Albion Enterprise VCT PLC
LEI number: 213800OVSRDHRJBMO720
As required by the UK Listing Authority's Disclosure Guidance and Transparency Rules 4.1 and 6.3, Albion Enterprise VCT PLC today makes public its information relating to the Annual Report and Financial Statements for the year ended 31 March 2018.
This announcement was approved for release by the Board of Directors on 29 June 2018.
This announcement has not been audited.
The Annual Report and Financial Statements for the year ended 31 March 2018 (which have been audited), will shortly be sent to shareholders. Copies of the full Annual Report and Financial Statements will be avaliable via the Albion Capital Group LLP website by clicking www.albion.capital/funds/AAEV/31Mar18.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
Albion Enterprise VCT PLC (the “Company”) is a Venture Capital Trust and the investment objective of the Company is to provide investors with a regular and predictable source of income, combined with the prospect of longer term capital growth.
The Company’s current general investment policy is as follows:
Investment policy
Investing up to 50 per cent. of the net funds raised in an asset-based portfolio of more stable businesses (the “Asset-based Portfolio”). The balance of the net funds raised, other than funds retained for liquidity purposes, are invested in a portfolio of higher growth businesses across a variety of sectors of the UK economy. These range from more stable, income producing businesses to higher risk technology companies (the “Growth Portfolio”). In neither category do portfolio companies normally have any external borrowing with a charge ranking ahead of the Company. Up to two-thirds of qualifying investments by cost comprise loan stock secured with a first charge on the portfolio company’s assets.
The Company’s investment portfolio is structured to provide a balance between income and capital growth for the longer term. The Asset-based Portfolio is designed to provide stability and income whilst still maintaining the potential for capital growth. The Growth Portfolio is intended to provide diversified exposure through its portfolio of investments in unquoted UK companies. Stock specific risk will be reduced by the Company’s policy of holding a diversified portfolio of Qualifying Investments.
VCT and non-VCT qualifying investments
The investment policy is designed to ensure that the Company continues to qualify and is approved as a VCT by HM Revenue and Customs. It is intended that at least 80 per cent. of the Company's funds will be invested in VCT qualifying investments.
Funds held prior to investing in VCT qualifying assets or for liquidity purposes will be held as cash on deposit, invested in floating rate notes or similar instruments with banks or other financial institutions with credit ratings, assigned by international credit agencies, of A or better (on acquisition) or invested in liquid open-ended equity funds providing income and capital equity exposure (where it is considered economic to do so). Investment in such open-ended equity funds will not exceed 10 per cent. of the Company's assets at the time of investment.
In the November 2017 Autumn Budget, a number of changes to the legislation governing venture capital trusts were announced. Those changes have now been enacted in the Finance Act 2017-19 and further information has been provided in Guidance Notes issued by HM Revenue & Customs. Some of these changes took effect from the date upon which the Finance Act received Royal Assent and others came into force from 6 April 2018. In future, VCTs may no longer offer secured loans to portfolio companies and to qualify for VCT tax reliefs, portfolio companies must satisfy a "risk to capital condition". This means that the portfolio company must have an objective to grow and develop over the long term and there must be a significant risk that there could be a loss of capital to the VCT of an amount exceeding the net return. The overall aim of HM Treasury is to encourage more high growth investment through VCTs rather than low risk, heavily asset backed investments.
As a result of these changes, and subject to shareholder approval, the Board is now recommending an update to the Company’s general investment policy, as set out below. The updated policy removes references to loan stock being secured by first charges and enables the Company to invest in a broad range of businesses.
Proposed new investment policy
The Company will invest in a broad portfolio of higher growth businesses across a variety of sectors of the UK economy including higher risk technology companies. 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 both in terms of sector and stage of maturity of company.
VCT qualifying and non-VCT qualifying investments
Application of the investment policy is designed to ensure that the Company continues to qualify and is approved as a VCT by HM Revenue and Customs (“VCT regulations”). The maximum amount invested in any one company is limited to any HMRC annual investment limits. It is intended that normally at least 80 per cent. of the Company's funds will be invested in VCT qualifying investments. The VCT regulations also have an impact on the type of investments and qualifying sectors in which the Company can make investment.
Funds held prior to investing in VCT qualifying assets or for liquidity purposes will be held as cash on deposit, invested in floating rate notes or similar instruments with banks or other financial institutions with high credit ratings or invested in liquid open-ended equity funds providing income and capital equity exposure (where it is considered economic to do so). Investment in such open-ended equity funds will not exceed 10 per cent. of the Company’s assets at the time of investment.
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 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 is represents a significantly higher proportion of total assets prior to a realisation opportunity being available.
Gearing
The Company's maximum exposure in relation to gearing is restricted to 10 per cent. of its adjusted share capital and reserves.
Financial calendar
| Record date for first dividend | 3 August 2018 |
| Annual General Meeting | 11:00am on 21 August 2018 |
| Payment date for first dividend | 31 August 2018 |
| Announcement of half-yearly results for the six months ending 30 September 2018 | November 2018 |
| Payment date for second dividend (subject to Board approval) | 28 February 2019 |
Financial highlights
| 13.4p | Total return per share for the year ended 31 March 2018 |
| 5.0p | Total tax-free dividend per share paid during the year ended 31 March 2018 |
| 109.5p | Net asset value per share as at 31 March 2018 |
| 148.3p | Total shareholder return since launch to 31 March 2018 |
| 31 March 2018 (pence per share) | 31 March 2017 (pence per share) | |
| Dividends paid | 5.00 | 5.00 |
| Revenue return | (0.39) | 0.64 |
| Capital return | 13.79 | 10.23 |
| Net asset value | 109.46 | 101.79 |
Total shareholder return to 31 March 2018:
| (Pence per share) | |
| Total dividends paid during the year ended: | |
| 31 March 2008 | 0.70 |
| 31 March 2009 | 1.65 |
| 31 March 2010 | 2.00 |
| 31 March 2011 | 3.00 |
| 31 March 2012 | 3.00 |
| 31 March 2013 | 3.50 |
| 31 March 2014 | 5.00 |
| 31 March 2015 | 5.00 |
| 31 March 2016 | 5.00 |
| 31 March 2017 | 5.00 |
| 31 March 2018 | 5.00 |
| Total dividends paid to 31 March 2018 | 38.85 |
| Net asset value as at 31 March 2018 | 109.46 |
| Total shareholder return to 31 March 2018 | 148.31 |
In addition to the dividends summarised above, the Board has declared a first dividend for the year ending 31 March 2019, of 3.00 pence per share to be paid on 31 August 2018 to shareholders on the register on 3 August 2018.
Notes
- The net asset value of the Company is not its share price as quoted on the official list of the London Stock Exchange. The share price of the Company can be accessed via a link on the Company’s webpage at www.albion.capital under ‘Trust Information’.
Chairman’s statement
Introduction
The Company achieved a total return of 13.40 pence per share, following the 10.87 pence per share total return for the previous year. This excellent result is due to the continued development of the investment portfolio, with a number of the companies that we invest in growing strongly.
Investment performance and progress
During the year over £7.1 million of cash was invested in new and existing companies. New investments included £950,000 into MPP Global Solutions, £917,000 into Women’s Health (London West One), £850,000 into G.Network Communications, £320,000 into Koru Kids, and £100,000 into Locum’s Nest.
Follow-on investments included £1,172,000 into Egress Software Technologies, £790,000 into Beddlestead, £482,000 into Oviva, £325,000 into Panaseer, £292,000 into Convertr Media, and £211,000 into Black Swan Data.
During the year the Company sold its investment in Hilson Moran Holdings realising proceeds of £1.5 million, 3x our original investment. We announced on 24 April 2018 that contracts had been exchanged for the sale of Grapeshot, with the sale subsequently completing on 15 May 2018. If the full escrow amount is received, we will have realised approximately 10x our original investment of £1 million.
Companies that performed particularly well during the period included Grapeshot, where there has been increasing customer demand for the company’s online advertising search facilities, Radnor House School (Holdings), where the Sevenoaks school is growing strongly, and G.Network Communications, which is rolling out its fibre optic broadband network in Central London. Further details can be found in the Portfolio of investments section on page 19 of the full Annual Report and Financial Statements.
