Annual Report • Dec 31, 2015
Annual Report
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Annual Report and Financial Statements for the year ended 31 December 2015
| Company number | 03139019 |
|---|---|
| Directors | R A Field, Chairman T W Chambers M G Fiennes |
| Country of incorporation | United Kingdom |
| Legal form | Public Limited Company |
| Manager, company secretary, AIFM and registered office |
Albion Ventures LLP 1 King's Arms Yard London, EC2R 7AF |
| Registrar | Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol, BS99 6ZZ |
| Auditor | BDO LLP 55 Baker Street London, W1U 7EU |
| Taxation adviser | Philip Hare & Associates LLP 1st Floor 4 Staple Inn London, WC1V 7QH |
| Legal adviser | Bird & Bird LLP 15 Fetter Lane London, EC4A 1JP |
| Kings Arms Yard VCT PLC is a member of The Association of Investment Companies (www.theaic.co.uk). | |
| Shareholder information | For help relating to dividend payments, shareholdings and share certificates please contact Computershare Investor Services PLC: Tel: 0370 873 5858 (UK National Rate call, lines are open 8.30am – 5.30pm; Mon – Fri; calls may be recorded) Website: www.investorcentre.co.uk |
| Shareholders can access holdings and valuation information regarding any of their shares held with Computershare by registering on Computershare's website. |
|
| Financial adviser information | For enquiries relating to the performance of the Company, and information for financial advisers, please contact Albion Ventures LLP: |
| Tel: 020 7601 1850 (lines are open 9.00am – 5.30pm; Mon – Fri; calls may be recorded) |
|
| Email: [email protected] Website: www.albion-ventures.co.uk |
|
| Please note that these contacts are unable to provide financial or taxation advice. |
With effect from 1 January 2016 new tax legislation under The Organisation for Economic Co-operation and Development (OECD) Common Reporting Standard for Automatic Exchange of Financial Account Information ("The Common Reporting Standard") is being introduced. The legislation will require venture capital trust companies to provide personal information to HMRC on certain investors who purchase shares in the trusts. As an affected company, Kings Arms Yard VCT PLC will have to provide information annually to HMRC in respect of any non-UK based certificated shareholders and corporate entities.
All new non-UK based certificated shareholders, excluding those whose shares are held in CREST, who are entered onto the share register from 1 January 2016, will be sent a certification form for the purposes of collecting this information.
For further information, please see HMRC's Quick Guide: Automatic Exchange of Information – information for account holders https://www.gov.uk/government/publications/exchange-of-information-account-holders.
The Company is a Venture Capital Trust. The investment policy is intended to produce a regular and predictable dividend stream with an appreciation in capital value as set out below.
| Record date for first dividend | 15 April 2016 |
|---|---|
| Payment date of first dividend | 29 April 2016 |
| Annual General Meeting | 11am on 18 May 2016 |
| Announcement of half-yearly results for the six months ending 30 June 2016 | August 2016 |
| Payment date of second dividend (subject to Board approval) | 31 October 2016 |
| 20.11p | Net asset value per share as at 31 December 2015. |
|---|---|
| 1.77p | Basic and diluted return per share. |
| 18.25p | Mid-market share price as at 31 December 2015. |
| 1.0p | Total tax free dividends per share paid in the year to 31 December 2015. |
| 0.5p | First tax free dividend per share declared for the year to 31 December 2016 payable on 29 April 2016. |
| 5.5% | Tax free yield on share price (dividend per annum/share price as at 31 December 2015). |
| 9.2% | Return on opening NAV per share as at 31 December 2015. |
Shareholder total return relative to FTSE All-Share Index total return from appointment of Albion Ventures LLP on 1 January 2011 to 31 December 2015 (in both cases with dividends reinvested)
Source: Albion Ventures LLP
Methodology: Shareholder total return, including original amount invested (rebased to 100), assuming that dividends were reinvested at the net asset value of the Company at the time when the shares were quoted ex-dividend. Tax reliefs and transaction costs are not taken into account.
| 31 December 2015 (pence per share) |
31 December 2014 (pence per share) |
|
|---|---|---|
| Dividends paid | 1.00 | 1.00 |
| Revenue return | 0.40 | 0.27 |
| Capital return/(loss) | 1.37 | (0.43) |
| Net asset value enhancement as a result of share buy-backs | 0.03 | 0.02 |
| Net asset value | 20.11 | 19.31 |
| 1 January 2011 to | From launch to |
|---|---|
| 31 December 2015 | 31 December 2015 |
| (pence per share) | (pence per share) |
| – | 100.00 |
| 4.67 | 63.33 |
| 3.51 | (79.89) ––––––––––––– |
| 8.18 ––––––––––––– |
83.44 ––––––––––––– |
| From launch to 31 December 2010 (pence per share) 100.00 58.66 (83.40) ––––––––––––– ––––––––––––– 75.26 ––––––––––––– |
The Directors have declared a first dividend of 0.5 pence per share for the year ending 31 December 2016, which will be paid on 29 April 2016 to shareholders on the register as at 15 April 2016.
Source: Albion Ventures LLP
The bar chart shows the aggregate of net asset value and cumulative dividends paid to date for Kings Arms Yard VCT PLC.
The above financial summary is for the Company, Kings Arms Yard VCT PLC only. Details of the financial performance of the various Quester, SPARK and Kings Arms Yard VCT 2 PLC companies, which have been merged into the Company, can be found on page 62.
I am pleased to report a total shareholder return for the year ended 31 December 2015 of 1.77 pence per share. This brings the total aggregate return over the five year period since Albion Ventures was appointed Manager to 50%. New investments totalled £4.4 million in 2015. The divestment of the legacy portfolio continues, with a total of £5.2 million realised from sales during the year, including those of Cluster Seven and Lab M.
Net asset value per share increased from 19.31p as at 31 December 2014 to 20.11p at 31 December 2015 after allowing for the payment of dividends totalling 1 penny per share during the year.
The Company recorded a positive total shareholder return of 1.77 pence per share, or £3.8 million for the year to 31 December 2015, driven partly by a 26% increase in investment income to £1.4 million and partly by positive developments at a number of portfolio companies, including Haemostatix, Hilson Moran, MyMeds&Me, Elateral and our renewable energy businesses, which more than offset the setbacks, including Xention and Oxford Immunotec.
During 2015, £4.4 million was invested into unquoted companies including £0.7 million into renewable energy projects, £1.5 million into the construction of three new care homes, and £2.2 million into the high growth portfolio, predominantly in the healthcare and technology sectors. Further information on all new investments is contained in the Strategic Report. The portfolio now includes thirty investments made since 2011 and the proportion of assets still invested in the legacy portfolio of investments made before 2011 has shrunk to 42%.
The main disposals in the year were the sales of Cluster Seven, Lab M and a reduction in our holding in Oxford Immunotec.
For a review of business and future changes please see the Strategic Report on page 8.
We are pleased to declare a first dividend of 0.5p per share to be paid on 29 April 2016 to shareholders on the register on 15 April 2016 and anticipate that a second dividend will be paid later in the year in line with our current dividend target of 1 penny per share.
As at 31 December 2015, 90.5% of total investments were in qualifying holdings. The Board continues to monitor this position very carefully in order to ensure that qualifying investments comfortably exceed the minimum threshold of 70% required for the Company to continue to benefit from VCT tax status.
The July 2015 budget introduced a number of changes to VCT legislation, including restrictions over the age of investments, a prohibition on management buyouts or the purchase of existing businesses and an overall lifetime investment cap of £12 million from tax-advantaged funds into any portfolio company. While these changes are significant, the Company has been advised that had they been in place previously they would have affected only a relatively small minority of the investments that we have made into new portfolio companies over recent years. The Board's current view is that there will be no material change in our investment policy as a result.
By 29 January 2016, the company had raised £2.7 million (2014: £1.1 million) from a first allotment of shares under the top up share offer launched on 17 November 2015. A second allotment is due on 31 March 2016. In view of the strong demand for the Company's shares the Board announced on 15 February 2016 that it had elected to exercise the over allotment facility referred to in the prospectus thus increasing the maximum amount that may be raised by the Company to £6 million.
Details of the offers are set out in a Prospectus (comprising a Securities Note, Registration Document and Summary) which has been sent to shareholders and these can be downloaded from www.albion-ventures.co.uk.
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% discount to net asset value, so far as market conditions and liquidity permit. During 2015, the Company purchased 6,588,000 Ordinary shares. Further information is shown in note 14. These shares were bought at a discount resulting in a 0.03p uplift in net asset value per share for continuing shareholders. The Boards intends to limit the sum available for share buy-backs for the six month period to 30 June 2016 to £750,000.
Details of transactions that took place with the Manager during the year can be found in note 4 and principally relate to the management fee.
The Board is pleased to announce that investment performance has exceeded the targets set by shareholders on 24 May 2013. Accordingly a first management performance fee of £242,000 is due for the year ended 31 December 2015.
Further details can be found in the Strategic Report on pages 11 and 12.
The Annual General Meeting of the Company will be held at the City of London Club, 19 Old Broad Street, London EC2N 1DS at 11.00am on 18 May 2016. Full details of the business to be conducted at the Annual General Meeting are given in the Notice of the Meeting on page 57.
The Board welcomes your attendance at the meeting as it gives an opportunity for shareholders to ask questions of the Board and Investment Manager. If you are unable to attend the Annual General Meeting in person, we would encourage you to make use of your proxy votes.
The outlook for the UK economy continues to be the key risk affecting your Company. The Company's investment risk is mitigated through a variety of processes, including our policy of ensuring that the Company has a first charge over portfolio companies' assets wherever possible.
A detailed analysis of the other risks and uncertainties facing the business is shown in the Strategic Report on pages 13 and 14.
We are encouraged by the investment performance over the last five years, which reflects the positive results achieved by the implementation of the investment strategy instigated by the Board and implemented by the Manager since the start of 2011. Whilst the economic outlook is more uncertain than it has been for some time, as reflected in equity market volatility, the Board continues to have confidence in the long-term prospects of the increasingly diversified and balanced portfolio.
Chairman 23 March 2016
The Company is a Venture Capital Trust. The investment policy is intended to produce a regular and predictable dividend stream with an appreciation in capital value as set out below.
The Company intends to achieve its strategy by adopting an investment policy for new investments which over time will rebalance the portfolio such that approximately 50% of the portfolio comprises an asset-backed portfolio of more stable, ungeared businesses, principally operating in the healthcare, environmental and leisure sectors (the "Asset-Backed Portfolio"). The balance of the portfolio, other than funds retained for liquidity purposes, will be invested in a portfolio of higher growth businesses across a variety of sectors of the UK economy. These will range from more stable, income producing businesses to a limited number of higher risk technology companies (the "Growth Portfolio").
In neither category would portfolio companies normally have any external borrowing with a charge ranking ahead of the Company. Up to two-thirds of qualifying investments by cost will comprise loan stock secured with a first charge on the portfolio company's assets.
The Company's investment portfolio will thus be structured to provide a balance between income and capital growth for the longer term. The Asset-Backed Portfolio is designed to provide stability and income whilst still maintaining the potential for capital growth. The Growth Portfolio is intended to provide highly diversified exposure through its portfolio of investments in unquoted UK companies.
Funds held pending investment or for liquidity purposes will be held as cash on deposit or in floating rate notes or similar instruments with banks or other financial institutions with high credit ratings assigned by international credit rating agencies.
A detailed review of the Company's business during the year and future prospects is contained in the Chairman's statement on pages 6 and 7.
One of the key aims of the Manager has been to increase the income generated by the investment portfolio to the extent that it more than covers the investment management fee and other charges. This continues to be achieved, with total income for 2015 of £1.41 million against total ongoing costs of £1.12 million. This is equivalent to a gross yield of 3.3% on the average net asset value for the year. As the asset based portfolio increases in the current year, we would expect the Company's income to grow accordingly.
As outlined below, the Company has recorded significant capital uplift during the year. This is led by an uplift of £1.6m across the asset-backed portfolio and £725,000 uplift in the valuation of our holding in Haemostatix, offset by a decline in the valuation of our holding in Xention and in the share price of Oxford Immunotec Global PLC, which is listed on NASDAQ.
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 4.
| Ordinary shares £'000 |
|
|---|---|
| Net revenue return for the year ended 31 December 2015 Net capital gain for the year ended |
869 |
| 31 December 2015 | 2,966 –––––––––– |
| Total return for the year ended | |
| 31 December 2015 | 3,835 |
| Dividend of 0.5 pence per share paid | |
| on 30 April 2015 | (1,109) |
| Dividend of 0.5 pence per share paid | |
| on 30 October 2015 | (1,116) |
| Unclaimed dividends returned | |
| to the Company | 30 –––––––––– |
| Transferred to reserves | 1,640 –––––––––– |
| Net assets as at 31 December 2015 | 44,612 –––––––––– |
| Net asset value per share as at | |
| 31 December 2015 (pence) | 20.11 –––––––––– |
The Company paid dividends of 1 penny per share during the year ended 31 December 2015 (2014: 1 penny per share). The Directors have declared a first dividend of 0.5 pence per share for the year ending 31 December 2016, which will be paid on 29 April 2016 to shareholders on the register at 15 April 2016.
It is the Company's policy to maintain a sustainable, predictable dividend policy with the current level of annual pay-out set at the time that Albion Ventures took over as Manager at 1 penny per share. The dividend has been more than covered by the total return for the year.
As shown in the Income statement on page 39 of the Financial Statements, investment income has increased to £1,412,000 (2014: £1,119,000). The increase in our investment income is due to our investments in our new care homes, dividends from our renewable investments and a dividend from Antenova Limited of £184,000.
The total return for the year has increased to £3,835,000 (2014: loss of £324,000). General expenses decreased slightly during the year to £263,000 (2014: £270,000).
The capital gain for the year was £2,966,000 (2014: loss of £859,000). In line with the accounting policy, a portion of management fees continued to be allocated to capital.
The total return was 1.77 pence per share (2014: loss of 0.16 pence per share).
The Balance sheet on page 40 of the Financial Statements shows that the net asset value has increased over the last year to 20.11 pence per share (2014: 19.31 pence per share) which is due to continued strong performance of the asset backed investments, as well as increased valuations in Haemostatix, Hilson Moran, MyMeds&Me and Elateral in the growth sector.
There has been a net cash inflow for the year, mainly due to fundraising during the year, operating activities and disposal of fixed asset investments. This was offset by the purchase of £4.4 million of new investments, the payment of dividends and buy-back of shares.
The following two pie charts outline firstly the different sectors in which the Company's assets, at carrying value, are currently invested, and secondly, delineates between those investments, at carrying value, by asset class.
Comparatives for 31 December 2014 are in brackets Source: Albion Ventures LLP
Comparatives for 31 December 2014 are in brackets Source: Albion Ventures LLP
During 2015, investments were made to build 3 new residential care homes for the elderly, Active Lives Care, Ryefield Court Care and Shinfield Lodge Care in Oxford, Greater London and Reading respectively. These investments have increased the allocation to healthcare from 9% to 11% and, when combined with investments in two new build hydro projects, have contributed to an increase in the asset-backed element of the portfolio from 32% to 36%.
We anticipate the Healthcare sector increasing in importance, as it is an area that the Manager has targeted for value creation and a good potential source of recurring income. The Company has reached its target percentage for the renewable energy sector, which now accounts for 24% of net assets (18% by cost) compared to 21% at the end of the previous financial year.
The Company's performance record reflects the success of the strategy outlined above and has enabled the Company to maintain a predictable stream of dividend payments to shareholders. The Board believes that this model will continue to meet the investment objective and has the potential to continue to deliver attractive returns to shareholders and that a number of investments in the growth portfolio, both old and new, have strong prospects. Further details on the Company's outlook and prospects can be found in the Chairman's statement on page 7.
The Directors believe that the following key performance indicators, which are typical for venture capital trusts, used in its own assessment of the Company, will provide shareholders with sufficient information to assess how effectively the Company is applying its investment policy to meet its objectives.
The graph on page 4 shows the strong performance of the Company's shareholder total return against the FTSE All-Share Index total return, with dividends reinvested, from the appointment of Albion Ventures LLP on 1 January 2011. Details on the performance of the net asset value and return per share for the year are given on pages 8 and 9.
* Shareholder total return is net asset value plus cumulative dividends paid since 1 January 2011 to date.
Shareholder total return since inception increased by 2.2% to 83.44 pence per share for the year ended 31 December 2015.
Dividends paid in respect of the year ended 31 December 2015 were 1 penny per share (2014: 1 penny per share), in line with the Board's dividend objective. The cumulative dividend paid since inception is 63.33 pence per share.
The ongoing charges ratio for the year to 31 December 2015 was 2.6% (2014: 2.7%). 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 2.6%.
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 23.
VCT investment is regarded as State aid, and new rules have been introduced under the Finance (No 2) Act 2015 in order for the VCT regime to comply with the EU Risk Finance Guidelines. The changes include:
While these changes are significant, the Company has been advised that had they been in place previously they would have affected only a relatively small minority of the investments that we have made into new portfolio companies over recent years. The Board's current view is that there will be no material change in our investment policy as a result.
The relevant tests to measure compliance have been carried out and independently reviewed for the year ended 31 December 2015. These showed that the Company has compiled with all tests and continues to do so.
During the year, there was a very active period of new investment, with a total of £4.4 million invested in new and existing portfolio companies. We continued to bias new investment activity towards asset-backed opportunities with the potential to produce a strong level of income, whilst still investing in companies providing the potential for significant capital growth. A total of £0.7 million was invested during the year into the renewable energy sector; £1.5 million into care homes; and £2.2 million in companies offering the potential of high growth.
Cash and liquid assets at the year end increased to £3.5 million (2014: £0.79 million), representing 7% of net asset value.
