Annual Report • Dec 31, 2013
Annual Report
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Annual Report and Financial Statements for the year ended 31 December 2013
Kings Arms Yard VCT PLC
| Company Number | 03139019 |
|---|---|
| Directors | R A Field, Chairman T W Chambers M G Fiennes A P M Lamb |
| Manager, company secretary 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 | Grant Thornton UK LLP 30 Finsbury Square London, EC2P 2YU |
| Taxation adviser | PricewaterhouseCoopers LLP 1 Embankment Place London, WC2N 6RH |
| Legal adviser | SGH Martineau LLP No 1 Colmore Square Birmingham, B4 6AA |
| Kings Arms Yard VCT PLC is a member of The Association of Investment Companies. | |
| Shareholder information | For help relating to dividend payments, shareholdings and share certificates please contact Computershare Investor Services PLC: Tel: 0870 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.
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 | 11 April 2014 |
|---|---|
| Payment date of first dividend | 30 April 2014 |
| Annual General Meeting | 23 May 2014 |
| Announcement of half-yearly results for the six months ending 30 June 2014 | August 2014 |
| Payment date of second dividend (subject to Board approval) | 31 October 2014 |
| 20.45p | Net asset value per share as at 31 December 2013. |
|---|---|
| 18.00p | Mid-market share price as at 31 December 2013. |
| 12.5% | Increase in mid-market share price during the year. |
| 2.35p | Total return per share to shareholders for the year ended 31 December 2013. |
| 1.0p | Total tax free dividends per share paid in the year to 31 December 2013. |
| 0.5p | First tax free dividend per share declared for the year to 31 December 2014 payable on 30 April 2014. |
| 5.6% | Tax free yield on share price (dividend per annum/share price as at 31 December 2013). |
Source: Albion Ventures LLP
Methodology: The net asset value total return to the shareholder, 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 2013 (pence per share) |
31 December 2012 (pence per share) |
|
|---|---|---|
| Dividends paid during the year | 1.00 | 1.00 |
| Revenue return | 0.58 | – |
| Capital return | 1.77 | 3.10 |
| Net asset value enhancement as a result of share buy-backs | 0.20 | 0.10 |
| Net asset value | 20.45 | 18.90 |
| Shareholder net asset value total return | From launch to 31 December 2010 (pence per share) |
1 January 2011 to 31 December 2013 (pence per share) |
From launch to 31 December 2013 (pence per share) |
||
|---|---|---|---|---|---|
| Subscription price at launch | 100.00 | – | 100.00 | ||
| Dividends paid | 58.66 | 2.67 | 61.33 | ||
| (Decrease)/increase in shareholder | |||||
| net asset value | (83.40) ––––––––––––– |
3.85 ––––––––––––– |
(79.55) ––––––––––––– |
||
| Shareholder net asset value total return | 75.26 ––––––––––––– |
6.52 ––––––––––––– |
81.78 ––––––––––––– |
||
| Current annual dividend objective (pence per share) |
The Directors have declared a first dividend of 0.5 pence per share for the year ending 31 December 2014, which will be paid on 30 April 2014 to shareholders on the register on 11 April 2014.
Source: Albion Ventures LLP
The bar chart shows the aggregate of the 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 60.
I am pleased to report another encouraging set of results for the financial year. The results for 2013 demonstrate growth in both income and capital with a total return of 12.4 per cent., or 2.35 pence per share, and we note that the improving performance of the UK and Global economies is providing promising opportunities both for portfolio companies and for new investments.
Net asset value per share rose by over 8 per cent. from 18.90p on 31 December 2012 to 20.45p on 31 December 2013 after allowing for the payment of dividends totalling 1 penny per share during the year.
The Company recorded a net return after taxation of £4.7 million for the year to 31 December 2013 driven partly by gains on investments of over £4.1 million and investment income of £1.6 million.
During 2013, £4.7 million was invested into unquoted companies including £2.2 million into renewable energy projects, £0.4 million into freehold pubs, and £2.1 million into the high growth portfolio, predominantly in the healthcare technology sector. Further information on all new investments is contained in the Strategic report.
Following a very active period of new investment, cash and liquid assets at the year-end fell to £5.0 million (2012: £12.2 million).
We are pleased to declare a first dividend of 0.5p per share to be paid on 30 April 2014 to shareholders on the register on 11 April 2014 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 2013, 80.5 per cent. 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 per cent. required for the Company to continue to benefit from VCT tax status.