Results and dividends
On 31 March 2018 the net asset value was 109.46 pence per share compared to 101.79 pence per share on 31 March 2017. The total return before taxation was £7.1 million compared to £5.1 million for the previous year. In light of this performance the annual dividend target will be raised by 20% to 6.00 pence per share. The Company will pay a first dividend for the financial year to 31 March 2019 of 3.00 pence per share on 31 August 2018 to shareholders on the register on 3 August 2018.
Modification to investment policy
As described more fully at the beginning of this announcement, the Manager and Board are updating the Company’s investment policy in light of the November 2017 Autumn Budget and the changes made to the legislation governing venture capital trusts therein. In future, VCTs may no longer offer secured loans to portfolio companies and to qualify for VCT tax reliefs, portfolio companies must satisfy a "risk to capital condition". The updated policy, therefore, removes references to loan stock being secured by first charges, enabling the Company to invest in a broad range of businesses and is compliant with current VCT regulations.
Performance incentive fee
The Board is pleased to announce that investment performance has exceeded the targets set and accordingly a performance incentive fee of £1.1 million is due for the year ended 31 March 2018 (2017: £255,000).
Further details can be found in the Strategic report below.
Board composition
Following the year end, the Board is pleased to announce the appointment of Christopher Burrows as a Director. Christopher, a Cambridge graduate, has spent his career in executive search, assessment and leadership consulting, latterly as a partner at Russell Reynolds Associates. His knowledge, in particular of the healthcare industry, where much of his professional life has been focused, will be a great addition to the Board.
Share buy-backs
It remains the Board’s policy to buy back shares in the market, subject to the overall constraint that such purchases are in the Company’s interest, including the maintenance of sufficient resources for investment in new and existing portfolio companies and the continued payment of dividends to shareholders. It is the Board’s intention for such buy-backs to be in the region of a 5 per cent. discount to net asset value, so far as market conditions and liquidity permit.
Transactions with the Manager
Albion Capital agreed to reduce a proportion of its management fee relating to the investments made by the Company in the SVS Albion OLIM UK Equity Income Fund (“OUEIF”) by 0.75 per cent., which represents the management fee charged by OLIM. This avoids double counting of fees and resulted in a reduction of the management fee of £2,000. Further details on the investments in the OUEIF can be found in note 20 and details of transactions that took place with the Manager during the year can be found in note 5.
Risks and uncertainties
The outlook for the UK economy continues to be a key risk affecting your Company, in particular, the effect of the withdrawal of Britain from the European Union which is difficult to quantify at this time.
The Company’s investment risk is mitigated through a variety of processes, including investing in a diversified portfolio in terms of sector and stage of maturity and focusing on opportunities where it is believed growth can be both resilient and sustainable.
A detailed analysis of the other risks and uncertainties facing the business is shown in the Stragic report below.
Albion VCTs Top Up Offers
In September 2017, the Company announced the launch of the Albion VCTs Prospectus Top Up Offers 2017/18. In aggregate, the Albion VCTs raised £32 million across five of the VCTs managed by Albion Capital Group LLP.
The Company was pleased to announce on 26 February 2018 that it had reached its £6m limit under its Offer which was fully subscribed and closed. Further details of the amounts raised under offers open during the year can be found in note 15 and note 19. The proceeds of the Offers will be used to provide further resources at a time when a number of attractive new investment opportunities are being identified.
Outlook and prospect
After another excellent result for the year, we remain confident that the fundamentals in the companies within our portfolio, and the new companies that we are backing, place the VCT well to continue to deliver positive shareholder returns.
Maxwell Packe
Chairman
29 June 2018
Strategic report
Albion Enterprise VCT PLC is a Venture Capital Trust and its current general investment objective and policy can be found at the beginning of this announcement.
As a result of changes in The Finance Act 2018, and subject to shareholder approval, the Board is now recommending a change to the Company’s general investment policy. The proposed new investment policy is as follows:
Proposed new investment policy
The Company will invest in a broad portfolio of higher growth businesses across a variety of sectors of the UK economy including higher risk technology companies. 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 both in terms of sector and stage of maturity of company.
VCT qualifying and non-VCT qualifying investments
Application of the investment policy is designed to ensure that the Company continues to qualify and is approved as a VCT by HM Revenue and Customs (“VCT regulations”). The maximum amount invested in any one company is limited to any HMRC annual investment limits. It is intended that normally at least 80 per cent. of the Company's funds will be invested in VCT qualifying investments. The VCT regulations also have an impact on the type of investments and qualifying sectors in which the Company can make investment.
Funds held prior to investing in VCT qualifying assets or for liquidity purposes will be held as cash on deposit, invested in floating rate notes or similar instruments with banks or other financial institutions with high credit ratings or invested in liquid open-ended equity funds providing income and capital equity exposure (where it is considered economic to do so). Investment in such open-ended equity funds will not exceed 10 per cent. of the Company’s assets at the time of investment.
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 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 is represents a significantly higher proportion of total assets prior to a realisation opportunity being available.
Gearing
The Company's maximum exposure in relation to gearing is restricted to 10 per cent. of its adjusted share capital and reserves.
Current portfolio sector allocation
The pie chart at the end of this announcement shows the split of the portfolio valuation by sector as at 31 March 2018. Details of the principal investments made by the Company are shown in the Portfolio of investments on pages 19 and 20 of the full Annual Report and Financial Statements.
Direction of portfolio
The analysis of the Company’s investment portfolio shows that the IT and other technology, healthcare, and renewable energy sectors continue to be the largest elements of the portfolio.
The IT and other technology sector has continued to grow as a proportion of the portfolio as we have continued to invest in key areas such as cyber security and the management of big data. In line with the proposed new investment policy, we will continue to invest in higher growth technology companies during the forthcoming year.
Results and dividend policy
| £'000 | ||
| Net revenue return for the year ended 31 March 2018 | (207 | ) |
| Net capital gain for the year ended 31 March 2018 | 7,353 | |
| Total return for the year ended 31 March 2018 | 7,146 | |
| Dividend of 2.50 pence per share paid on 31 August 2017 | (1,294 | ) |
| Dividend of 2.50 pence per share paid on 28 February 2018 | (1,417 | ) |
| Transferred to reserves | 4,435 | |
| Net assets as at 31 March 2018 | 61,871 | |
| Net asset value as at 31 March 2018 (pence per share) | 109.46 | |
The Company paid dividends totaling 5.00 pence per share during the year ended 31 March 2018 (2017: 5.00 pence per share). As described in the Chairman’s statement, the Board has declared a first dividend of 3.00 pence per share for the year ending 31 March 2019. This dividend will be paid on 31 August 2018 to shareholders on the register on 3 August 2018.
As shown in the Company’s Income statement below, investment income decreased to £651,000 (2017: £939,000) due to capitalising interest on a number of companies in order to fund further acquisitions.
The capital gain on investments for the year of £9,205,000 (2017: £5,790,000), was mainly attributable to the upward unrealised revaluations in the Company’s investment portfolio, in particular for Grapeshot (the sale of which completed after the year end) and Radnor House School (Holdings).
The total return was 13.40 pence per share (2017: 10.87 pence per share). The Balance sheet below shows that the net asset value has increased over the last year to 109.46 pence per share (2017: 101.79 pence per share), due to the increased valuations.
There was a net cash outflow for the Company of £5,361,000 for the year (2017: net inflow of £6,141,000), from the investment in current and fixed asset investments, dividends paid and the buy-back of shares, offset by the disposal of fixed asset investments and the issue of Ordinary shares under the Albion VCTs Top Up Offers.
Review of business and future changes
A review of the Company’s portfolio performance and progress during the year is contained in the Chairman’s statement. Total gains on investments for the year were £9.2 million (2017: £5.8 million). The key contributors to this were the increase in valuations of Grapeshot of £7.3 million, Radnor House School (Holdings) of £694,000 and G.Network Communications of £510,000. These gains more than offset the reduction in value of a small number of our investments, the largest being Aridhia Informatics of £599,000 and Egress Software Technologies of £481,000.
