019 as a result of the positive total return of 3.23 pence per share.
3. Shareholder return in the year
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
---- ---- ---- ---- ---- ---- ---- ----- ----- ----
4.9% 7.1% 4.6% 6.9% 5.4% 4.1% 6.5% 10.0% 20.3% 3.8%
---- ---- ---- ---- ---- ---- ---- ----- ----- ----
Source: Albion Capital Group LLP
Methodology: Shareholder return is calculated by the movement in total
shareholder value for the year divided by the opening net asset value.
4. Dividend distributions
Dividends paid in respect of the year ended 31 December 2019 were 4.50
pence per share (2018: 4.00 pence per share). Cumulative dividends paid
since inception are 100.25 pence per share.
5. Ongoing charges
The ongoing charges ratio for the year to 31 December 2019 was 2.5%
(2018: 2.6%). 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. From
1 January 2019, the ongoing charges cap was reduced from 3.0% to 2.5%,
which has resulted in a saving of GBP105,000 to shareholders during the
year.
6. 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, details of which are provided in the Directors' report on page
29 of the full Annual Report and Financial Statements.
The relevant tests to measure compliance have been carried out and
independently reviewed for the year ended 31 December 2019. These showed
that the Company has complied with all tests and continues to do so.
*VCT compliance is not a numerical measure of performance and thus
cannot be defined as an APM.
Operational arrangements
The Company has delegated the investment management of the portfolio to
Albion Capital Group LLP, which is authorised and regulated by the
Financial Conduct Authority. Albion Capital Group LLP also provides
company secretarial and other accounting and administrative support to
the Company.
Management agreement
Under the Management agreement, the Manager provides investment
management, secretarial and administrative services to the Company. The
Management agreement may be terminated by either party on 12 months'
notice and is subject to earlier termination in the event of certain
breaches or on the insolvency of either party. The Manager is paid an
annual fee equal to 2.25 per cent. of the net asset value of the Company
paid quarterly in arrears.
Additionally, Albion agreed to reduce that proportion of its management
fee relating to the investment in the SVS Albion OLIM UK Equity Income
Fund ("OUEIF") by 0.75 per cent. per annum, which represents the OUEIF
management fee charged by OLIM to avoid any double charging for the
investment exposure.
Total annual expenses, including the management fee, are limited to 2.5
per cent. of the net asset value, as per the resolution passed at the
General Meeting in 2019.
The Manager is also entitled to an arrangement fee, payable by each
portfolio company, of approximately 2 per cent. on each investment made
and also monitoring fees where the Manager has a representative on the
portfolio company's board.
Management performance incentive
At the 2019 General Meeting, a resolution was passed by 86.8% of
shareholders that the two existing current management performance
incentive arrangements for the Ordinary shares and the former D shares
will be merged into one all-encompassing arrangement so that the Manager
is both properly incentivised and its objectives are aligned with those
of the Company.
The new hurdle requires that the growth of the aggregate of the net
asset value per share and dividends paid by the Company compared with
the previous accounting date exceeds RPI plus 2%. The hurdle will be
calculated every year, based on the previous year's closing NAV per
Share. The starting NAV is 84.70 pence per Share, being the audited net
asset value at 31 December 2018. The Manager continues to receive an
amount equal to 20% of the returns achieved in excess of the hurdle. If
the target return is not achieved in a period, the cumulative shortfall
is carried forward to the next accounting period and has to be made up
before an incentive fee becomes payable.
There was no management performance incentive fee payable during the
year. As at 31 December 2019 the cumulative shortfall of the target
return was 0.29 pence per share and this amount needs to be made up in
following accounting periods before an incentive fee becomes payable.
Investment and co-investment
The Company co-invests with other Albion Capital Group LLP managed
venture capital trusts and funds. Allocation of investments is on the
basis of an allocation agreement which is based, inter alia, on the
ratio of funds available for investment.
Evaluation of the Manager
The Board has evaluated the performance of the Manager based on the
returns generated by the Company, the continuing achievement of the 70
per cent. (80 per cent. from 1 January 2020 for the Company) qualifying
holdings investment requirement for venture capital trust status, the
long term prospects of the current portfolio of investments, a review of
the Management agreement and the services provided therein, and
benchmarking the performance of the Manager to other service providers
including the performance of other VCTs that the Manager is responsible
for managing. The Board believes that it is in the interests of
shareholders as a whole, and of the Company, to continue the appointment
of the Manager for the forthcoming year.
Alternative Investment Fund Managers Directive ("AIFMD")
The Board appointed Albion Capital Group LLP as the Company's AIFM in
June 2014 as required by the AIFMD. The Manager became a full-scope
Alternative Investment Fund Manager under the AIFMD on 1 October 2018.
As a result, from that date, Ocorian (UK) Limited was appointed as
Depositary to oversee the custody and cash arrangements and provide
other AIFMD duties with respect to the Company.
Companies Act 2006 Section 172 Reporting
Under Section 172 of the Companies Act 2006, the Board has a duty to
promote the success of the Company for the benefit of its members as a
whole, having regard to the interests of other stakeholders in the
Company, such as suppliers, and to do so with an understanding of the
impact on the community and environment and with high standards of
business conduct, which includes acting fairly between members of the
Company.
The Board is very conscious of these wider responsibilities in the ways
it promotes the Company's culture and ensures, as part of its regular
oversight, that the integrity of the Company's affairs is foremost in
the way the activities are managed and promoted. This includes regular
engagement with the wider stakeholders of the Company and being alert to
issues that might damage the Company's standing in the way that it
operates. The Board works very closely with the Manager in reviewing how
stakeholder issues are handled, ensuring good governance and
responsibility in managing the Company's affairs, as well as visibility
and openness in how the affairs are conducted.
The Board considers its significant stakeholder groups to be its
Shareholders; suppliers, including direct agents of the Company such as
the Manager to whom most executive functions are delegated; the
community and the environment in the way that investments are made and
managed.
The Company's shareholders are key to the success of the Company. The
Board seeks to create value for Shareholders by generating strong and
sustainable returns to provide shareholders with a strong, predictable
dividend flow and the prospect of capital growth. The Company has in
place a buyback back policy as an important means of providing market
liquidity for shareholders. Details regarding the current buy-back
policy can be found above in the Chairman's statement. These important
components, performance, predictable income return and liquidity when
required are fundamental tenets of the way in which the Company operates
for its Shareholders.
Shareholders' views are important. The Board encourages Shareholders to
vote on the resolutions at the Annual General Meeting. The Company's
Annual General Meeting, this year on 9 June 2020, is typically used as
an opportunity to communicate with investors, including through a
presentation made by the investment management team. However, as
detailed in the Chairman's statement above, there will be no
presentation from the Manager or from a portfolio company, and we will
not be providing lunch after this year's AGM due to the impact of the
COVID-19 outbreak. Details of the location and time of the Annual
General Meeting can be found in the Directors' report on page 31 of the
full Annual Report and Financial Statements.
Shareholders are also encouraged to attend the annual Shareholders'
Seminar. The seminar includes some of the portfolio companies sharing
insights into their businesses and also have presentations from Albion
executives on some of the key factors affecting the investment outlook,
as well as a review of the past year and the plans for the year ahead.
Details of the seminar event are placed on the Manager's website.
Representatives of the Board attend the seminar.
The Company is an externally managed investment company with no
employees, and as such has nothing to report in relation to employee
engagement but does keep close attention to how the Board operates as a
cohesive and competent unit. The Company also has no customers in the
traditional sense and, therefore, there is also nothing to report in
relation to relationships with customers.
