Quarterly Report • Jun 30, 2018
Quarterly Report
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Half-yearly Financial Report (unaudited) for the six months to 30 June 2018
This Half-yearly Financial Report has not been audited or reviewed by the Auditor.
| 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 Capital Group 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 12 New Fetter Lane London, EC4A 1JP |
| Kings Arms Yard VCT PLC is a member of The Association of Investment Companies (www.theaic.co.uk). |
| Please note that these contacts are unable to provide financial | |
|---|---|
| Financial adviser information | For enquiries relating to the performance of the Company, and information for financial advisers, please contact Albion Capital Group LLP: Tel: 020 7601 1850 (lines are open 9.00am – 5.30pm; Mon-Fri, calls may be recorded) Email: [email protected] Website: www.albion.capital |
| Shareholders can access holdings and valuation information regarding any of their shares held with Computershare by registering on Computershare's website. |
|
| 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 |
or taxation advice.
Kings Arms Yard VCT PLC is a Venture Capital Trust and the investment policy is intended to produce a regular and predictable dividend stream with an appreciation in capital value.
The Company will invest in a broad portfolio of higher growth businesses across a variety of sectors of the UK economy including higher risk technology companies. Allocation of assets will be determined by the investment opportunities which become available but efforts will be made to ensure that the portfolio is diversified both in terms of sector and stage of maturity of company.
Funds held pending investment or for liquidity purposes are held as cash on deposit or similar instruments with bank or other financial institutions with high credit ratings assigned by international credit rating agencies.
Risk is spread by investing in a number of different businesses within venture capital trust qualifying industry sectors using a mixture of securities. The maximum amount which the Company will invest in a single portfolio company is 15 per cent. of the Company's assets at cost, thus ensuring a spread of investment risk. The value of an individual investment may increase over time as a result of trading progress and it is possible that it may grow in value to a point where it represents a significantly higher proportion of total assets prior to a realisation opportunity being available.
The Company's maximum exposure in relation to gearing is restricted to the amount equal to its adjusted capital and reserves. The Directors do not currently have any intention to utilise long term gearing.
Record date for second dividend 5 October 2018 Payment date of second dividend 31 October 2018 Financial year end 31 December
| Unaudited | Unaudited | Audited | |
|---|---|---|---|
| six months ended | six months ended | year ended | |
| 30 June 2018 | 30 June 2017 | 31 December 2017 | |
| (pence per share) | (pence per share) | (pence per share) | |
| Revenue return Capital return |
0.15 1.62 ––––––– |
0.23 0.75 ––––––– |
0.56 0.69 ––––––– |
| Total return | 1.77 | 0.98 | 1.25 |
| Dividends paid | 0.60 | 0.50 | 1.00 |
| Net asset value | 22.74 | 21.81 | 21.60 |
| From Launch to 31 December 2010 |
1 January 2011 to 30 June 2018 |
From Launch to 30 June 2018 |
|
|---|---|---|---|
| Total shareholder return | (pence per share) | (pence per share) | (pence per share) |
| Subscription price per share at launch | 100.00 | – | 100.00 |
| Dividends paid | 58.66 | 7.27 | 65.93 |
| (Decrease)/increase in net asset value | (83.40) | 6.14 | (77.26) |
| Total shareholder return | 75.26 | 13.41 | 88.67 |
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 22.
We are pleased to report a total return of 1.77 pence per share (8.2% on opening net asset value) for the six month period to 30 June 2018, compared to a total return of 0.98 pence per share for the six month period to 30 June 2017. This continues to build on the strong performance the Company has had in recent years of a 1.25 pence per share return in 2017 and 2.32 pence per share return in 2016.
Net asset value increased from 21.60 pence per share at 31 December 2017 to 22.74 pence per share at 30 June 2018, following the payment of a 0.60 pence per share dividend on 30 April 2018.
Progress to date gives the Board confidence in the sustainability of our dividend policy and we are therefore pleased to announce a further dividend of 0.60 pence per share to be paid on 31 October 2018, to shareholders on the register on 5 October 2018. The annual dividend target per share of 1.20 pence represents a tax free yield of 5.6% on the mid-market share price of 21.60 pence per share as at 30 June 2018. The Company continues to offer a Dividend Reinvestment Scheme whereby shareholders can elect to receive dividends in the form of new shares.
The net effect of the Board's regular portfolio revaluation has been an overall gain on investments of £5.8m. The key movements in the period include: a further £2.3m uplift following the disposal of Grapeshot to Oracle Corporation (NYSE:ORCL); a £1.4m uplift in the valuation of Quantexa following a third party led funding round. There were increases on a variety of investments following independent valuations performed as at March 2018 including: Active Lives Care, Chonais River Hydro, and Ryefield Court Care offset by a reduction in the valuation of a number of investments including Edo Consulting and Elateral due to lower growth than anticipated. Further details of the portfolio of investments can be found on pages 8 to 10.