In light of the new VCT regulations set out in the recent Finance Act, asset-based investments will continue to decrease as a proportion of the portfolio, and greater emphasis will be given to growth and technology investments. The Company continues with its objective to invest in unquoted companies throughout the United Kingdom with a view to providing both capital growth and a reliable dividend income to shareholders over the long term.
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.
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 27 of the full Annual Report and Financial Statements.
The Finance Act 2018 contained a number of measures that affects all VCTs. These include:
- a principles-based test for qualifying companies to ensure that investment activity focuses on higher risk opportunities;
- an increase in the proportion of the portfolio invested in qualifying unquoted companies from 70 per cent. to 80 per cent. in respect of accounting periods starting on or after 6 April 2019 (so from 1 April 2020 for this Company); and
- VCT loan investments to be unsecured and represent no more than normal commercial terms.
The relevant tests to measure compliance have been carried out and independently reviewed for the year ended 31 March 2018. These showed that the Company has complied with all tests and continues to do so.
Future prospects
The Company’s portfolio is well balanced across sectors and risk classes and the Board believes that the Company has a number of investments which have stong prospects. As detailed at the beginning of this announcement, the Board is proposing a change to the investment policy which will result in a greater emphasis on growth and technology investments.
After another excellent result for the year, the Board remains confident that the fundamentals in the companies within the portfolio and the new companies that are being backed, place the Company well for delivering positive shareholder returns.
Key performance indicators
The Directors believe that the following key performance indicators, which are typical for venture capital trusts, and used in their 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 key performance indicators give a good indication that the Company is achieving its investment objective and policy. These are:
- Total shareholder return relative to FTSE All Share Index total return
The graph on page 5 of the full Annual Report and Financial Statements shows the Company’s total shareholder return against the FTSE All-Share Index total return, with dividends reinvested.
- Net asset value per share and total shareholder return
Net asset value per share increased by 7.5 per cent. to 109.46 pence per share for the year ended 31 March 2018.
Total shareholder return increased by 9.3 per cent. to 148.31 pence per share for the year ended 31 March 2018.
- Dividend distributions
Dividends paid in respect of the year ended 31 March 2018 were 5.00 pence per share (2017: 5.00 pence per share). In light of strong performance, the annual dividend target will be raised by 20% to 6.00 pence per share. The cumulative dividend paid since inception is 38.85 pence per share.
- Ongoing charges
The ongoing charges ratio for the year ended 31 March 2018 was 2.9 per cent. (2017: 3.0 per cent.) against a cap of 3.0 per cent. The ongoing charges ratio has been calculated using The Association of Investment Companies’ (AIC) recommended methodology. This figure shows shareholders the total recurring annual running expenses (including investment management fees charged to capital reserve) as a percentage of the average net assets attributable to shareholders. The Directors expect the ongoing charges ratio for the year ahead to be approximately 2.9 per cent..
Gearing
As defined by the Articles of Association, the Company’s maximum exposure in relation to gearing is restricted to 10 per cent. of its adjusted share capital and reserves. The Directors do not currently have any intention to utilise gearing for the Company.
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 can be terminated by either party on 12 months’ notice. The Management agreement 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 2.5 per cent. of the net asset value of the Company, payable quarterly in arrears. Total annual expenses, including the management fee, are limited to 3.0 per cent. of the net asset value.
Additionally, Albion Capital 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., which represents the OUEIF management fee charged by OLIM to avoid any double charging for the investment exposure.
In line with common practice, the Manager is also entitled to an arrangement fee, payable by each portfolio company, of approximately 2 per cent. on each new investment made and monitoring fees where the Manager has a representative on the portfolio company’s board.
Management performance incentive fee
In order to provide the Manager with an incentive to maximise the return to investors, the Company has entered into a Management performance incentive arrangement with the Manager. Under the incentive arrangement, the Company will pay an incentive fee to the Manager of an amount equal to 20 per cent. of such excess return that is calculated for each financial year.
The minimum target level, comprising dividends and net asset value, will be equivalent to an annualised rate of return of the average base rate of the Royal Bank of Scotland plc plus 2 per cent. per annum on the original subscription price of £1. Any shortfall of the target return will be carried forward into subsequent periods and the incentive fee will only be paid once all previous and current target returns have been met.
For the year ended 31 March 2018, the total return of the Company since launch (the performance incentive fee start date) amounted to 148.31 pence per share, compared to the hurdle of 138.00 pence per share. As a result, a performance incentive fee is payable to the Manager of £1,100,000 (2017: £255,000).
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. (to be 80 per cent. in respect of accounting periods starting on or after 6 April 2019) qualifying investment holdings requirement for the Venture Capital Trust status, the long term prospects of current investments, a review of the Management agreement and the services provided therein, and benchmarking the performance and remuneration of the Manager to other service providers.
The Board believes that it is in the interest 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.
Share buy-backs
It remains the Board’s policy to buy back shares in the market, subject to the overall constraint that such purchases are in the Company’s interest, including the maintenance of sufficient resources for investment in new and existing portfolio companies and the continued payment of dividends to shareholders.
It is the Board’s intention for such buy-backs to be in the region of a 5 per cent. discount to net asset value, so far as market conditions and liquidity permit.
Further details of shares bought back during the year ended 31 March 2018 can be found in note 15 below.
Social and community issues, employees and human rights
The Board recognises the requirement under section 414C of the Companies Act 2006 to detail information about social and community issues, employees and human rights; including any policies it has in relation to these matters and effectiveness of these policies. As an externally managed investment company with no employees, the Company has no policies in these matters and as such these requirements do not apply.
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 pages 27 and 28 of the full Annual Report and Financial Statements.