The Company's suppliers are fundamental to the operations of the Company,
particularly Albion Capital Group LLP as the Manager, given that
day-to-day management responsibilities are sub-contracted to the
Manager. Details of the Manager's and Board's responsibilities can be
found in the Statement of corporate governance on pages 34 to 38 of the
full Annual Report and Financial Statements.
The contractual arrangements with all the principal suppliers to the
Company are reviewed regularly and formally once a year, alongside the
performance of the suppliers in acquitting their responsibilities. The
performance of the Manager in managing the portfolio and in providing
company secretarial, administration and accounting services is reviewed
in detail each year, which includes reviewing comparator engagement
terms and portfolio performance. Further details on the evaluation of
the Manager, and the decision to continue the appointment of the Manager
for the forthcoming year, can be found in this report above.
The Board receives reports on Environmental, Social and Governance
("ESG") factors within its portfolio from Albion Capital Group LLP as it
is a signatory of the UN Principles for Responsible Investment. Further
details of this are set out below. ESG, without its specific definition,
has always been at the heart of the responsible investing that the
Company engages in and in how the Company conducts itself with all of
its stakeholders.
The Board, although non-executive, is fully engaged in both oversight
and the general strategic direction of the Company. During the year the
Board's main strategic discussions focussed around cash management and
deployment of cash for future investments, dividends and share buyback,
resulting in the decision to participate in the Albion VCTs Top Up
Offers 2019/20. Time was also spent in ensuring the Board met Corporate
Governance requirements which continue to evolve, including the
introduction of the new AIC Code last year.
Environmental, Social, and Governance ("ESG")
Albion Capital Group LLP became a signatory of the UN Principles for
Responsible Investment ("UN PRI") on 14 May 2019. The UN PRI is the
world's leading proponent of responsible investment, working to
understand the investment implications of ESG factors and to support its
international network of investor signatories in incorporating these
factors into their investment and ownership decisions.
Albion will make its first trial submission in 2020 against this
framework and the first full submission in 2021. The trial process in
2020 will identify initial gaps in information being collected and areas
that require action. This annual process will inform fuller ESG
disclosure by 2021 and create a regular audit function to ensure
continual improvement.
To ensure that the principles are starting to be translated into both
the investment and portfolio management processes, since June 2019 all
quarterly valuations and investment papers include a section covering
relevant aspects of ESG for each investment. In addition, all fund level
reports also include ESG sections and ESG will be included as a standing
item on the agendas of all investment committees and Albion's internal
board meetings, and any findings are discussed at fund board meetings
(VCTs and LP funds). Reporting is intentionally light in the first
instance, partly due to the stage and nature of investments and to
encourage widespread adoption. The level of reporting is expected to
build over time as the range of factors to consider increases and as our
compliance with the UN PRI guidelines becomes apparent.
The Board and Manager have exercised conscious principles in making
responsible investments throughout the life of the Company, not least in
providing finance for nascent companies in a variety of important
sectors such as technology, healthcare and renewable energy. In making
the investments, the Manager is directly involved in the oversight and
governance of these investments, including ensuring standards of
reporting and visibility on business practices, all of which is reported
to the Board of the Company. By its nature, not least in making
qualifying investments which fulfil the criteria set by HMRC, the
Company has focused on sustainable and longer-term investment
propositions, some of which will fail in the nature of small companies,
but some of which will grow and serve important societal demands. One of
the most important key performance indicators is the quality of the
investment portfolio, which goes beyond the individual valuations and
examines the prospects of each of the portfolio companies, as well as
the sectors in which they operate -- all requiring a longer- term view.
The Company adheres to the principles of the AIC Code of Corporate
Governance and is also aware of other governance and other corporate
conduct guidance which it meets as far as practical, including in the
constitution of a diversified and independent board capable of providing
constructive challenge but also, through its experience of the Company,
continuity over the longer term investments the Company makes.
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 formal policies in these
matters and as such these requirements do not apply.
General Data Protection Regulation
The General Data Protection Regulation came into effect on 25 May 2018
with the objective of unifying data privacy requirements across the
European Union. The Manager, Albion Capital Group LLP, has taken action
to ensure that the Manager and the Company are compliant with the
regulation.
Further policies
The Company has adopted a number of further policies relating to:
-- Environment
-- Global greenhouse gas emissions
-- Anti-bribery
-- Anti-facilitation of tax evasion
-- Diversity
and these are set out in the Directors' report on page 30 of 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, changes to the environment and individual risks.
The Board also identifies emerging risks which might impact on the
Company. In the period the most noticeable emerging risk has been the
global pandemic which has impacted on not only public health and
mobility but also has had an adverse impact on global traded markets,
the impact of which, by its nature, is likely to be uncertain for some
time, and at time of publishing the accounts is severe.
The Directors have carried out a robust assessment of the Company's
disclosures below that describe the principal risks, and explain how
they are being managed or mitigated. 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
------------ ----------------------------------------------------------- ------------------------------------------------------------
Investment, The risk of investment in poor quality businesses, To reduce this risk, the Board places reliance upon
performance which could reduce the capital and income returns the skills and expertise of the Manager and its track
and to shareholders and could negatively impact on the record over many years of making successful investments
valuation Company's current and future valuations. in this segment of the market. In addition, the Manager
risk By nature, smaller unquoted businesses, such as those operates a formal and structured investment appraisal
that qualify for venture capital trust purposes, are and review process, which includes an Investment Committee,
more fragile than larger, long established businesses. comprising investment professionals from the Manager
The Company's investment valuation methodology is and at least one external investment professional.
reliant on the accuracy and completeness of information The Manager also invites and takes account of comments
that is issued by portfolio companies. In particular, from non-executive Directors of the Company on matters
the Directors may not be aware of or take into account discussed at the Investment Committee meetings. Investments
certain events or circumstances which occur after are actively and regularly monitored by the Manager
the information issued by such companies is reported. (investment managers normally sit on portfolio company
boards), including the level of diversification in
the portfolio, and the Board receives detailed reports
on each investment as part of the Manager's report
at quarterly board meetings.
The unquoted investments held by the Company are designated
at fair value through profit or loss and valued in
accordance with the International Private Equity and
Venture Capital Valuation Guidelines. These guidelines
set out recommendations, intended to represent current
best practice on the valuation of venture capital
investments. The valuation takes into account all
known material facts up to the date of approval of
the Financial Statements by the Board.
------------ ----------------------------------------------------------- ------------------------------------------------------------
VCT approval The Company must comply with section 274 of the Income To reduce this risk, the Board has appointed the Manager,
risk Tax Act 2007 which enables its investors to take advantage which has a team with significant experience in venture
of tax relief on their investment and on future returns. capital trust management, used to operating within
Breach of any of the rules enabling the Company to the requirements of the venture capital trust legislation.
hold VCT status could result in the loss of that status. In addition, to provide further formal reassurance,
the Board has appointed Philip Hare & Associates LLP
as its taxation adviser, who report quarterly to the
Board to independently confirm compliance with the
venture capital trust legislation, to highlight areas
of risk and to inform on changes in legislation. Each
investment in a new portfolio company is also pre-cleared
with our profession advisors or H.M. Revenue & Customs.
The Company monitors closely the extent of qualifying
holdings and addresses this as required.