There has been a significant level of investment activity in the six months ended 30 June 2018. The Company has invested £0.4m into three new portfolio companies, with the expectation of further funding rounds over time to support success. In addition, the Company invested £1.9m to support existing portfolio companies scale.
New investments in the period included:
In the period, the Company sold its investment in Grapeshot generating proceeds at completion of £4.3m (excluding an amount placed in escrow). If the full escrow amount is received, the Company will realise approximately 10x the total investment cost of £0.5m. In addition, the Company sold all of its remaining quoted securities in Oxford Immunotec Global (£0.8m) and disposed of further securities in ErgoMed (£0.3m). For more information please see the realisation table on page 10.
The following pie chart outlines the different sectors in which the Company's assets, at carrying value, are currently invested.
Comparatives for 31 December 2017 are in brackets Source: Albion Capital Group LLP
Details of transactions with the Manager for the reporting period can be found in note 4. Details of related party transactions can be found in note 10.
The Company is pleased to announce that its participation in the Albion VCTs Prospectus Top Up Offers 2017/18 was fully subscribed and closed early raising net proceeds of £7.8m. Further details can be found in note 7 on page 19. The proceeds of the Offer are being deployed into new investments as mentioned above, and supporting further funding of existing portfolio companies to promote growth.
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. This includes the maintenance of sufficient cash resources for investment in new and existing portfolio companies and the continued payment of dividends to shareholders. It is the Board's intention over time for such buy-backs to be in the region of a 5 per cent. discount to net asset value, so far as market conditions and liquidity permit.
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 investing in a diversified portfolio in terms of sector and stage of maturity and focusing on opportunities where it is believed growth can be both resilient and sustainable.
Other risks and uncertainties remain as set out on pages 13 and 14 of the Annual Report and Financial Statements for the year ended 31 December 2017.
Your Board remains cautious on the economic outlook but positive on the long term prospects of the portfolio. Our investments are well diversified in more than 50 companies in a wide variety of sectors and stages of maturity. The Board believes the portfolio offers significant long-term growth potential which will be determined primarily by the success of the underlying businesses rather than the macroeconomic environment.
Robin Field Chairman 29 August 2018
The Directors, Robin Field, Thomas Chambers and Martin Fiennes, are responsible for preparing the Half-yearly Financial Report. In preparing these condensed Financial Statements for the period to 30 June 2018 we, the Directors of the Company, confirm that to the best of our knowledge:
(c) the Interim management report, includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).
This Half-yearly Financial Report has not been audited or reviewed by the Auditor.
For and on behalf of the Board
Chairman 29 August 2018
The following is a summary of fixed asset investments as at 30 June 2018:
| Fixed asset investments | % voting rights |
Cost(1) £'000 |
Cumulative movement in value £'000 |
Value £'000 |
Change in value for the period(2) £'000 |
|---|---|---|---|---|---|
| Unquoted investments | |||||
| Active Lives Care Limited | 20.3 | 4,395 | 2,588 | 6,983 | 615 |
| Ryefield Court Care Limited | 18.7 | 3,070 | 2,043 | 5,113 | 457 |
| Chonais River Hydro Limited | 6.5 | 2,428 | 948 | 3,376 | 373 |
| Proveca Limited | 14.7 | 1,304 | 1,613 | 2,917 | (147) |
| Antenova Limited | 28.7 | 1,733 | 888 | 2,621 | (4) |
| Elateral Group Limited | 47.9 | 4,663 | (2,070) | 2,593 | (213) |
| Egress Software Technologies Limited | 5.3 | 1,003 | 1,264 | 2,267 | – |