Risk management
The Board carries out a robust review of the risk environment in which the Company operates. The principal risks and uncertainties of the Company as identified by the Board and how they are managed are as follows:
| Risk | Possible consequence | Risk management |
| Investment and performance risk | The risk of investment in poor quality assets, which could reduce the capital and income returns to shareholders, and could negatively impact on the Company’s current and future valuations. By nature, smaller unquoted businesses, such as those that qualify for venture capital trust purposes, are more fragile than larger, long established businesses. Investments in open-ended equity funds result in exposure to market risk through movements in price per unit. | To reduce this risk, the Board places reliance upon the skills and expertise of the Manager and its track record over many years of making successful investments in this segment of the market. In addition, the Manager operates a formal and structured investment appraisal and review process, which includes an Investment Committee, comprising investment professionals from the Manager and at least one external investment professional. The Manager also invites and takes account of comments from non-executive Directors of the Company on matters discussed at the Investment Committee meetings. Investments are actively and regularly monitored by the Manager (investment managers normally sit on portfolio company boards), including the level of diversification in the portfolio, and the Board receives detailed reports on each investment as part of the Manager’s report at quarterly board meetings. The Board and Manager regularly reviews the deployment of cash resources into equity markets, the extent of exposure and performance of the exposure. |
| VCT approval risk | The Company must comply with section 274 of the Income Tax Act 2007 which enables its investors to take advantage of tax relief on their investment and on future returns. Breach of any of the rules enabling the Company to hold VCT status could result in the loss of that status. | To reduce this risk, the Board has appointed the Manager, which has a team with significant experience in venture capital trust management, used to operating within the requirements of the venture capital trust legislation. In addition, to provide further formal reassurance, the Board has appointed Philip Hare & Associates LLP as its taxation adviser, who report quarterly to the Board to independently confirm compliance with the venture capital trust legislation, to highlight areas of risk and to inform on changes in legislation. Each investment in a new portfolio company is also pre-cleared with H.M. Revenue & Customs or our professional advisers. |
| Regulatory and compliance risk | The Company is listed on The London Stock Exchange and is required to comply with the rules of the UK Listing Authority, as well as with the Companies Act, Accounting Standards and other legislation. Failure to comply with these regulations could result in a delisting of the Company’s shares, or other penalties under the Companies Act or from financial reporting oversight bodies. | Board members and the Manager have experience of operating at senior levels within or advising quoted companies. In addition, the Board and the Manager receive regular updates on new regulation, including legislation on the management of the Company, from its auditor, lawyers and other professional bodies. The Company is subject to compliance checks through the Manager’s compliance officer. The Manager reports monthly to its Board on any issues arising from compliance or regulation. These controls are also reviewed as part of the quarterly Board meetings, and also as part of the review work undertaken by the Manager’s compliance officer. The report on controls is also evaluated by the internal auditors. |
| Operational and internal control risk | The Company relies on a number of third parties, in particular the Manager, for the provision of investment management and administrative functions. Failures in key systems and controls within the Manager’s business could put assets of the Company at risk or result in reduced or inaccurate information being passed to the Board or to shareholders. | The Company and its operations are subject to a series of rigorous internal controls and review procedures exercised throughout the year, and receives reports from the Manager on internal controls and risk management, including on matters relating to cyber security. The Audit Committee reviews the Internal Audit Reports prepared by the Manager’s internal auditors, PKF Littlejohn LLP and has access to the internal audit partner of 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 and cyber security. 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 and political risk | Changes in economic conditions, including, for example, interest rates, rates of inflation, industry conditions, competition, political and diplomatic events and other factors could substantially and adversely affect the Company’s prospects in a number of ways. | The Company invests in a diversified portfolio of companies across a number of industry sectors and in addition often invests a mixture of equity and loan stock in portfolio companies and has a policy of not normally permitting any external bank borrowings within portfolio companies. At any given time, the Company has sufficient cash resources to meet its operating requirements, including share buybacks and follow on investments. |
| Market value of Ordinary shares | The market value of Ordinary shares can fluctuate. The market value of an Ordinary share, as well as being affected by its net asset value and prospective net asset value, also takes into account its dividend yield and prevailing interest rates. As such, the market value of an Ordinary share may vary considerably from its underlying net asset value. The market prices of shares in quoted investment companies can, therefore, be at a discount or premium to the net asset value at different times, depending on supply and demand, market conditions, general investor sentiment and other factors. Accordingly the market price of the Ordinary shares may not fully reflect their underlying net asset value. | The Company operates a share buyback policy, which is designed to limit the discount at which the Ordinary shares trade to around 5 per cent to net asset value, by providing a purchaser through the Company in absence of market purchasers. From time to time buybacks cannot be applied, for example when the Company is subject to a close period, or if it were to exhaust any buyback authorities. New Ordinary shares are issued at sufficient premium to net asset value to cover the costs of issue and to avoid asset value dilution to existing investors. |
Viability statement
In accordance with the FRC UK Corporate Governance Code published in 2016 and principle 21 of the AIC Code of Corporate Governance, the Directors have assessed the prospects of the Company over three years to 31 March 2021. 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 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 Directors have carried out a robust assessment of the 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 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. 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 March 2021.
This Strategic report of the Company for the year ended 31 March 2018 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.
For and on behalf of the Board
Maxwell Packe
Chairman
29 June 2018
Responsibility statement
In preparing these Financial Statements for the year to 31 March 2018, the Directors of the Company, being Maxwell Packe, Lady Balfour of Burleigh, Lord St John of Bletso, Christopher Burrows 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 March 2018 for the Company have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (UK Accounting Standards and applicable law) and give a true and fair view of the assets, liabilities, financial position and profit and loss of the Company for the year ended 31 March 2018 as required by DTR 4.1.12R;
- the Chairman's statement and Strategic report include a fair review of the information required by DTR 4.2.7R (indication of important events during the year ended 31 March 2018 and description of principal risks and uncertainties that the Company faces); and
- the Chairman's statement and Strategic report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties transactions and changes therein).
A detailed "Statement of Directors' responsibilities” is contained on page 31 within the full audited Annual Report and Financial Statements.
For and on behalf of the Board
Maxwell Packe
Chairman
29 June 2018
Income statement
| Year ended 31 March 2018 | Year ended 31 March 2017 | ||||||||||||
| Revenue | Capital | Total | Revenue | Capital | Total | ||||||||
| Note | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | |||||||
| Gains on investments | 3 | - | 9,205 | 9,205 | - | 5,790 | 5,790 | ||||||
| Investment income | 4 | 651 | - | 651 | 939 | - | 939 | ||||||
| Investment management fees | 5 | (342 | ) | (1,027 | ) | (1,369 | ) | (292 | ) | (875 | ) | (1,167 | ) |
| Performance incentive fee | 5 | (275 | ) | (825 | ) | (1,100 | ) | (64 | ) | (191 | ) | (255 | ) |
| Other expenses | 6 | (241 | ) | - | (241 | ) | (227 | ) | - | (227 | ) | ||
| Return/(loss) on ordinary activities before taxation | (207 | ) | 7,353 | 7,146 | 356 | 4,724 | 5,080 | ||||||
| Tax (charge)/credit on ordinary activities | 8 | - | - | - | (57 | ) | 57 | - | |||||
| Return/(loss) and total comprehensive income attributable to shareholders | (207 | ) | 7,353 | 7,146 | 299 | 4,781 | 5,080 | ||||||
| Basic and diluted return/(loss) per share (pence)* | 10 | (0.39 | ) | 13.79 | 13.40 | 0.64 | 10.23 | 10.87 | |||||
* excluding treasury shares
The accompanying notes form an integral part of these Financial Statements.
The total column of this Income statement represents the profit and loss account of the Company. The supplementary revenue and capital columns have been prepared in accordance with The Association of Investment Companies’ Statement of Recommended Practice.
Balance sheet
| Note | 31 March 2018 £’000 | 31 March 2017 £’000 | |||
| Fixed asset investments | 11 | 52,436 | 37,775 | ||
| Current assets | |||||
| Current asset investments | 13 | 1,127 | - | ||
| Trade and other receivables less than one year | 13 | 105 | 232 | ||
| Cash and cash equivalents | 9,760 | 15,121 | |||
| 10,992 | 15,353 | ||||
| Total assets | 63,428 | 53,128 | |||
| Payables: amounts falling due within one year | |||||
| Trade and other payables less than one year | 14 | (1,557 | ) | (670 | ) |
| Total assets less current liabilities | 61,871 | 52,458 | |||
| Equity attributable to equity holders | |||||
| Called up share capital | 15 | 638 | 580 | ||
| Share premium | 28,945 | 23,225 | |||
| Capital redemption reserve | 104 | 104 | |||
| Unrealised capital reserve | 17,657 | 9,910 | |||
| Realised capital reserve | 890 | 1,284 | |||
| Other distributable reserve | 13,637 | 17,355 | |||
| Total equity shareholders’ funds | 61,871 | 52,458 | |||
| Basic and diluted net asset value per share (pence) * | 16 | 109.46 | 101.79 | ||
* excluding treasury shares
The accompanying notes form an integral part of these Financial Statements.
These Financial Statements were approved by the Board of Directors, and were authorised for issue on 29 June 2018 and were signed on its behalf by
Maxwell Packe
Chairman
Company number: 05990732
Statement of changes in equity
| Called up share capital £’000 | Share premium £’000 | Capital redemption reserve £’000 | Unrealised capital reserve £’000 | Realised capital reserve* £’000 | Other distributable reserve* £’000 | Total £’000 | ||||||
| As at 1 April 2017 | 580 | 23,225 | 104 | 9,910 | 1,284 | 17,355 | 52,458 | |||||
| Return/(loss) and total comprehensive income for the year | - | - | - | 8,852 | (1,499 | ) | (207 | ) | 7,146 | |||
| Transfer of previously unrealised gains on disposal of investments | - | - | - | (1,105 | ) | 1,105 | - | - | ||||
| Issue of equity | 58 | 5,845 | - | - | - | - | 5,903 | |||||
| Cost of issue of equity | - | (125 | ) | - | - | - | - | (125 | ) | |||
| Purchase of own shares for treasury | - | - | - | - | - | (800 | ) | (800 | ) | |||
| Dividends paid | - | - | - | - | - | (2,711 | ) | (2,711 | ) | |||
| As at 31 March 2018 | 638 | 28,945 | 104 | 17,657 | 890 | 13,637 | 61,871 | |||||
| As at 1 April 2016 | 518 | 17,285 | 104 | 6,389 | 24 | 20,150 | 44,470 | |||||
| Return/(loss) and total comprehensive income for the year | - | - | - | 5,016 | (235 | ) | 299 | 5,080 | ||||
| Transfer of previously unrealised gains on disposal of investments | - | - | - | (1,495 | ) | 1,495 | - | - | ||||
| Issue of equity | 62 | 6,106 | - | - | - | - | 6,168 | |||||
| Cost of issue of equity | - | (166 | ) | - | - | - | - | (166 | ) | |||
| Purchase of own shares for treasury | - | - | - | - | - | (689 | ) | (689 | ) | |||
| Dividends paid | - | - | - | - | - | (2,405 | ) | (2,405 | ) | |||
| As at 31 March 2017 | 580 | 23,225 | 104 | 9,910 | 1,284 | 17,355 | 52,458 | |||||
* These reserves amount to £14,527,000 (2017: £18,639,000) which is considered distributable.