------------ ----------------------------------------------------------- ------------------------------------------------------------
Regulatory The Company is listed on The London Stock Exchange Board members and the Manager have experience of operating
and and is required to comply with the rules of the UK at senior levels within or advising quoted companies.
compliance Listing Authority, as well as with the Companies Act, In addition, the Board and the Manager receive regular
risk Accounting Standards and other legislation. Failure updates on new regulation from its auditor, lawyers
to comply with these regulations could result in a and other professional bodies. The Company is subject
delisting of the Company's shares, or other penalties to compliance checks through the Manager's compliance
under the Companies Act or from financial reporting officer, and any issues arising from compliance or
oversight bodies. regulation are reported to its own Board on a monthly
basis. These controls are also reviewed as part of
the quarterly Board meetings, and also as part of
the review work undertaken by the Manager's compliance
officer. The report on controls is also evaluated
by the internal auditors.
------------ ----------------------------------------------------------- ------------------------------------------------------------
Operational The Company relies on a number of third parties, in The Company and its operations are subject to a series
and internal particular the Manager, for the provision of investment of rigorous internal controls and review procedures
control management and administrative functions. Failures exercised throughout the year.
risk in key systems and controls within the Manager's business The Audit Committee reviews the Internal Audit Reports
could put assets of the Company at risk or result prepared by the Manager's internal auditors, PKF Littlejohn
in reduced or inaccurate information being passed LLP and has access to the internal audit partner of
to the Board or to shareholders. PKF Littlejohn LLP to provide an opportunity to ask
specific detailed questions in order to satisfy itself
that the Manager has strong systems and controls in
place including those in relation to business continuity.
From 1 October 2018, Ocorian (UK) Limited was appointed
as Depositary to oversee the custody and cash arrangements
and provide other AIFMD duties. The Board reviews
the quarterly reports prepared by Ocorian (UK) Limited
to ensure that Albion Capital is adhering to its policies
and procedures as required by the AIFMD.
In addition, the Board regularly reviews the performance
of its key service providers, particularly the Manager,
to ensure they continue to have the necessary expertise
and resources to deliver the Company's investment
objective and policies. The Manager and other service
providers have also demonstrated to the Board that
there is no undue reliance placed upon any one individual.
------------ ----------------------------------------------------------- ------------------------------------------------------------
Economic, Changes in economic conditions, including, for example, The Company invests in a diversified portfolio of
political interest rates, rates of inflation, industry conditions, companies across a number of industry sectors and
and social competition, political and diplomatic events and other in addition often invests a mixture of instruments
risk factors could substantially and adversely affect the in portfolio companies and has a policy of minimising
Company's prospects in a number of ways. This also any external bank borrowings within portfolio companies.
includes risks of social upheaval, including from At any given time, the Company has sufficient cash
infection and population re-distribution, as well resources to meet its operating requirements, including
as economic risk challenges as a result of healthcare share buy-backs and follow on investments.
pandemics/infection. In common with most commercial operations, exogenous
risks over which the Company has no control are always
a risk and the Company does what it can to address
these risks where possible, not least as the nature
of the investments the Company makes are long term.
------------ ----------------------------------------------------------- ------------------------------------------------------------
Market value The market value of Ordinary shares can fluctuate. The Company operates a share buy-back policy, which
of Ordinary The market value of an Ordinary share, as well as is designed to limit the discount at which the Ordinary
shares being affected by its net asset value and prospective shares trade to around 5 per cent to net asset value,
net asset value, also takes into account its dividend by providing a purchaser through the Company in absence
yield and prevailing interest rates. As such, the of market purchasers. From time to time buy-backs
market value of an Ordinary share may vary considerably cannot be applied, for example when the Company is
from its underlying net asset value. The market prices subject to a close period, or if it were to exhaust
of shares in quoted investment companies can, therefore, any buy-back authorities.
be at a discount or premium to the net asset value New Ordinary shares are issued at sufficient premium
at different times, depending on supply and demand, to net asset value to cover the costs of issue and
market conditions, general investor sentiment and to avoid asset value dilution to existing investors.
other factors. Accordingly, the market price of the
Ordinary shares may not fully reflect their underlying
net asset value.
------------ ----------------------------------------------------------- ------------------------------------------------------------
Reputational The Company relies on the judgement and reputation The Board regularly questions the Manager on its ethics,
risk of the Manager which is itself subject to the risk procedures, safeguards and investment philosophy,
of loss. which should consequently result in the risk to reputation
being minimised.
------------ ----------------------------------------------------------- ------------------------------------------------------------
Viability statement
In accordance with the FRC UK Corporate Governance Code published in
2018 and principle 36 of the AIC Code of Corporate Governance, the
Directors have assessed the prospects of the Company over three years to
31 December 2022. The Directors believe that three years is a reasonable
period in which they can assess the future of the Company to continue to
operate and meet its liabilities as they fall due and is also the period
used by the Board in the strategic planning process and is considered
reasonable for a business of our nature and size. The three year period
is also considered the most appropriate given the forecasts that the
Board require from the Manager, and the estimated timelines for finding,
assessing and completing investments. The three year period also takes
account of the potential impact of new regulations, should they be
imposed, and how they may impact the Company over the longer term, and
the availability of cash but cannot take into account the exogenous
risks that are impacting on global economies at the date of these
accounts.
The Directors have carried out a robust assessment of the emerging and
principal risks facing the Company as explained above, including those
that could threaten its business model, future performance, solvency or
liquidity. The Board also considered the procedures in place to identify
emerging risks and the risk management processes in place to avoid or
reduce the impact of the underlying risks. The Board focused on the
major factors which affect the economic, regulatory and political
environment. The Board deliberated over the importance of the Manager
and the processes that they have in place for dealing with the principal
risks.
The Board assessed the ability of the Company to raise finance and
deploy capital, as well as the existing cash resources of the Company.
The portfolio is well balanced and geared towards long term growth,
delivering dividends and capital growth to shareholders. In assessing
the prospects of the Company, the Directors have considered the cash
flow by looking at the Company's income and expenditure projections and
funding pipeline over the assessment period of three years and they
appear realistic.
Taking into account the processes for mitigating risks, monitoring costs,
share price discount, the Manager's compliance with the investment
objective, policies and business model and the balance of the portfolio
the Directors have concluded that there is a reasonable expectation that
the Company will be able to continue in operation and meet its
liabilities as they fall due over the three year period to 31 December
2022.
This Strategic report of the Company for the year ended 31 December 2019
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
provide shareholders 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.
On behalf of the Board,
Ben Larkin
Chairman
27 March 2020
Responsibility statement
In preparing these Financial Statements for the year to 31 December
2019, the Directors of the Company, being Ben Larkin, Lyn Goleby, Lord
O'Shaughnessy 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 2019 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 or loss of the
Company; and
-the Chairman's statement and Strategic report include a fair review of
the development and performance of the business and the position of the
Company, together with a description of the principal risks and
uncertainties it faces.
We consider that the Annual Report and Financial Statements, taken as a
whole, are fair, balanced, and understandable and provide the
information necessary for shareholders to assess the Company's position,
performance, business model and strategy.
A detailed "Statement of Directors' responsibilities" is contained on
page 33 within the full audited Annual Report and Financial Statements.