On 10 March 2014, the Company announced an increase in the size of the Albion VCTs Top Up Offers 2013/2014, initially announced on 6 November 2013, in which the Company is participating. In aggregate, the six VCTs managed by Albion Ventures LLP will be aiming to raise approximately £27 million, of which the Company will be aiming to raise circa £4 million. The funds raised by each company pursuant to its Offer will be added to the liquid resources available for investments so as to put each company into a position to take advantage of attractive investment opportunities over the next two to three years. Accordingly, the proceeds of the Offers will be applied in accordance with the respective companies' investment policy. An Investor Guide and Offers document have been sent to the shareholders and these, as well as a prospectus, has now been published and can be obtained 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 per cent. discount to net asset value, so far as market conditions and liquidity permit. During the year, the Company purchased 13,638,000 shares for treasury at a total cost of £2,317,000 including stamp duty. These shares were bought at an average discount of 10 per cent. resulting in a 0.2p uplift in net asset value per share for continuing shareholders.
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.
No performance fee is due for the period ended 31 December 2013. As the Company's net asset value per share for the year ended 31 December 2013 exceeds the Starting NAV of 20 pence per share, as set out in the Performance Incentive Fee Arrangement, the Start Date for the arrangement has been triggered and is therefore 1 January 2014.
Further details can be found in the Strategic report on page 11.
The Annual General Meeting of the Company will be held at the City of London Club, 19 Old Broad Street, London EC2N 1DS at 11.00 am on 23 May 2014. Full details of the business to be conducted at the Annual General Meeting are given in the Notice of the Meeting on page 55.
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.
Alan Lamb has indicated that he will be standing down at the forthcoming Annual General Meeting. Alan has served as a Director for more than 11 years, initially on the board of Kings Arms Yard VCT 2 PLC (formerly SPARK VCT 2 plc, originally Quester VCT 4 PLC) and finally, following the merger, on the Board of Kings Arms Yard VCT PLC. The Board would like to record its thanks for Alan's many years of valuable service.
At present, the Board have no immediate intention of replacing Alan, but will keep this situation under review.
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 to 15.
We have now seen three years of continuous improvement in shareholder return which includes a sharp increase in investment income. This in turn has led to a material revenue return for the first time, as a result of the investment strategy instigated by the Board and implemented by the new Manager. We expect the portfolio to benefit from the improving economic conditions and confidence and note that a number of our portfolio companies occupy niche positions in growing global markets.
Chairman 28 March 2014
The Directors present the Strategic report of the Company for the year ended 31 December 2013, which 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 inform Shareholders and provide them 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 Company's independent Auditor is required to report on whether the information given in the Strategic report is consistent with the Financial Statements. The independent Auditor's report can be found on pages 34 and 35.
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 per cent. 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 a Moody's rating of 'A' or above.
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. Details of significant events which have occurred since the end of the financial year are listed in note 21. Details of transactions with the Manager are shown in note 4.
The Directors do not foresee any major changes in the activity undertaken by the Company in the current year. The Company continues with its objective to invest in unquoted companies throughout the United Kingdom with a view to providing both capital growth and a reliable dividend income to shareholders over the long term.
| 1,147 (992) (979) 7 |
|---|
| –––––––––– |
| (817) –––––––––– |
| (588) |
| 4,097 –––––––––– |
| 3,509 –––––––––– |
| 39,262 –––––––––– |
| 20.45 –––––––––– |
The Company paid dividends of 1 penny per share during the year ended 31 December 2013 (2012: 1 penny per share). The Directors have declared a first dividend of 0.5 pence per share for the year ending 31 December 2014, which will be paid on 30 April 2014 to shareholders on the register on 11 April 2014.
As shown in the Income statement on page 36 of the Financial Statements, investment income has risen significantly to £1,624,000 (2012: £511,000). Investment income for 2013 included a large one-off dividend receipt of £797,000 from Antenova Limited. The increase in underlying investment income is as a result of investment in interest-bearing loan stock during the year. The revenue return to equity holders has risen to £1,147,000 (2012: £28,000). General expenses increased slightly to £289,000 (2012: £273,000), however, this
included costs of issuing the shareholder circular for the approval of the performance fee.
The capital return for the year was £3,509,000 (2012: £6,438,000). Although there has been a significant increase in valuations, there have been few exits during the year. A portion of management fees also continued to be allocated to capital. There was an additional uplift to net asset value per share of 0.2p as a result of the buying back of shares at a discount to net asset value.
The total return was 2.35 pence per share (2012: 3.10 pence per share).
The Balance sheet on page 37 of the Financial Statements shows that the net asset value has increased over the last year to 20.45 pence per share (2012: 18.90 pence per share) which is due to the movement for the year as noted above less the dividends paid during the year.
There has been a net cash outflow for the year due to the purchase of new investments, payment of dividends and buy-back of shares, offset by the net cash inflow from operating activities and disposal of fixed and current asset investments.
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, comprising the legacy portfolio and those that have been made by Albion Ventures LLP in new portfolio companies.