| Anthropics Technology Limited | 13.8 | 19 | 1,933 | 1,952 | 177 |
| The Street by Street Solar Programme Limited | 10.0 | 1,040 | 759 | 1,799 | 89 |
| MyMeds&Me Limited | 15.4 | 1,459 | 229 | 1,688 | (9) |
| Alto Prodotto Wind Limited | 11.1 | 974 | 691 | 1,665 | 144 |
| Perpetuum Limited | 13.4 | 2,373 | (755) | 1,618 | – |
| Quantexa Limited | 1.7 | 190 | 1,378 | 1,568 | 1,378 |
| Regenerco Renewable Energy Limited | 9.8 | 988 | 507 | 1,495 | 26 |
| Dragon Hydro Limited | 17.2 | 736 | 453 | 1,189 | 84 |
| Academia Inc | 3.0 | 351 | 781 | 1,132 | (30) |
| Bravo Inns II Limited | 5.0 | 800 | 253 | 1,053 | 63 |
| G.Network Communications Limited | 6.8 | 635 | 397 | 1,032 | 397 |
| Sandcroft Avenue Limited | 5.3 | 954 | 38 | 992 | 26 |
| Shinfield Lodge Care Limited | 2.9 | 535 | 412 | 947 | 61 |
| OmPrompt Holdings Limited | 13.2 | 1,197 | (273) | 924 | (10) |
| Earnside Energy Limited | 5.2 | 835 | 13 | 848 | 4 |
| Symetrica Limited | 3.5 | 389 | 458 | 847 | (134) |
| Gharagain River Hyrdo Limited | 5.0 | 620 | 184 | 804 | 100 |
| Sift Limited | 42.1 | 2,306 | (1,607) | 699 | (29) |
| AVESI Limited | 14.8 | 484 | 206 | 690 | (3) |
| Black Swan Data Limited | 1.4 | 671 | – | 671 | – |
| Women's Health (London West One) Limited | 4.7 | 583 | – | 583 | – |
| Convertr Media Limited | 3.1 | 425 | 127 | 552 | 150 |
| MPP Global Solutions Limited | 1.9 | 550 | – | 550 | – |
| Beddlestead Limited | 5.1 | 502 | – | 502 | – |
| Edo Consulting Limited | 38.6 | 923 | (442) | 481 | (555) |
| Greenenerco Limited | 8.6 | 286 | 194 | 480 | 46 |
| Oviva AG | 2.1 | 367 | 91 | 458 | – |
| Zift Channel Solutions Inc | 0.6 | 321 | 57 | 378 | 58 |
| Celoxica Holdings plc | 4.4 | 513 | (144) | 369 | – |
| Mirada Medical Limited | 1.1 | 303 | 58 | 361 | 21 |
| Panaseer Limited | 1.5 | 253 | 97 | 350 | 30 |
| Secured By Design Limited | 1.7 | 260 | 81 | 341 | 81 |
| Abcodia Limited | 4.3 | 735 | (475) | 260 | (128) |
| Koru Kids Limited | 1.7 | 204 | – | 204 | – |
| The Wentworth Wooden Jigsaw Company Limited | 5.4 | – | 178 | 178 | (33) |
| Infinite Ventures (Goathill) Limited | 2.7 | 112 | 48 | 160 | 12 |
| Fixed asset investments | % voting rights |
Cost(1) £'000 |
Cumulative movement in value £'000 |
Value £'000 |
Change in value for the period(2) £'000 |
|---|---|---|---|---|---|
| uMotif Limited | 1.0 | 160 | – | 160 | – |
| Erin Solar Limited | 5.7 | 160 | (7) | 153 | – |
| Aridhia Informatics Limited | 2.2 | 381 | (243) | 138 | (52) |
| InCrowd Sports Limited | 1.5 | 126 | 12 | 138 | 12 |
| Cisiv Limited | 2.8 | 216 | (104) | 112 | – |
| Locum's Nest Limited | 1.6 | 75 | 23 | 98 | 23 |
| Healios Limited | 0.8 | 80 | – | 80 | – |
| Harvest AD Limited(i) | – | 70 | 2 | 72 | 2 |
| Innovation Broking Group Limited | 4.5 | 45 | 24 | 69 | 1 |
| Xention Limited | 10.6 | 38 | (28) | 10 | – |
| Other holdings (7 companies) | 26 | (19) | 7 | – | |
| Total unquoted investments | 43,866 | 12,861 | 56,727 | 3,083 | |
| Quoted investments | |||||
| ErgoMed PLC | 841 | 210 | 1,051 | (30) | |
| Total quoted investments | 841 | 210 | 1,051 | (30) | |
| Total fixed asset investments | 44,707 | 13,071 | 57,778 | 3,053 |
(1) 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 value.
(2) The above column shows the movement in the period from the opening balance as at 1 January 2018 to the closing balance as at 30 June 2018 after adjustments for additions and disposals.
(i) Early stage investment of convertible loan stock.
| Total change in value of investments for the period Movement in loan stock accrued interest |
3,053 (74) _ |
|---|---|
| Unrealised gains on fixed asset investments sub-total Realised gains in current period Unrealised gains on current asset investments |
2,979 2,426 373 _ |
| Total gains on investments as per Income statement | 5,778 |
| Current asset investments | Cost £'000 |
Cumulative movement in value £'000 |
Value £'000 |
Change in value for the period £'000 |
|---|---|---|---|---|
| ErgoMed PLC* | – | 373 | 373 | 373 |
| Total current asset investments | – | 373 | 373 | 373 |
* Amounts shown represent future contingent receipts.