New investments were made in 3 companies and totalled £390,000 during the year and included: a care home project – Shinfield Lodge Care Limited (£295,000); a cyber security company – Panaseer Limited (£50,000) and an insurance broking company – Dickson Financial Services Limited (£45,000).
Follow-on investments were made in 26 portfolio companies and totalled £4 million during the year. The largest being £1.2 million into the construction of the two care homes (£825,000 into Active Lives Care Limited and £405,000 into Ryefield Court Care Limited); £550,000 into Chonais Holdings Limited to complete the development of a new hydroelectricity plant in Scotland; and £323,000 into Haemostatix Limited.
During the year Lab M Holdings Limited was sold, realising proceeds of £2.1 million and a gain on cost of £1.2 million; and Cluster Seven Limited was disposed of realising proceeds of £1.9 million with a realised loss of £148,000 on cost. The Company also sold 78,938 Oxford Immnotec Global shares with proceeds of £682,000 and a realised gain of £376,000 on cost. Other realisations can be found in the realisations table on page 19.
The policy of increasing the income generating capacity of the Company continues to bear fruit. The Company received £1,095,000 of loan stock income during the year representing a rise of 23% on the £892,000 loan stock income received from the portfolio during the previous year.
The pie chart in the Strategic report on page 9 outlines the different sectors in which the Company's assets, at carrying value, are currently invested.
As defined by the Articles of Association, the Company's maximum exposure in relation to gearing is restricted to the amount equal to the adjusted capital and reserves, being £43,434,000 (2014: £37,905,000). As at 31 December 2015, the Company's actual short term and long term gearing was £nil (2014: £nil). The Directors do not currently have any intention to utilise long term gearing.
The Company has delegated the investment management of the portfolio to Albion Ventures LLP, which is authorised and regulated by the Financial Conduct Authority. Albion Ventures LLP also provides company secretarial and other accounting and administrative support to the Company.
Under the Investment Management Agreement, Albion Ventures LLP provides investment management, company secretarial and administrative services to the Company. Albion Ventures LLP is entitled to an annual management fee of 2% of net asset value of the Company, payable quarterly in arrears, along with an annual administration fee of £50,000.
Under the terms of the Investment Management Agreement, the aggregate payable for management and administration (normal running costs) are subject to an aggregate annual cap of 3% of the year end closing net asset value, for accounting periods commencing after 31 December 2011.
The Investment Management Agreement can 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.
In line with common practice, the Manager is entitled to arrangement fees payable by portfolio companies (up to a maximum of 2% of the amount invested) and to fees charged for the monitoring of investments (up to a maximum of £20,000 per company per annum). The maximums are increased by the Retail Prices Index each year.
In order to provide the Manager with an incentive to maximise the return to investors, the Manager is entitled to charge an incentive fee in the event that the returns exceed minimum target levels.
The performance hurdle is equal to the greater of the Starting NAV of 20 pence per share, increased by the increase in RPI plus 2 per cent per annum from the Start Date of 1 January 2014 (calculated on a simple and not compound basis) and the highest Total Return for any earlier period after the Start Date (the 'high watermark'). An annual fee (in respect of each share in issue) of an amount equal to 15 per cent of any excess of the Total Return (this being NAV per share plus dividends paid after the Start Date) as at the end of the relevant accounting period over the performance hurdle will be due to the Manager.
As at 31 December 2015, the total return of the Company since 1 January 2014 (the performance incentive fee start date) was 22.11 pence per share, compared to a performance hurdle rate of 21.36 pence per share. As a result, a performance incentive fee is payable to the manager of £242,000 (2014: nil).
The Board has evaluated the performance of the Manager based on the returns generated by the Company from the management and sale of existing investments, the continuing achievement of the 70% investment requirement for Venture Capital Trust status, the making of new investments in accordance with the investment policy, the long term prospects of current investments, a review of the Investment Management agreement and the services provided therein and benchmarking the performance of the Manager to other service providers.
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.
The Board has appointed Albion Ventures LLP as the Company's AIFM as required by the AIFMD.
It remains the Board's primary objective to maintain sufficient resources for investment in existing and new portfolio companies and for the continued payment of dividends to shareholders. The Board's policy is to buy back shares in the market, subject to the overall constraint that such purchases are in the Company's interest.
It is the Board's intention for such buy-backs to be in the region of a 5% discount to net asset value, so far as market conditions and liquidity permit.
Further details of shares bought back during the year ended 31 December 2015 can be found in note 14 of the Financial Statements.
The Board recognises the requirement under section 414c of the Companies Act 2006 (the "Act") to detail information about social and community issues, employees and human rights; including any policies it has in relation to these matters and effectiveness of these policies. As an externally managed investment company with no employees, the Company has no policies in these matters and as such these requirements do not apply.
The Company has adopted a number of further policies relating to:
and these are set out in the Directors' report on pages 23 and 24.
The Board carries out a regular review of the risk environment in which the Company operates. The principal risks and uncertainties of the Company as identified by the Board and how they are managed are as follows:
| Risk | Possible consequence | Risk management |
|---|---|---|
| Economic risk | Changes in economic conditions, including, for example, interest rates, rates of inflation, industry conditions, competition, political and diplomatic events and other factors could substantially and adversely affect the Company's prospects in a number of ways. |
To reduce this risk, in addition to investing equity in portfolio companies, the Company often invests in secured loan stock and has a policy of not normally permitting any external bank borrowings within portfolio companies. Additionally, the Manager has been rebalancing the sector exposure of the portfolio with a view to reducing reliance on consumer led sectors. |
| Investment risk | This is the risk of investment in poor quality assets which reduces the capital and income returns to shareholders and negatively impacts on the Company's reputation. By nature, smaller unquoted businesses, such as those that qualify for venture capital trust purposes, are more fragile than larger, long established businesses. The success of investments in certain sectors is also subject to regulatory risk, such as those affecting companies involved in UK renewable energy. |
To reduce this risk, the Board places reliance upon the skills and expertise of the Manager in investing in this segment of the market. In addition, the Manager operates a formal and structured investment process, which includes an Investment Committee, comprising investment professionals from the Manager and at least one external investment professional. The Manager also invites and takes account of comments from non-executive Directors of the Company on investments discussed at the Investment Committee meetings. Investments are actively and regularly monitored by the Manager (investment managers normally sit on portfolio company boards) and the Board receives detailed reports on each investment as part of the Manager's report at quarterly board meetings. |
| Valuation risk | The Company's investment valuation methodology is reliant on the accuracy and completeness of information that is issued by portfolio companies. In particular, the Directors may not be aware of or take into account certain events or circumstances which occur after the information issued by such companies is reported. |
As described in note 1 of the Financial Statements, the unquoted equity investments, loan stock, convertible loan stock and debt issued at a discount held by the Company are designated at fair value through profit or loss and valued in accordance with the International Private Equity and Venture Capital Valuation Guidelines. These guidelines set out recommendations, intended to represent current best practice on the valuation of venture capital investments. These investments are valued on the basis of forward looking estimates and judgments about the business itself, its market and the environment in which it operates, together with the state of the mergers and acquisitions market, stock market conditions and other factors. In making these judgments the valuation takes into account all known material facts up to the date of approval of the Financial Statements by the Board. The values of a number of investments are also underpinned by independent third party professional valuations. |
| VCT approval risk | The Company's current approval as a venture capital trust allows investors to take advantage of tax reliefs on initial investment and ongoing tax free capital gains and dividend income. Failure to meet the qualifying requirements could result in investors losing the tax relief on initial investment and loss of tax relief on any tax-free income or capital gains received. In addition, failure to meet the qualifying requirements could result in a loss of listing of the shares. |
To reduce this risk, the Board has appointed the Manager, 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. Philip Hare & Associates LLP 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. |
| Risk | Possible consequence | Risk management |
|---|---|---|
| Compliance risk | The Company is listed on The London Stock Exchange and is required to comply with the rules of the UK Listing Authority, as well as with the Companies Act, Accounting Standards and other legislation. Failure to comply with these regulations could result in a delisting of the Company's shares, or other penalties under the Companies Act or from financial reporting oversight bodies. |
Board members and the Manager have experience of operating at senior levels within or advising quoted businesses. In addition, the Board and the Manager receive regular updates on new regulation from its auditor, lawyers and other professional bodies. The Company is subject to compliance checks via 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 Manager Board meetings, and also as part of the review work undertaken by the Manager's Compliance Officer. The report on controls is evaluated by Internal Audit during its reports. |
| Internal control risk |
Failures in key controls, within the Board or within the Manager's business, could put assets of the Company at risk or result in reduced or inaccurate information being passed to the Board or to shareholders. |
The Audit Committee meets with the Manager's Internal Auditor, PKF Littlejohn LLP, when required, receiving a report regarding the last formal internal audit performed on the Manager and providing the opportunity for the Audit Committee to ask specific and detailed questions. Thomas Chambers, Chairman of the Audit Committee, met with the internal audit Partner of PKF Littlejohn LLP in January 2016 to discuss the most recent Internal Audit Report on the Manager. The Manager has a comprehensive business continuity plan in place in the event that operational continuity is threatened. Further details regarding the Board's management and review of the Company's internal controls through the implementation of the Turnbull guidance are detailed on page 30. Measures are in place to mitigate information risk in order to ensure the integrity, availability and confidentiality of information used within the business. |
| Reliance upon third parties risk |
The Company is reliant upon the services of Albion Ventures LLP for the provision of investment management and administrative functions. |
There are provisions within the Management agreement for the change of Manager under certain circumstances (for further detail, see the Management agreement paragraph on page 11). In addition, the Manager has demonstrated to the Board that there is no undue reliance placed upon any one individual within Albion Ventures LLP. The Board monitors the performance of other third party service providers annually. |
| Financial risk | By its nature, as a venture capital trust, the Company is exposed to investment risk (which comprises investment price risk and cash flow interest rate risk), credit risk and liquidity risk. |
The Company's policies for managing these risks and its financial instruments are outlined in full in note 17 to the Financial Statements. Most of the Company's income and expenditure is denominated in sterling. As at 31 December 2015, the Company held investments denominated in US dollars of £2,451,000 (2014: £3,195,000). It is therefore likely that the Company would be affected by currency fluctuations; however, this is not expected to be material. The Company does not use derivative financial instruments for speculative purposes. |
In accordance with the FRC UK Corporate Governance Code published in September 2014 and principle 21 of the AIC Code of Corporate Governance published by the AIC in February 2015, the Directors have assessed the prospects of the Company over three years to 31 December 2018. The Directors have taken a three year period as the Code does not specify a time period, except it must be longer than 12 months. 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 that looking to five years would incorporate too much uncertainty and not have any meaningful benefit to shareholders. It 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 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 it has in place for dealing with the principal risks.
The Board assessed the ability of the Company to raise finance. As explained in this Strategic report the Company's income more than covers on-going expenses. This income should increase as our asset-backed investments continue to mature. 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 2018.
This Strategic report of the Company for the year ended 31 December 2015 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.
The Strategic report was approved by the Board of Directors on 23 March 2016 and was signed on its behalf by:
Robin Field Chairman 23 March 2016
The following are the Directors of the Company, all of whom operate in a non-executive capacity.
Robin Field (Chairman), appointed 21 January 2009, began his commercial career with Jardine Matheson & Co. in the Far East where he fulfilled a number of managerial roles, including that of general manager of the largest independent shipping agency in Taiwan. He then gained an MBA with distinction at INSEAD, before serving as a strategy consultant with the LEK Partnership. He was chief executive of Filofax Group plc when the company floated on the London Stock Exchange in 1996.
Thomas Chambers (Chairman of the Audit Committee), appointed 3 October 2011, has over ten years' operational experience at mobile operating systems provider Symbian Limited (acquired by Nokia Oyj in 2009) and at ADSL/fixed line phone provider First Telecom plc. Since 2002, Thomas has had a range of industry, venture capital and government, non-executive and advisory roles giving insight into, in particular, the technology and communications sectors. As CFO of Symbian he played a significant leadership role in the creation of the first Smartphones. He was also CFO of Robert Walters plc which he took through its listing on the London Stock Exchange in 1996. He spent six years in corporate finance at Dresdner Kleinwort Benson Limited after a five year career with Price Waterhouse. Until February 2016 he was non-executive Treasurer and a council member of the University of Surrey. He is a non-executive director of NCC Group plc and of a number of private companies.
Martin Fiennes, appointed 5 April 2011, is a Principal with Oxford Sciences Innovation, an investment company created in 2015 to invest in spin-outs from the University of Oxford. Prior to this he ran a corporate finance boutique, Gatehouse Capital, which specialised in raising capital for early-stage UK technology companies. From 1997 until he founded Gatehouse Capital in 2006, Martin had been an investment manager with Top Technology Ventures. Martin is a director of the HDH Wills 1965 Charitable Trust, and also serves as a director at Drayton Manor Park Ltd, Bodle Technologies Ltd and Oxford Flow Ltd.
All of the Directors are non-executive and independent of the Manager, Albion Ventures LLP, and are members of the Audit Committee.
At the Annual General Meeting, Martin Fiennes will retire from the Board by rotation in accordance with the Company's Articles of Association and Companies Act 2006 and he will offer himself for re-election.
Albion Ventures LLP, is authorised and regulated by the Financial Conduct Authority and is the Manager of Kings Arms Yard VCT PLC. In addition, it manages a further five venture capital trusts, the UCL Technology Fund and provides management services to Albion Community Power PLC. It currently has total assets under management or administration of approximately £400 million.
The following are specifically responsible for the management and administration of the venture capital trusts managed by Albion Ventures LLP:
Patrick Reeve, MA, ACA, qualified as a chartered accountant before joining Cazenove & Co where he spent three years in the corporate finance department. He joined Close Brothers Group plc in 1989, working in both the development capital and corporate finance divisions before establishing Albion Ventures (formerly Close Ventures Limited) in 1996. He is the managing partner of Albion Ventures and is also a director of Albion Development VCT PLC, Albion Enterprise VCT PLC and Albion Technology & General VCT PLC, all managed by Albion Ventures. He is also chief executive of Albion Community Power PLC, a member of the Audit Committee of University College London, a director of the Association of Investment Companies, and is on the Council of the BVCA.
Will Fraser-Allen, BA (Hons), FCA, qualified as a chartered accountant with Cooper Lancaster Brewers in 1996 and then joined their corporate finance team providing corporate finance advice to small and medium sized businesses. He joined Albion Ventures in 2001 since when he has focused on leisure and healthcare investing. Will became deputy managing partner of Albion Ventures LLP in 2009. Will has a BA in history from Southampton University.
Adam Chirkowski, MA, having graduated in Industrial Economics followed by a Masters in Corporate Strategy, spent five years at N M Rothschild & Sons specialising in mergers and acquisitions, principally in the natural resources and then healthcare sectors, before joining Albion Ventures in 2013, where he currently concentrates on renewable energy projects and healthcare.
Dr Andrew Elder, MA, FRCS, initially practised as a surgeon for six years, specialising in neurosurgery, before joining the Boston Consulting Group (BCG) as a consultant in 2001. Whilst at BCG he specialised in healthcare strategy, gaining experience with many large, global clients across the full spectrum of healthcare including biotechnology, pharmaceuticals, service and care providers, software and telecommunications. He joined Albion Ventures in 2005 and became a partner in 2009. He has an MA plus Bachelors of Medicine and Surgery from Cambridge University and is a Fellow of the Royal College of Surgeons (England).
Emil Gigov, BA (Hons), FCA, graduated from the European Business School, London, with a BA (Hons) Degree in European Business Administration in 1994. He then joined KPMG in their financial services division and qualified as a chartered accountant in 1997. Following this he transferred to KPMG Corporate Finance where he specialised in the leisure, media and marketing services sectors acting on acquisitions, disposals and fundraising mandates. He joined Albion Ventures in 2000 and has since made and exited investments in a number of industry sectors, including healthcare, education, technology, leisure and engineering. Emil became a partner in Albion Ventures in 2009.
Vikash Hansrani, BA (Hons), ACA, qualified as a chartered accountant with RSM Tenon plc and latterly worked in its corporate finance team. He joined Albion Ventures in 2010, where he is currently Finance Director. He is also Finance Director of Albion Community Power PLC. He has a BA in Accountancy & Finance from Nottingham Business School.
David Gudgin, BSc (Hons), ACMA, qualified as a management accountant with ICL before spending 3 years at the BBC. In 1999 he joined 3i plc as an investor in European technology based in London and Amsterdam. In 2002 he moved to Foursome Investments (now Frog Capital) as the lead investor of an environmental technology and a later stage development capital fund. David joined Albion Ventures in 2005 and became a partner in 2009. He is also Managing Director of Albion Community Power PLC. David has a BSc in Economics from Warwick University.
Ed Lascelles, BA (Hons), began by advising quoted UK companies on IPOs, takeovers and other corporate transactions, first with Charterhouse Securities and then ING Barings. Companies ranged in value from £10 million to £1 billion, across the healthcare and technology sectors among others. After moving to Albion Ventures in 2004, Ed started investing in the technology, healthcare, financial and business services sectors. Ed became a partner in 2009 and is responsible for a number of Albion's technology investments. He graduated from University College London with a first class degree in Philosophy.
Robert Henderson, BA (Hons), ACA, graduated from Newcastle University with a first-class degree in business management. Prior to joining Albion Ventures in 2015, he qualified as a chartered accountant with KPMG, spending four years working in transactions and restructuring, primarily in turnaround and M&A situations.
Dr Christoph Ruedig, MBA, initially practised as a radiologist, before spending 3 years at Bain & Company. In 2006 he joined 3i plc working for their healthcare venture capital arm leading investments in biotechnology, pharmaceuticals and medical technology. More recently he worked for General Electric UK, where he was responsible for mergers and acquisitions in the medical technology and healthcare IT sectors. He joined Albion Ventures in 2011 and became a partner in 2014. He holds a degree in medicine from Ludwig-Maximilians University, Munich and an MBA from INSEAD.