On behalf of the Board,
Ben Larkin
Chairman
27 March 2020
Income statement
Year ended 31 December Year ended 31 December
2019 2018
------------------------- -------------------------
Revenue Capital Total Revenue Capital Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------------- ---- ------- ------- ------- ------- ------- -------
Gains on investments 3 - 3,074 3,074 - 12,326 12,326
Investment income 4 1,294 - 1,294 881 - 881
Investment management fee 5 (357) (1,070) (1,427) (334) (1,004) (1,338)
Performance incentive fee 5 - - - (105) (315) (420)
Other expenses 6 (268) - (268) (231) - (231)
------- ------- ------- ------- ------- -------
Profit on ordinary activities before tax 669 2,004 2,673 211 11,007 11,218
Tax (charge)/credit on ordinary activities 8 (76) 76 - (30) 30 -
------- ------- ------- ------- ------- -------
Profit and total comprehensive income attributable
to shareholders 593 2,080 2,673 181 11,037 11,218
------- ------- ------- ------- ------- -------
Basic and diluted return per share (pence)* 10 0.73 2.55 3.28 0.20 14.80 15.00
--------------------------------------------------- ---- ------- ------- ------- ------- ------- -------
* adjusted for treasury shares
The accompanying notes below 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.
Balance sheet
31 December 2019 31 December 2018
Note GBP'000 GBP'000
---------------------------------- ---- ------------------ ----------------
Fixed asset investments 11 51,406 52,663
Current assets
Current asset investments 13 3,878 1,243
Trade and other receivables less
than one year 13 304 1,128
Cash and cash equivalents 14,529 9,189
------------------ ----------------
18,711 11,560
Total assets 70,117 64,223
Payables: amounts falling due
within one year
Trade and other payables less than
one year 14 (434) (845)
------------------ ----------------
Total assets less current
liabilities 69,683 63,378
------------------ ----------------
Equity attributable to equity
holders
Called up share capital 15 938 839
Share premium 36,712 28,406
Capital redemption reserve 12 12
Unrealised capital reserve 14,702 16,234
Realised capital reserve 15,151 11,539
Other distributable reserve 2,168 6,348
------------------ ----------------
Total equity shareholders' funds 69,683 63,378
------------------ ----------------
Basic and diluted net asset value
per share (pence)* 16 83.47 84.70
---------------------------------- ---- ------------------ ----------------
* excluding treasury shares
The accompanying notes below form an integral part of these Financial
Statements.
These Financial Statements were approved by the Board of Directors, and
authorised for issue on 27 March 2020 and were signed on its behalf by
Ben Larkin
Chairman
Company number: 03654040
Statement of changes in equity
Capital Unrealised Realised Other
Called up share Share redemption capital capital distributable
capital premium reserve reserve reserve* reserve* Total
--------------- ------- ---------- ---------- -------- ------------- -------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- --------------- ------- ---------- ---------- -------- ------------- -------
As at 1
January 2019 839 28,406 12 16,234 11,539 6,348 63,378
Profit and
total
comprehensive
income for
the period - - - 1,667 413 593 2,673
Transfer of
unrealised
gains on
disposal of
investments - - - (3,199) 3,199 - -
Purchase of
shares for
treasury - - - - - (1,013) (1,013)
Issue of
equity 99 8,521 - - - - 8,620
Cost of issue
of equity - (215) - - - - (215)
Dividends paid - - - - - (3,760) (3,760)
--------------
As at 31
December
2019 938 36,712 12 14,702 15,151 2,168 69,683
-------------- --------------- ------- ---------- ---------- -------- ------------- -------
As at 1
January 2018 801 25,704 12 10,892 5,844 10,093 53,346
Profit and
total
comprehensive
income for
the period - - - 8,560 2,477 181 11,218
Transfer of
unrealised
gains on
disposal of
investments - - - (3,218) 3,218 - -
Purchase of
shares for
treasury - - - - - (921) (921)
Issue of
equity 38 2,761 - - - - 2,799
Cost of issue
of equity - (59) - - - - (59)
Dividends paid - - - - - (3,005) (3,005)
--------------
As at 31
December
2018 839 28,406 12 16,234 11,539 6,348 63,378
-------------- --------------- ------- ---------- ---------- -------- ------------- -------
* These reserves amount to GBP17,319,000 (2018: GBP17,887,000) which is
considered distributable.
Statement of cash flows
Year ended Year ended
31 December 2019 31 December 2018
GBP'000 GBP'000
--------------------------------------- ------------------ -----------------
Cash flow from operating activities
Loan stock income received 1,131 809
Deposit interest received 49 38
Dividend income received 151 56
Investment management fees paid (1,435) (1,284)
Performance incentive fee paid (420) -
Other cash payments (253) (227)
Corporation tax paid - -
Net cash flow from operating activities (777) (608)
Cash flow from investing activities
Purchase of current asset investments (2,400) (1,400)
Purchase of fixed asset investments (5,675) (5,722)
Disposal of fixed asset investments 10,560 7,154
Net cash flow from investing activities 2,485 32
------------------ -----------------
Cash flow from financing activities
Issue of share capital 7,807 2,244
Cost of issue of shares (30) (3)
Equity dividends paid (3,132) (2,510)
Purchase of own shares (including
costs) (1,013) (921)
------------------ -----------------
Net cash flow from financing activities 3,632 (1,190)
------------------ -----------------
Increase/(decrease) in cash and cash
equivalents 5,340 (1,766)
Cash and cash equivalents at start of
period 9,189 10,955
------------------ -----------------
Cash and cash equivalents at end of
period 14,529 9,189
--------------------------------------- ------------------ -----------------
Notes to the Financial Statements
1. Basis of preparation
The Financial Statements have been prepared in accordance with
applicable United Kingdom law and accounting standards, including
Financial Reporting Standard 102 ("FRS 102"), 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").
The preparation of the Financial Statements requires management to make
judgements and estimates that affect the application of policies and
reported amounts of assets, liabilities, income and expenses. The most
critical estimates and judgements relate to the determination of
carrying value of investments at Fair Value Through Profit and Loss
("FVTPL"). The Company values investments by following the International
Private Equity and Venture Capital Valuation ("IPEV") Guidelines as
issued in 2018 and further detail on the valuation techniques used are
in note 2 below.
Company information is shown on page 2 of the full Annual Report and
Financial Statements.
2. Accounting policies
Fixed and current asset investments
The Company's business is investing in financial assets with a view to
profiting from their total return in the form of income and capital
growth. This portfolio of financial assets is managed and its
performance evaluated on a fair value basis, in accordance with a
documented investment policy, and information about the portfolio is
provided internally on that basis to the Board.
In accordance with the requirements of FRS 102, those undertakings in
which the Company holds more than 20 per cent. of the equity as part of
an investment portfolio are not accounted for using the equity method.
In these circumstances the investment is measured at FVTPL.
Upon initial recognition (using trade date accounting) investments,
including loan stock, are classified by the Company as FVTPL and are
included at their initial fair value, which is cost (excluding expenses
incidental to the acquisition which are written off to the Income
statement).
Subsequently, the investments are valued at 'fair value', which is
measured as follows:
-- Investments listed on recognised exchanges are valued at their bid prices
at the end of the accounting period or otherwise at fair value based on
published price quotations.
-- Unquoted investments, where there is not an active market, are valued
using an appropriate valuation technique in accordance with the IPEV
Guidelines. Indicators of fair value are derived using established
methodologies including earnings multiples, the level of third party
offers received, cost or price of recent investment rounds, net assets
and industry valuation benchmarks. Where price of recent investment is
used as a starting point for estimating fair value at subsequent
measurement dates, this has been benchmarked using an appropriate
valuation technique permitted by the IPEV guidelines.
-- In situations where cost or price of recent investment is used,
consideration is given to the circumstances of the portfolio company
since that date in determining fair value. This includes consideration of
whether there is any evidence of deterioration or strong definable
evidence of an increase in value. In the absence of these indicators, the
investment in question is valued at the amount reported at the previous
reporting date. Examples of events or changes that could indicate a
diminution include:
-- the performance and/or prospects of the underlying business are
significantly below the expectations on which the investment was
based;
-- a significant adverse change either in the portfolio company's
business or in the technological, market, economic, legal or
regulatory environment in which the business operates; or
-- market conditions have deteriorated, which may be indicated by a
fall in the share prices of quoted businesses operating in the
same or related sectors.