Statement of cash flows
| Year ended 31 March 2018 £’000 | Year ended 31 March 2017 £’000 | ||||
| Cash flow from operating activities | |||||
| Investment income received | 581 | 733 | |||
| Dividend income received | 39 | 70 | |||
| Deposit interest received | 12 | 76 | |||
| Investment management fee paid | (1,312 | ) | (1,117 | ) | |
| Performance incentive fee paid | (255 | ) | - | ||
| Other cash payments | (236 | ) | (226 | ) | |
| UK corporation tax paid | - | (11 | ) | ||
| Net cash flow from operating activities | (1,171 | ) | (475 | ) | |
| Cash flow from investing activities | |||||
| Purchase of current asset investments | (1,200 | ) | - | ||
| Purchase of fixed asset investments | (7,143 | ) | (3,375 | ) | |
| Disposal of fixed asset investments | 1,907 | 4,424 | |||
| Net cash flow from investing activities | (6,436 | ) | 1,049 | ||
| Cash flow from financing activities | |||||
| Issue of share capital | 5,359 | 8,271 | |||
| Cost of issue of equity | (3 | ) | (1 | ) | |
| Dividends paid | (2,289 | ) | (2,037 | ) | |
| Purchase of own shares (including costs) | (821 | ) | (666 | ) | |
| Net cash flow from financing activities | 2,246 | 5,567 | |||
| (Decrease)/increase in cash and cash equivalents | (5,361 | ) | 6,141 | ||
| Cash and cash equivalents at start of the year | 15,121 | 8,980 | |||
| Cash and cash equivalents at end of the year | 9,760 | 15,121 | |||
| Cash and cash equivalents comprise | |||||
| Cash at bank | 9,760 | 15,121 | |||
| Cash equivalents | - | - | |||
| Total cash and cash equivalents | 9,760 | 15,121 | |||
Notes to the Financial Statements
1. Accounting convention
The Financial Statements have been prepared in accordance with the historical cost convention, modified to include the revaluation of investments, in accordance with applicable United Kingdom law and accounting standards, including Financial Reporting Standard 102 (“FRS 102”), and with the 2014 Statement of Recommended Practice “Financial Statements of Investment Trust Companies and Venture Capital Trusts” (“SORP”) issued by The Association of Investment Companies (“AIC”).
The preparation of the Financial Statements requires management to make judgements and estimates that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The most critical estimates and judgements relate to the determination of carrying value of investments at fair value through profit and loss (“FVTPL”). The Company values investments by following the International Private Equity and Venture Capital Valuation (“IPEVCV”) Guidelines and further detail on the valuation techniques used are outlined in note 2 below.
Company information can be found on page 2 of the full Annual Report and Financial Statements.
2. Accounting policies
Fixed asset investments
The Company’s business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth. This portfolio of financial assets is managed and its performance evaluated on a fair value basis, in accordance with a documented investment policy, and information about the portfolio is provided internally on that basis to the Board.
In accordance with the requirements of FRS 102, those undertakings in which the Company holds more than 20 per cent. of the equity as part of an investment portfolio are not accounted for using the equity method. In these circumstances the investment is measured at FVTPL.
Upon initial recognition (using trade date accounting) investments, including loan stock, are classified by the Company as FVTPL and are included at their initial fair value, which is cost (excluding expenses incidental to the acquisition which are written off to the Income statement).
Subsequently, the investments are valued at ‘fair value’, which is measured as follows:
- Investments listed on recognised exchanges are valued at their bid prices at the end of the accounting period or otherwise at fair value based on published price quotations;
- Unquoted investments, where there is not an active market, are valued using an appropriate valuation technique in accordance with the IPEVCV Guidelines. Indicators of fair value are derived using established methodologies including earnings multiples, the level of third party offers received, prices of recent investment rounds, net assets and industry valuation benchmarks. Where the Company has an investment in an early stage enterprise, the price of a recent investment round is often the most appropriate approach to determining fair value. In situations where a period of time has elapsed since the date of the most recent transaction, consideration is given to the circumstances of the portfolio company since that date in determining fair value. This includes consideration of whether there is any evidence of deterioration or strong definable evidence of an increase in value. In the absence of these indicators, the investment in question is valued at the amount reported at the previous reporting date. Examples of events or changes that could indicate a diminution include:
- the performance and/or prospects of the underlying business are significantly below the expectations on which the investment was based;
- a significant adverse change either in the portfolio company’s business or in the technological, market, economic, legal or regulatory environment in which the business operates; or
- market conditions have deteriorated, which may be indicated by a fall in the share prices of quoted businesses operating in the same or related sectors.
Investments are recognised as financial assets on legal completion of the investment contract and are de-recognised on legal completion of the sale of an investment.
Dividend income is not recognised as part of the fair value movement of an investment, but is recognised separately as investment income through the other distributable reserve when a share becomes ex-dividend.
Receivables and payables and cash are carried at amortised cost, in accordance with FRS 102. There are no financial liabilities other than payables.
Investment income
Equity income
Dividend income is included in revenue when the investment is quoted ex-dividend.
Unquoted loan stock and other preferred income
Fixed returns on non-equity shares and debt securities are recognised when the Company’s right to receive payment and expect settlement is established. Where interest is rolled up and/or payable at redemption then it is recognised as income unless there is reasonable doubt as to its receipt.
Bank interest income
Interest income is recognised on an accrual basis using the rate of interest agreed with the bank.
Investment management fees and other expenses
All expenses have been accounted for on an accruals basis. Expenses are charged through the other distributable reserve except the following which are charged through the realised capital reserve:
- 75 per cent. of management fees are allocated to the 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.
Performance incentive fee
Any performance incentive fee will be allocated between other distributable and realised capital reserves based upon the proportion to which the calculation of the fee is attributable to revenue and capital returns.
Taxation
Taxation is applied on a current basis in accordance with FRS 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
This reserve accounts for the difference between the price paid for shares and the nominal value of the shares, less issue costs.
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 2013 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 smaller companies principally based in the UK.
3. Gains on investments
| Year ended 31 March 2018 £’000 | Year ended 31 March 2017 £’000 | ||
| Unrealised gains on fixed asset investments | 8,925 | 5,016 | |
| Unrealised losses on current asset investments | (73 | ) | - |
| Realised gains on fixed asset investments | 353 | 774 | |
| | 9,205 | 5,790 | |
4. Investment income
| Year ended 31 March 2018 £’000 | Year ended 31 March 2017 £’000 | |
| Income recognised on investments | ||
| Interest from loans to portfolio companies | 599 | 800 |
| Dividends | 39 | 70 |
| Bank deposit interest | 13 | 69 |
| 651 | 939 |
Interest income earned on impaired investments at 31 March 2018 amounted to £1,000 (2017: £15,000).
All of the Company’s income is derived from operations in the United Kingdom.