Henry Stanford, MA, ACA, qualified as a chartered accountant with Arthur Andersen before joining the corporate finance department of Close Brothers Group in 1992, becoming an assistant director in 1996. He moved to Albion Ventures in 1998, where he has been responsible for much of the asset based portfolio. Henry became a partner in Albion Ventures in 2009. He holds an MA degree in Classics from Oxford University.
Robert Whitby-Smith, BA (Hons), FCA. After graduating in History at Reading University, Robert qualified as a chartered accountant with KPMG and subsequently worked in corporate finance at Credit Suisse First Boston and ING Barings. Since joining in 2005, Robert has assisted in the workout of portfolios formerly managed by other fund managers (now named Crown Place VCT PLC and Kings Arms Yard VCT PLC), and is responsible for investments primarily in the advanced manufacturing, digital media and technology sectors. Robert became a partner in Albion Ventures in 2009.
Marco Yu, MPhil, MA, MRICS, spent two and a half years at Bouygues (UK), before moving to EC Harris in 2005 where he advised senior lenders on large capital projects. Since joining Albion Ventures in 2007 Marco has been involved in hotel, cinema, pub, residential property and garden centre investments and is, more recently, responsible for a number of renewable energy investments. Marco became an Investment Director in April 2014. Marco graduated from Cambridge University with a first class degree in economics and is a Chartered Surveyor.
| As at 31 December 2015 | As at 31 December 2014 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| % voting | % voting rights held by all AVL(1) managed rights companies |
Cost(2) £'000 |
Cumulative movement in value £'000 |
Value £'000 |
Cost(2) £'000 |
Cumulative movement in value £'000 |
Value £'000 |
Change in value for the year(3) £'000 |
|
| Asset-backed unquoted investments | |||||||||
| Chonais River Hydro Limited | 6.5 | 25.0 | 2,428 | 499 | 2,927 | 1,878 | 25 | 1,903 | 473 |
| Active Lives Care Limited | 18.2 | 45.1 | 2,737 | 157 | 2,894 | 1,912 | 49 | 1,961 | 107 |
| Ryefield Court Care Limited | 13.3 | 35.5 | 1,459 | 88 | 1,547 | 1,054 | 28 | 1,082 | 60 |
| The Street by Street Solar | |||||||||
| Programme Limited | 10.0 | 50.0 | 1,040 | 436 | 1,476 | 1,040 | 349 | 1,389 | 87 |
| Alto Prodotto Wind Limited | 11.1 | 50.0 | 1,000 | 474 | 1,474 | 1,000 | 342 | 1,342 | 132 |
| Regenerco Renewable Energy Limited | 9.8 | 50.0 | 988 | 295 | 1,283 | 935 | 125 | 1,060 | 171 |
| Dragon Hydro Limited | 17.2 | 30.0 | 736 | 348 | 1,084 | 736 | 150 | 886 | 198 |
| Gharagain River Hydro Limited | 5.0 | 25.1 | 620 | 261 | 881 | 516 | 7 | 523 | 254 |
| Bravo Inns II Limited | 5.0 | 50.0 | 800 | 21 | 821 | 800 | 14 | 814 | 8 |
| AVESI Limited | 14.8 | 50.0 | 484 | 131 | 615 | 460 | 49 | 509 | 82 |
| Greenenerco Limited | 8.6 | 50.0 | 300 | 158 | 458 | 300 | 102 | 402 | 56 |
| Shinfield Lodge Care Limited | 2.2 | 35.7 | 295 | 3 | 298 | – | – | – | 3 |
| Erin Solar Limited | 5.7 | 50.0 | 160 | (3) | 157 | 160 | – | 160 | (3) |
| Infinite Ventures (Goathill) Limited | 2.7 | 31.0 | 112 | – | 112 | 112 | – | 112 | – |
| Harvest AD Limited(i) | – | – | 70 | – | 70 | 70 | – | 70 | – |
| Total asset-backed unquoted investments | 13,229 | 2,868 | 16,097 | 10,973 | 1,240 | 12,213 | 1,628 | ||
| High growth unquoted investments | |||||||||
| Elateral Group Limited | 37.7 | 37.7 | 3,644 | 2,077 | 5,721 | 3,343 | 1,655 | 4,998 | 423 |
| Sift Limited | 42.1 | 42.1 | 3,229 | (488) | 2,741 | 3,274 | (635) | 2,639 | 148 |
| Haemostatix Limited | 33.3 | 33.3 | 1,877 | (327) | 1,550 | 1,554 | (1,052) | 502 | 725 |
| Hilson Moran Holdings Limited | 10.4 | 34.7 | 381 | 1,022 | 1,403 | 495 | 511 | 1,006 | 551 |
| MyMeds&Me Limited | 10.9 | 29.9 | 848 | 471 | 1,319 | 657 | (10) | 647 | 481 |
| Proveca Limited | 16.4 | 45.9 | 930 | 261 | 1,191 | 751 | 415 | 1,166 | (153) |
| Perpetuum Limited | 15.0 | 15.0 | 1,773 | (652) | 1,121 | 1,644 | (823) | 821 | 170 |
| OmPrompt Holdings Limited | 7.1 | 19.7 | 900 | 21 | 921 | 900 | 10 | 910 | 11 |
| Antenova Limited | 28.7 | 28.7 | 1,733 | (816) | 917 | 1,543 | (1,114) | 429 | 297 |
| Academia Inc | 5.3 | 5.3 | 351 | 531 | 882 | 351 | 513 | 864 | 18 |
| Symetrica Limited | 3.5 | 3.5 | 389 | 253 | 642 | 309 | 245 | 554 | 8 |
| Egress Software Technologies Limited | 4.3 | 22.0 | 430 | 200 | 630 | 430 | 78 | 508 | 121 |
| Anthropics Technologies Limited | 18.6 | 18.6 | 25 | 589 | 614 | – | 623 | 623 | (34) |
| Abcodia Limited | 5.0 | 22.7 | 428 | 109 | 537 | 298 | 3 | 301 | 105 |
| Grapeshot Limited | 2.4 | 12.7 | 371 | 61 | 432 | 280 | – | 280 | 61 |
| Relayware Limited | 1.6 | 17.3 | 417 | 5 | 422 | 325 | 8 | 333 | (2) |
| Celoxica Holdings plc | 4.4 | 4.4 | 513 | (144) | 369 | 513 | (144) | 369 | – |
| Aridhia Informatics Limited | 1.8 | 14.7 | 324 | (97) | 227 | 299 | (43) | 256 | (53) |
| Mirada Medical Limited | 1.1 | 45.0 | 230 | (3) | 227 | 190 | – | 190 | (3) |
| Cisiv Limited | 2.6 | 27.2 | 170 | 42 | 212 | 133 | – | 133 | 43 |
| The Wentworth Wooden Jigsaw Company Limited |
5.4 | 5.4 | – | 139 | 139 | – | 140 | 140 | (1) |
| Silent Herdsman Holdings Limited Sandcroft Avenue Limited |
3.6 1.3 |
36.4 5.6 |
153 120 |
(15) 11 |
138 131 |
102 84 |
(56) (10) |
46 74 |
41 21 |
| UniServity Limited | – | – | 88 | – | 88 | 250 | (100) | 150 | (50) |
| Panaseer Limited | 1.0 | 7.8 | 50 | – | 50 | – | – | – | – |
| Dickson Financial Services Limited | 4.5 | 30.0 | 45 | – | 45 | – | – | – | – |
| Xention Limited† | 10.5 | 10.5 | 38 | (5) | 33 | 608 | 194 | 802 | (793) |
| Oxonica Limited† | 2.1 | 2.1 | 1 | – | 1 | 185 | (184) | 1 | – |
| De Novo Pharmaceuticals Limited | 0.0 | 0.0 | – | 1 | 1 | – | 1 | 1 | – |
| TeraView Limited | 1.0 | 1.0 | 1 | – | 1 | 1 | – | 1 | – |
| Furzeland Limited | – | – | – | 1 | 1 | – | 1 | 1 | – |
| Keronite Group Limited | 1.1 | 1.1 | – | 1 | 1 | – | 1 | 1 | – |
| Lectus Therapeutics Limited | 4.5 | 4.5 | – | 1 | 1 | – | 1 | 1 | – |
| Ario Pharma Limited | 3.6 | 3.6 | 24 | (23) | 1 | – | 96 | 96 | (119) |
| Total high growth unquoted investments | 19,483 | 3,226 | 22,709 | 18,519 | 324 | 18,843 | 2,016 |
| As at 31 December 2015 | As at 31 December 2014 | ||||||
|---|---|---|---|---|---|---|---|
| Cost(2) £'000 |
Cumulative movement in value £'000 |
Value £'000 |
Cost(2) £'000 |
Cumulative movement in value £'000 |
Value £'000 |
Change in value for the year(3) £'000 |
|
| Quoted investments | |||||||
| Oxford Immunotec Global PLC (NASDAQ) | 1,114 | 1,109 | 2,223 | 1,422 | 1,768 | 3,190 | (279) |
| Xtera Communications Inc (NASDAQ) | 85 | 143 | 228 | 85 | (75) | 10 | 217 |
| Total quoted investments | 1,199 | 1,252 | 2,451 | 1,507 | 1,693 | 3,200 | (62) |
| Total fixed asset investments | 33,911 | 7,348 | 41,257 | 30,999 | 3,257 | 34,256 | 3,582 |
| Total change in value of investments for the year | 3,582 |
|---|---|
| Movement in loan stock accrued interest | (59) |
| Unrealised gains sub-total | 3,523 |
| Realised gains in current period | 261 |
| Total gains on investments as per Income statement | 3,784 |
(i) Early stage investment of convertible loan stock.
† The accounting cost as shown above is after deducting realised losses of £594,000 for Xention Limited and £184,000 for Oxonica Limited which are still held at the balance sheet date.
The comparative cost and valuations for 31 December 2014 do not agree to the Annual Report and Financial Statements for the year ended 31 December 2014 as the above list does not include brought forward investments that were fully disposed of in the year.
| Realisations in the year to 31 December 2015 | Cost(2) £'000 |
Opening carrying value £'000 |
Disposal proceeds £'000 |
Realised gain/(loss) £'000 |
Gain/(loss) on opening or acquired value £'000 |
|---|---|---|---|---|---|
| Lab M Holdings Limited | 858 | 1,342 | 2,082 | 1,224 | 740 |
| Cluster Seven Limited | 2,076 | 2,400 | 1,928 | (148) | (472) |
| Oxford Immunotec Global PLC | 306 | 688 | 682 | 376 | (6) |
| Orchard Portman Group | 175 | 206 | 225 | 50 | 19 |
| Hilson Moran (Loan Stock repayment) | 115 | 156 | 156 | 41 | – |
| Perpetuum (Loan Stock repayment) | 51 | 51 | 64 | 13 | 13 |
| Sift Group Limited | 48 | 48 | 48 | – | – |
| Clear2Pay NV | – | – | 10 | 10 | 10 |
| UniServity Limited | 162 | 12 | 12 | (150) | – |
| Atego Group (escrow adjustment) | – | – | (43) | (43) | (43) |
| Oxonica Limited† | 184 | – | – | (184) | – |
| Xention Limited† | 594 | – | – | (594) | – |
| Total | 4,569 | 4,903 | 5,164 | 595 | 261 |
† Cost of realisation is net of amounts of £778,000 written off during the period in respect of investments still held at the balance sheet date.
(1) Albion Ventures LLP.
(2) Amounts shown as cost represent the acquisition cost in the case of investments originally made by the Company and/or the valuation attributed to the investments acquired from Quester VCT 2 plc and Quester VCT 3 plc at the date of the merger in 2005, and those acquired from Kings Arms Yard VCT 2 PLC at the merger on 30 September 2011, plus any subsequent acquisition costs, as reduced in certain cases by amounts written off as representing an impairment in value.
(3) The above column shows the movement in the year from the opening balance as at 1 January 2015 to the closing balance as at 31 December 2015 after adjustment for additions and disposals.
The top ten fixed asset investments by total aggregate value of equity and loan stock are shown below.
The accounting information disclosed below is the latest as filed at Companies House. For the purposes of the valuation process, the most recent financial information available is used, which may include management accounts. The audited results are therefore not necessarily the figures used for the valuation of a portfolio company.
| Elateral Group Limited | |||
|---|---|---|---|
| Development and sale of brand marketing automation software. | |||
| Website: www.elateral.com | |||
| Audited results for year ended | 31 March 2015 | Investment information: | |
| £'000 | £'000 | ||
| Turnover | 5,582 | Income recognised in the year | – |
| Loss before tax | (3,388) | Accounting cost | 3,644 |
| Loss after tax | (3,390) | Total valuation | 5,721 |
| Net liabilities | (6,311) | Voting equity held | 37.7% |
| Basis of valuation | Revenue multiple | ||
| Chonais River Hydro Limited | |||
| Hydropower project in Scotland. | |||
| Abbreviated audited results for year ended | 30 September 2015 | Investment information: | |
| £'000 | £'000 | ||
| Income recognised in the year | 209 | ||
| Accounting cost | 2,428 | ||
| Total valuation | 2,927 | ||
| Net liabilities | (7) | Voting equity held | 6.5% |
| Basis of valuation | Net assets supported by third party valuation | Voting rights for all AVL managed companies | 25.0% |
| Active Lives Care Limited | |||
| A 72 bed care home under construction one mile from Oxford city centre. | |||
| Website: www.cumnorhillhouse.uk | |||
| Abbreviated results for year ended | 31 December 2014 | Investment information: | |
| £'000 | £'000 | ||
| Income recognised in the year | 108 | ||
| Accounting cost Total valuation |
2,737 2,894 |
||
| Net assets | 1,182 | Voting equity held | 18.2% |
| Basis of valuation | Cost | Voting rights for all AVL managed companies | 45.1% |
| Sift Limited | |||
| A leading digital media expert working with over 1,000 organisations, delivering effective online business solutions. | |||
| Website: www.sift.com | |||
| Audited results for year ended | 31 December 2014 | Investment information: |
| £'000 | £'000 | ||
|---|---|---|---|
| Turnover | 8,467 | Income recognised in the year | 82 |
| Profit before tax | 28 | Accounting cost | 3,229 |
| Profit after tax | 428 | Total valuation | 2,741 |
| Net assets | 1,615 | Voting equity held | 42.1% |
| Basis of valuation | Earnings multiple |
A global, commercial-stage diagnostic company in the field of immunology.
| Haemostatix Limited Develops haemostatic therapies for applications during surgery. |
|||
|---|---|---|---|
| Website: www.haemostatix.com | |||
| Abbreviated audited results for year ended | 31 March 2015 | Investment information: | |
| £'000 | £'000 | ||
| Income recognised in the year | – | ||
| Accounting cost | 1,877 | ||
| Total valuation | 1,550 | ||
| Net liabilities | (9,145) | Voting equity held | 33.3% |
| Basis of valuation | Discount to offer price |
A 60 bed care home located in Hillingdon, Middlesex.
| Website: www.ryefieldcourt.uk | ||
|---|---|---|
| 30 April 2015 | Investment information: | |
| £'000 | £'000 | |
| Income recognised in the year | 60 | |
| Accounting cost | 1,459 | |
| Total valuation | 1,547 | |
| 629 | Voting equity held | 13.3% |
| Net assets supported by third party valuation | Voting rights for all AVL managed companies | 35.5% |
| The Street by Street Solar Programme Limited | |||
|---|---|---|---|
| The company installs, owns and operates domestic photovoltaic systems on homes in England. | |||
| Abbreviated audited results for year ended | 30 November 2014 | Investment information: | |
| £'000 | £'000 | ||
| Income recognised in the year | 101 | ||
| Accounting cost | 1,040 | ||
| Total valuation | 1,476 | ||
| Net assets | 382 | Voting equity held | 10.0% |
| Basis of valuation | Net assets supported by third party valuation | Voting rights for all AVL managed companies | 50.0% |
| Alto Prodotto Wind Limited The company builds, owns and operates medium scale (100kWp to 1500kWp) wind projects in the UK. |
|||
|---|---|---|---|
| Abbreviated audited results for year ended | 31 March 2015 £'000 |
Investment information: | £'000 |
| Income recognised in the year | 130 | ||
| Accounting cost | 1,000 | ||
| Total valuation | 1,474 | ||
| Net assets | 1,513 | Voting equity held | 11.1% |
| Basis of valuation | Net assets supported by third party valuation | Voting rights for all AVL managed companies | 50.0% |
| Hilson Moran Holdings Limited | |||
|---|---|---|---|
| The company provides consultancy in building services, sustainability and facilities management. | |||
| Website: www.hilsonmoran.com | |||
| Audited results for year ended | 31 December 2014 | Investment information: | |
| £'000 | £'000 | ||
| Turnover | 18,410 | Income recognised in the year | 21 |
| Profit before tax | 125 | Accounting cost | 381 |
| Profit after tax | 585 | Total valuation | 1,403 |
| Net assets | 2,400 | Voting equity held | 10.4% |
| Basis of valuation | Earnings multiple | Voting rights for all AVL managed companies | 34.7% |
The Directors present their Annual Report and the audited Financial Statements on the affairs of Kings Arms Yard VCT PLC (the "Company") for the year ended 31 December 2015.
The principal activity of the Company is that of a Venture Capital Trust. It has been approved by H.M. Revenue & Customs ("HMRC") as a venture capital trust in accordance with Part 6 of the Income Tax Act 2007 and in the opinion of the Directors, the Company has conducted its affairs so as to enable it to continue to obtain such approval.