Source: Albion Ventures LLP
Distribution of net assets, at carrying value, for the legacy portfolio and for investments made into new companies by Albion Ventures as at 31 December 2013 (31 December 2012)
Source: Albion Ventures LLP
The sector analysis of the Company's investment portfolio shows that renewable energy now accounts for 17 per cent. of net assets compared to 10 per cent. at the end of the previous financial year. This remains in line with the Board's target exposure to the sector with a view to increasing this to 20 per cent. as new opportunities arise.
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. 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 Company's net asset value 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 page 8.
Net asset value per share and cumulative net asset value total shareholder return
Net asset value per Share and cumulative NAV total Shareholder return*
*Cumulative net asset value total shareholder return is net asset value plus cumulative dividends paid since 1 January 2011 to date.
Net asset value per share increased by 8.2 per cent. to 20.45 pence for the year ended 31 December 2013. Cumulative net asset value total return to shareholders increased by 3.2 per cent. to 81.78 pence for the year ended 31 December 2013.
Dividend distributions
Dividends paid in respect of the year ended 31 December 2013 were 1 penny per share (2012: 1 penny per share), in line with the Board's dividend objective. The cumulative dividends paid since inception is 61.33 pence per share.
The ongoing charges ratio for the year to 31 December 2013 was 2.7 per cent. (2012: 2.7 per cent.). The ongoing charges ratio has been calculated using The Association of Investment Companies ("AIC") recommended methodology. This figure shows shareholders the total recurring annual running expenses (including investment management fees charged to capital reserve) as a percentage of the average net assets attributable to shareholders. The Directors expect the ongoing charges ratio for the next year to be approximately 2.7 per cent.
The Company continues to comply with HMRC rules in order to maintain its status under Venture Capital Trust legislation as highlighted on pages 11 and 12. This has been independently reviewed for the year ended 31 December 2013.
During the year, there was a very active period of new investment, with a total of £4.7 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 £2.2 million was invested during the year into the renewable energy sector and £0.4 million into freehold pubs, plus £2.1 million was invested in companies offering the potential of high growth.
Cash and liquid assets at the year-end fell to £5.0 million (2012: £12.2 million), representing 12.7 per cent. of net asset value.
New investments were made in 9 new companies and totalled £2,749,000 during the year and included: two hydro-electric projects – Chonais Holdings Limited (£1,306,000) and Green Highland Renewables (Ledgowan) Limited (£186,000); a solar investment – Erin Solar Limited (£160,000); an anaerobic digestion project – Harvest AD Limited (£70,000); three healthcare investments – Aridhia Informatics Limited (£250,000), Cisiv Limited (£97,000), MyMeds&Me Limited (£366,000); and two technology investments – Silent Herdsman Limited (£82,000) and Relayware Limited (£232,000).
Follow-on investments were made in 13 portfolio companies and totalled £1,939,000 during the year. The two largest follow-on investments were £489,000 into Dragon Hydro Limited to complete the development of a new hydro project and £400,000 into Bravo Inns II Limited to fund the acquisition of additional freehold pubs.
Save for the distribution from Antenova Limited detailed below, as the result of the disposal of a substantial part of its business, there were no significant disposals during the year. However, disposal discussions are currently progressing on a number of our portfolio companies.
Most of the portfolio companies are performing well. Valuations which moved more than 1 per cent. of NAV include: Atego Group Limited (£1,279,000 uplift), Cluster Seven Ltd. (£502,000 uplift), Elateral Group Holdings Limited (£577,000 uplift), Hilson Moran Holdings Limited (£632,000 uplift) and Sift Limited (£1,507,000) driven by trading performance; and Oxford Immunotec Global PLC which floated on the NASDAQ stock exchange (£765,000 uplift); Antenova Limited was reduced by £933,000 after distributing £797,000 to Kings Arms Yard VCT PLC and Uniservity Limited (£2,054,000 reduction) due to poor trading.
The policy of increasing the income generating capacity of the Company is bearing fruit. The Company received £1,624,000 of income during the year, which after deducting the one-off distribution received from Antenova Limited of £797,000, represents £827,000 of income, a rise of over 60 per cent. on the £511,000 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.
An overview showing the holding period and the running revenue profile of each of the top ten investments in the unquoted portfolio (as at 31 December 2013) and which comprise nearly 69 per cent. of the unquoted portfolio is set out below.
At the AGM on 24 May 2013, the proposed Management performance incentive arrangement was approved by shareholders representing 88 per cent. of the votes cast. As the Company's net asset value per share, including the payment of dividends, for the year ended 31 December 2013 exceeds the Starting NAV of 20 pence per share as set out in the Performance Incentive Fee Arrangement, the Start Date for the arrangement has been triggered and is therefore 1 January 2014. No performance fee is due for the period ended 31 December 2013. As set out in the circular, the performance hurdle will be equal to the greater of the Starting NAV per share increased by the increase in RPI plus 2 per cent. per annum from the Start Date (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.