5. Investment management fees
| Year ended 31 March 2018 £’000 | Year ended 31 March 2017 £’000 | |
| Investment management fee charged to revenue | 342 | 292 |
| Investment management fee charged to capital | 1,027 | 875 |
| Performance incentive fee charged to revenue | 275 | 64 |
| Performance incentive fee charged to capital | 825 | 191 |
| 2,469 | 1,422 |
Further details of the Management agreement under which the investment management fee and performance incentive fee are paid is given in the Strategic report.
During the year, services of a total value of £1,369,000 (2017: £1,167,000) were purchased by the Company from Albion Capital Group LLP in respect of management fees. In addition, a performance incentive fee with a value of £1,100,000 (2017: £255,000) has been disclosed in the Income statement. At the financial year end, the amount due to Albion Capital Group LLP in respect of these services disclosed as accruals and deferred income was £1,485,000 (2017: £583,000).
Patrick Reeve is the managing partner of the Manager, Albion Capital Group LLP. During the year, the Company was charged by Albion Capital Group LLP £24,000 including VAT (2017: £24,000) in respect of his services as a Director. At the year end, the amount due to Albion Capital Group LLP in respect of these services disclosed as accruals and deferred income was £6,000 (2017: £6,000). From 30 June 2018, Patrick Reeve has agreed to waive his fees for his services as a Director.
Albion Capital Group LLP, its partners and staff (including Patrick Reeve) hold a total of 290,393 shares in the Company as at 31 March 2018.
The Manager is, from time to time, eligible to receive arrangement fees and monitoring fees from portfolio companies. During the year ended 31 March 2018, fees of £232,000 attributable to the investments of the Company were received pursuant to these arrangements (2017: £167,000).
Additionally, following approval at the 2017 Annual General Meeting of the investment policy which permitted investment of working capital in open-ended funds to obtain equity returns, an amount of £1,200,000 was invested in the SVS Albion OLIM UK Equity Income Fund (“OUEIF”) 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., which represents the OUEIF management fee charged by OLIM. This resulted in a reduction of the management fee of £2,000.
6. Other expenses
| Year ended 31 March 2018 £’000 | Year ended 31 March 2017 £’000 | |
| Directors’ fees and associated costs (inclusive of NIC and VAT) | 96 | 97 |
| Auditor’s remuneration for statutory audit services (exclusive of VAT) | 28 | 26 |
| Other administrative expenses | 117 | 104 |
| 241 | 227 |
7. Directors’ fees and associated costs
The amounts paid to and on behalf of the Directors during the year are as follows:
| Year ended 31 March 2018 £’000 | Year ended 31 March 2017 £’000 | |
| Directors’ fees | 86 | 86 |
| National insurance and/or VAT | 10 | 10 |
| Expenses | - | 1 |
| 96 | 97 |
The Company’s key management personnel are the Directors. Expenses charged related to travel expenses in furtherance of their duties as Directors. Further information regarding Directors’ remuneration can be found in the Directors’ remuneration report on pages 37 to 39 of the full Annual Report and Financial Statements.
8. Tax charge on ordinary activities
| Year ended 31 March 2018 | Year ended 31 March 2017 | ||||||
| Revenue £’000 | Capital £’000 | Total £’000 | Revenue £’000 | Capital £’000 | Total £’000 | ||
| UK corporation tax in respect of the current year | - | - | - | 57 | (57 | ) | - |
Factors affecting the tax charge | Year ended 31 March 2018 £’000 | Year ended 31 March 2017 £’000 | ||
| Return on ordinary activities before tax | 7,146 | 5,080 | ||
| Tax charge on profit at the standard companies rate of 19% (2017: 20%) | 1,358 | 1,016 | ||
| Factors affecting the charge: | ||||
| Non taxable gains | (1,749 | ) | (1,158 | ) |
| Non taxable income | (7 | ) | (14 | ) |
| Unutilised management expenses | 398 | 156 | ||
| - | - | |||
The tax charge for the year shown in the Income statement is lower than the standard company’s rate of corporation tax in the UK of 19 per cent. (2017: 20 per cent.). The differences are explained above. The Company has excess management expenses of £2,878,000 (2017: £779,000) that are available for offset against future profits. A deferred tax asset of £489,000 (2017: £132,000) has not been recognised in respect of those losses as they will be recoverable only to the extent that the Company has sufficient future taxable profits.
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.
9. Dividends
| Year ended 31 March 2018 £’000 | Year ended 31 March 2017 £’000 | |
| Dividend of 2.50p per share paid on 31 August 2016 | - | 1,156 |
| Dividend of 2.50p per share paid on 28 February 2017 | - | 1,249 |
| Dividend of 2.50p per share paid on 31 August 2017 | 1,294 | - |
| Dividend of 2.50p per share paid on 28 February 2018 | 1,417 | - |
| 2,711 | 2,405 |
Details of the consideration paid 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 for the year ending 31 March 2019 of 3.00 pence per share to be paid on 31 August 2018 to shareholders on the register on 3 August 2018. The total dividend will be approximately £1,719,000.
10. Basic and diluted return per share
| Year ended 31 March 2018 | Year ended 31 March 2017 | ||||||
| Revenue | Capital | Total | Revenue | Capital | Total | ||
| The return per share has been based on the following figures: | |||||||
| Return/(loss) attributable to equity shares (£’000) | (207 | ) | 7,353 | 7,146 | 299 | 4,781 | 5,080 |
| Weighted average shares in issue (excluding treasury shares) | 53,333,261 | 46,759,602 | |||||
| Return/(loss) attributable per equity share (pence) | (0.39 | ) | 13.79 | 13.40 | 0.64 | 10.23 | 10.87 |
There are no convertible instruments, derivatives or contingent share agreements in issue for the Company, and therefore no dilution affecting the return per share. The basic return per share is therefore the same as the diluted return per share.
The weighted average number of shares is calculated excluding treasury shares of 7,270,443 (2017: 6,429,443).
11. Fixed asset investments
| 31 March 2018 £’000 | 31 March 2017 £’000 | |||||
| Investments held at fair value through profit or loss Unquoted equity and preference shares | 34,581 | 21,426 | ||||
| Quoted equity | 237 | 368 | ||||
| Unquoted loan stock | 17,618 | 15,981 | ||||
| 52,436 | 37,775 | |||||
| 31 March 2018 £’000 | 31 March 2017 £’000 | |||||
| Opening valuation | 37,775 | 32,971 | ||||
| Purchases at cost | 8,200 | 3,407 | ||||
| Disposal proceeds | (2,834 | ) | (4,427 | ) | ||
| Realised gains | 353 | 774 | ||||
| Movement in loan stock revenue accrued income | 17 | 35 | ||||
| Unrealised gains | 8,925 | 5,016 | ||||
| Closing valuation | 52,436 | 37,775 | ||||
| Movement in loan stock revenue accrued income | ||||||
| Opening accumulated movement in loan stock revenue accrued income | 216 | 181 | ||||
| Movement in loan stock revenue accrued income | 17 | 35 | ||||
| Closing accumulated movement in loan stock revenue accrued income | 233 | 216 | ||||
| Movement in unrealised gains | ||||||
| Opening accumulated unrealised gains | 9,910 | 6,389 | ||||
| Movement in unrealised gains | 8,925 | 5,016 | ||||
| Transfer of previously unrealised gains to realised reserve on disposal of investments | (1,105 | ) | (1,495 | ) | ||
| Closing accumulated unrealised gains | 17,730 | 9,910 | ||||
| Historic cost basis | ||||||
| Opening book cost | 27,649 | 26,400 | ||||
| Purchases at cost | 8,200 | 3,407 | ||||
| Sales at cost | (1,376 | ) | (2,158 | ) | ||
| Closing book cost | 34,473 | 27,649 | ||||
The Company does not hold any assets as the result of an enforcement of security during the period, and believes that the carrying values for both impaired and past due assets are covered by the value of security held for these loan stock investments.