The Company is not a close company for taxation purposes and its shares are listed on the official list of the London Stock Exchange.
Under current tax legislation, shares in the Company provide tax-free capital growth and income distribution, in addition to the income and capital gains tax relief some investors would have obtained when they invested in the original share offers.
Details of the Company's issued share capital, together with details of the movements in the Company's issued share capital during the year, are shown in note 14.
Ordinary shares represent 100 per cent. of the total share capital and voting rights. All shares (except for treasury shares which have no rights to a dividend and no voting rights) rank pari passu for dividend and voting purposes. Each Ordinary share is currently entitled to one vote. The Directors are not aware of any restrictions on the transfer of shares or on voting rights.
The Company operates a Dividend Reinvestment Scheme, details of which can be found on www.albion-ventures.co.uk within the 'Our Funds' section by clicking on Kings Arms Yard VCT PLC.
The Company is currently participating in the Albion VCTs Prospectus Top Up Offers 2015/2016 for which a prospectus has recently been published, copies of which are available on the Company's website at www.albion-ventures.co.uk.
During the year, the Company issued 26,799,853 new Ordinary shares as a result of the DRIS and Albion VCT Prospectus Top Up Offers, details of which can be found in note 14.
The Company operates a policy of buying back shares either for cancellation or for holding in treasury. Details regarding the current buy-back policy can be found in the Chairman's statement on page 6.
As at 31 December 2015 and at the date of this Report, the Company was not aware of any beneficial interest exceeding 3% of voting rights. There have been no disclosures in accordance with Disclosure and Transparency Rule 5 made to the Company during the year ended 31 December 2015 and up to the date of this Report.
The total return attributable to Shareholders for the year was £3,835,000 (2014: loss £324,000) or 1.77 pence per share (2014: loss of 0.16 pence per share).
During the year, the Company paid a dividend of 1 penny per share (2014: 1 penny per share).
As shown in the Chairman's statement, the Board has declared a first dividend of 0.5 pence per share for the year ending 31 December 2016 to be paid on 29 April 2016 to shareholders on the register as at 15 April 2016.
Details on the future developments of the business can be found on page 7 of the Chairman's statement and on page 9 of the Strategic report.
In accordance with the Guidance on Risk Management, Internal Control and Related Financial and Business Reporting issued by the Financial Reporting Council in September 2014, the Board has assessed the Company's operation as a going concern. The Company has adequate cash and liquid resources, and the major cash outflows of the Company (namely investments, share buy-backs and dividends) are within the Company's control. Accordingly, after making diligent enquiries the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. After accounting for investments available for disposal and current fundraising the Company has adequate cash resources. For this reason, the Directors have adopted the going concern basis in preparing the accounts.
The Board's assessment of liquidity risk and details of the Company's policies for managing its capital and financial risks are shown in note 17. The Company's business activities, together with details of its performance are shown in the Strategic report and this Directors' report.
Details of events that have occurred since the balance sheet date are shown in note 19.
A summary of the principal risks faced by the Company is set out in the Strategic report on pages 13 and 14.
The investment policy is designed to ensure that the Company continues to qualify and is approved as a VCT by HMRC. In order to maintain its status under Venture Capital Trust legislation, a VCT must comply on a continuing basis with the provisions of Section 274 of the Income Tax Act 2007 as follows:
These tests drive a spread of investment risk through disallowing holdings of more than 15% in any portfolio company. The tests have been carried out and independently reviewed for the year ended 31 December 2015. The Company has complied with all tests and continues to do so.
'Qualifying holdings' include shares or securities (including loans with a five year or greater maturity period) in companies which operate a 'qualifying trade' wholly or mainly in the United Kingdom. Eligible shares must comprise at least 10% by HMRC value of the total of the shares and securities that the Company holds in any one portfolio company. 'Qualifying trade' excludes, amongst other sectors, dealing in property or shares and securities, insurance, banking and agriculture. Details of the sectors in which the Company is invested can be found in the pie chart on page 9.
Portfolio company gross assets must not exceed £15 million immediately prior to the investment and £16 million immediately thereafter.
Details of changes in VCT legislation can be found in the Strategic report on pages 10 and 11.
The management and administration of the Company is undertaken by the Manager. Albion Ventures LLP recognises the importance of its environmental responsibilities, monitors its impact on the environment, and designs and implements policies to reduce any damage that might be caused by its activities. Initiatives designed to minimise the Company's impact on the environment include recycling and reducing energy consumption as is shown in the financial statements of Albion Ventures LLP.
The Company has no greenhouse gas emissions to report from the operations of the Company, nor does it have responsibility for any other emissions producing sources under the Company Act 2006 (Strategic Report and Directors' Reports) Regulations 2013, including those within our underlying investment portfolio.
The Company has adopted a zero tolerance approach to bribery, and will not tolerate bribery under any circumstances in any transaction the Company is involved in.
Albion Ventures LLP has reviewed the anti-bribery policies and procedures of all portfolio companies.
The Board currently consists of three male Directors. The Board's policy on the recruitment of new Directors is to attract a range of backgrounds, skills and experience and to ensure
that appointments are made on the grounds of merit against clear and objective criteria and bear in mind gender and other diversity within the Board. More details on the Directors can be found in the Board of Directors section on page 16.
The Manager has an equal opportunities policy and currently employees 13 men and 10 women.
The Company is managed by Albion Ventures LLP and hence has no employees other than its Directors.
The Directors who held office throughout the year, and their interests in the shares of the Company (together with those of their immediate family) are shown in the Directors' remuneration report on page 33.
Directors' retirement and re-election is subject to the Articles of Association and the UK Corporate Governance Code. At the forthcoming Annual General Meeting, Martin Fiennes will retire by rotation in accordance with the Articles and offer himself for re-election.
Each Director has entered into a deed of indemnity with the Company which indemnifies each Director, subject to the provisions of the Companies Act 2006 and the limitations set out in each deed, against any liability arising out of any claim made against him in relation to the performance of his duties as a Director of the Company. A copy of each deed of indemnity entered into by the Company for each Director is available at the registered office of the Company.
The Company currently conducts its affairs so that its shares can be recommended by financial intermediaries to ordinary retail investors in accordance with the FCA's rules in relation to non-mainstream investment products and intends to continue to do so for the foreseeable future. The FCA's restrictions which apply to non-mainstream investment products do not apply to the Company's shares because they are shares in a Venture Capital Trust which, for the purposes of the new rules relating to non-mainstream investment products, are excluded securities and may be promoted to ordinary retail investors without restriction.
The Company co-invests with other venture capital trusts and funds managed by Albion Ventures LLP. Allocation of investments is on the basis of an allocation agreement which is based, inter alia, on the ratio of funds available for investment.
The Audit Committee annually reviews and evaluates the standard and quality of service provided by the Auditor, as well as value for money in the provision of these services. Further details of this evaluation can be found in the Audit Committee section of the Statement of Corporate Governance on pages 29 and 30.
A resolution to appoint BDO LLP will be proposed at the Annual General Meeting.
The Annual General Meeting will be held at the City of London Club, 19 Old Broad Street, London EC2N 1DS at 11.00am on 18 May 2016. The Notice of Annual General Meeting can be found on page 57.
The proxy form enclosed with this Annual Report and Financial Statements permits shareholders to disclose votes 'for', 'against' and 'withheld'. A 'vote withheld' is not a vote in law and will not be counted in the proportion of the votes for and against the resolution. A summary of proxies lodged at the Annual General Meeting will be published at www.albion-ventures.co.uk within the 'Our Funds' section by clicking on Kings Arms Yard VCT PLC.
Resolutions relating to the following items of special business will be proposed at the forthcoming Annual General Meeting for which shareholder approval is required in order to comply either with the Companies Act 2006 or the Listing Rules of the Financial Conduct Authority.
Ordinary resolution 6 proposes to renew the Directors' authority to allot additional shares of the Company up to an aggregate nominal amount of £534,033 which represents approximately 20% of the issued share capital of the Company.
The Directors current intention is to allot shares under the Dividend Reinvestment Scheme, any Albion VCTs Share Offers and the reissuance of treasury shares where it is in the Company's interest to do so. The Company currently holds 31,463,000 treasury shares representing 12% of the total Ordinary share capital in issue as at 31 December 2015.
During the year, Ordinary shares were allocated under the terms of the Dividend Reinvestment Scheme as described in detail in note 14.
Since the year ended 31 December 2015, shares were allotted under the Albion VCTs Prospectus Top Up Offers 2015/2016 as described in detail in note 19.
This resolution replaces the authority given to the Directors at the Annual General Meeting in 2015. The authority sought at the forthcoming Annual General Meeting will expire 18 months from the date that this resolution is passed, or at the conclusion of the next Annual General Meeting of the Company, whichever is earlier.
Special resolution number 7 will request the authority for the Directors to allot equity securities for cash without first being required to offer such securities to existing members. This will include the sale on a non pre-emptive basis of any shares the Company holds in treasury for cash. The authority relates to a maximum aggregate of £534,033 of the nominal value of the share capital representing approximately 20 per cent. of the issued Ordinary share capital of the Company as at the date of this Report.
This resolution replaces the authority given to the Directors at the Annual General Meeting in 2015. The authority sought at the forthcoming Annual General Meeting will expire 18 months from the date that this resolution is passed or at the conclusion of the next Annual General Meeting of the Company, whichever is earlier.
Special resolution 8 proposes to renew the existing power of the Company to purchase its own shares up to a maximum number of 14.99% of the total number of shares currently in issue at or between the minimum and maximum prices specified in resolution 8.
The Board believes that it is helpful for the Company to continue to have the flexibility to buy its own shares and this resolution seeks authority from shareholders to do so.
Under s724-732 of the Companies Act 2006, shares purchased by the Company out of distributable profits can be held as treasury shares, which may then be cancelled or sold for cash. The authority sought by this resolution is intended to apply equally to shares to be held by the Company as treasury shares in accordance with the Regulations.
During the financial year under review, the Company purchased 6,588,000 Ordinary shares which were held in treasury. Further information is shown in note 14.
The authority sought at the forthcoming Annual General Meeting will expire 18 months from the date that this resolution is passed, or at the conclusion of the next Annual General Meeting of the Company, whichever is earlier.
Under the Companies (Acquisition of Own Shares)(Treasury Shares) Regulations 2003 (the "Regulations"), shares purchased by the Company out of distributable profits can be held as treasury shares, which may then be cancelled or sold for cash. The authority sought is intended to apply equally to shares to be held by the Company as treasury shares in accordance with the Regulations.
This special resolution 9 proposes to permit Directors to sell treasury shares at the higher of the prevailing current share price and the price bought in at.
In the case of the persons who are Directors of the Company at the date of approval of this report:
This disclosure is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006.
The Board believes that the passing of the resolutions above are in the best interests of the Company and its shareholders as a whole and accordingly, unanimously recommends that you vote in favour of these resolutions, as the Directors intend to do in respect of their own shareholdings.
By order of the Board
Company Secretary 1 King's Arms Yard London, EC2R 7AF 23 March 2016
The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Financial Statements for each financial year. Under that law the Directors are required to prepare Financial Statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss for the Company for that period.
In preparing these Financial Statements, the Directors are required to:
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the Financial Statements comply with the Companies Act 2006 and, as regards the Company financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for ensuring that the Annual Report and accounts, taken as a whole, are fair, balanced, and understandable and provides the information necessary for shareholders to assess the Company's position, performance, business model and strategy.
The Directors are responsible for ensuring the Annual Report and the Financial Statements are made available on a website. Financial Statements are published on the Company's webpage on the Investment Manager's website (www.albion-ventures.co.uk) in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Manager's website is, so far as it relates to the Company, the responsibility of the Manager.
The work carried out by the Auditor does not involve consideration of the maintenance and integrity of this website and, accordingly, the Auditor accepts no responsibility for any changes that have occurred to the Financial Statements since they were initially presented on the website.
The Directors confirm to the best of their knowledge:
The Financial Statements have been prepared in accordance with applicable UK Generally Accepted Accounting Practice and give a true and fair view of the assets, liabilities, financial position and profit of the Company.
The Annual Report includes a fair review of the development and performance of the business and the financial position of the Company, together with a description or the principal risks and uncertainties that they face.
By o rder of the Board
Robin Field Chairman 23 March 2016
The Financial Conduct Authority requires all listed companies to disclose how they have applied the principles and complied with the provisions of the UK Corporate Governance Code ("the Code") issued by the Financial Reporting Council ("FRC") in September 2014.
The Board has also considered the principles and recommendations of the AIC Code of Corporate Governance ("AIC Code") by reference to the AIC Corporate Governance Guide for Investment Companies ("AIC Guide"). The AIC Code, as explained by the AIC Guide, addresses all the principles set out in the UK Corporate Governance Code, as well as setting out additional principles and recommendations on issues that are of specific relevance to the Company.
The Board considers that reporting against the principles and recommendations of the AIC Code, and by reference to the AIC Guide (which incorporates the UK Corporate Governance Code), will provide better information to shareholders than reporting under the Code alone.
The Company has complied with the recommendations of the AIC Code and the relevant provisions of the UK Corporate Governance Code, except as set out below.
The Board attaches importance to matters set out in the Code and applies its principles. However, as a venture capital trust company, most of the Company's day-to-day responsibilities are delegated to third parties and the Directors are all non-executive. Thus, not all the provisions of the Code are directly applicable to the Company.
The Board consists solely of non-executive Directors. Since all Directors are non-executive and day-to-day management responsibilities are sub-contracted to the Manager, the Company does not have a Chief Executive Officer.
Robin Field is the Chairman and all the Directors of the Company are considered independent. The Board will continue to act independently of the Manager and the Directors consider that the size of the Board is adequate to meet the Company's future needs.
The Board has considered whether it is appropriate to appoint a Senior Independent Director and has concluded that, due to the size of the Board and the fact that all Directors are non-executive, it is inappropriate for the time being. The need to appoint a Senior Independent Director is reviewed annually. The Articles of Association require that all Directors be subject to re-election procedures by rotation at the Annual General Meeting. All Directors will submit themselves for re-election at least once every three years. Directors appointed since an annual general meeting will retire and be subject to election at the next Annual General Meeting and Directors not considered to be independent, or who have served for longer than nine years, will be subject to annual re-election. The Company's policy for the period for which a director may serve is an absolute maximum of 10 years and that the process of selecting a successor commences at the latest after 8 years of service. In accordance with the Articles of Association, Mr Martin Fiennes will resign and offer himself for re-election.
Information regarding the terms of appointment of the non-executive Directors is available on request.
The Directors have a range of business and financial skills which are relevant to the Company; these are described in the Board of Directors section of this Report, on page 16. Directors are provided with key information on the Company's activities, including regulatory and statutory requirements, and internal controls, by the Manager. The Board has access to secretarial advice and compliance services by the Manager, who is responsible for ensuring that Board procedures are followed and applicable procedures complied with. All Directors are able to take independent professional advice in furtherance of their duties if necessary. In accordance with the Code, the Company has in place Directors' & Officers' Liability Insurance.
The Directors have considered diversity in relation to the composition of the Board and have concluded that given it's size its membership is diverse in relation to experience and balance of skills.
The Board met four times during the year as part of its regular programme of Board meetings. All Directors attended each meeting. In addition, and in accordance with best practice, further meetings took place without the Manager present. A sub-committee of the Board comprising at least two Directors met during the year to allot shares under the Dividend Reinvestment Scheme, the Albion VCTs Prospectus Top Up Offers 2014/2015 and to approve the terms of the Albion VCTs Prospectus Top Up Offers 2015/2016.
The Chairman ensures that all Directors receive, in a timely manner, all relevant management, regulatory and financial information. The Board receives and considers reports regularly from the Manager and other key advisers, and ad hoc reports and information are supplied to the Board as required. The
Board has a formal schedule of matters reserved for it and the agreement between the Company and its Manager sets out the matters over which the Manager has authority and limits beyond which Board approval must be sought.
The Manager has delegated authority over the day-to-day management of the investment portfolio, the organisation of custodial services, accounting, secretarial and administrative services. The main issues reserved for the Board include:
It is the responsibility of the Board to present an Annual Report that is fair, balanced and understandable, which provides the information necessary for shareholders to assess the position, performance, strategy and business model of the Company.
Performance of the Board and the Directors is assessed on the following:
The evaluation process has identified that the Board works well together and has the right balance of skills, experience, independence and knowledge for the effective governance of the Company. Diversity within the Board is achieved through the appointment of directors with different sector experiences and skills.
Directors are offered training, both at the time of joining the Board and on other occasions where required. The Board also undertakes a proper and thorough evaluation of its committees on an annual basis.
In light of the structured performance evaluation, Martin Fiennes is considered to be effective and demonstrates strong commitment to the role. The Board believes it to be in the best interest of the Company that this Director continues in his position.
Since the Company has no executive directors, the detailed Directors' Remuneration disclosure requirements set out in Listing Rules as they relate to the Code provisions are not considered relevant.
The Board as a whole is responsible for the appointment and remuneration of Directors and, given the small size of the Board, separate Remuneration and Nomination Committees are not considered appropriate.
The Audit Committee consists of all Directors and Thomas Chambers is the Chairman. In accordance with the Code, at least one member of the Audit Committee has recent and relevant financial experience. The Audit Committee met twice during the year ended 31 December 2015; all members attended.
The independent Auditors, BDO LLP, attended the Audit Committee at which the Annual Report and Financial Statements for the year ended 31 December 2015 were discussed. BDO also met with the Audit Committee prior to the meeting without the presence of the Manager.
Written terms of reference have been constituted for the Audit Committee and can be found on the Manager's website at www.albion-ventures.co.uk within the 'Our Funds' section by clicking on Kings Arms Yard VCT PLC and looking under the Corporate Governance section.