In addition to the investment policy described above, the Company's investment allocation and risk diversification policies are substantially driven by the relevant HMRC rules and, in order to maintain its status under Venture Capital Trust legislation, it is the intention of the Company to apply the following policies in this respect:
| Running | |||
|---|---|---|---|
| Valuation | Date of first | revenue | |
| £'000 | investment | profile | Basis of valuation |
| 4,941 | 1999 | >£5m | Revenue multiple |
| 2,934 | 1998 | >£10m | Earnings multiple |
| 2,637 | 2006 | >£5m | Earnings multiple |
| 2,263 | 2005 | <£5m | Revenue multiple |
| 1,308 | 2013 | <£5m | Cost |
| 1,279 | 1995 | <£5m | Earnings multiple |
| 1,264 | 2011 | <£5m | Net assets supported by third party valuation |
| 1,237 | 2011 | <£5m | Net assets supported by third party valuation |
| 1,230 | 2011 | >£15m | Earnings multiple |
| 997 | 2011 | <£5m | Net assets supported by third party valuation |
| 20,090 | |||
| –––––––––––– –––––––––––– |
* In accordance with section 278 of the Income Taxes Act 2007, HMRC value is the original cost of the investment, adjusted to the value at the time of any addition or disposal of that investment.
These tests drive a spread of investment risk through disallowing holdings of more than 15 per cent. in any portfolio company. The tests have been carried out and independently reviewed for the year ended 31 December 2013. 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. 'Qualifying trade' excludes, amongst other sectors, dealing in property or shares and securities, insurance, banking and agriculture. The Company may not control a portfolio company. 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. With effect from 6 April 2012 the legislation has been amended so as to prevent any company from receiving more than £5 million in aggregate from all stateaided providers of risk capital, including VCTs, in the 12 month period up to and including the most recent such investment.
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 £38,276,000 (2012: £37,803,000). As at 31 December 2013, the Company's actual short term and long term gearing was £nil (2012: £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. Further details regarding the terms of engagement of the Manager and the way the Board has evaluated the performance of the Manager are shown on pages 23 and 24.
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 per cent. discount to net asset value, so far as market conditions and liquidity permit.
Further details of shares bought back during the year ended 31 December 2013 can be found in note 15 of the Financial Statements.
The Board recognises the requirement under section 414c of the Act to detail information about social and community issues, employees and human rights; including any policies it has in relation to these matters and effectiveness of these policies. As an externally managed investment company with no employees, the Company has no 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 page 23.
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. |
To reduce this risk, the Board places reliance upon the skills and expertise of the Manager and its strong track record for investing in this segment of the market. In addition, the Manager operates a formal and structured investment process, which includes an Investment Committee, comprising investment professionals from the Manager and at least one external investment professional. The Manager also invites 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. |
| Risk | Possible consequence | Risk management |
|---|---|---|
| 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 PricewaterhouseCoopers LLP as its taxation advisor. PricewaterhouseCoopers 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 HM Revenue & Customs. |
| Compliance risk | The Company is listed on The London Stock Exchange and is required to comply with the rules of the UK Listing Authority, as well as with the Companies Act, Accounting Standards and other legislation. Failure to comply with these regulations could result in a delisting of the Company's shares, or other penalties under the Companies Act or from financial reporting oversight bodies. |
Board members and the Manager have experience of operating at senior levels within quoted businesses. In addition, the Board and the Manager receive regular updates on new regulation from its Auditor, lawyers and other professional bodies. |
| Risk | Possible consequence | Risk management |
|---|---|---|
| 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 2014 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, in the Directors' Report on page 23). In addition, the Manager has demonstrated to the Board that there is no undue reliance placed upon any one individual within Albion Ventures LLP. |
| 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), |
The Company's policies for managing these risks and its financial instruments are outlined in full in note 19 to the Financial Statements. |
| credit risk and liquidity risk. | Most of the Company's income and expenditure is denominated in sterling. As at 31 December 2013, the Company held an investment and accrued income denominated in US dollars of £557,000 (2012: £582,000). It is therefore likely that the Company would be affected by currency fluctuations; however, this is not expected to be material. The Company is financed through equity and does not have any borrowings. The Company does not use derivative financial instruments for speculative purposes. |
The Strategic report was approved by the Board of Directors on 28 March 2014 and was signed on its behalf by:
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 (now part of Nokia Oyj) 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. He is currently non-executive Treasurer and a council member of the University of Surrey, sits on the advisory board of Green Square Partners LLP, is a non-executive director of NCC Group plc and of a number of private companies.