Investments are recognised as financial assets on legal completion of
the investment contract and are de-recognised on legal completion of the
sale of an investment.
Dividend income is not recognised as part of the fair value movement of
an investment, but is recognised separately as investment income through
the other distributable reserve when a share becomes ex-dividend.
Current assets and payables
Receivables, payables and cash are carried at amortised cost, in
accordance with FRS 102. There are no financial liabilities other than
payables.
Investment income
Equity income
Dividend income is included in revenue when the investment is quoted
ex-dividend.
Unquoted loan stock income
Fixed returns on non-equity shares and debt securities are recognised
when the Company's right to receive payment and expect settlement is
established. Where interest is rolled up and/or payable at redemption
then it is recognised as income unless there is reasonable doubt as to
its receipt.
Bank interest income
Interest income is recognised on an accruals basis using the rate of
interest agreed with the bank.
Investment management fees, performance incentive 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 and performance incentive fees are
allocated to the capital account to the extent that these relate to an
enhancement in the value of the investments. 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.
Taxation
Taxation is applied on a current basis in accordance with FRS 102.
Current tax is tax payable (refundable) in respect of the taxable profit
(tax loss) for the current period or past reporting periods using the
tax rates and laws that have been enacted or substantively enacted at
the financial reporting date. Taxation associated with capital expenses
is applied in accordance with the SORP.
Deferred tax is provided in full on all timing differences at the
reporting date. Timing differences are differences between taxable
profits and total comprehensive income as stated in the Financial
Statements that arise from the inclusion of income and expenses in tax
assessments in periods different from those in which they are recognised
in the Financial Statements. As a VCT the Company has an exemption from
tax on capital gains. The Company intends to continue meeting the
conditions required to obtain approval as a VCT in the foreseeable
future. The Company therefore, should have no material deferred tax
timing differences arising in respect of the revaluation or disposal of
investments and the Company has not provided for any deferred tax.
Reserves
Share premium reserve
This reserve accounts for the difference between the price paid for the
Company's shares and the nominal value of those shares, less issue costs
and transfers to the other distributable reserve.
Capital redemption reserve
This reserve accounts for amounts by which the issued share capital is
diminished through the repurchase and cancellation of the Company's own
shares.
Unrealised capital reserve
Increases and decreases in the valuation of investments held at the year
end against cost are included in this reserve.
Realised capital reserve
The following are disclosed in this reserve:
-- gains and losses compared to cost on the realisation of investments, or
permanent diminutions in value;
-- expenses, together with the related taxation effect, charged in
accordance with the above policies; and
-- dividends paid to equity holders where paid out by capital.
Other distributable reserve
The special reserve, treasury share reserve and the revenue reserve were
combined in 2012 to form a single reserve named other distributable
reserve.
This reserve accounts for movements from the revenue column of the
Income statement, the payment of dividends, the buy-back of shares and
other non-capital realised movements.
Dividends
Dividends by the Company are accounted for in the period in which the
dividend is paid or approved at the Annual General Meeting.
Segmental reporting
The Directors are of the opinion that the Company is engaged in a single
operating segment of business, being investment in equity and debt in
smaller companies principally based in the UK.
3. Gains on investments
Year ended Year ended
31 December 2019 31 December 2018
GBP'000 GBP'000
----------------- -----------------
Unrealised gains on fixed asset
investments 1,431 8,717
Unrealised gains/(losses) on current
asset investments 236 (157)
Realised gains on fixed asset
investments 1,407 3,766
3,074 12,326
4. Investment income
Year ended Year ended
31 December 2019 31 December 2018
GBP'000 GBP'000
----------------------------------------
Loan stock interest and other fixed
returns 977 787
UK dividend income 268 56
Bank deposit interest 49 38
1,294 881
----------------- -----------------
5. Investment management fees
Year ended Year ended
31 December 2019 31 December 2018
GBP'000 GBP'000
Investment management fee charged to
revenue 357 334
Investment management fee charged to
capital 1,070 1,004
Performance incentive fee charged to
revenue - 105
Performance incentive fee charged to
capital - 315
------------------ -----------------
1,427 1,758
------------------ -----------------
Further details of the Management agreement under which the investment
management fee and performance incentive fee are paid is given in the
Strategic report above.
During the year, services of a total value of GBP1,427,000 (2018:
GBP1,338,000) were purchased by the Company from Albion Capital Group
LLP in respect of management fees. There is no performance incentive fee
payable this year (2018: GBP420,000). At the financial year end, the
amount due to Albion Capital Group LLP in respect of these services
disclosed as accruals was GBP347,000 (2018: GBP775,000). The total
annual running costs of the Company are capped at an amount equal to 2.5
per cent. of the Company's net assets, with any excess being met by
Albion by way of a reduction in management fees. During the year, the
management fee was reduced by GBP105,000 as a result of this cap (2018:
GBPnil).
During the year, the Company was not charged by Albion Capital Group LLP
in respect of Patrick Reeve's services as a Director (2018: GBPnil).
Albion Capital Group LLP, its partners and staff hold 652,413 Ordinary
shares in the Company.
Albion Capital Group LLP is, from time to time, eligible to receive
arrangement fees and monitoring fees from portfolio companies. During
the year ended 31 December 2019, fees of GBP198,000 attributable to the
investments of the Company were received by Albion Capital Group LLP
pursuant to these arrangements (2018: GBP190,000).
The Company has entered into an offer agreement relating to the Offers
with the Company's investment manager Albion Capital Group LLP, pursuant
to which Albion Capital will receive a fee of 2.5 per cent. of the gross
proceeds of the Offers and out of which Albion Capital will pay the
costs of the Offers, as detailed in the Prospectus.
Additionally, an amount of GBP2,400,000 was invested in the SVS Albion
OLIM UK Equity Income Fund ("OUEIF") (2018: GBP1,400,000) as part of the
Company's management of surplus liquid funds. To avoid double charging,
Albion agreed to reduce its management fee relating to the investment in
the OUEIF by 0.75 per cent. per annum, which represents the OUEIF
management fee charged by OLIM. This resulted in a further reduction of
the management fee of GBP20,000 (2018: GBP3,000).
6. Other expenses
Year ended Year ended
31 December 2019 31 December 2018
GBP'000 GBP'000
Directors' fees (including NIC) 74 74
Auditor's remuneration for statutory audit services
(excluding VAT) 31 28
Other administrative expenses 163 129
268 231
------------------ ------------------
7. Directors' fees
The amounts paid to the Directors during the year are as follows:
Year ended Year ended
31 December 2019 31 December 2018
GBP'000 GBP'000
----------------- -----------------
Directors' fees 69 68
National insurance 5 6
74 74
The Company's key management personnel are the non-executive Directors.
Further information regarding Directors' remuneration can be found in
the Directors' remuneration report on pages 39 and 40 of the full Annual
Report and Financial Statements.
8. Tax on ordinary activities
Year ended Year ended
31 December 2019 31 December 2018
GBP'000 GBP'000
- -
UK corporation tax charge in respect of current year
- -
----------------- -----------------
Year ended Year ended
31 December 2019 31 December 2018
Factors affecting the tax charge: GBP'000 GBP'000
---------------------------------------------------
Return on ordinary activities before taxation 2,673 11,218
----------------- -----------------
Tax charge on profit at the average companies rate
of 19 per cent.