During the year under review, the Audit Committee discharged its responsibilities including:
necessary for shareholders to assess the Company's position, performance, business model and strategy;
The Audit Committee has initial responsibility for reviewing the Financial Statements and reporting on any significant issues that arise in relation to the audit of the Financial Statements as outlined below. Such issues were communicated with the external Auditor with the approval of the audit strategy and at the completion of the audit of the Financial Statements. No conflicts arose between the Audit Committee and the external Auditor in respect of their work during the year.
The key accounting and reporting issues considered by the Committee were:
Valuations of investments are prepared by the Investment Manager. The Audit Committee reviewed the estimates and judgments made in relation to these investments and were satisfied that they were appropriate. The Audit Committee also discussed the controls in place over the valuation of investments. The Audit Committee recommended investment valuations to the Board for approval.
The revenue generated from loan stock interest and dividend income has been considered by the Audit Committee as part of its review of the Annual Report as well as a quarterly review of the management accounts prepared by the Manager. The Audit Committee has considered the controls in place over revenue recognition to ensure that amounts received are in line with expectation and budget.
Following detailed reviews of the Annual Report and Financial Statements and consideration of the key areas of risk identified, the Audit Committee has concluded that, as a whole, the Financial Statements are fair, balanced and understandable and that they provide the information necessary for shareholders to assess the Company's position, performance, business model and strategy.
The Committee reviews the performance and continued suitability of the Company's external Auditor on an annual basis. They assess the external Auditor's independence, qualification, extent of relevant experience, effectiveness of audit procedures as well as the robustness of their quality assurance procedures. In 2014, an extensive audit tender process was undertaken; as a result of this process, BDO LLP was appointed the external Auditor of the Company. In advance of each audit, the Committee obtains confirmation from the external Auditor that they are independent and of the level of non-audit fees earned by them and their affiliates. No non-audit services were provided during the financial year ended 31 December 2015.
As part of its work, the Audit Committee has undertaken a formal evaluation of the external Auditor against the following criteria:
In order to form a view of the effectiveness of the external audit process, the Audit Committee took into account information from the Manager regarding the audit process, the formal documentation issued to the Audit Committee and the Board by the external Auditor regarding the external audit for the year ended 31 December 2015, and assessments made by individual Directors.
The Audit Committee also has an annual meeting with the external Auditor, without the Manager present, at which pertinent questions are asked to help the Audit Committee determine if the Auditors' skills match all the relevant and appropriate criteria.
Where non-audit fee levels are considered significant, the Audit Committee considers the appropriateness of the independence safeguards put in place by the Auditor. No non-audit fees were paid to BDO LLP in the financial year to 31 December 2015. The Audit Committee considers BDO
LLP to be independent of the Company. As part of its annual review procedures, the Audit Committee has obtained sufficient assurance from their own evaluation and the audit feedback documentation. Based on the assurance obtained, the Audit Committee has recommended to the Board that BDO LLP is appointed and that a resolution to this effect be proposed at the Annual General Meeting.
In accordance with the Code, the Board has an established process for identifying, evaluating and managing the significant risks faced by the Company. This process has been in place throughout the year and continues to be subject to regular review by the Board in accordance with the Internal Control Guidance for Directors in the Code published in September 1999 and updated in 2005 (the "Turnbull guidance"). The Board is responsible for the Company's system of risk management and internal control and for reviewing its effectiveness. However, acknowledging that such a system is designed to manage, rather than eliminate, the risks of failure to achieve the Company's business objectives and that such controls can only provide reasonable and not absolute assurance against material mis-statement or loss.
The Board, assisted by the Audit Committee, monitors all controls, including financial, operational and compliance controls, and risk management. The Audit Committee receives each year from the Manager a formal report, which details the steps taken to monitor the areas of risk, including those that are not directly the responsibility of the Manager, and which reports the details of any known internal control failures. Steps are, and continue to be, taken to embed the system of internal control and risk management into the operations and culture of the Company and its key suppliers, and to deal with areas of improvement which come to the Manager's and the Audit Committee's attention.
The Board, through the Audit Committee, has performed a specific assessment for the purpose of this Annual Report. This assessment considers all significant aspects of internal control arising during the year. The Audit Committee assists the Board in discharging its review responsibilities.
The main features of the internal control and risk management system with respect to financial reporting, implemented throughout the year are:
independent third party valuations of the majority of asset-backed investments within the portfolio are undertaken annually;
reviews of valuations are carried out by the Managing Partner and reviews of financial reports are carried out by the Finance Director of the Manager, Albion Ventures LLP;
As the Board has delegated the investment management and administration of the Company to Albion Ventures LLP, the Board feels that it is not necessary to have its own internal audit function. Instead, the Board had access to PKF Littlejohn LLP, which, as internal auditor for Albion Ventures LLP, undertakes periodic examination of the business processes and controls environment at Albion Ventures LLP and ensures that any recommendations to implement improvements in controls are carried out. During the year, the Board reviewed internal audit reports prepared by PKF Littlejohn LLP. The Board and the Audit Committee will continue to monitor its system of internal control in order to provide assurance that it operates as intended.
Directors review the disclosure of conflicts of interest annually, with changes reviewed and noted at the beginning of each Board meeting. A Director who has conflicts of interest refers to an independent Director to authorise and acknowledge those conflicts. Procedures to disclose and authorise conflicts of interest have been adhered to throughout the year.
Details regarding the Company's capital structure, substantial interests and Directors' powers to buy and issue shares are detailed in full in the Directors' report on pages 22, 24 and 25. The Company is not party to any significant agreements that may take effect, alter or terminate upon a change of control of the Company following a takeover bid.
Any amendments to the Company's Articles of Association are by way of a special resolution subject to ratification by shareholders.
The Company's Annual General Meeting on 18 May 2016 will be used as an opportunity to communicate with investors. The Board, including the Chairman of the Audit Committee, will be available to answer questions at the Annual General Meeting.
At the Annual General Meeting, the level of proxies lodged on each resolution, the balance for and against the resolution, and the number of votes withheld, are announced after the resolution has been voted on by a show of hands.
The Annual General Meeting will also include a presentation from the Manager on the portfolio and on the Company and a presentation from a portfolio company.
Shareholders and financial advisers are able to obtain information on holdings and performance using the contact details provided on page 2.
The Company's shares are listed on the London Stock Exchange and it is through this market that the Company operates its share buy-back programme. In order for shareholders to sell shares they should, after due consideration of their personal tax position, approach a broker to undertake the sale. Banks may be able to assist shareholders with a referral to a broker within their banking group.
The Directors consider that, with the exception of the requirement for the appointment of a Chief Executive Officer, Senior Independent Director and the appointment of separate Remuneration and Nomination Committees, the Company has complied throughout the year ended 31 December 2015 with all the relevant provisions of the Code and with the AIC Code of Corporate Governance. The Company continues to comply with the Code as at the date of this report.
By order of the Board
Company Secretary
1 King's Arms Yard London, EC2R 7AF 23 March 2016
This report is submitted in accordance with Section 420 of the Companies Act 2006 and describes how the Board has applied the principles relating to the Directors' remuneration.
An Ordinary resolution will be proposed at the Annual General Meeting of the Company to be held on 18 May 2016 for the approval of the Annual Remuneration Report as set out below. The current Remuneration Policy was approved by the Shareholders (96% of shareholders voted for the resolution) at the Annual General Meeting held on 23 May 2014, and it will remain in place for a three year period.
The Company's independent Auditor, BDO LLP, is required to give its opinion on certain information included in this report as indicated below. The Auditor's opinion is included in the Independent Auditor's Report.
Since the Company's Board consists solely of non-executive Directors and there are no executive employees, a Remuneration Committee is not considered necessary. The Board as a whole is responsible for the appointment and remuneration of Directors and, in accordance with the AIC Code of Corporate Governance, considers the level of the fees at least annually.
A review is currently underway to determine whether the current fees remain both competitive and reflective of the workload and responsibilities required from the Directors. Any change in remuneration levels arising from this review would be in line with the remuneration policy as detailed below.
The Company's policy is that fees payable to non-executive Directors should reflect their expertise, responsibilities and time spent on Company matters and should be sufficient to enable candidates of high calibre to be recruited. In determining the level of non-executive Directors' remuneration, market equivalents are considered in comparison to the overall activities and size of the Company. There is no performance related pay criteria applicable to non-executive Directors.
None of the Directors have a service contract with the Company, and as such there is no policy on termination payments. There is no notice period and no payments for loss of office were made during the year. On being appointed to the Board, Directors receive a letter from the Company setting out the terms of their appointment and their specific duties and responsibilities. The Company has no employees other than the Directors.
The Company's Articles of Association limit fees payable to the Directors to £80,000 per annum in aggregate and amendment to this is by way of a special resolution subject to ratification by shareholders. This policy will continue for the year ending 31 December 2016. Directors' fees payable during the year totalled £60,000 (2014: £67,000) as set out below and in note 6 to the Financial Statements. An ordinary resolution to approve the Directors' Remuneration policy will be put to shareholders at least once every three years, and will be next be put to shareholders at the 2017 AGM.
In addition to Directors' remuneration, the Company pays an annual premium in respect of Directors' & Officers' Liability Insurance of £8,600 (2014: £10,000).
The Company's Articles of Association provide for the resignation and, if approved, re-election of the Directors every three years at the Annual General Meeting. In accordance with the recommendations of the AIC Code, Directors who have served the Company for longer than nine years are subject to annual re-election, and any non-independent Directors are also subject to annual re-election.
At the Annual General Meeting to be held on 18 May 2016, Martin Fiennes will retire by rotation and be subject to re-election.
Shareholders' views in respect of Directors' remuneration are respected and the Board encourages shareholders to attend its Annual General Meeting in order to communicate their thoughts, which it takes into account where appropriate when formulating its policy. At the last Annual General Meeting, 96% of shareholders voted for the resolution approving the Directors' remuneration report which shows significant shareholder support.
The remuneration of individual Directors is determined by the entire Board to a set framework.
The Board annually reviews the remuneration of the Directors and the Company's remuneration policy to ensure that it reflects the duties, responsibilities and value of time spent by the Directors on the business of the Company.
The Directors consider that total return to shareholders (defined as the net asset value per share of the Company plus cumulative dividends paid) since the date of launch of the Company is the most appropriate indicator of the performance of the Company. The total return (excluding tax benefits of 20p per share) of 83.44 pence per share, which is shown on page 5,
can be compared against the issue price of 100p at the date of launch of the fund.
The graph below shows the Company's share price total return against the FTSE All-Share Index total return, in both instances rebased to 100 and with dividends reinvested, since 31 December 2008. The Directors consider the FTSE All-Share Index to be the most appropriate benchmark for the Company as it contains a range of sectors relevant to the Company. Investors should, however, be reminded that shares in VCTs generally trade at a discount to the actual net asset value of the Company.
There are no options, issued or exercisable, in the Company which would distort the graphical representation.
Source: Albion Ventures LLP
Methodology: The share price return to the shareholder, including original amount invested (rebased to 100), assuming that dividends were re-invested at the share price of the Company at the time the shares were quoted ex-dividend. Transaction costs are not taken into account.
| 2015 | 2014 | Percentage | |
|---|---|---|---|
| £'000 | £'000 | change | |
| Total distribution to | |||
| shareholders including | |||
| dividends and share | |||
| buybacks | 3,385 | 3,322 | 1.9% |
| Total directors fees | 60 | 67 | (10.4%) |
The following items have been audited.
The following table shows an analysis of the remuneration, excluding national insurance, of individual Directors who served during the year:
| Year ended | Year ended | |
|---|---|---|
| 31 December | 31 December | |
| 2015 | 2014 | |
| £ | £ | |
| R A Field (Chairman) (1) | 22,500 | 22,500 |
| T W Chambers (2) | 20,000 | 20,000 |
| M G Fiennes | 17,500 | 17,500 |
| A P M Lamb | ||
| (resigned 23 May 2014) | – –––––––––– |
7,000 –––––––––– |
| 60,000 –––––––––– |
67,000 –––––––––– |
The Company does not confer any share options, long term incentives or retirement benefits to any Director, nor does it make a contribution to any pension scheme on behalf of the Directors.
Director's remuneration is paid to the Director personally through the Manager's payroll and subsequently recharged to the Company.
The Directors who held office throughout the year and their interests in the issued Ordinary shares of 1 penny each of the Company (together with those of their immediate family) are shown below:
| Shares held at | Shares held at | |
|---|---|---|
| 31 December | 31 December | |
| 2015 | 2014 | |
| R A Field | 782,477 | 782,477 |
| T W Chambers | 383,781 | 383,781 |
| M G Fiennes | 132,500 –––––––––––––– |
132,500 –––––––––––––– |
| 1,298,758 –––––––––––––– |
1,298,758 –––––––––––––– |
Thomas Chambers was issued with a further 9,900 shares under the Albion VCTs Prospectus Top Up Offers 2015/2016 on 29 January 2016.
Partners and staff of Albion Ventures LLP (the Manager) currently hold 317,511 shares.
All of the Directors' share interests shown above (together with those of their immediate family) were held beneficially and no right to subscribe for shares in the Company was granted to, or exercised by, any Director during the year.
The Directors' remuneration report was approved by the Board of Directors and signed on its behalf by order of the Board.
Director
23 March 2016
In our opinion the Kings Arms Yard VCT plc Financial Statements for the year ended 31 December 2015, which have been prepared by the Directors in accordance with applicable law and United Kingdom Accounting Standards including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland':
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Our audit opinion on the Financial Statements covers the:
As explained more fully in the report of the Directors, the Directors are responsible for the preparation of the Financial Statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the Financial Statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Financial Reporting Council's (FRC's) Ethical Standards for Auditors.
A description of the scope of an audit of Financial Statements is provided on the FRC's website at www.frc.org.uk/auditscopeukprivate
Our audit approach was developed by obtaining an understanding of the Company's activities, the key functions undertaken on behalf of the Board by the Investment Manager and Administrator and the overall control environment. Based on this understanding we assessed those aspects of the Company's transactions and balances which were most likely to give rise to a material misstatement.
The outcome of our risk assessment was that the valuation of investments was considered to be the area with the greatest effect on the overall audit strategy including the allocation of resources in the audit.
The valuation of investments is a key accounting estimate where there is an inherent risk of management override arising from the investment valuations being prepared by the Investment Manager, who is remunerated based on the net asset value of the Company.
We performed initial analytical procedures to determine the extent of our work considering, inter alia, the value of individual investments, the nature of the investment and the extent of the fair value movement. A breakdown of the investment portfolio by nature of instrument type and valuation method is shown below.
We tested a sample of 89% of the unquoted investment portfolio having regard to the subjectivity of the inputs to the valuations.
65% of the unquoted portfolio is based on net asset value supported by a third party valuation, price of recent investment, cost (where the investment was recently acquired) or offer price. For such investments, we verified the cost or price of recent investment to supporting documentation and reviewed the Investment Manager's determination of whether there were any reasons why the valuation did not remain appropriate.
35% of the portfolio is valued with reference to more subjective techniques including multiples of earnings and revenue. For detailed testing we:
For a risk-weighted sample of loans held at fair value, we:
In respect of equity investments quoted on NASDAQ, we confirmed that bid price had been used and that there were no contra indicators, such as liquidity considerations, to suggest bid price was not the most appropriate indication of fair value. 6% of the portfolio is valued at bid price.
The chart below depicts the coverage of our audit work across the entire portfolio:
We also considered revenue recognition to be a significant risk. Revenue consists of dividends receivable from the portfolio companies and interest earned on loans to portfolio companies and cash balances. Revenue recognition is a significant audit risk as it is one of the key drivers of dividend returns to investors. In particular, in unquoted companies, dividends receivable can be difficult to predict.
We assessed the design and the implementation of the controls relating to revenue recognition and we developed expectations for interest income receivable based on loan instruments and investigated any variations in amounts recognised to ensure they were valid.
We also reviewed the recognition and classification of accrued fixed income receipts to ascertain whether it meets the definition of realised income, considering management information relevant to the ability of the portfolio Company to service the loan and the reasons for any arrears of loan interest.
In respect of dividends receivable, we compared actual income to expectations set based on independent published data on dividends declared by the portfolio companies held. We tested the categorisation of dividends received from the portfolio companies between the revenue and capital.
The audit committee's consideration of their key issues is set out on pages 28 to 29.
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. For planning, we consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the Financial Statements. Importantly, misstatements below this level will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the Financial Statements. The application of these key considerations gives rise to two levels of materiality, the quantum and purpose of which are tabulated below.
| Materiality measure | Purpose | Key considerations and benchmarks |
Quantum (£) |
|---|---|---|---|
| Financial statement materiality – Based on 2% of invested assets |
Assessing whether the financial statements as a whole present a true and fair view |
● The value of investments ● The level of judgment inherent in the valuation ● The range of reasonable alternative valuation |
840,000 |
| Specific materiality – classes of transactions and balances which impact on revenue profits – Based on 10% of the revenue return before tax |
Assessing those classes of transactions, balances or disclosures for which misstatements of lesser amounts than materiality for the financial statements as a whole could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. |
● The level of net income return |
80,000 |
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £8,000 as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.
In our opinion:
We have nothing material to add or to draw attention to in relation to:
Under the ISAs (UK and Ireland), we are required to report to you if, in our opinion, information in the Annual Report is:
In particular, we are required to consider whether we have identified any inconsistencies between our knowledge acquired during the audit and the Directors' statement that they consider the Annual Report is fair, balanced and understandable and whether the Annual Report appropriately discloses those matters that we communicated to the Audit Committee which we consider should have been disclosed.
Under the Companies Act 2006 we are required to report to you if, in our opinion:
Under the Listing Rules we are required to review:
We have nothing to report in respect of these matters.