Martin Fiennes, appointed 5 April 2011. Martin is a self-employed corporate finance adviser. He trades as Gatehouse Capital, a technology corporate finance business based in Oxford which specialises in fund-raisings and M&A for UK technology companies. Prior to starting Gatehouse Capital, Martin worked for nine years with Top Technology Ventures where he was responsible for making investments in early stage UK technology companies. Martin has wide experience in marketing and management roles, including as an executive director in a start-up in the leisure sector. He was, until its sale in 2011, a non-executive director of Focus Solutions Group plc. Martin is also a Trustee of the HDH Wills 1965 Charitable Trust and a non-executive director of Drayton Manor Park Limited.
Alan Lamb, appointed 3 October 2011, has broad experience as a manager and entrepreneur in technology businesses, from early stage through to being part of a large public company. He founded Flexion Inc. in 1998 to provide new generation communication systems for smaller businesses. Previously, he founded Airtech Computer Security that grew to become a highly profitable group delivering secure electronic payments solutions. Having sold Airtech to Racal Electronics plc in 1994, he was divisional managing director responsible for banking and communications security business in Europe and the USA. In the last ten years he has focused on developing spin-out companies from UK universities as a mentor, chairman and non-executive director. He formed Blaze Photonics which was sold to Crystal Fibre; and Identum which was sold to Trend Micro. He is currently on the board of Promethean Particles Limited, a supplier of specialist nano-particles, and Resilient Networks plc who provide smart voice services to banks and government.
All of the Directors are non-executive and independent of the Manager, Albion Ventures LLP, and are members of the Audit Committee. Thomas Chambers is Chairman of the Audit Committee.
At the Annual General Meeting, Thomas Chambers will retire from the Board by rotation in accordance with the Company's Articles of Association and Companies Act 2006 and will offer himself for re-election. Alan Lamb will also retire from the Board; he will not seek 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 to Kings Arms Yard VCT PLC, Albion Ventures LLP manages a further five venture capital trusts and currently has total funds under management of approximately £240 million.
The following are specifically responsible for the management and administration of the venture capital trusts managed by Albion Ventures LLP, including Kings Arms Yard VCT PLC:
Patrick Reeve, MA, ACA, qualified as a chartered accountant with Deloitte, Haskins & Sells 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 founding the venture capital division in 1996. He led the buy-out of this business from Close Brothers in 2009, and re-named it Albion Ventures LLP. He is the managing partner of Albion Ventures LLP and is director of Albion Technology & General VCT PLC, Albion Development VCT PLC and Albion Enterprise VCT PLC, which are managed by Albion Ventures, and is chief executive officer of Albion Community Power PLC. He read modern languages at Oxford University. He is a Member of Council of the BVCA and is a member of the Audit Committee of the University College London. He is also a director of UCL Business, the university technology transfer arm.
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 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, he spent five years at N M Rothchild & 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.
Dr Andrew Elder, MA, FRCS, He 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.
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 Albion Ventures in 2009. David has a BSc in Economics from Warwick University.
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 Director of Finance. He is also finance director of Albion Community Power PLC. He has a BA in Accountancy and Finance from Nottingham Business School.
Ed Lascelles, BA (Hons), Ed 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 Albion Ventures 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.
Dr Christoph Ruedig, MBA, He 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. Most recently he has 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 October 2011. 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 at KPMG and subsequently worked in corporate finance at Credit Suisse First Boston and ING Barings. Since joining Albion Ventures in 2005, Robert has assisted in the workout of portfolios formerly managed by other fund managers (now named Kings Arms Yard VCT PLC and Crown Place VCT PLC) and is responsible for investments primarily in the advanced manufacturing 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, 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 graduated from Cambridge University with a first class degree in economics and is a Chartered Surveyor.