| Realisations in the period to 30 June 2018 | Cost £'000 |
Opening carrying value £'000 |
Disposal proceeds £'000 |
Realised gain on cost £'000 |
Gain/(loss) on opening or acquired value £'000 |
|---|---|---|---|---|---|
| Disposals: | |||||
| Grapeshot Limited | 518 | 2,478 | 4,795 | 4,277 | 2,317 |
| Oxford Immunotec Global PLC | 279 | 743 | 776 | 497 | 33 |
| ErgoMed PLC | 171 | 220 | 295 | 124 | 75 |
| Loan stock repayments and other: | |||||
| MyMeds&Me Limited | 620 | 840 | 839 | 219 | (1) |
| Alto Prodotto Wind Limited | 11 | 16 | 16 | 5 | – |
| Greenenerco Limited | 6 | 8 | 8 | 2 | – |
| Escrow adjustments | – | – | 2 | 2 | 2 |
| Total | 1,605 | 4,305 | 6,731 | 5,126 | 2,426 |
| Unaudited six months ended 30 June 2018 |
Unaudited six months ended 30 June 2017 |
Audited year ended 31 December 2017 |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Note | Revenue Capital £'000 |
£'000 | £'000 | Total Revenue Capital £'000 |
£'000 £'000 | Total Revenue Capital £'000 |
£'000 £'000 | Total | ||
| Gains on investments | 2 | – | 5,778 | 5,778 | – | 2,527 2,527 | – | 2,753 2,753 | ||
| Investment income | 3 | 918 | – | 918 | 940 | – | 940 | 2,116 | – 2,116 | |
| Investment management fee |
4 | (162) | (486) | (648) | (142) | (427) | (569) | (291) | (873)(1,164) | |
| Performance incentive fee |
4 | (142) | (426) | (568) | (32) | (95) | (127) | – | – | – |
| Other expenses | (159) | – | (159) | (152) | – | (152) | (303) | – | (303) | |
| Profit on ordinary activities before tax |
455 | 4,866 | 5,321 | 614 | 2,005 2,619 | 1,522 | 1,880 3,402 | |||
| Tax on ordinary activities |
– | – | – | – | – | – | – | – | – | |
| Profit and total comprehensive income attributable to |
||||||||||
| shareholders | 455 | 4,866 | 5,321 | 614 | 2,005 2,619 | 1,522 | 1,880 3,402 | |||
| Basic and diluted return per share (pence)* |
6 | 0.15 | 1.62 | 1.77 | 0.23 | 0.75 | 0.98 | 0.56 | 0.69 | 1.25 |
* Excluding treasury shares
The accompanying notes on pages 15 to 20 form an integral part of this Half-yearly Financial Report.
Comparative figures have been extracted from the unaudited Half-yearly Financial Report for the six months ended 30 June 2017 and the audited statutory accounts for the year ended 31 December 2017.
The total column of this Condensed 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.
| Note | Unaudited 30 June 2018 £'000 |
Unaudited 30 June 2017 £'000 |
Audited 31 December 2017 £'000 |
|---|---|---|---|
| Fixed asset investments | 57,778 | 54,697 | 55,815 |
| Current assets | |||
| Current asset investments | 373 | – | – |
| Trade and other receivables less than one year |
713 | 66 | 368 |
| Cash and cash equivalents | 11,689 | 5,388 | 6,700 |
| 12,775 | 5,454 | 7,068 | |
| Total assets | 70,553 | 60,151 | 62,883 |
| Payables: amounts falling due within one year |
|||
| Trade and other payables less than one year |
(1,032) | (605) | (391) |
| Total assets less current liabilities | 69,521 | 59,546 | 62,492 |
| Equity attributable to equity holders | |||
| Called up share capital 7 |
3,509 | 3,127 | 3,321 |
| Share premium | 27,693 | 19,899 | 23,841 |
| Capital redemption reserve | 11 | 11 | 11 |
| Unrealised capital reserve | 12,770 | 14,523 | 12,118 |
| Realised capital reserve | 9,934 | 3,440 | 5,720 |
| Other distributable reserve | 15,604 | 18,546 | 17,481 |
| Total equity shareholders' funds | 69,521 | 59,546 | 62,492 |
| Basic and diluted net asset value per share (pence)* |
22.74 | 21.81 | 21.60 |
* Excluding treasury shares
The accompanying notes on pages 15 to 20 form an integral part of this Half-yearly Financial Report.
Comparative figures have been extracted from the unaudited Half-yearly Financial Report for the six months ended 30 June 2017 and the audited statutory accounts for the year ended 31 December 2017.