For and on behalf of BDO LLP, statutory auditor London United Kingdom 23 March 2016
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127)
| Year ended 31 December 2015 | Year ended 31 December 2014 | ||||||
|---|---|---|---|---|---|---|---|
| Revenue | Capital | Total | Revenue | Capital | Total | ||
| Note | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Gains/(losses) on investments | 2 | – | 3,784 | 3,784 | – | (370) | (370) |
| Investment income | 3 | 1,412 | – | 1,412 | 1,007 | 112 | 1,119 |
| Investment management fees | 4 | (212) | (636) | (848) | (200) | (601) | (801) |
| Performance incentive fee | 4 | (60) | (182) | (242) | – | – | – |
| Other expenses | 5 | (263) | – | (263) | (270) | – | (270) |
| Foreign exchange cost | 5 | (8) –––––––––– |
– –––––––––– |
(8) –––––––––– |
(2) –––––––––– |
– –––––––––– |
(2) –––––––––– |
| Return/(loss) on ordinary activities before tax | 869 | 2,966 | 3,835 | 535 | (859) | (324) | |
| Tax on ordinary activities | 7 | – –––––––––– |
– –––––––––– |
– –––––––––– |
– –––––––––– |
– –––––––––– |
– –––––––––– |
| Return/(loss) and total comprehensive income | |||||||
| attributable to shareholders | 869 –––––––––– |
2,966 –––––––––– |
3,835 –––––––––– |
535 –––––––––– |
(859) –––––––––– |
(324) –––––––––– |
|
| Basic and diluted return/(loss) | |||||||
| per share (pence)* | 9 | 0.40 –––––––––– |
1.37 –––––––––– |
1.77 –––––––––– |
0.27 –––––––––– |
(0.43) –––––––––– |
(0.16) –––––––––– |
* excluding treasury shares
The accompanying notes on pages 43 to 56 form an integral part of these Financial Statements.
The total column of this Income statement represents the profit and loss account of the Company. The supplementary revenue and capital columns have been prepared in accordance with The Association of Investment Companies' Statement of Recommended Practice.
All revenue and capital items in the above statement derive from the continuing operations of the Company.
The Company has only one class of business and derives its income from investments made in shares and securities and from bank deposits.
There is no other comprehensive income other than the results for the year disclosed above. Accordingly a Statement of total comprehensive income is not required.
The difference between the reported profit/(loss) on ordinary activities before tax and the historical cost profit/(loss) is due to the fair value movements on investments. As a result, a note on historical cost profits and losses has not been prepared.
| 31 December 2015 | 31 December 2014 | |
|---|---|---|
| Note | £'000 | £'000 |
| Fixed asset | ||
| Investments 10 |
41,257 –––––––––––– |
38,055 |
| Current assets | –––––––––––– | |
| Trade and other receivables less than one year 12 |
388 | 473 |
| Current asset investments 12 |
– | 150 |
| Cash and cash equivalents | 3,518 –––––––––––– |
798 |
| 3,906 | –––––––––––– 1,421 |
|
| Total assets | 45,163 | 39,476 |
| Creditors: amounts falling due within one year | ||
| Trade and other payables less than one year 13 |
(551) –––––––––––– |
(535) –––––––––––– |
| Total assets less current liabilities | 44,612 –––––––––––– |
38,941 –––––––––––– |
| Equity attributable to equityholders | ||
| Called up share capital 14 |
2,533 | 2,265 |
| Share premium | 8,399 | 3,444 |
| Capital redemption reserve | 11 | 11 |
| Unrealised capital reserve | 7,170 | 3,981 |
| Realised capital reserve | 3,830 | 2,978 |
| Other distributable reserve | 22,669 –––––––––––– |
26,262 –––––––––––– |
| Total equity shareholders' funds | 44,612 –––––––––––– |
38,941 –––––––––––– |
| Basic and diluted net asset value per share (pence)* 15 |
20.11 –––––––––––– |
19.31 –––––––––––– |
* excluding treasury shares
The accompanying notes on pages 43 to 56 form an integral part of these Financial Statements.
The Financial Statements were approved by the Board of Directors and authorised for issue on 23 March 2016 and were signed on its behalf by:
Robin Field Chairman Company number: 03139019
| Called up | Capital | Unrealised | Realised | Other | |||
|---|---|---|---|---|---|---|---|
| share | Share | redemption | capital | capital | distributable | ||
| capital | premium | reserve | reserve | reserve* | reserve* | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| At 31 December 2014 | 2,265 | 3,444 | 11 | 3,981 | 2,978 | 26,262 | 38,941 |
| Return and total comprehensive | |||||||
| income for the period | – | – | – | 3,523 | (557) | 869 | 3,835 |
| Transfer of previously unrealised | |||||||
| gains on disposal or write off | |||||||
| of investments | – | – | – | (334) | 334 | – | – |
| Purchase of own shares for treasury | – | – | – | – | – | (1,192) | (1,192) |
| Issue of equity | 268 | 5,105 | – | – | – | – | 5,373 |
| Cost of issue of equity | – | (150) | – | – | – | – | (150) |
| Transfer from other distributable | |||||||
| reserve to realised capital reserve** | – | – | – | – | 1,075 | (1,075) | – |
| Dividends paid | – –––––––––– |
– –––––––––– |
– –––––––––– |
– –––––––––– |
– –––––––––– |
(2,195) –––––––––– |
(2,195) –––––––––– |
| At 31 December 2015 | 2,533 –––––––––– |
8,399 –––––––––– |
11 –––––––––– |
7,170 –––––––––– |
3,830 –––––––––– |
22,669 –––––––––– |
44,612 –––––––––– |
| At 31 December 2013 | 2,099 | 82 | – | 1,711 | 1,352 | 34,018 | 39,262 |
| Loss and total comprehensive | |||||||
| income for the period | – | – | – | (279) | (580) | 535 | (324) |
| Transfer of previously unrealised | |||||||
| losses on disposal or write off | |||||||
| of investments | – | – | – | 2,549 | (2,549) | – | – |
| Purchase of shares for cancellation | (11) | – | 11 | – | – | (214) | (214) |
| Purchase of own shares for treasury | – | – | – | – | – | (1,297) | (1,297) |
| Issue of equity | 177 | 3,448 | – | – | – | – | 3,625 |
| Cost of issue of equity | – | (86) | – | – | – | – | (86) |
| Transfer from other distributable | |||||||
| reserve to realised capital reserve** | – | – | – | – | 4,755 | (4,755) | – |
| Dividends paid | – | – | – | – | – | (2,025) | (2,025) |
| At 31 December 2014 | –––––––––– 2,265 –––––––––– |
–––––––––– 3,444 –––––––––– |
–––––––––– 11 –––––––––– |
–––––––––– 3,981 –––––––––– |
–––––––––– 2,978 –––––––––– |
–––––––––– 26,262 –––––––––– |
–––––––––– 38,941 –––––––––– |
* Included within these reserves is an amount of £26,499,000 (2014: £29,240,000) which is considered distributable.
** A transfer of £1,075,000 (2014: £4,755,000) representing gross realised losses on disposal of investments during the year ended 31 December 2015 has been made from the other distributable reserve to the realised capital reserve.
The accompanying notes on pages 43 to 56 form an integral part of these Financial Statements.
Unrealised gains and losses arising on investments held at fair value are transferred to the unrealised capital reserve.
| Year ended | Year ended | |
|---|---|---|
| 31 December 2015 | 31 December 2014 | |
| Note | £'000 | £'000 |
| Cash flow from operating activities | ||
| Investment income received | 1,036 | 829 |
| Deposit interest received | 37 | 164 |
| Dividend income received | 282 | 77 |
| Investment management fee paid | (1,024) | (379) |
| Other cash payments | (313) | (448) |
| Exchange rate movement on a part disposal of an asset | (10) –––––––––––– |
(3) –––––––––––– |
| Net cash flow from operating activities 16 |
8 | 240 |
| Cash flow from investing activities | ||
| Purchase of fixed asset investments | (4,375) | (8,353) |
| Disposal of fixed asset investments | 5,250 | 3,899 |
| Cash received from investments previously sold or written off | – | 30 |
| Disposal of current asset investments | – –––––––––––– |
3,750 –––––––––––– |
| Net cash flow from investing activities | 875 –––––––––––– |
(674) –––––––––––– |
| Cash flow from financing activities | ||
| Issue of share capital 14 |
5,059 | 3,450 |
| Cost of issue of equity | (2) | (2) |
| Purchase of own shares (including costs) 14 |
(1,192) | (1,511) |
| Equity dividends paid* | (2,028) –––––––––––– |
(1,930) –––––––––––– |
| Net cash flow from financing activities | 1,837 –––––––––––– |
7 –––––––––––– |
| Increase/(decrease) in cash and cash equivalents | 2,720 | (427) |
| Cash and cash equivalents at start of the year | 798 –––––––––––– |
1,225 –––––––––––– |
| Cash and cash equivalents at end of the year | 3,518 –––––––––––– |
798 –––––––––––– |
| Cash and cash equivalents comprise: | ||
| Cash at bank and in hand | 3,518 | 798 |
| Cash equivalents | – –––––––––––– |
– –––––––––––– |
| Total cash and cash equivalents | 3,518 –––––––––––– |
798 –––––––––––– |
The accompanying notes on pages 43 to 56 form an integral part of these Financial Statements.
* The equity dividends paid shown in the cash flow are different to the dividends disclosed in note 8 as a result of the non-cash effect of the Dividend Reinvestment Scheme.
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"). This is the first period in which the Financial Statements have been prepared under FRS 102 which became mandatory for companies with a financial year beginning on or after 1 January 2015. The transition to FRS 102 has not led to a material change in value and so has not led to a restatement of comparatives.
The preparation of the financial statements requires management to make judgments and estimates that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The most critical estimates and judgments relate to the determination of carrying value of investments at fair value through profit and loss ("FVTPL"). The Company values investments by following the IPEVCV Guidelines and further detail on the valuation techniques used are outlined below.
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% 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 designated 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:
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:
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 Income statement when a share becomes ex-dividend.
Trade, other receivables and creditors are initially recorded at FVTPL including transaction costs and subsequently at amortised cost.
Gains and losses arising from changes in the fair value of the investments are included in the Income statement for the year as a capital item and are allocated to unrealised capital reserve.
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.
Interest income is recognised on an accruals basis using the rate of interest agreed with the bank.
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:
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 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.
The currency of the primary economic environment in which the Company operates (the functional currency) is pounds Sterling ("Sterling"), which is also the presentational currency of the Company. Transactions involving currencies other than Sterling are recorded at the exchange rate ruling on the transaction date. At each Balance sheet date, monetary items and non-monetary assets and liabilities that are measured at fair value, which are denominated in foreign currencies, are retranslated at the closing rates of exchange. Exchange differences arising on settlement of monetary items and from retranslating at the Balance sheet date of investments and other financial instruments measured at fair value through profit or loss, and other monetary items, are included in the Income statement. Exchange differences relating to investments and other financial instruments measured at fair value are subsequently included in the Investment holding reserve.
This reserve accounts for the difference between the price paid for shares and the nominal value of the shares, less issue costs and transfers to other distributable 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.
Increases and decreases in the valuation of investments held at the year end against cost are included in this reserve.
The following are disclosed in this 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 by the Company are accounted for in the period in which the dividend is paid or approved at the Annual General Meeting.
| 31 December 2015 31 December 2014 | |
|---|---|
| £'000 | £'000 |
| Unrealised gains/(losses) on fixed asset investments held at fair value | |
| through profit or loss 3,523 |
(329) |
| Unrealised gains on current asset investments held at fair value | |
| through profit or loss – –––––––––––––– |
50 –––––––––––––– |
| Unrealised gains/(losses) sub-total 3,523 –––––––––––––– |
(279) –––––––––––––– |
| Realised gains/(losses) on fixed asset investments held at fair value through | |
| profit or loss 251 |
(156) |
| Realised gains in respect of escrow receipts from previously sold investments and | |
| distributions from investments in liquidation 10 –––––––––––––– |
65 –––––––––––––– |
| Realised gain/(losses) sub-total 261 –––––––––––––– |
(91) –––––––––––––– |
| 3,784 –––––––––––––– |
(370) –––––––––––––– |
| Year ended | Year ended | |
|---|---|---|
| 31 December 2015 31 December 2014 | ||
| £'000 | £'000 | |
| Income recognised on investments held at fair value through profit or loss | ||
| Interest from loans to portfolio companies | 1,095 | 892 |
| Dividends | 282 | 176 |
| Bank deposit interest | 35 –––––––––––––– |
51 –––––––––––––– |
| 1,412 –––––––––––––– |
1,119 –––––––––––––– |
Interest income earned on impaired investments at 31 December 2015 was £nil (2014: £nil).
| Year ended Year ended |
|---|
| 31 December 2015 31 December 2014 |
| £'000 £'000 |
| 212 200 |
| 636 601 |
| 60 – |
| 182 – –––––––––––––– –––––––––––––– |
| 1,090 801 –––––––––––––– –––––––––––––– |
Further details of the Management agreement under which the investment management fee is paid are given in the Strategic report on page 11.
During the year, services with a value of £848,000 (2014: £801,000) and £50,000 (2014: £50,000) were purchased by the Company from Albion Ventures LLP in respect of management and administration fees respectively. A performance incentive fee with a value of £242,000 has been disclosed within the Income statement. At the financial year end, the amount due to Albion Ventures LLP in respect of these services disclosed as accruals was £468,000 (2014: £426,000).
Albion Ventures LLP is, from time to time, eligible to receive transaction fees and Directors' fees from portfolio companies. During the year ended 31 December 2015 Albion Ventures LLP received transaction fees from 24 portfolio companies and Directors' fees from 32 portfolio companies. Portfolio companies held by Kings Arms Yard share of these fees were transactions fees of £52,000 and Directors' fees of £137,000 (2014: transaction fees: £199,000; Directors fees: £95,000).
Albion Ventures LLP holds 84,185 (2014: 43,199) Ordinary shares in the Company.
| Year ended 31 December 2015 31 December 2014 £'000 |
Year ended £'000 |
|
|---|---|---|
| Administrative and secretarial services to the Manager | 50 | 50 |
| Directors' fees (note 6) | 65 | 63 |
| Auditor's remuneration for statutory audit services (excluding VAT) | 24 | 22 |
| Legal and professional expenses | – | 17 |
| Other expenses | 124 –––––––––––––– |
118 –––––––––––––– |
| 263 | 270 | |
| Foreign exchange cost | 8 –––––––––––––– |
2 –––––––––––––– |
| 271 –––––––––––––– |
272 –––––––––––––– |
| Year ended | |
|---|---|
| £'000 | £'000 |
| 67 | |
| 6 | |
| – | (10) –––––––––––––– |
| 63 –––––––––––––– |
|
| Year ended 31 December 2015 31 December 2014 60 5 –––––––––––––– 65 –––––––––––––– |
Further information regarding Directors' remuneration can be found in the Directors' remuneration report on pages 32 and 33.
| Year ended | Year ended | |
|---|---|---|
| 31 December 2015 31 December 2014 | ||
| £'000 | £'000 | |
| UK Corporation tax payable | – –––––––––––––– |
– –––––––––––––– |
| Year ended | Year ended |
|---|---|
| 31 December 2015 31 December 2014 | |
| £'000 | £'000 |
| 3,835 Return/(loss) on ordinary activities before taxation –––––––––––––– |
(324) –––––––––––––– |
| Tax (charge)/credit on profit/ (loss) at the standard UK corporation tax rate | |
| of 20.25% (2014: 21.5%) (776) |
70 |
| Effects of: | |
| Non-taxable gain/(losses) 766 |
(55) |
| Non-taxable income 57 |
14 |
| Non-deductible expenses – |
(1) |
| (47) Unutilised management expenses –––––––––––––– |
(28) –––––––––––––– |
| – –––––––––––––– |
– –––––––––––––– |
The UK government changed the rate of corporation tax from 21% to 20% with effect from 1 April 2015. The effective rate of tax for the year ended 31 December 2015 is 20.25% (91 days at 21% and 275 days at 20%). The tax charge for the year shown in the Income statement is lower than the standard rate of corporation tax for the reasons shown above.
The Company has excess management expenses of £10,279,000 (2014: £10,047,000) that are available for offset against future profits. A deferred tax asset of £2,056,000 (2014: £2,009,000) 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.
| Year ended 31 December 2015 31 December 2014 £'000 |
Year ended £'000 |
|
|---|---|---|
| First dividend of 0.5 pence per share paid on 30 April 2014 | – | 1,017 |
| Second dividend of 0.5 pence per share paid on 31 October 2014 | – | 1,014 |
| First dividend of 0.5 pence per share paid on 30 April 2015 | 1,109 | – |
| Second dividend of 0.5 pence per share paid on 30 October 2015 | 1,116 | – |
| Unclaimed dividends returned to Company | (30) –––––––––––––– |
(6) –––––––––––––– |
| 2,195 –––––––––––––– |
2,025 –––––––––––––– |
The Directors have declared a first dividend of 0.5 pence per share for the year ending 31 December 2016, which will amount to approximately £1,178,000. This dividend will be paid on 29 April 2016 to shareholders on the register at 15 April 2016.
| Year ended 31 December 2015 | Year ended 31 December 2014 | |||||
|---|---|---|---|---|---|---|
| Revenue | Capital | Total | Revenue | Capital | Total | |
| Return/(loss) attributable to | ||||||
| shareholders (£'000) | 869 | 2,966 | 3,835 | 535 | (859) | (324) |
| Weighted average shares in issue | ||||||
| (excluding treasury shares) | 216,878,531 | 199,680,249 | ||||
| Return/(loss) attributable per equity | ||||||
| share (pence) | 0.40 | 1.37 | 1.77 | 0.27 | (0.43) | (0.16) |
The weighted average number of Ordinary shares is calculated excluding the treasury shares of 31,463,000 (2014: 24,875,000).