| As at 31 December 2013 | As at 31 December 2012 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| % 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 Holdings Limited | 13.1 | 50.0 | 1,306 | 2 | 1,308 | – | – | – | 2 |
| Alto Prodotto Wind Limited | 11.1 | 50.0 | 1,000 | 264 | 1,264 | 1,000 | – | 1,000 | 264 |
| The Street by Street Solar Programme Limited | 10.0 | 50.0 | 1,000 | 237 | 1,237 | 1,000 | – | 1,000 | 237 |
| Regenerco Renewable Energy Limited | 9.8 | 50.0 | 935 | 62 | 997 | 935 | – | 935 | 62 |
| Bravo Inns II Limited | 5.0 | 50.0 | 800 | 7 | 807 | 400 | (1) | 399 | 8 |
| Dragon Hydro Limited | 17.2 | 30.0 | 736 | – | 736 | 247 | – | 247 | – |
| AVESI Limited | 14.8 | 50.0 | 460 | – | 460 | 460 | – | 460 | – |
| Greenenerco Limited | 8.6 | 50.0 | 300 | – | 300 | 300 | – | 300 | – |
| Green Highland Renewables | |||||||||
| (Ledgowan) Limited(i) | – | – | 186 | – | 186 | – | – | – | – |
| Erin Solar Limited | 5.7 | 50.0 | 160 | – | 160 | – | – | – | – |
| Harvest AD Limited(i) | – | – | 70 | – | 70 | – | – | – | – |
| Total asset-backed unquoted investments | 6,953 | 572 | 7,525 | 4,342 | (1) | 4,341 | 573 | ||
| High growth unquoted investments | |||||||||
| Elateral Group Holdings Limited | 37.7 | 37.7 | 2,343 | 2,597 | 4,941 | 2,243 | 2,021 | 4,264 | 577 |
| Atego Group Limited(ii) | 9.5 | 9.5 | 948 | 1,986 | 2,934 | 960 | 708 | 1,667 | 1,279 |
| Sift Limited | 40.2 | 40.2 | 3,274 | (637) | 2,637 | 3,271 | (2,144) | 1,127 | 1,507 |
| Cluster Seven Ltd | 28.6 | 28.6 | 2,218 | 44 | 2,263 | 2,218 | (458) | 1,761 | 502 |
| Lab M Holdings Limited | 26.4 | 26.4 | 858 | 421 | 1,279 | 690 | 53 | 743 | 368 |
| Hilson Moran Holdings Limited | 15.0 | 50.0 | 675 | 555 | 1,230 | 1,065 | 1 | 1,066 | 632 |
| Xention Limited | 5.1 | 5.1 | 608 | 194 | 801 | 608 | (213) | 395 | 406 |
| Academia Inc | 3.7 | 3.7 | 351 | 440 | 791 | 351 | 392 | 743 | 48 |
| Perpetuum Limited | 12.8 | 12.8 | 1,365 | (734) | 630 | 1,314 | (953) | 361 | 218 |
| Proveca Limited | 12.1 | 33.7 | 572 | 35 | 607 | 215 | – | 215 | 35 |
| Symetrica Limited | 3.4 | 3.4 | 309 | 244 | 554 | 279 | 195 | 474 | 50 |
| Anthropics Technologies Limited | 12.4 | 12.4 | – | 502 | 502 | – | – | – | 502 |
| MyMeds&Me Limited | 7.3 | 20.0 | 365 | 18 | 383 | – | – | – | 18 |
| Celoxica Holdings plc Antenova Limited |
4.4 12.3 |
4.4 12.3 |
513 1,543 |
(157) (1,188) |
356 355 |
413 1,543 |
(29) (255) |
384 1,288 |
(128) * (933) |
| Haemostatix Limited | 18.9 | 18.9 | 1,392 | (1,052) | 340 | 1,330 | (772) | 558 | (280) |
| Abcodia Limited | 6.7 | 21.4 | 266 | 1 | 267 | 235 | – | 235 | 1 |
| Aridhia Informatics Limited | 0.8 | 6.7 | 250 | 2 | 252 | – | – | – | 2 |
| Relayware Limited | 1.1 | 11.6 | 232 | 6 | 238 | – | – | – | 6 |
| UniServity Limited(iii) | 93.6 | 93.6 | 3,810 | (3,710) | 100 | 3,710 | (1,656) | 2,054 | (2,054) |
| Cisiv Limited | 0.9 | 9.1 | 97 | 1 | 98 | – | – | – | 1 |
| Clear2Pay NV | 0.1 | 0.1 | 129 | (46) | 83 | 129 | (61) | 68 | 15 |
| Silent Herdsman Holdings Limited | 1.9 | 18.9 | 82 | – | 82 | – | – | – | – |
| The Wentworth Wooden Jigsaw | |||||||||
| Company Limited | 5.4 | 5.4 | – | 73 | 73 | – | – | – | 73 |
| TeraView Limited | 1.0 | 1.0 | 1,197 | (1,184) | 13 | 1,197 | (1,184) | 13 | – |
| Xtera Communications Inc | 0.9 | 0.9 | 85 | (75) | 10 | 85 | – | 85 | (75) |
| Oxonica Limited(iv) | 2.1 | 2.1 | 185 | (184) | 1 | 185 | (185) | – | 1 |
| De Novo Pharmaceuticals Limited(iv) | 0.0 | 0.0 | – | 1 | 1 | – | – | – | 1 |
| Furzeland Limited(iv) | – | – | – | 1 | 1 | – | – | – | 1 |
| Keronite Group Limited(iv) Lectus Therapeutics Limited(iv) |
1.1 4.5 |
1.1 4.5 |
– – |
1 1 |
1 1 |
– – |
– – |
– – |
1 1 |
| Total high growth unquoted investments | 23,667 | (1,843) | 21,824 | 22,041 | (4,540) 17,501 | 2,774 | |||
| Quoted investments | |||||||||
| Oxford Immunotec Global PLC (NASDAQ) | 1,524 | 3,031 | 4,555 | 1,476 | 2,267 | 3,743 | 765 | ||
| Total quoted investments | 1,524 | 3,031 | 4,555 | 1,476 | 2,267 | 3,743 | 765 | ||
| Total fixed asset investments | 32,144 | 1,760 | 33,904 | 27,859 | (2,274) | 25,585 | 4,112 | ||
| Movement in loan stock accrued interest | (15) | ||||||||
| Unrealised gains | 4,097 | ||||||||
| Realised gain from disposal of fixed asset investments | 3 | ||||||||
| Realised loss from disposal of current asset investments | (50) | ||||||||
| Realised gain from current asset escrow receipts from previously sold investments/distributions from investments in liquidation | 30 | ||||||||
| Total gains on investments as per Income statement | 4,080 |
* Antenova Limited change in the year is mainly attributable to a dividend distribution of £797,000
(i) Early stage investment of convertible loan stock.