(2018: 19 per cent.) 508 2,131
Factors affecting the charge:
Non-taxable gains (584) (2,342)
Income not taxable (51) (11)
Excess management expenses carried forward 127 222
- -
----------------- -----------------
The tax charge for the year shown in the Income statement is lower than
the average companies rate of corporation tax in the UK of 19 per cent.
(2018: 19 per cent.). The differences are explained above.
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.
1. The Company has excess management expenses of GBP2,652,000 (2018:
GBP1,983,000) that are available for offset against future profits. A
deferred tax asset of GBP451,000 (2018: GBP337,000) has not been
recognised in respect of these losses as they will be recoverable only to
the extent that the Company has sufficient future taxable profits.
9. Dividends
Year ended Year ended
31 December 2019 31 December 2018
GBP'000 GBP'000
---------------------------------------------------------- ----------------- -----------------
Dividend of 2.00p per Ordinary share paid on 31 May
2018 - 1,505
Dividend of 2.00p per Ordinary share paid on 28 September
2018 - 1,503
Dividend of 2.25p per Ordinary share paid on 31 May
2019 1,880 -
Dividend of 2.25p per Ordinary share paid on 30 September
2019 1,885 -
Unclaimed dividends (5) (3)
----------------- -----------------
3,760 3,005
----------------- -----------------
Details of the consideration issued under the Dividend Reinvestment
Scheme included in the dividends above can be found in note 15.
In addition to the dividends summarised above, the Board has declared a
first dividend of 2.25 pence per Ordinary share for the year ending 31
December 2020, payable on 29 May 2020 to shareholders on the register on
8 May 2020. The total dividend will be approximately GBP2,082,000.
10. Basic and diluted return per share
Year ended 31 December Year ended 31 December
2019 2018
Revenue Capital Total Revenue Capital Total
-------------------------------------------------------- ------- ------- ------- ------- ------- --------
Profit attributable to equity shares (GBP'000) 593 2,080 2,673 181 11,037 11,218
Weighted average shares in issue (adjusted for treasury
shares) 81,487,820 74,732,976
Return attributable per equity share (pence) 0.73 2.55 3.28 0.20 14.80 15.00
The weighted average number of Ordinary shares is calculated after
adjusting for treasury shares of 10,350,156 (2018: 9,072,156).
There are no convertible instruments, derivatives or contingent share
agreements in issue so basic and diluted return per share are the same.
11. Fixed asset investments
31 December 2019 31 December 2018
GBP'000 GBP'000
------------------------------------------
Investments held at fair value through
profit or loss
Unquoted equity and preference shares 37,372 34,327
Unquoted loan stock 14,012 18,205
Quoted equity 22 131
51,406 52,663
---------------- ----------------
31 December 2019 31 December 2018
GBP'000 GBP'000
----------------------------------------------------
Opening valuation 52,663 42,291
Purchases at cost 6,595 6,518
Disposal proceeds (10,519) (8,556)
Realised gains 1,407 3,766
Movement in loan stock accrued income (171) (73)
Unrealised gains 1,431 8,717
---------------- ----------------
Closing valuation 51,406 52,663
---------------- ----------------
Movement in loan stock accrued income
Opening accumulated loan stock accrued income 284 357
Movement in loan stock accrued income (171) (73)
---------------- ----------------
Closing accumulated loan stock accrued income 113 284
---------------- ----------------
Movement in unrealised gains
Opening accumulated unrealised gains 16,215 10,716
Transfer of previously unrealised gains to realised
reserve on disposal of investments (3,199) (3,218)
Movement in unrealised gains 1,431 8,717
---------------- ----------------
Closing accumulated unrealised gains 14,447 16,215
---------------- ----------------
Historic cost basis
Opening book cost 36,164 31,218
Purchases at cost 6,595 6,518
Sales at cost (5,913) (1,572)
Closing book cost 36,846 36,164
---------------- ----------------
Purchases and disposals detailed above do not agree to the Statement of
cash flows due to restructuring of investments, conversion of
convertible loan stock and settlement debtors and creditors.
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 those valued below cost and past due assets are covered by the
value of security held for these loan stock investments.
Unquoted fixed asset investments are valued at fair value in accordance
with the IPEV guidelines as follows:
31 December 2019 31 December 2018
Valuation methodology GBP'000 GBP'000
--------------------------------------------------
Cost and price of recent investment (reviewed for
impairment or uplift) 33,479 27,717
Third party valuation -- discounted cash flow 9,104 8,951
Revenue multiple 2,969 3,272
Third party valuation - earnings multiple 2,723 8,244
Net assets 2,347 2,293
Earnings multiple 762 671
Contracted sale price - 1,384
51,384 52,532
---------------- ----------------
When using the cost or price of a recent investment in the valuations
the Company looks to 're-calibrate' this price at each valuation point
by reviewing progress within the investment, comparing against the
initial investment thesis, assessing if there are any significant events
or milestones that would indicate the value of the investment has
changed and considering whether a market-based methodology (i.e. using
multiples from comparable public companies) or a discounted cashflow
forecast would be more appropriate.
The main inputs into the calibration exercise, and for the valuation
models using multiples, are revenue, EBITDA and P/E multiples (based on
the most recent revenue, EBITDA or earnings achieved and equivalent
corresponding revenue, EBITDA or earnings multiples of comparable
companies), quality of earnings assessments and comparability difference
adjustments. Revenue multiples are often used, rather than EBITDA or
earnings, due to the nature of the Company's investments, being in
growth and technology companies which are not normally expected to
achieve profitability or scale for a number of years. Where an
investment has achieved scale and profitability the Company would
normally then expect to switch to using an EBITDA or earnings multiple
methodology.
In the calibration exercise and in determining the valuation for the
Company's equity instruments, comparable trading multiples are used. In
accordance with the Company's policy, appropriate comparable companies
based on industry, size, developmental stage, revenue generation and
strategy are determined and a trading multiple for each comparable
company identified is then calculated. The multiple is calculated by
dividing the enterprise value of the comparable group by its revenue,
EBITDA or earnings. The trading multiple is then adjusted for
considerations such as illiquidity, marketability and other differences,
advantages and disadvantages between the portfolio company and the
comparable public companies based on company specific facts and
circumstances.
Fair value investments had the following movements between valuation
methodologies between 31 December 2018 and 31 December 2019:
Change in Value as at Explanatory note
valuation 31 December 2019
methodology GBP'000
(2018 to
2019)
-------------- ----------------- --------------------------------------------------
Price of 1,173 Discounted revenue multiple more relevant based on
recent current trading
investment to
revenue
multiple
Revenue 832 Recent external funding round
multiple to
price of
recent
investment
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 IPEV Guidelines. The Directors believe that, within
these parameters, there are no other possible methods of valuation which
would be reasonable as at 31 December 2019.
FRS 102 and the SORP 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. The table below sets
out fair value hierarchy definitions using FRS102 s.11.27.
Fair value hierarchy Definition
-------------------- ----------------------------------------------------
Level 1 Unadjusted quoted prices in an active market
-------------------- ----------------------------------------------------
Level 2 Inputs to valuations are from observable sources and
are directly or indirectly derived from prices
-------------------- ----------------------------------------------------
Level 3 Inputs to valuations not based on observable market
data
-------------------- ----------------------------------------------------
Quoted investments are valued according to Level 1 valuation methods.
Unquoted equity, preference shares and loan stock are all valued
according to Level 3 valuation methods.