Unquoted fixed asset investments are valued at fair value in accordance with the IPEVCV guidelines as follows:
| 31 March 2018 | 31 March 2017 | |
| Valuation methodology | £’000 | £’000 |
| Cost and price of recent investment (reviewed for impairment or uplift) | 16,964 | 14,640 |
| Third party valuation – Earnings multiple | 9,732 | 8,826 |
| Discount to third party offer | 9,451 | - |
| Third party valuation – Discounted cash flow | 8,538 | 8,042 |
| Revenue multiple | 7,007 | 4,115 |
| Earnings multiple | 662 | 1,702 |
| Net assets | 82 | 82 |
| 52,436 | 37,407 |
Fair value investments had the following movements between valuation methodologies between 31 March 2017 and 31 March 2018:
| Change in valuation methodology (2017 to 2018) | Value as at 31 March 2018 £’000 | Explanatory note |
| Price of recent investment to discount to third party offer | 9,451 | Third party offer received |
| Cost to revenue multiple | 1,179 | More recent information available |
The valuation will be the most appropriate valuation methodology for an investment within its market, with regard to the financial health of the investment and the IPEVCV Guidelines. The Directors believe that, within these parameters, there are no other possible methods of valuation which would be reasonable as at 31 March 2018.
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 in the year to 31 March 2018:
| 31 March 2018 | 31 March 2017 | ||||
| £’000 | £’000 | ||||
| Opening balance | 37,407 | 32,366 | |||
| Additions | 8,200 | 3,407 | |||
| Disposals | (2,834 | ) | (4,427 | ||
| Realised gains | 353 | 774 | |||
| Accrued loan stock interest | 17 | 35 | |||
| Unrealised gains | 9,056 | 5,252 | |||
| Closing balance | 52,199 | 37,407 | |||
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. 75 per cent. of the portfolio of investments is based on cost, recent investment price, discount to third party offer 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 £753,000 or a decrease in the valuation of investments by £899,000. 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 of a portfolio company. 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 investments listed below are held as part of an investment portfolio and therefore, as permitted by FRS 102 section 9.9B, they are measured at fair value through profit and loss and not accounted for using the equity method.
The Company has interests of greater than 20 per cent. of the nominal value of any class of the allotted shares in the portfolio company as at 31 March 2018 as described below:
Company | Registered postcode | Profit before tax £’000 | Net assets £’000 | Result for year ended | % class and share type | % total voting rights | |||||||
| Greenenerco Limited | EC2R 7AF, UK | n/a* | 516 | 31 March 2017 | 28.6% A Ordinary | 28.6 | % | ||||||
*The company files filleted accounts which do not disclose this information.
13. Current assets
| Current asset investments | 31 March 2018 | 31 March 2017 |
| £’000 | £’000 | |
| SVS Albion OLIM UK Equity Income Fund | 1,127 | - |
Current asset investments at 31 March 2018 consist of cash invested in SVS Albion OLIM UK Equity Income Fund and is capable of realisation within 7 days. These are valued using the level 1 fair value hierarchy as defined in note 11.
| Trade and other receivables less than one year | 31 March 2018 | 31 March 2017 |
| £’000 | £’000 | |
| Deferred consideration | 97 | 226 |
| Prepayments and accrued income | 8 | 6 |
| 105 | 232 |
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 March 2018 | 31 March 2017 | |
| £’000 | £’000 | |
| Trade payables | 11 | 30 |
| Accruals and deferred income | 1,546 | 640 |
| 1,557 | 670 |
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 | £’000 | |
| 57,964,774 Ordinary shares of 1 penny each at 31 March 2017 | 580 | |
| 5,829,378 Ordinary shares of 1 penny each issued during the year | 58 | |
| 63,794,152 Ordinary shares of 1 penny each at 31 March 2018 | 638 | |
| 6,429,443 Ordinary shares of 1 penny each held in treasury at 31 March 2017 | (64 | ) |
| 841,000 Ordinary shares purchased during the year to be held in treasury | (8 | ) |
| 7,270,443 Ordinary shares of 1 penny each held in treasury at 31 March 2018 | (72 | ) |
| 56,523,709 Ordinary shares of 1 penny each in circulation* at 31 March 2018 | 566 | |
*Carrying one vote each
The Company purchased 841,000 shares (2017: 759,443) to be held in treasury at a nominal value of £8,410 and a cost of £800,000 (2017: £689,000) representing 1.3 per cent. of the shares in issue as at 31 March 2018, leading to a balance of 7,270,443 shares (2017: 6,429,443) in treasury representing 11.4 per cent. (2017: 11.1 per cent.) of the shares in issue as at 31 March 2018.
Under the terms of the Dividend Reinvestment Scheme Circular (dated 26 November 2009), the following new Ordinary shares of nominal value 1 penny each were allotted during the year:
| Date of allotment | Number of shares allotted | Aggregate nominal value of shares (£’000) | Issue price (pence per share) | Net invested (£’000) | Opening market price on allotment date (pence per share) |
| 31 August 2017 | 203,492 | 2 | 98.28 | 199 | 97.00 |
| 28 February 2018 | 219,253 | 2 | 101.38 | 221 | 95.50 |
| 422,745 | 4 | 420 |
During the year the following new Ordinary shares of nominal value 1 penny each were allotted under the terms of the Albion VCTs Prospectus Top Up Offers 2016/2017 and the Albion VCTs Prospectus Top Up Offers 2017/18:
| Date of allotment | Number of shares allotted | Aggregate nominal value of shares (£’000) | Issue price (pence per share) | Net consideration received (£’000) | Opening market price on allotment date (pence per share) |
| 7 April 2017 | 15,240 | - | 99.40 | 15 | 95.00 |
| 7 April 2017 | 16,057 | - | 99.90 | 16 | 95.00 |
| 7 April 2017 | 263,313 | 3 | 100.50 | 256 | 95.00 |
| 17 November 2017 | 1,324,563 | 13 | 99.80 | 1,302 | 95.25 |
| 17 November 2017 | 616,447 | 6 | 100.30 | 606 | 95.25 |
| 17 November 2017 | 1,796,032 | 18 | 100.80 | 1,765 | 95.25 |
| 31 January 2018 | 1,374,981 | 14 | 104.30 | 1,398 | 95.50 |
| 5,406,633 | 54 | 5,358 |
16. Basic and diluted net asset value per share
| 31 March 2018 | 31 March 2017 | |
| (pence per share) | (pence per share) | |
| Basic and diluted net asset value per Ordinary share | 109.46 | 101.79 |
The basic and diluted net asset value per share at the year end is calculated in accordance with the Articles of Association and is based upon total shares in issue (less treasury shares) of 56,523,709 Ordinary shares (2017: 51,535,331) at 31 March 2018.
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 in the Chairman’s statement.
The Company’s financial instruments comprise equity and loan stock investments in unquoted and quoted companies, cash balances, short term receivables and payables which arise from its operations. The main purpose of these financial instruments is to generate cash flow 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 unquoted investments, details of which are shown on pages 19 and 20 of the full Annual Report and Financial Statements. Investment risk is the exposure of the Company to the revaluation and devaluation of investments. The main driver of investment risk is the operational and financial performance of the portfolio companies 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 reviews 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 and quoted investments.
The maximum investment risk as at the balance sheet date is the value of the fixed and current asset investment portfolio which is £53,563,000 (2017: £37,775,000). Fixed and current asset investments form 87 per cent. of the net asset value as at 31 March 2018 (2017: 72 per cent.).
More details regarding the classification of fixed asset investments is 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. To mitigate the investment price risk for the Company as a whole, the strategy of the Company has been to invest in a broad spread of industries using a mixture of equity and debt securities in accordance with the VCT regulations. Debt securities, which, owing to the structure of their yield, have a lower level of price volatility than equity. Details of the industries in which investments have been made are contained in the Strategic report.
Valuations are based on the most appropriate valuation methodology for an investment within its market, with regard to the financial health of the investment and the IPEVCV Guidelines.
As required under FRS 102 section 34.29, the Board is required to illustrate by way of a sensitivity analysis, the degree of exposure to market risk. The Board considers that the value of the fixed and current asset investment portfolio is sensitive to a 10 per cent. change based on the current economic climate. The impact of a 10 per cent. change has been selected as this is considered reasonable given the current level of volatility observed both on a historical basis and future expectations.