(ii) Loan stock denominated in US\$.
(iii) As permitted by FRS 2 "Accounting for Subsidiary Undertakings", holdings in excess of 50 per cent. of the equity of an investment company may be excluded from consolidation where the holding is held exclusively for subsequent resale. The results of UniServity Limited, where the Company holds in excess of 50 per cent. of that company's equity are, therefore, excluded from consolidation as the interest in UniServity Limited is held exclusively for subsequent resale and has not previously been consolidated.
(iv) Nominal valuations.
The comparative cost and valuations for 31 December 2012 do not agree to the Annual Report and Financial Statements for the year ended 31 December 2012 as the above list does not include brought forward investments that were fully disposed of in the year.
| As at 31 December 2013 As at 31 December 2012 |
|||||||
|---|---|---|---|---|---|---|---|
| Current asset investments | Cost(2) £'000 |
Cumulative movement in value £'000 |
Value £'000 |
Cost(2) £'000 |
Cumulative movement in value £'000 |
Change in value for the Value year(3) £'000 £'000 |
|
| Close Brothers Limited fixed term deposit | |||||||
| 3.0% to 18/03/14 The Co-operative Bank p.l.c. fixed term deposit |
3,500 | – | 3,500 | 3,500 | – | 3,500 – |
|
| 1.5625% to 09/01/14 Total current asset investments |
250 3,750 |
– – |
250 3,750 |
– 3,500 |
– – |
– – 3,500 – |
|
| Fixed asset realisations in the year to 31 December 2013 | Cost(2) £'000 |
Opening carrying value(3) £'000 |
Disposal proceeds £'000 |
Realised gain/(loss) |
£'000 | Gain/(loss) on opening or acquired value £'000 |
|
| Hilson Moran Holdings Limited (loan repayment) | 390 | 468 | 486 | 96 | 18 | ||
| Allergy Therapeutics Limited (AIM) Isango! Limited |
456 - |
140 69 |
128 66 |
(328) 66 |
(12) (3) |
||
| Total | 846 | 677 | 680 | (166) | 3 | ||
| Current asset realisations in the year to 31 December 2013 | Cost(2) £'000 |
Opening carrying value(3) £'000 |
Disposal proceeds £'000 |
Realised | loss £'000 |
Loss on opening or acquired value £'000 |
|
| Royal Bank of Scotland Group Euro Medium Term Note 6.375% 26/06/12 to 29/04/14 |
1,974 | 1,976 | 1,926 | (48) | (50) | ||
| Total | 1,974 | 1,976 | 1,926 | (48) | (50) | ||
| Realisations from current asset escrow receipts/distributions and costs from investments in liquidation in the year to 31 December 2013 |
Cost(2) £'000 |
Opening carrying value(3) £'000 |
Disposal proceeds £'000 |
Realised gain/(loss) |
£'000 | Gain/(loss) on opening or acquired value £'000 |
|
| Westchester Boxman Limited | – | – | 22 | 22 | 22 | ||
| Vivacta Limited Workshare Limited |
– – |
– – |
10 (2) |
10 (2) |
10 (2) |
||
| Total | – | – | 30 | 30 | 30 | ||
(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) 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 Holdings Limited Development and sale of brand marketing automation software. |
|||
|---|---|---|---|
| Audited results for year ended | 31 March 2013 | Investment information: | Website: www.elateral.com |
| £'000 | £'000 | ||
| Turnover | 6,105 | Income recognised in the year | – |
| Loss before tax | (1,562) | Accounting cost | 2,343 |
| Loss after tax | (1,411) | Loan stock valuation | 100 |
| Net liabilities | (1,534) | Equity valuation | 4,841 |
| Basis of valuation | Revenue multiple | Voting equity held | 37.7% |
| Oxford Immunotec Global plc A global, commercial-stage diagnostic company in the field of immunology. |
|||
| Website: www.oxfordimmunotec.com |
| Unaudited results for year ended | 31 December 2013 | Investment information: | |
|---|---|---|---|
| US\$'000 | US\$'000 | ||
| Turnover | 38,784 | Income recognised in the year | – |
| Loss before tax | (8,572) | Accounting cost | 1,524 |
| Loss after tax | (8,664) | Loan stock valuation | – |
| Net assets | 80,752 | Equity valuation | 4,555 |
| Basis of valuation | NASDAQ market bid price | Voting equity held | 2.3% |
| Website: www.atego.com | |||
|---|---|---|---|
| Audited results for year ended | 31 December 2012 | Investment information: | |
| £'000 | £'000 | ||
| Turnover | 13,360 | Income recognised in the year | 93 |
| Profit before tax | 788 | Accounting cost | 948 |
| Profit after tax | 2,938 | Loan stock valuation | 557 |
| Net assets | 9,599 | Equity valuation | 2,377 |
| Basis of valuation | Earnings multiple | Voting equity held | 9.5% |
Web based provision of online business and community management solutions.