These Financial Statements were approved by the Board of Directors, and authorised for issue on 29 August 2018 and were signed on its behalf by
Robin Field Chairman
Company number: 03139019
| Called up share capital £'000 |
premium £'000 |
Capital Share redemption reserve £'000 |
Unrealised capital reserve £'000 |
Realised capital reserve* £'000 |
Other distributable reserve* £'000 |
Total £'000 |
|
|---|---|---|---|---|---|---|---|
| At 1 January 2018 | 3,321 | 23,841 | 11 | 12,118 | 5,720 | 17,481 62,492 | |
| Profit and total comprehensive | |||||||
| income for the period | – | – | – | 3,352 | 1,514 | 455 | 5,321 |
| Transfer of previously unrealised gains on disposal of investments |
– | – | – | (2,700) | 2,700 | – | – |
| Purchase of own shares for treasury | – | – | – | – | – | (495) | (495) |
| Issue of equity | 188 | 3,952 | – | – | – | – | 4,140 |
| Cost of issue of equity | – | (100) | – | – | – | – | (100) |
| Dividends paid | – | – | – | – | – | (1,837) (1,837) | |
| At 30 June 2018 | 3,509 | 27,693 | 11 | 12,770 | 9,934 | 15,604 69,521 | |
| At 1 January 2017 | 2,840 | 14,218 | 11 | 12,526 | 3,432 | 19,983 | 53,010 |
| Profit/(loss) and total comprehensive | |||||||
| income for the period | – | – | – | 2,395 | (390) | 614 | 2,619 |
| Transfer of previously unrealised | |||||||
| gains on disposal of investments | – | – | – | (398) | 398 | – | – |
| Purchase of own shares for treasury | – | – | – | – | – | (676) | (676) |
| Issue of equity | 287 | 5,853 | – | – | – | – | 6,140 |
| Cost of issue of equity | – | (172) | – | – | – | – | (172) |
| Dividends paid | – | – | – | – | – | (1,375) | (1,375) |
| At 30 June 2017 | 3,127 | 19,899 | 11 | 14,523 | 3,440 | 18,546 | 59,546 |
| At 1 January 2017 | 2,840 | 14,218 | 11 | 12,526 | 3,432 | 19,983 | 53,010 |
| Profit and total comprehensive | |||||||
| income for the period | – | – | – | 1,695 | 185 | 1,522 | 3,402 |
| Transfer of previously unrealised | |||||||
| gains on disposal of investments | – | – | – | (2,103) | 2,103 | – | – |
| Purchase of own shares for treasury | – | – | – | – | – | (1,301) | (1,301) |
| Issue of equity | 481 | 9,880 | – | – | – | – | 10,361 |
| Cost of issue of equity | – | (257) | – | – | – | – | (257) |
| Dividends paid | – | – | – | – | – | (2,723) | (2,723) |
| At 31 December 2017 | 3,321 | 23,841 | 11 | 12,118 | 5,720 | 17,481 | 62,492 |
* The total distributable reserves are £25,538,000 (30 June 2017: £21,986,000; 31 December 2017: £23,201,000).
The accompanying notes on pages 15 to 20 form an integral part of this Half-yearly Financial Report.
Comparative figures have been extracted from the unaudited Half-yearly Financial Report for the six months ended 30 June 2017 and the audited statutory accounts for the year ended 31 December 2017.
| Unaudited six months ended 30 June 2018 £'000 |
Unaudited six months ended 30 June 2017 £'000 |
Audited year ended 31 December 2017 £'000 |
|
|---|---|---|---|
| Cash flow from operating activities | |||
| Investment income received | 596 | 594 | 1,218 |
| Deposit interest received | 9 | 1 | 3 |
| Dividend income received | 32 | 337 | 782 |
| Investment management fees paid | (609) | (526) | (1,128) |
| Performance incentive fee paid | – | (513) | (513) |
| Other cash payments | (173) | (136) | (295) |
| Net cash flow from operating activities | (145) | (243) | 67 |
| Cash flow from investing activities | |||
| Purchase of fixed asset investments | (2,304) | (1,573) | (5,735) |
| Disposal of fixed asset investments | 5,688 | 1,422 | 4,498 |
| Net cash flow from investing activities | 3,384 | (151) | (1,237) |
| Cash flow from financing activities | |||
| Issue of share capital | 3,826 | 5,824 | 9,814 |
| Cost of issue of equity | (2) | – | (2) |
| Purchase of own shares (including costs) | (448) | (602) | (1,300) |
| Equity dividends paid* | (1,626) | (1,228) | (2,430) |
| Net cash flow from financing activities | 1,750 | 3,994 | 6,082 |
| Increase in cash and cash equivalents Cash and cash equivalents at start of period |
4,989 6,700 |
3,600 1,788 |
4,912 1,788 |
| Cash and cash equivalents at end of period | 11,689 | 5,388 | 6,700 |
| Cash and cash equivalents comprise: | |||
| Cash at bank and in hand | 11,689 | 5,388 | 6,700 |
| Cash equivalents | – | – | – |
| Total cash and cash equivalents | 11,689 | 5,388 | 6,700 |
* The equity dividend paid in the cash flow is different to the dividend disclosed in note 5 due to the non-cash effect of the Dividend Reinvestment Scheme.