Investments held at fair value through profit or loss (Level 3) had the
following movements:
31 December 2019 31 December 2018
GBP'000 GBP'000
---------------------------- ---------------- ----------------
Opening balance 52,532 42,109
Additions 6,595 6,518
Disposals (10,513) (8,556)
Accrued loan stock interest (171) (73)
Realised gains 1,510 3,766
Unrealised gains 1,431 8,768
---------------- ----------------
Closing balance 51,384 52,532
---------------- ----------------
FRS 102 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. 85 per cent. of the portfolio of
investments is based on cost, recent investment price, net assets, or is
loan stock, and as such the Board considers that the assumptions used
for their valuations are the most reasonable. The Directors believe that
changes to reasonable possible alternative assumptions (by adjusting the
revenue and earnings multiples) for the valuations of the remainder of
the portfolio companies could result in an increase in the valuation of
investments by GBP444,000 or a decrease in the valuation of investments
by GBP443,000. For valuations based on earnings and revenue multiples,
the Board considers that the most significant input is the
price/earnings ratio; for valuations based on third party valuations,
the Board considers that the most significant inputs are price/earnings
ratio, discount factors and market values for buildings; which have been
adjusted to drive the above sensitivities.
12. 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
investment listed below is held as part of an investment portfolio and
therefore, as permitted by FRS 102 section 9.9B, it is measured at fair
value through profit and loss and not consolidated as a subsidiary.
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 2019 as described below:
% total
Aggregate voting
Registered capital % class rights
address and and and held by Profit/(loss)
country of Principal reserves share the before tax
Company incorporation activity GBP'000 type Company GBP'000
----------- -------------- ------------ --------- -------- --------- -------------
Albion Former owner
Investment of
Properties residential 68.2% A
Limited EC1M 5QL, UK property (736) Ordinary 68.2% n/a*
* The company files filleted accounts which does not disclose this
information.
13. Current assets
Current asset investments 31 December 2019 31 December 2018
GBP'000 GBP'000
-------------------------------------- ---------------- ----------------
SVS Albion OLIM UK Equity Income Fund 3,878 1,243
---------------- ----------------
Current asset investments at 31 December 2019 consist of cash invested
in SVS Albion OLIM UK Equity Income Fund and is capable of realisation
within 7 days. These fall into the level 1 fair value hierarchy as
defined in note 11.
Trade and other receivables less than one
year 31 December 2019 31 December 2018
GBP'000 GBP'000
------------------------------------------ ---------------- ----------------
Prepayments and accrued income 17 16
Other receivables 287 1,112
---------------- ----------------
304 1,128
---------------- ----------------
The Directors consider that the carrying amount of receivables is not
materially different to their fair value.
14. Payables: amounts falling due within one year
31 December 2019 31 December 2018
GBP'000 GBP'000
----------------------------- ----------------- ----------------
Accruals and deferred income 417 836
Trade payables 17 9
434 845
----------------- ----------------
The Directors consider that the carrying amount of payables is not
materially different to their fair value.
15. Called up share capital
Allotted, called up and fully paid shares: GBP'000
---------------------------------------------------------- -------
83,860,469 Ordinary shares of 1 penny each at 31 December
2018 839
9,967,836 Ordinary shares of 1 penny each issued during
the year 99
93,828,305 Ordinary shares of 1 penny each at 31 December
2019 938
9,072,156 Ordinary shares of 1 penny each held in
treasury at 31 December 2018 (91)
1,278,000 Ordinary shares of 1 penny each purchased
during the year to be held in treasury (13)
10,350,156 Ordinary shares of 1 penny each held in
treasury at 31 December 2019 (104)
----------------------------------------------------------- -------
Voting rights of 83,478,149 Ordinary shares of 1 penny
each at 31 December 2019 835
----------------------------------------------------------- -------
The Company purchased 1,278,000 Ordinary shares (2018: 1,253,456) at a
cost of GBP1,013,000 including stamp duty (2018: GBP921,000) to be held
in treasury during the year to 31 December 2019. Total share buy backs
in 2019 represents 1.4 per cent. (2018: 1.5 per cent.) of called-up
share capital as at 31 December 2019.
The Company holds a total of 10,350,156 shares (2018: 9,072,156) in
treasury representing 11.0 per cent. (2018: 10.8 per cent.) of the
issued Ordinary share capital at 31 December 2019.
Under the terms of the Dividend Reinvestment Scheme, the following new
Ordinary shares of nominal value 1 penny each were allotted during the
year:
Aggregate
Number nominal
of value of Issue price Net
shares shares (pence per invested Opening market price on allotment date (pence per
Date of allotment allotted (GBP'000) share) (GBP'000) share)
-------------------
31 May 2019 376,536 4 83.91 301 78.50
30 September 2019 378,342 4 83.03 298 79.00
-------- --------- ---------
754,878 8 599
Under the terms of the Albion VCTs Prospectus Top Up Offers 2018/19, the
following new Ordinary shares of nominal value 1 penny each, were
allotted during the year:
Aggregate
nominal Net
Number of value of Issue price consideration
Date of shares shares (pence per received Opening market price on allotment date (pence per
allotment allotted (GBP'000) share) (GBP'000) share)
----------
1 April
2019 1,483,587 15 86.00 1,257 79.50
1 April
2019 280,678 3 86.50 238 79.50
1 April
2019 6,249,810 62 86.90 5,296 79.50
5 April
2019 680,623 7 86.90 577 80.50
12 April
2019 165,805 2 86.00 140 80.50
12 April
2019 3,699 - 86.50 3 80.50
12 April
2019 348,756 3 86.90 296 80.50
9,212,958 92 7,807
--------- --------- -------------
16. Basic and diluted net asset value per share
31 December 2019 (pence 31 December 2018 (pence
per share) per share)
-------------------------
Basic and diluted net
asset value per Ordinary
share 83.47 84.70
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 83,478,149 Ordinary
shares as at 31 December 2019 (2018: 74,788,313).
17. Capital and financial instruments risk management
The Company's capital comprises Ordinary shares as described in note 15.
The Company is permitted to buy back its own shares for cancellation or
treasury purposes, and this is described in more detail on page 28 of
the Directors' report of the full Annual Report and Financial
Statements.
The Company's financial instruments comprise equity and loan stock
investments in quoted and unquoted companies, cash balances and
receivables and payables 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 payables. 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 quoted and
unquoted investments, details of which are shown on pages 20 to 22 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 GBP55,284,000
(2018: GBP53,906,000). Fixed asset and current asset investments form 79
per cent. of net asset value as at 31 December 2019 (2018: 85 per
cent.).
More details regarding the classification of fixed asset investments are
shown in note 11.
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. The
management of risk within the venture capital portfolio is addressed
through careful investment selection, by diversification across
different industry segments, by maintaining a wide spread of holdings in
terms of financing stage and by limitation of the size of individual
holdings. The Directors monitor the Manager's compliance with the
investment policy, review and agree policies for managing this risk and
monitor the overall level of risk on the investment portfolio on a
regular basis.
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 IPEV Guidelines. Details of the industries in
which investments have been made are contained in the pie chart at the
end of this announcement.
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 IPEV Guidelines.
As required under FRS 102 the Board is required to illustrate by way of
a sensitivity analysis the extent to which the assets are exposed to
market risk. The Board considers that the value of the fixed and current
asset investment portfolio is sensitive to a change of between 15% to
30% based on the current economic climate. The impact of a 15% to 30%
change has been selected as this is a range which is considered
reasonable given the current level of volatility observed. When
considering the appropriate level of sensitivity to be applied, the
Board has considered both historic performance and future expectations.