The sensitivity of a 10 per cent. increase or decrease in the valuation of the fixed and current asset investments (keeping all other variables constant) would increase or decrease the net asset value and return for the year by £5,356,000 (2017: £3,778,000).
Interest rate risk
It is the Company’s policy to accept a degree of interest rate risk on its financial assets through the effect of interest rate changes. On the basis of the Company’s analysis, it is estimated that a rise of 1.0 per cent. in all interest rates would have increased total return before tax for the year by approximately £65,000 (2017: £77,000). Furthermore, it is considered that a fall of interest rates below current levels during the year would have been very unlikely.
The weighted average effective interest rate applied to the Company’s unquoted loan stock during the year was approximately 4.3 per cent. (2017: 6.3 per cent.). The weighted average period to expected maturity for the unquoted loan stock is approximately 4.8 years (2017: 5.0 years).
The Company’s financial assets and liabilities, all denominated in pounds sterling, consist of the following:
| 31 March 2018 | 31 March 2017 | |||||||||||
| Fixed rate £’000 | Floating rate £’000 | Non- interest bearing £’000 | Total £’000 | Fixed rate £’000 | Floating rate £’000 | Non- interest bearing £’000 | Total £’000 | |||||
| Unquoted equity | - | - | 34,581 | 34,581 | - | - | 21,426 | 21,426 | ||||
| Quoted equity | - | - | 237 | 237 | - | - | 368 | 368 | ||||
| Unquoted loan stock | 16,482 | - | 1,136 | 17,618 | 15,571 | - | 410 | 15,981 | ||||
| Current asset investments | - | - | 1,127 | 1,127 | - | - | - | - | ||||
| Receivables* | - | - | 99 | 99 | - | - | 227 | 227 | ||||
| Current liabilities | - | - | (1,557 | ) | (1,557 | ) | - | - | (670 | ) | (670 | ) |
| Cash | - | 9,760 | - | 9,760 | - | 15,121 | - | 15,121 | ||||
| 16,482 | 9,760 | 35,623 | 61,865 | 15,571 | 15,121 | 21,761 | 52,453 | |||||
*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. Typically loan stock instruments have a fixed or floating charge, which may or may not have been subordinated, 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 as at 31 March 2018 was limited to £17,618,000 (2017: £15,981,000) of unquoted loan stock instruments, £9,760,000 (2017: £15,121,000) of cash deposits with banks and £99,000 (2017: £227,000) of other receivables.
As at the balance sheet date, the cash held by the Company is held with the Lloyds Bank plc, Scottish Widows Bank plc (part of Lloyds Banking Group plc), Barclays Bank Plc and National Westminster Bank plc. Credit risk on cash transactions is mitigated by transacting with counterparties that are regulated entities subject to prudential supervision, with high credit ratings assigned by international credit-rating agencies.
The Company has an informal policy of limiting counterparty banking exposure to a maximum of 20 per cent. of net asset value for any one counterparty.
The credit profile of unquoted loan stock is described under liquidity risk below.
Impaired loan stock instruments have a first fixed charge or a fixed and floating charge over the assets of the portfolio company and the Board estimate that the security value approximates to the carrying value.
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 share capital and reserves of the latest published audited Balance sheet, which amounts to £6,015,000 (2017: £5,116,000) as at 31 March 2018.
The Company has no committed borrowing facilities as at 31 March 2018 (2017: nil) and had cash balances of £9,760,000 (2017: £15,121,000), 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, share buy-backs and dividend payments, which are within the control of the Company. The Manager formally reviews the cash requirements of the Company on a monthly basis, and the Board on a quarterly basis as part of its review of management accounts and forecasts. All the Company’s financial liabilities are short term in nature and total £1,557,000 as at 31 March 2018 (2017: £670,000).
The carrying value of loan stock investments as analysed by expected maturity dates is as follows:
| 31 March 2018 | 31 March 2017 | |||||||
| Redemption date | Fully performing £’000 | Past due £’000 | Impaired £’000 | Total £’000 | Fully performing £’000 | Past due £’000 | Impaired £’000 | Total £’000 |
| Less than one year | 4,256 | 1,326 | 515 | 6,097 | 4,074 | 1,210 | 534 | 5,818 |
| 1-2 years | 1,289 | 600 | - | 1,889 | 1,322 | 124 | - | 1,446 |
| 2-3 years | 1,156 | 124 | 15 | 1,295 | 1,617 | 555 | - | 2,172 |
| 3-5 years | 3,992 | - | - | 3,992 | 2,328 | 113 | - | 2,441 |
| Greater than 5 years | 4,345 | - | - | 4,345 | 4,104 | - | - | 4,104 |
| Total | 15,038 | 2,050 | 530 | 17,618 | 13,445 | 2,002 | 534 | 15,981 |
Loan stock can be past due as a result of interest or capital not being paid in accordance with contractual terms.
Impaired loan stock has a cost of £590,000 (2017: £606,000).
In view of the factors identified above, the Board considers that the Company is subject to low liquidity risk.
Fair values of financial assets and financial liabilities
All the Company’s financial assets and liabilities as at 31 March 2018, are stated at fair value as determined by the Directors, with the exception of receivables and 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. Commitments and contingencies
There are no contingent liabilities or guarantees given by the Company as at 31 March 2018 (2017: nil).
19. Post balance sheet events
Since 31 March 2018 the Company has had the following post balance sheet events:
- Cash proceeds of £8,468,000 were received on 17 May 2018 for the sale of Grapeshot Limited, with further amounts held in escrow;
- Investment of £961,000 in Sandcroft Avenue Limited (PayAsUGym.com);
- Investment of £800,000 in SVS Albion OLIM UK Equity Income Fund;
- Investment of £211,000 in Black Swan Data Limited;
- Investment of £210,000 in uMotif Limited;
- Investment of £189,000 in Abcodia Limited;
- Investment of £180,000 in MyMeds&Me Limited;
- Investment of £165,000 in InCrowd Sports Limited;
- Investment of £148,000 in DySIS Medical Limited; and
- Investment of £100,000 in Healios Limited.
The following new Ordinary shares of nominal value 1 penny each were allotted under the Albion VCTs Prospectus Top Up Offers 2017/18 after 31 March 2018:
| Date of allotment | Number of shares allotted | Aggregate nominal value of shares | Issue price (pence per | Net consideration received | Opening market price on allotment date | ||
| £’000 | share) | £’000 | (pence per share) | ||||
| 5 April 2018 | 575,386 | 6 | 104.00 | 584 | 95.50 | ||
| 11 April 2018 | 77,861 | 1 | 103.00 | 79 | 94.00 | ||
| 11 April 2018 | 5,603 | - | 103.50 | 6 | 94.00 | ||
| 11 April 2018 | 123,485 | 1 | 104.00 | 125 | 94.00 | ||
| 782,335 | 8 | 794 | |||||
20. Related party transactions
In November 2016, Albion acquired OLIM Investment Managers (“OLIM”), a specialist fund manager of UK quoted equities. During the year, a total of £1,200,000 (2017: £nil) was invested into the SVS Albion OLIM UK Equity Income Fund (“OUEIF”) following shareholder approval at the 2017 Annual General Meeting, with a further £800,000 invested after the year end.
Albion agreed to reduce that proportion of its management fee relating to the investment in the OUEIF by 0.75 per cent., which represents the OUEIF management fee charged by OLIM; this resulted in a reduction of the management fee of £2,000 (2017: £nil).
Other than transactions with the Manager as disclosed in note 5 and that disclosed above, there are no other related party transactions 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 March 2018 and 31 March 2017, 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 March 2018, which will be, delivered to the Registrar of Companies. The Auditor reported on those accounts; the reports were unqualified and did not contain a statement under s498 (2) or (3) of the Companies Act 2006.
The Company's Annual General Meeting will be held at The City of London Club, 19 Old Broad Street, London, EC2N 1DS on 21 August 2018 at 11:00am.
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 www.albion.capital/funds/AAEV , where the Report can be accessed as a PDF document via a link in the 'Financial Reports and Circulars' section.
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