The accompanying notes on pages 15 to 20 form an integral part of this Half-yearly Financial Report.
Comparative figures have been extracted from the unaudited Half-yearly Financial Report for the six months ended 30 June 2017 and the audited statutory accounts for the year ended 31 December 2017.
The condensed 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"), Financial Reporting Standard 104 – Interim Financial Reporting ("FRS 104"), and with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" ("SORP") issued by The Association of Investment Companies ("AIC").
The preparation of the Financial Statements requires management to make judgements and estimates that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The most critical estimates and judgements relate to the determination of carrying value of investments at fair value through profit and loss ("FVTPL"). The Company values investments by following the IPEVCV Guidelines and further detail on the valuation techniques used are outlined below.
The Half-yearly Financial Report has not been audited, nor has it been reviewed by the auditor pursuant to the FRC's guidance on Review of interim financial information.
Company information can be found on page 2.
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, 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:
• Investments listed on recognised exchanges are valued at their bid prices at the end of the accounting period or otherwise at fair value based on published price quotations;
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.
Receivables and payables and cash are carried at amortised cost, in accordance with FRS 102. There are no financial liabilities other than payables.
Contractual future contingent receipts on the disposal of investments are designated at fair value through profit or loss and are subsequently measured at fair value.
Gains and losses arising from changes in the fair value of the investments are included in the Income statement for the period as a capital item and are allocated to the unrealised capital reserve.
Dividend income is included in revenue when the investment is quoted ex-dividend.
Fixed returns on non-equity shares and debt securities are recognised when the Company's right to receive payment and expected 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 FVTPL, 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 unrealised capital 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 the 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.
The Directors are of the opinion that the Company is engaged in a single operating segment of business, being investment in smaller companies principally based in the UK.
| Unaudited six months ended 30 June 2018 £'000 |
Unaudited six months ended 30 June 2017 £'000 |
Audited year ended 31 December 2017 £'000 |
|---|---|---|
| 2,395 | 1,695 | |
| – | ||
| 2,426 | 132 | 1,058 |
| 2,527 | ––––––––––––– 2,753 ––––––––––––– |
|
| 373 ––––––––––––– ––––––––––––– |
2,979 – ––––––––––––– 5,778 ––––––––––––– |
| Unaudited | Unaudited | Audited | |
|---|---|---|---|
| six months ended | six months ended | year ended | |
| 30 June 2018 | 30 June 2017 | 31 December 2017 | |
| £'000 | £'000 | £'000 | |
| Interest from loans to portfolio companies | 743 | 602 | 1,331 |
| Dividends | 165 | 337 | 782 |
| Bank deposit interest | 10 | 1 | 3 |
| ––––––––––––– 918 |
––––––––––––– 940 |
––––––––––––– 2,116 |
|
| ––––––––––––– | ––––––––––––– | ––––––––––––– |
| six months ended 30 June 2017 £'000 |
Audited year ended 31 December 2017 £'000 |
|---|---|
| 142 | 291 |
| 427 | 873 |
| 32 | – |
| 95 | – |
| 696 | ––––––––––––– 1,164 ––––––––––––– |
| Unaudited ––––––––––––– ––––––––––––– |
Further details of the Management agreement under which the investment management fee and performance incentive fee are paid is given in the Strategic report on page 12 of the Annual Report and Financial Statements for the year ended 31 December 2017.
During the period, services with a value of £648,000 (30 June 2017: £569,000; 31 December 2017: £1,164,000) and £25,000 (30 June 2017: £25,000; 31 December 2017: £50,000) were purchased by the Company from Albion Capital Group LLP in respect of investment management and administration fees respectively. At the period end, the amount due to Albion Capital Group LLP in respect of these services disclosed as accruals was £348,000 (30 June 2017: £317,000; 31 December 2017: £309,000). For the period to 30 June 2018, a provisional performance incentive fee of £568,000 has been accrued, however any performance incentive fee is only payable on year end results (30 June 2017: £127,000; 31 December 2017: nil).
Albion Capital Group LLP is, from time to time, eligible to receive arrangement fees and monitoring fees from portfolio companies. During the period, fees of £145,000 (30 June 2017: £113,000; 31 December 2017: £233,000) attributable to the investments of the Company were paid pursuant to these arrangements.