At the lower end of the range, the sensitivity of a 15% increase or
decrease in the valuation of the fixed and current asset investment
portfolio (keeping all other variables constant) would increase or
decrease the net asset value and return for the year by GBP8,292,600. At
the higher end of the range, the sensitivity of a 30% increase or
decrease in the valuation of the fixed and current asset investment
portfolio (keeping all other variables constant) would increase or
decrease the net asset value and return for the year by GBP16,585,200.
Interest rate risk
The Company is exposed to fixed and floating rate interest rate risk on
its financial assets through the effect of interest rate changes. On the
basis of the Company's analysis, it was estimated that a rise of 1 per
cent. in all interest rates would have increased total return before tax
for the year by approximately GBP121,000 (2018: GBP139,000). Furthermore,
it was considered that a fall of interest rates below current levels
during the year would have been very unlikely.
The weighted average effective interest rate applied to the Company's
fixed rate assets during the year was approximately 7.0 per cent. (2018:
5.3 per cent.). The weighted average period to maturity for the fixed
rate assets is approximately 6.0 years (2018: 5.1 years).
The Company's financial assets and liabilities, all denominated in
pounds sterling, consist of the following:
31 December 2019 31 December 2018
Floating rate Non-interest bearing Total Floating rate Non-interest bearing Total
Fixed rate GBP'000 GBP'000 GBP'000 GBP'000 Fixed rate GBP'000 GBP'000 GBP'000 GBP'000
-------------
Unquoted
equity - - 37,372 37,372 - - 34,327 34,327
Quoted equity - - 22 22 - - 131 131
Unquoted loan
stock 12,913 193 906 14,012 17,542 201 462 18,205
Current asset
investments - - 3,878 3,878 - - 1,243 1,243
Receivables* - - 289 289 - - 1,114 1,114
Current
liabilities - - (434) (434) - - (845) (845)
Cash - 14,529 - 14,529 - 9,189 - 9,189
------------- -------------------- ------------- -------------------- -------- -------------------- ------------- -------------------- --------
Total 12,913 14,722 42,033 69,668 17,542 9,390 36,432 63,364
-------------
*The receivables do not reconcile to the Balance sheet as prepayments
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
receivables, investment in unquoted loan stock, and through the holding
of cash on deposit with banks.
The Manager evaluates credit risk on loan stock and other similar
instruments 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. For loan stock investments made prior to 6
April 2018, which account for 87 per cent. of loan stock by value,
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
often 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
receivables) and other risks, both at the time of initial investment and
at quarterly Board meetings.
The Company's total gross credit risk at 31 December 2019 was limited to
GBP14,012,000 (2018: GBP18,205,000) of unquoted loan stock instruments,
GBP14,529,000 (2018: GBP9,189,000) of cash deposits with banks and
GBP304,000 (2018: GBP1,128,000) of other receivables.
At the Balance sheet date, the cash held by the Company was 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 was 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
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 shown below.
Liquidity risk
Liquid assets are held as cash on current account, cash on deposit 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 GBP6,760,000 as at 31 December 2019 (2018:
GBP6,169,000).
The Company had no committed borrowing facilities as at 31 December 2019
(2018: nil) and the Company had cash balances of GBP14,529,000 (2018:
GBP9,189,000), and current asset investments of GBP3,878,000 (2018:
GBP1,128,000), which are considered to be readily realisable within the
timescales required to make cash available for investment. The main cash
outflows are for new investments, buy-back of shares 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 of the Company's financial liabilities are
short term in nature and total GBP434,000 (2018: GBP845,000).
The carrying value of loan stock investments, analysed by expected
maturity dates is as follows:
31 December 2019 31 December 2018
Redemption Fully performing Valued below cost Past due Total Fully performing Valued below cost Past due Total
date GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------- ---------------- ----------------- -------- -------- ---------------- ----------------- -------- --------
Less than
one year 1,515 613 1,618 3,746 1,996 911 1,311 4,218
1-2 years 608 113 - 721 2,704 171 1,484 4,359
2-3 years 1,658 112 - 1,770 677 112 116 905
3-5 years 1,825 211 - 2,036 2,645 222 - 2,867
5 + years 5,623 - 116 5,739 5,741 - 115 5,856
----------- ---------------- ----------------- -------- -------- ---------------- ----------------- -------- --------
Total 11,229 1,049 1,734 14,012 13,763 1,416 3,026 18,205
----------- ---------------- ----------------- -------- -------- ---------------- ----------------- -------- --------
Loan stock can be past due as a result of interest or capital not being
paid in accordance with contractual terms.
The cost of loan stock investments valued below cost is GBP1,682,000
(2018: GBP1,746,000).
In view of the availability of adequate cash balances and the repayment
profile of loan stock investments, 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
2019 are stated at fair value as determined by the Directors, with the
exception of receivables, payables and cash which are carried at
amortised cost, in accordance with FRS 102. There are no financial
liabilities other than payables. 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.
18. Contingencies and commitments
As at 31 December 2019, the Company had no financial commitments (2018:
GBPnil).
There were no contingent liabilities or guarantees given by the Company
as at 31 December 2019 (2018: GBPnil).
19. Post balance sheet events
The following are the post balance sheet events since 31 December 2019:
-- Investment of GBP601,000 in SVS Albion OLIM UK Equity Income Fund; and
-- Investment of GBP575,000 in a new portfolio company, Concirrus Limited.
The following new Ordinary shares of nominal value 1 penny each were
allotted under the Albion VCTs Prospectus Top Up Offers 2019/20 after 31
December 2019:
Aggregate
Number of nominal Net
Date of shares value of consideration
allotment allotted shares Issue price (pence per received Opening market price on allotment date
GBP'000 share) GBP'000 (pence per share)
---------- --------- --------- ------------------------ ------------- ----------------------------------------
31 January
2020 1,843,797 18 84.80 1,540 79.50
31 January
2020 401,498 4 85.30 336 79.50
31 January
2020 6,789,082 68 85.70 5,674 79.50
9,034,377 90 7,550
--------- --------- -------------
Since the Company's year end the world has been plunged into a
healthcare emergency the possible extent of which cannot yet be
assessed. This will likely have an adverse impact on the market
multiples used when valuing portfolio companies and will impact on our
own forecasting models. The Board and the Manager will be undertaking an
analysis of the underlying portfolio companies with a view to announcing
an unaudited net asset value as at 31 March 2020 by the end of April
2020. More details on this can be found in the Chairman's statement
above.
20. Related party transactions
Other than transactions with the Manager as disclosed in note 5, there
are no other related party transactions or balances requiring
disclosure.
21. 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 2019 and 31 December
2018, 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 2019, 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.
22. 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
https://www.globenewswire.com/Tracker?data=31xsu8U_G9PtsBqyyOdMNeNtwePrF96SNWllFG-UO8f1xaanmVAsBLShdied1YJ9eftXxUp3u0g83NsAYwxZtbzP7CH3EIaltNAZspkKeTkVg7EJ-maE3HpgZdOs-EMO
www.albion.capital/funds/AADV, where the Report can be accessed as a PDF
document via a link in the 'Financial Reports and Circulars' section.
Attachment
-- Pie charts for AADV Announcement 31122019
https://ml-eu.globenewswire.com/Resource/Download/191e51a7-cc70-4ba6-885a-f744d4b31032
(END) Dow Jones Newswires
March 27, 2020 13:15 ET (17:15 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
1 Year Albion Development Vct Chart |
1 Month Albion Development Vct Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