There are no convertible instruments, derivatives or contingent share agreements in issue so basic and diluted return/(loss) per share are the same.
| 31 December 2015 31 December 2014 | ||
|---|---|---|
| £'000 | £'000 | |
| Investments held at fair value through profit or loss | ||
| Unquoted equity | 22,148 | 19,290 |
| Unquoted loan stock | 16,658 | 15,575 |
| Quoted equity | 2,451 –––––––––––––– |
3,190 –––––––––––––– |
| 41,257 –––––––––––––– |
38,055 –––––––––––––– |
|
| 31 December 2015 31 December 2014 £'000 |
£'000 | |
| Opening valuation | 38,055 | 33,904 |
| Purchases at cost | 4,373 | 8,223 |
| Disposal proceeds | (5,164) | (3,553) |
| Realised gains/(losses) | 261 | (156) |
| Movement from/(to) current asset investments | 150 | (150) |
| Movement in loan stock accrued income | 59 | 66 |
| Movement in unrealised gains/(losses) | 3,523 –––––––––––––– |
(279) –––––––––––––– |
| Closing valuation | 41,257 –––––––––––––– |
38,055 –––––––––––––– |
| Movement in loan stock accrued income | ||
| Opening accumulated movement in loan stock accrued income | 128 | 62 |
| Movement in loan stock accrued income | 59 –––––––––––––– |
66 –––––––––––––– |
| Closing accumulated movement in loan stock accrued income | 187 –––––––––––––– |
128 –––––––––––––– |
| Movement in unrealised gains | ||
| Opening accumulated unrealised gains | 4,069 | 1,698 |
| Transfer of previously unrealised gains to realised reserve on disposal of investments Transfer of previously unrealised losses to realised reserve on investments written off |
(1,111) | (2,195) |
| but still held | 778 | 4,744 |
| Movement (from)/to current asset investments | (100) | 100 |
| Movement in unrealised gains/(losses) | 3,523 –––––––––––––– |
(279) –––––––––––––– |
| Closing accumulated unrealised gains | 7,158 –––––––––––––– |
4,069 –––––––––––––– |
| Historical cost basis | ||
| Opening book cost | 33,858 | 32,144 |
| Purchases at cost | 4,373 | 8,223 |
| Sales at cost | (3,791) | (5,062) |
| Cost of investments written off but still held | (778) | (1,196) |
| Movement from/(to) current asset investments | 250 –––––––––––––– |
(250) –––––––––––––– |
Closing book cost 33,912 33,858 –––––––––––––– ––––––––––––––
Closing cost is net of amounts of £1,974,000 (2014: £1,196,000) written off in respect of investments still held at balance sheet date.
Amounts shown as cost represent the acquisition cost in the case of investments made by the Company and/or the valuation attributed to the investments acquired from other VCTs at the dates of merger, plus any subsequent acquisition cost.
Purchases and disposals detailed above may not agree to purchases and disposals in the Cash flow statement due to restructuring of investments, conversion of convertible loan stock and settlement debtors and creditors.
Unquoted investment valuation methodologies
Unquoted investments are valued in accordance with the IPEVCV guidelines as follows:
| 31 December 2015 31 December 2014 | ||
|---|---|---|
| Valuation Methodologies | £'000 | £'000 |
| Net assets supported by third party valuation | 12,869 | 7,694 |
| Revenue multiple | 7,802 | 8,564 |
| 3,440 | ||
| 6,370 | ||
| 8,797 | ||
| Discount to offer price | 1,550 | – –––––––––––––– |
| 38,806 | 34,865 –––––––––––––– |
|
| Price of recent investment (reviewed for impairment) Earnings multiple Cost reviewed for impairment |
6,434 5,815 4,336 –––––––––––––– –––––––––––––– |
Third party valuations are prepared by PricewaterhouseCoopers and independent RICS qualified surveyors in full compliance with the RICS Red Book.
Fair value investments had the following movements between valuation methodologies between 31 December 2014 and 31 December 2015.
| Value as at | |
|---|---|
| £'000 | Explanatory Note |
| 3,807 | Third party valuations prepared |
| 2,174 | Investment round has recently taken place |
| 1,550 | Third party offer received |
| 1,191 | Investment round has recently taken place |
| 1,121 | Investment round has recently taken place |
| 1,062 | More relevant valuation methodology |
| 369 | More relevant valuation methodology |
| 228 | Recently listed on NASDAQ |
| 227 | More relevant valuation methodology |
| 31 December 2015 |
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, the methods used are the most appropriate methods of valuation as at 31 December 2015.
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 according to the following definitions:
| Fair value hierarchy | Definition |
|---|---|
| Level A | Quoted prices in an active market |
| Level B | Price of a recent transaction for identical instruments |
| Level C (i) | Inputs to valuations are from observable sources and are directly or indirectly derived from prices |
| Level C (ii) | Inputs to valuations not based on observable market data |
Quoted NASDAQ investments are valued according to Level A valuation methods. Unquoted equity, preference shares, and loan stock are all valued according to Level C (ii) valuation methods.
| 31 December 2015 31 December 2014 | ||
|---|---|---|
| Level 'C' reconciliation | £'000 | £'000 |
| Opening valuation | 34,865 | 29,349 |
| Purchases at cost | 4,373 | 8,223 |
| Unrealised gains | 3,802 | 778 |
| Movement in loan stock accrued income | 59 | 66 |
| Transfer to Level 'A'* | (228) | – |
| Realised net gains/(losses) on disposal | 267 | (75) |
| Movement from/(to) current asset investments | 150 | (150) |
| Disposal proceeds | (4,482) –––––––––––––– |
(3,326) –––––––––––––– |
| Closing valuation | 38,806 –––––––––––––– |
34,865 –––––––––––––– |
* During the year Xtera Communications Inc was quoted on NASDAQ and transferred to Level 'A' fair value hierarchy
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. The valuation methodology applied to 65% of the unquoted portfolio (Level 'C') is based on third party independent evidence, price of recent investment, discount to offer price and cost reviewed for impairment. The Directors believe that changes to reasonable possible alternative assumptions for the valuation of the largest investments of the remaining part of the portfolio could result in an increase of £1,627,000 or a decrease of £1,530,000 in the valuation of the unquoted investments.
The principal activity of the Company is to select and hold a portfolio of investments in quoted and unquoted securities. Although the Company, through the Manager, will, in some cases, be represented on the board of the portfolio company, it will not ordinarily take a controlling interest or become involved in the management. The size and structure of 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 and are not accounted for using the equity method.
The Company has interests of greater than 20% of the nominal value of any class (some of which are non-voting) of the allotted shares in the portfolio companies as at 31 December 2015 as described below:
| Number | % total | |||||
|---|---|---|---|---|---|---|
| Country of | Profit/(loss) | Net assets/ | of shares | voting | ||
| Company | incorporation | before tax | (liabilities) | held | % class and share type | rights |
| Academia Inc | United States | |||||
| of America | n/a | n/a | 774,400 | 23.2% Preferred shares | 5.3% | |
| Antenova Limited | Great Britain | n/a* | 1,338,000 | 9,226,988 | 22.2% Preferred shares | 28.7% |
| Elateral Group | ||||||
| Holdings Limited | Great Britain | (3,388,000) | (6,311,000) | 17,380,462 | 37.7% Ordinary shares | 37.7% |
| Haemostatix Limited | Great Britain | n/a* | (9,145,000) | 5,764,407 | 33.3% Preferred shares | 33.3% |
| Proveca Limited | Great Britain | n/a* | (1,128,603) | 40,289 | 35.8% D Ordinary shares | 16.4% |
| Sift Limited | Great Britain | 365,000 | 1,245,000 | 33,671,618 | 42.1% Ordinary shares | 42.1% |
* The company files abbreviated accounts at Companies House which does not disclose this information.
| 31 December 2015 31 December 2014 | ||
|---|---|---|
| Trade and other receivables less than one year | £'000 | £'000 |
| Trade and other receivables less than one year | 369 | 457 |
| Prepayments and accrued income | 19 –––––––––––––– |
16 –––––––––––––– |
| 388 –––––––––––––– |
473 –––––––––––––– |
The Directors consider that the carrying amount of receivables is not materially different to their fair value.
| Current asset investments | 31 December 2015 31 December 2014 £'000 |
£'000 |
|---|---|---|
| UniServity Limited | – | 150 |
| –––––––––––––– – –––––––––––––– |
–––––––––––––– 150 –––––––––––––– |
The equity in UniServity Limited was disposed of during the year.
| 31 December 2015 31 December 2014 | |
|---|---|
| £'000 | £'000 |
| 17 | 246 |
| 522 | 271 |
| 12 | 18 –––––––––––––– |
| 551 | 535 –––––––––––––– |
| –––––––––––––– –––––––––––––– |
The Directors consider that the carrying amount of creditors is not materially different to their fair value.
| 31 December 2015 31 December 2014 | ||
|---|---|---|
| £'000 | £'000 | |
| Allotted, issued and fully paid: | ||
| 253,303,558 Ordinary shares of 1 penny (2014: 226,503,705) | 2,533 –––––––––––––– |
2,265 –––––––––––––– |
221,840,558 Ordinary shares of 1 penny (net of 31,463,000 treasury shares) (2014: 201,628,705).
The Company operates a share buy-back programme, as detailed in the Chairman's statement on page 6. During the year the Company purchased 6,588,000 Ordinary shares (2014: 6,995,000) representing 2.6% of the issued Ordinary share capital as at 31 December 2015, at a cost of £1,192,000 (2014: £1,297,000), including stamp duty, to be held in treasury. The Company holds a total of 31,463,000 Ordinary shares in treasury, representing 12% of the issued Ordinary share capital as at 31 December 2015. The Company did not purchase any Ordinary shares for cancellation as at 31 December 2015 (2014: 1,134,000 at a cost of £214,000).
Under the terms of the Dividend Reinvestment Scheme, Circular dated 19 April 2011, the following Ordinary shares of nominal value 1 penny per share were allotted during the year:
| Date of allotment | Number of shares allotted |
Aggregate nominal value of shares (£'000) |
Issue price (pence per share) |
Net consideration received (£'000) |
Opening market price on allotment date (pence per share) |
|---|---|---|---|---|---|
| 30 April 2015 | 411,322 | 4 | 18.81 | 75 | 18.00 |
| 30 October 2015 | 468,940 –––––––––––––– |
5 –––––––––––––– |
19.40 | 89 –––––––––––––– |
18.50 |
| 880,262 –––––––––––––– |
9 –––––––––––––– |
164 –––––––––––––– |
During the period from 1 January 2015 to 31 December 2015, the Company issued the following new Ordinary shares of nominal value 1 penny each under the Albion VCT Prospectus Top Up Offers 2014/2015:
| 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) |
|---|---|---|---|---|---|
| 30 January 2015 | 3,630,710 | 36 | 19.90 | 708 | 18.00 |
| 30 January 2015 | 2,026,810 | 20 | 20.00 | 395 | 18.00 |
| 2 April 2015 | 14,511,698 | 145 | 20.00 | 2,816 | 17.88 |
| 30 June 2015 | 118,239 | 1 | 20.10 | 23 | 18.50 |
| 30 June 2015 | 41,253 | 1 | 20.20 | 8 | 18.50 |
| 30 June 2015 | 2,859,491 | 29 | 20.30 | 563 | 18.50 |
| 30 September 2015 | 2,731,390 –––––––––––––– |
27 –––––––––––––– |
20.60 | 546 –––––––––––––– |
18.50 |
| 25,919,591 –––––––––––––– |
259 –––––––––––––– |
5,059 –––––––––––––– |
The basic and diluted net asset value per share as at 31 December 2015 of 20.11 pence (2014: 19.31 pence) are based on net assets of £44,612,000 (2014: £38,941,000) divided by the 221,840,558 shares in issue (net of treasury shares) at that date (2014: 201,628,705).
| 31 December 2015 31 December 2014 £'000 |
£'000 | |
|---|---|---|
| Revenue return on ordinary activities before tax | 869 | 535 |
| Foreign exchange rate movement | 8 | 2 |
| Investment management fees allocated to capital | (636) | (601) |
| Performance incentive fee charged to capital | (182) | – |
| Movement in accrued loan stock interest | (59) | (66) |
| (Increase)/decrease in debtors | (7) | 127 |
| Increase in creditors | 15 –––––––––––––– |
243 –––––––––––––– |
| Net cash flow from operating activities | 8 –––––––––––––– |
240 –––––––––––––– |
The Company's capital comprises Ordinary shares as described in note 14. The Company is permitted to buy back its own shares for cancellation or treasury purposes and this policy is described in more detail in the Chairman's statement on page 6.
The Company's financial instruments comprise equity and loan stock investments in unquoted and quoted companies, cash balances and liquid cash instruments and short term debtors and creditors which arise from its operations. The main purpose of these financial instruments is to generate cash flow, revenue and capital appreciation for the Company's operations. The Company has no gearing or other financial liabilities apart from short term creditors. The Company does not use any derivatives for the management of its Balance sheet.
The principal financial instrument risks arising from the Company's operations are:
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 there have been no changes in the objectives, policies or processes for managing risks during the past year. The key risks are summarised below.
As a venture capital trust, it is the Company's specific nature to evaluate and control the investment risk in its portfolio in unquoted and quoted investments, details of which are shown on pages 18 and 19. 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 fair 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 asset investment portfolio which is £41,257,000 (2014: £38,055,000). Fixed asset investments form 92% of the net asset value as at 31 December 2015 (2014: 98%).
More details regarding the classification of fixed asset investments are shown in note 10.
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. As a venture capital trust the Company invests in unquoted companies in accordance with the investment policy set out on page 8. 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. Furthermore, new unquoted investments are often made with up to two-thirds of the investments comprising debt securities, which, owing to the structure of their yield and the fact that they are usually secured, have a lower level of price volatility than equity. 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 IPEVCV guidelines. Details of the sectors in which the Company is currently invested are shown in the pie chart in the Strategic report on page 9.
As required under FRS 102 s.11,12 and 34 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 asset investment portfolio is sensitive to a 10% change based on the current economic climate. The impact of a 10% 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% increase or decrease in the valuation of the fixed asset investment portfolio (keeping all other variables constant) would increase or decrease the net asset value and return for the year by £4,126,000 (2014: £3,806,000).
Foreign currency risk is the risk of exposure to movements in foreign exchange rates relative to sterling.
The majority of the Company's assets are denominated in sterling; however, the Company is exposed to US dollars through its investment in US dollar denominated securities. No hedging of the currency exposure is currently undertaken. The Manager monitors the Company's exposure and reports to the Board on a regular basis.
Investment and revenue received in currencies other than sterling is converted into sterling on or shortly after the date of investment or receipt of revenue as are any proceeds from the disposal of a foreign currency investment.
As at 31 December 2015, the Company held investments denominated in US dollars of £2,451,000 (2014: £3,190,000).
During the year to 31 December 2015, sterling depreciated by 4.72% (2014: depreciated by 5.79%) against the US dollar.
It is the Company's policy to accept a degree of interest rate risk on its financial assets through the effect of interest rate changes. On the basis of the Company's analysis, it is estimated that a rise of one percentage point in all interest rates would have increased total return before tax for the year by approximately £34,000 (2014: £56,000). Furthermore, it is considered that a fall of interest rates below current levels during the year would have been unlikely.
The weighted average effective interest rate applied to the Company's fixed rate fixed asset investments during the year was approximately 7.3% (2014: 7.8%). The weighted average period to maturity for the fixed rate fixed asset investments is approximately 6.4 years (2014: 6.5 years).
The Company's financial assets and liabilities as at 31 December 2015, denominated in pounds sterling, consist of the following:
| Non- | Non- | ||||||
|---|---|---|---|---|---|---|---|
| Fixed | Floating | interest | Fixed | Floating | interest | ||
| rate | rate | bearing | Total | rate | rate | bearing | Total |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| – | – | 22,148 | 22,148 | – | – | 19,290 | 19,290 |
| – | – | 2,451 | 2,451 | – | – | 3,190 | 3,190 |
| 11,982 | 661 | 4,015 | 16,658 | 12,387 | 661 | 2,527 | 15,575 |
| – | – | 372 | 372 | – | – | 457 | 457 |
| – | – | (551) | (551) | – | – | (535) | (535) |
| – | 3,518 | – | 3,518 | 150 | 798 | – | 948 –––––––––––– |
| 11,982 | 4,179 –––––––––––– |
28,435 | 44,596 –––––––––––– |
12,537 –––––––––––– |
1,459 –––––––––––– |
24,929 | 38,925 –––––––––––– |
| –––––––––––– –––––––––––– |
–––––––––––– | 31 December 2015 –––––––––––– –––––––––––– |
–––––––––––– | –––––––––––– | –––––––––––– | 31 December 2014 –––––––––––– –––––––––––– |
* The receivables do not reconcile to the Balance sheet as prepayments are not included in the above table.
Credit risk is the risk that the counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company. The Company is exposed to credit risk through its debtors, investment in unquoted loan stock, quoted corporate bonds and through the holding of cash on deposit with banks.
The Manager evaluates credit risk on loan stock 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. In the past loan stock may or may not have a fixed or floating charge, which may or may not have been subordinated, over the assets of the portfolio company. However, for new investments, typically loan stock instruments will 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 debtors) 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 2015 was limited to £16,658,000 (2014: £15,575,000) of unquoted loan stock instruments, £3,518,000 (2014: £798,000) cash on deposit with banks and £372,000 (2014: £457,000) of other debtors.
The Company does not hold any assets as the result of the enforcement of security during the year and believes that the carrying values for past due assets are covered by the value of security held for these loan stock investments.