Albion Capital Group LLP, its partners and staff hold 897,071 Ordinary shares in the Company.
| Unaudited 30 June 2018 £'000 |
Unaudited six months ended 30 June 2017 £'000 |
Audited year ended 31 December 2017 £'000 |
|---|---|---|
| 1,375 | ||
| 1,363 | ||
| 1,842 | – | – |
| – | (15) | |
| 1,375 | ––––––––––––– 2,723 ––––––––––––– |
|
| six months ended – – ––––––––––––– 1,837 ––––––––––––– |
1,375 – (5) ––––––––––––– ––––––––––––– |
The Directors have declared a second dividend of 0.6 pence per share for the year ending 31 December 2018, which will be paid on 31 October 2018 to shareholders on the register on 5 October 2018.
| Unaudited | Unaudited | Audited | ||||
|---|---|---|---|---|---|---|
| six months ended 30 June 2018 |
six months ended 30 June 2017 |
year ended 31 December 2017 |
||||
| Revenue | Capital | Revenue | Capital | Revenue | Capital | |
| Profit attributable to shareholders (£'000) | 455 | 4,866 | 614 | 2,005 | 1,522 | 1,880 |
| Weighted average shares in issue (excluding treasury shares) |
299,536,878 | 267,189,319 | 272,042,345 | |||
| Return attributable per equity share (pence) | 0.15 | 1.62 | 0.23 | 0.75 | 0.56 | 0.69 |
The weighted average number of Ordinary shares is calculated excluding the treasury shares of 45,209,000 (30 June 2017: 39,731,000; 31 December 2017: 42,771,000)
There are no convertible instruments, derivatives or contingent share agreements in issue so basic and diluted return per share are the same.
| Unaudited | Unaudited | Audited | |
|---|---|---|---|
| 30 June 2018 | 30 June 2017 | 31 December 2017 | |
| £'000 | £'000 | £'000 | |
| Allotted, issued and fully paid: 350,885,505 Ordinary shares of 1 penny each (30 June 2017: 312,691,928; 31 December 2017: 332,100,215) |
3,509 ––––––––––––– |
3,127 ––––––––––––– |
3,321 ––––––––––––– |
305,676,505 Ordinary shares of 1 penny each (net of treasury shares) (30 June 2017: 272,960,928; 31 December 2017: 289,329,215).
The Company operates a share buy-back programme, as detailed in the Interim management report on page 6. During the period the Company purchased 2,438,000 Ordinary shares (nominal value of £24,380) at a cost of £495,000. The total number of Ordinary shares held in treasury as at 30 June 2018 was 45,209,000 (30 June 2017: 39,731,000; 31 December 2017: 42,771,000) representing 12.9% of the issued Ordinary share capital as at 30 June 2018.
During the period from 1 January 2018 to 30 June 2018, the Company issued the following new Ordinary shares of 1 penny each under the terms of the Dividend Reinvestment Scheme Circular dated 19 April 2011:
| Aggregate | Opening market price |
||||
|---|---|---|---|---|---|
| Date of allotment | Number of shares allotted |
nominal value of shares (£'000) |
Issue price (pence per share) |
Net invested (£'000) |
on allotment date (pence per share) |
| 30 April 2018 | 1,030,225 | 10 | 21.00 | 214 | 22.40 |
Under the terms of the Albion VCTs Prospectus Top Up Offers 2017/18, the following new Ordinary shares of nominal value 1 penny each were allotted during the period to 30 June 2018:
| 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) |
|---|---|---|---|---|
| 21.30 | ||||
| 19.80 | ||||
| 19.80 | ||||
| 19.80 | ||||
| 2,411,951 | 24 | 22.20 | 522 | 19.80 |
| 17,755,065 | 178 | 3,826 | ||
| 5,979,493 9,261,391 94,086 8,144 ––––––––––– ––––––––––– |
60 93 1 – ––––––––––– ––––––––––– |
21.90 22.20 22.00 22.10 |
1,277 2,005 20 2 ––––––––––– ––––––––––– |
As at 30 June 2018, the Company had no financial commitments (30 June 2017: £5,000; 31 December 2017: nil).
There were no contingent liabilities or guarantees given by the Company as at 30 June 2018 (30 June 2017: nil; 31 December 2017: nil).
Since 30 June 2018, the Company has completed the following investments:
Other than transactions with the Manager as disclosed in note 4, there are no related party transactions or balances requiring disclosure.
The Board's assessment of liquidity risk remains unchanged and is detailed on page 61 of the Annual Report and Financial Statements for the year ended 31 December 2017.
The Company has adequate cash and liquid resources. The portfolio of investments is diversified in terms of sector, and the major cash outflows of the Company (namely investments, dividends and share buy-backs) 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. For this reason, the Directors have adopted the going concern basis in preparing this Half-yearly Financial Report and this is 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 information set out in this Half-yearly Financial Report does not constitute the Company's statutory accounts within the terms of section 435 of the Companies Act 2006 for the periods ended 30 June 2018 and 30 June 2017, and is unaudited. The information for the year ended 31 December 2017 does not constitute statutory accounts within the terms of section 435 of the Companies Act 2006 and is derived from the statutory accounts for that financial year, which have been delivered to the Registrar of Companies. The Auditor reported on those accounts; their report was unqualified and did not contain a statement under s498 (2) or (3) of the Companies Act 2006.
This Half-yearly Financial Report is being sent to shareholders and copies will be made available to the public at the registered office of the Company, Companies House, the National Storage Mechanism and also electronically at www.albion.capital/funds/KAY, where the Report can be accessed from the 'Financial Reports and Circulars' section.
| 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 Capital 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 |
| 30 June 2018 (pence per share) |
(pence per share) |
30 June 2017 31 December 2017 (pence per share) |
|
|---|---|---|---|
| Net asset value of the Company | 22.74 | 21.81 | 21.60 |
| Dividends paid to shareholders of the Company Dividends paid during the period Cumulative dividend paid |
0.60 65.93 |
0.50 64.83 |
1.00 65.33 |
| Total shareholder return(1) (per 100p invested) To shareholders of the Company (formerly SPARK VCT plc; Quester VCT plc) Total shareholder return including tax benefits(2) |
88.67 108.67 |
86.64 106.64 |
86.93 106.93 |
| Total shareholder return to former shareholders of: Quester VCT 2 plc, per 100p invested in shares of that company Total shareholder return Total shareholder return including tax benefits(2) |
74.94 94.94 |
72.86 92.86 |
73.16 93.16 |
| Quester VCT 3 plc, per 100p invested in shares of that company Total shareholder return Total shareholder return including tax benefits(2) |
48.23 68.23 |
46.24 66.24 |
46.53 66.53 |
| 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 Total shareholder return Total shareholder return including tax benefits(2) |
46.48 66.48 |
43.88 63.88 |
44.25 64.25 |
| Quester VCT 5 plc (renamed SPARK VCT 3 PLC), per 100p invested in shares of that company Total shareholder return Total shareholder return including tax benefits(2) |
61.33 81.33 |
57.53 77.53 |
58.07 78.07 |
(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 1996.
(2) Return after 20 per cent. income tax relief but excluding capital gains deferral.
The total returns stated are applicable only to shareholders of shares at the time of each companies launch. They do not represent the return to subsequent subscribers or purchasers of shares.
Source: Albion Capital Group LLP
Dividends paid to shareholders of KAY launched in 1996 (formerly SPARK VCT plc ("SVCT") and originally Quester VCT PLC ("QVCT")).
| (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 |
| 31 December 2016 | 1.000 |
| 31 December 2017 | 1.000 |
| 30 June 2018 | 0.600 |
| Total dividends paid to 30 June 2018 | 65.929 |
| Net asset value as at 30 June 2018 | 22.740 |
| Total shareholder return to 30 June 2018 | 88.669 |
QVCT2 was launched in 1998 and was merged with KAY (formerly SPARK VCT plc ("SVCT") and originally Quester VCT PLC ("QVCT")) 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 |
| 29 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 |
| 31 December 2016 | 1.025 |
| 31 December 2017 | 1.025 |
| 30 June 2018 | 0.615 |
| Total dividends paid to 30 June 2018 | 51.635 |
| Net asset value as at 30 June 2018 | 23.306 |
| Total shareholder return to 30 June 2018 | 74.941 |
QVCT3 was launched in 2000 and was merged with KAY (formerly SPARK VCT plc ("SVCT") and originally Quester VCT PLC ("QVCT")) 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 |
| 31 December 2016 | 0.982 |
| 31 December 2017 | 0.982 |
| 30 June 2018 | 0.589 |
| Total dividends paid to 30 June 2018 | 25.912 |
| Net asset value as at 30 June 2018 | 22.322 |
| Total shareholder return to 30 June 2018 | 48.234 |
QVCT4 was launched in 2000 and was renamed SPARK VCT 2 plc ("SVCT2") 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 |
| 31 December 2016 | 1.281 |
| 31 December 2017 | 1.281 |
| 30 June 2018 | 0.768 |
| Total dividends paid to 30 June 2018 | 17.354 |
| Net asset value as at 30 June 2018 | 29.121 |
| Total shareholder return to 30 June 2018 | 46.475 |
QVCT5 was launched in 2002 and was renamed SPARK VCT 3 plc ("SVCT3") and merged with SPARK VCT 2 plc ("SVCT2") (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 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 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 |
| 31 December 2016 | 1.871 |
| 31 December 2017 | 1.871 |
| 30 June 2018 | 1.123 |
| Total dividends paid to 30 June 2018 | 18.771 |
| Net asset value as at 30 June 2018 | 42.554 |
| Total shareholder return to 30 June 2018 | 61.325 |
A member of The Association of Investment Companies
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