As at the Balance sheet date, cash and liquid investments held by the Company are held with the National Westminster Bank plc, Scottish Widows Bank plc (part of Lloyds Banking Group plc), Barclays Bank plc and UBS Wealth Management AG. Credit risk on cash transactions is mitigated by transacting with counterparties that are regulated entities subject to regulatory supervision, with high credit ratings assigned by international credit-rating agencies.
The credit profile of unquoted loan stock is described under liquidity risk below.
Liquid assets are held as cash on current account, deposit or short term money market accounts or similar instruments. Under the terms of its Articles, the Company has the ability to borrow an amount equal to its adjusted capital and reserves of the latest published audited Balance sheet.
The Company has no committed borrowing facilities as at 31 December 2015 (2014: £nil) and had cash, before its current fundraising of £3,518,000 (2014: £798,000) and no current asset investments (2014: £150,000). Against this the Company has an investment commitment as at 31 December 2015 of £2,396,000 (2014: £923,000).
There are no externally imposed capital requirements other than the minimum statutory share capital requirements for public limited companies.
The main cash outflows are for new investments, the 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. The Company's financial liabilities at 31 December 2015 are short term in nature and total £551,000 (2014: £535,000).
The carrying value of loan stock investments analysed by expected maturity dates is as follows:
| 31 December 2015 | 31 December 2014 | |||||||
|---|---|---|---|---|---|---|---|---|
| Fully | Past due | Impaired | Fully | Past due | Impaired | |||
| performing | loan | loan | performing | loan | loan | |||
| loan stock | stock | stock | Total | loan stock | stock | stock | Total | |
| Redemption date | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Less than one year | 2,081 | – | – | 2,081 | 1,907 | 1,195 | – | 3,102 |
| 1-2 years | 1,147 | – | – | 1,147 | 296 | – | – | 296 |
| 2-3 years | 1,417 | – | – | 1,417 | 1,217 | – | – | 1,217 |
| 3-5 years | 5,340 | – | – | 5,340 | 4,771 | – | – | 4,771 |
| 5 + years | 5,520 –––––––––––– |
1,153 –––––––––––– |
– –––––––––––– |
6,673 –––––––––––– |
5,917 –––––––––––– |
272 –––––––––––– |
– –––––––––––– |
6,189 –––––––––––– |
| Total | 15,505 –––––––––––– |
1,153 –––––––––––– |
– –––––––––––– |
16,658 –––––––––––– |
14,108 –––––––––––– |
1,467 –––––––––––– |
– –––––––––––– |
15,575 –––––––––––– |
Loan stock can be past due as a result of interest or capital not being paid in accordance with contractual terms. This includes:
• loan stock valued at £1,153,000 yielding an average of 13% which has interest past due by less than one year.
In view of the factors identified above, the Board considers that the Company is subject to low liquidity risk.
All of the Company's financial assets and liabilities as at 31 December 2015 are stated at fair value as determined by the Directors. There are no financial liabilities other than short term trade and other 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 and that the Company is subject to low financial risk as a result of having nil gearing and positive cash balances.
As at 31 December 2015, the Company had the following financial commitments totalling £2,396,000 (2014: £923,000), which are expected to be invested during the next 12 months:
There were no contingent liabilities or guarantees given by the Company as at 31 December 2015 (2014: £nil).
Since the year end, the Company made the following investments:
On 17 November 2015 the Company announced the publication of a prospectus in relation to an offer for subscription for new Ordinary shares. A Securities Note, which forms part of the prospectus, has been sent to shareholders.
A copy of the prospectus may be obtained from www.albion-ventures.co.uk.
The following Ordinary shares of nominal value 1 penny were allotted under the Offers after 31 December 2015:
| 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) |
|---|---|---|---|---|---|
| 29 January 2016 | 8,861,834 | 89 | 20.20 | 1,754 | 18.25 |
| 29 January 2016 | 4,851,404 –––––––––––––– 13,713,238 –––––––––––––– |
49 –––––––––––––– 137 –––––––––––––– |
20.30 | 961 –––––––––––––– 2,715 –––––––––––––– |
18.25 |
Other than transactions with the Manager as disclosed in note 4, there are no related party transactions or balances requiring disclosure.
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Kings Arms Yard VCT PLC (the "Company") will be held at the City of London Club, 19 Old Broad Street, London EC2N 1DS on 18 May 2016 at 11.00am for the following purposes:
To consider and, if thought fit, to pass the following resolutions, of which numbers 1 to 6 will be proposed as ordinary resolutions and numbers 7 to 9 as special resolutions.
That the Directors be generally and unconditionally authorised in accordance with section 551 of the Companies Act 2006 (the "Act") to allot Ordinary shares of nominal value 1 penny per share in the Company up to a maximum aggregate nominal amount of £534,033 provided that this authority shall expire 18 months from the date that this resolution is passed, or, if earlier, the conclusion of the next Annual General Meeting of the Company, but so that the Company may, before the expiry, make an offer or agreement which would or might require shares to be allotted or rights to subscribe for or convert securities into shares to be granted after such expiry and the Directors may allot shares or grant rights to subscribe for or convert securities into shares pursuant to such an offer or agreement as if the authority had not expired.
That, subject to and conditional on the passing of resolution number 6, the Directors be empowered, pursuant to section 570 of the Act, to allot equity securities (within the meaning of section 560 of the Act) for cash pursuant to the authority conferred by resolution number 6 as if section 561(1) of the Act did not apply to any such allotment, provided that this power shall be limited to the allotment of equity securities:
This authority shall expire 18 months from the date that this resolution is passed or, if earlier, the conclusion of the next Annual General Meeting, save that the Company may, before such expiry, make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of any such offer or agreement as if the power had not expired.
This power applies in relation to a sale of treasury shares which is an allotment of equity securities by virtue of section 560(2)(b) of the Act as if in the first paragraph of the resolution the words "pursuant to the authority conferred by resolution number 6" were omitted in relation to such a sale.
In this resolution, "rights issue" means an offer of equity securities open for acceptance for a period fixed by the Directors to holders on the register on a fixed record date in proportion as nearly as may be to their respective holdings, but subject to such exclusions or other arrangements as the Directors may deem necessary or expedient to deal with any treasury shares, fractional entitlements or legal or practical issues under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory, or any other matter.
That, the Company be generally and unconditionally authorised to make market purchases (within the meaning of Section 693(4) of the Act) of Ordinary shares of 1 penny each in the capital of the Company ("Ordinary shares"), on such terms as the Directors think fit, and where such shares are held as treasury shares, the Company may use them for the purposes set out in section 727 of the Act, provided that:
Under the Companies (Acquisition of Own Shares) (Treasury Shares) Regulations 2003 (the "Regulations"), Ordinary shares purchased by the Company out of distributable profits can be held as treasury shares, which may then be cancelled or sold for cash. The authority sought by this special resolution is intended to apply equally to shares to be held by the Company as treasury shares in accordance with the Regulations.
That the Directors be empowered to sell treasury shares at the higher of the prevailing current share price and the price bought in at.
By order of the Board
Albion Ventures LLP Company Secretary
Registered office 1 King's Arms Yard London, EC2R 7AF 23 March 2016
Kings Arms Yard VCT PLC is registered in England and Wales with company number 03139019
● completing and returning the Form of Proxy enclosed with this Notice to Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZZ;
● going to www.investorcentre.co.uk and following the instructions provided there; or
● by having an appropriate CREST message transmitted, if you are a user of the CREST system (including CREST personal members).
Return of the Form of Proxy will not preclude a member from attending the meeting and voting in person. A member may not use any electronic address provided in the Notice of this meeting to communicate with the Company for any purposes other than those expressly stated.
To be effective the Form of Proxy must be completed in accordance with the instructions and received by the Registrars of the Company by 11.00am on 16 May 2016.
The statement of rights of members in relation to the appointment of proxies in note 1 above does not apply to Nominated Persons. The rights described in that note can only be exercised by members of the Company.
In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a "CREST Proxy Instruction") must be properly authenticated in accordance with Euroclear UK and Ireland Limited's specifications, and must contain the information required for such instruction, as described in the CREST Manual (available via www.euroclear.com/CREST). The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer's agent by 11.00am on 16 May 2016. For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp applied to the message by the CREST Application Host) from which the issuer's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.
CREST members and, where applicable, their CREST sponsors or voting service provider(s) should note that Euroclear UK and Ireland Limited does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service provider(s) are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.
section 437 of the Act. The Company may not require the members requesting any such website publication to pay its expenses in complying with sections 527 or 528 of the Act. Where the Company is required to place a statement on a website under section 527 of the Act, it must forward the statement to the Company's auditor not later than the time when it makes the statement available on the website. The business which may be dealt with at the AGM includes any statement that the Company has been required under section 527 of the Act to publish on a website.
| February 1996 | Quester VCT PLC (QVCT) launched |
|---|---|
| June 2005 | Quester VCT 2 PLC (QVCT2) and Quester VCT 3 PLC (QVCT3) merged into QVCT |
| June 2008 | All Quester names changed to SPARK QVCT became SPARK VCT plc (SVCT) Quester VCT 4 PLC (QVCT4) became SPARK VCT 2 plc (SVCT2) Quester VCT 5 PLC (QVCT5) became SPARK VCT 3 plc (SVCT3) |
| November 2008 | SVCT3 merged into SVCT2 |
| January 2011 | Albion Ventures became Manager |
| February 2011 | All SPARK names changed to Kings Arms Yard SVCT became Kings Arms Yard VCT PLC (KAY) SVCT2 became Kings Arms Yard VCT 2 PLC (KAY2) |
| September 2011 | KAY2 merged into KAY |
| 31 December 2015 (pence per share) |
31 December 2014 (pence per share) |
31 December 2013 (pence per share) |
|
|---|---|---|---|
| Net asset value of Kings Arms Yard VCT PLC | 20.11 –––––––––––––– |
19.31 –––––––––––––– |
20.45 –––––––––––––– |
| Dividends paid to shareholders of Kings Arms Yard VCT PLC |
|||
| Dividends paid during the year Cumulative dividend paid to 31 December 2015 |
1.00 63.33 |
1.00 62.33 |
1.00 61.33 |
| Shareholder total return (1) per 100p invested to shareholders of Kings Arms Yard VCT PLC (formerly SPARK VCT plc, Quester VCT PLC) |
–––––––––––––– 83.44 |
–––––––––––––– 81.64 |
–––––––––––––– 81.78 |
| Shareholder total return including tax benefits (2) | 103.44 –––––––––––––– |
101.64 –––––––––––––– |
101.78 –––––––––––––– |
| Shareholder total return to former shareholders of: | |||
| Quester VCT 2 PLC, per 100p invested in shares of that company |
|||
| Shareholder total return | 69.58 | 67.74 | 67.88 |
| Shareholder total return including tax benefits (2) | 89.58 –––––––––––––– |
87.74 –––––––––––––– |
87.88 –––––––––––––– |
| Quester VCT 3 PLC, per 100p invested in shares of that company |
|||
| Shareholder total return | 43.10 | 41.33 | 41.47 |
| Shareholder total return including tax benefits (2) | 63.10 –––––––––––––– |
61.33 –––––––––––––– |
61.47 –––––––––––––– |
| Quester VCT 4 PLC (renamed SPARK VCT 2 plc and then Kings Arms Yard VCT 2 PLC), per 100p invested in shares of that company |
|||
| Shareholder total return | 39.78 | 37.47 | 37.65 |
| Shareholder total return including tax benefits (2) | 59.78 –––––––––––––– |
57.47 –––––––––––––– |
57.65 –––––––––––––– |
| Quester VCT 5 PLC (renamed SPARK VCT 3 plc), per 100p invested in shares of that company |
|||
| Shareholder total return | 51.54 | 48.17 | 48.43 |
| Shareholder total return including tax benefits (2) | 71.54 –––––––––––––– |
68.17 –––––––––––––– |
68.43 –––––––––––––– |
(1) Net asset value plus cumulative dividend per share to ordinary shareholders in the Company since the launch of the Company (then called Quester VCT plc) in April 1996.
(2) Return after 20% income tax relief but excluding capital gains deferral.
The total returns stated are applicable only to subscribers of shares at the time of each companies launch. They do not represent the return to subsequent subscribers or purchasers of shares.
Source: Albion Ventures LLP
Dividends paid to shareholders of Kings Arms Yard VCT PLC launched in 1996 (formerly SPARK VCT plc; Quester VCT PLC):
| (pence per share) | |
|---|---|
| 31 January 1997 | 0.937 |
| 31 January 1998 | 2.547 |
| 31 January 1999 | 2.875 |
| 31 January 2000 | 7.110 |
| 31 January 2001 | 26.650 |
| 31 January 2002 | 1.350 |
| 28 February 2006 | 1.250 |
| 28 February 2007 | 3.910 |
| 31 December 2007 | 4.220 |
| 31 December 2008 | 2.810 |
| 31 December 2010 | 5.000 |
| 31 December 2011 | 0.670 |
| 31 December 2012 | 1.000 |
| 31 December 2013 | 1.000 |
| 31 December 2014 | 1.000 |
| 31 December 2015 | 1.000 –––––––––––––– |
| Total dividends paid to 31 December 2015 | 63.329 |
| Net asset value as at 31 December 2015 | 20.110 –––––––––––––– |
| Shareholder total return to 31 December 2015 | 83.439 –––––––––––––– |
QVCT2 was launched in 1998 and was merged with Kings Arms Yard VCT PLC (formerly SPARK VCT plc and originally Quester VCT PLC) in June 2005 with a share exchange ratio of 1.0249 QVCT shares for each QVCT2 share.
| (pence per share) | |
|---|---|
| 28 February 1999 | 1.000 |
| 28 February 2000 | 3.065 |
| 28 February 2001 | 20.500 |
| 28 February 2002 | 2.000 |
| 28 February 2006 | 1.281 |
| 28 February 2007 | 4.007 |
| 31 December 2007 | 4.325 |
| 31 December 2008 | 2.880 |
| 31 December 2010 | 5.125 |
| 31 December 2011 | 0.687 |
| 31 December 2012 | 1.025 |
| 31 December 2013 | 1.025 |
| 31 December 2014 | 1.025 |
| 31 December 2015 | 1.025 –––––––––––––– |
| Total dividends paid to 31 December 2015 | 48.970 |
| Net asset value as at 31 December 2015 | 20.611 –––––––––––––– |
| Shareholder total return to 31 December 2015 | 69.581 –––––––––––––– |
QVCT3 was launched in 2000 and was merged with Kings Arms Yard VCT PLC (formerly SPARK VCT plc and originally Quester VCT PLC) in June 2005 with a share exchange ratio of 0.9816 QVCT shares for each QVCT3 share.
| (pence per share) | |
|---|---|
| 28 February 2001 | 0.750 |
| 28 February 2002 | 1.000 |
| 28 February 2003 | 0.150 |
| 28 February 2006 | 1.227 |
| 28 February 2007 | 3.838 |
| 31 December 2007 | 4.142 |
| 31 December 2008 | 2.758 |
| 31 December 2010 | 4.908 |
| 31 December 2011 | 0.658 |
| 31 December 2012 | 0.982 |
| 31 December 2013 | 0.982 |
| 31 December 2014 | 0.982 |
| 31 December 2015 | 0.982 –––––––––––––– |
| Total dividends paid to 31 December 2015 | 23.359 |
| Net asset value as at 31 December 2015 | 19.740 –––––––––––––– |
| Shareholder total return to 31 December 2015 | 43.099 –––––––––––––– |
QVCT4 was launched in 2000 and was renamed SPARK VCT 2 plc and then Kings Arms Yard VCT 2 PLC (KAY2). KAY2 merged with Kings Arms Yard VCT PLC (KAY) in September 2011 with a share exchange ratio of 1.2806 KAY shares for each KAY2 share.
| (pence per share) | |
|---|---|
| 31 October 2002 | 1.750 |
| 31 October 2003 | 1.150 |
| 31 October 2005 | 1.000 |
| 31 October 2006 | 1.000 |
| 31 December 2007 | 1.000 |
| 31 December 2008 | 1.000 |
| 31 December 2010 | 1.000 |
| 31 December 2011 | 1.000 |
| 31 December 2012 | 1.281 |
| 31 December 2013 | 1.281 |
| 31 December 2014 | 1.281 |
| 31 December 2015 | 1.281 –––––––––––––– |
| Total dividends paid to 31 December 2015 | 14.024 |
| Net asset value as at 31 December 2015 | 25.753 –––––––––––––– |
| Shareholder total return to 31 December 2015 | 39.777 –––––––––––––– |
QVCT5 was launched in 2002 and was renamed SPARK VCT 3 plc and merged with SPARK VCT 2 plc (originally QVCT4) in November 2008 with a share exchange ratio of 1.4613 SVCT2 shares for each SVCT3 share. The merged company was then renamed KAY2. KAY2 merged with Kings Arms Yard VCT PLC (KAY) in September 2011 with a share exchange ratio of 1.2806 KAY shares for each KAY2 share.
| (pence per share) | |
|---|---|
| 31 December 2003 | 0.500 |
| 31 December 2004 | 1.000 |
| 31 December 2006 | 1.000 |
| 31 December 2007 | 1.000 |
| 31 December 2010 | 1.461 |
| 31 December 2011 | 1.461 |
| 31 December 2012 | 1.871 |
| 31 December 2013 | 1.871 |
| 31 December 2014 | 1.871 |
| 31 December 2015 | 1.871 –––––––––––––– |
| Total dividends paid to 31 December 2015 | 13.906 |
| Net asset value as at 31 December 2015 | 37.633 –––––––––––––– |
| Shareholder total return to 31 December 2015 | 51.539 –––––––––––––– |
Perivan Financial Print 239983
Kings Arms Yard VCT PLC
A member of the Association of Investment Companies
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