| Website: www.sift.com | |||
|---|---|---|---|
| Audited results for year ended | 31 December 2012 | Investment information: | |
| £'000 | £'000 | ||
| Turnover | 8,038 | Income recognised in the year | 37 |
| Loss before tax | (442) | Accounting cost | 3,275 |
| Loss after tax | (438) | Loan stock valuation | 428 |
| Net liabilities | (54) | Equity valuation | 2,211 |
| Basis of valuation | Earnings multiple | Voting equity held | 40.2% |
Design and development of spreadsheet management software for risk control and compliance.
| Website: www.clusterseven.com | |||
|---|---|---|---|
| Audited results for year ended | 31 December 2012 | Investment information: | |
| £'000 | £'000 | ||
| Turnover | 3,363 | Income recognised in the year | – |
| Profit before tax | 453 | Accounting cost | 2,218 |
| Profit after tax | 702 | Loan stock valuation | 1,761 |
| Net liabilities | (2,495) | Equity valuation | 502 |
| Basis of valuation | Revenue multiple | Voting equity held | 28.6% |
Hydropower project in Scotland.
Investment information:
| The company was incorporated on 26 June 2013 and has not yet filed accounts at | Income recognised in the year | 2 |
|---|---|---|
| Companies House | Accounting cost | 1,306 |
Loan stock valuation 603 Equity valuation 705 Basis of valuation Cost reviewed for impairment Voting equity held 13.1% Other funds managed and advised by Albion Ventures LLP have invested in this company and have a combined equity holding of 50.0 per cent.
Range of microbiological testing products.
| Website: www.labm.com | |||
|---|---|---|---|
| Audited results for year ended | 31 December 2012 | Investment information: | |
| £'000 | £'000 | ||
| Turnover | 3,862 | Income recognised in the year | 13 |
| Profit before tax | 271 | Accounting cost | 858 |
| Profit after tax | 271 | Loan stock valuation | 252 |
| Net assets | 618 | Equity valuation | 1,027 |
| Basis of valuation | Earnings multiple | Voting equity held | 26.4% |
£'000
The company builds, owns and operates medium scale (100kWp to 1500kWp) wind projects in the UK.
| Audited results for year ended | 31 March 2013 | Investment information: | |
|---|---|---|---|
| £'000 | £'000 | ||
| Turnover | 448 | Income recognised in the year | 81 |
| Loss before tax | (106) | Accounting cost | 1,000 |
| Loss after tax | (106) | Loan stock valuation | 1,000 |
| Net assets | 1,295 | Equity valuation | 264 |
| Basis of valuation | Net assets supported by third party valuation | Voting equity held | 11.1% |
| Other funds managed and advised by Albion Ventures LLP have invested in this company and have a combined equity holding of 50.0 per cent. |
| The Street by Street Solar Programme Limited | |||
|---|---|---|---|
| The company installs, owns and operates domestic photovoltaic systems on homes in England. | |||
| Audited results for year ended | 30 November 2012 | Investment information: | |
| £'000 | £'000 | ||
| Turnover | 495 | Income recognised in the year | 95 |
| Loss before tax | (370) | Accounting cost | 1,000 |
| Loss after tax | (370) | Loan stock valuation | 1,000 |
| Net assets | 1,031 | Equity valuation | 237 |
| Basis of valuation | Net assets supported by third party valuation | Voting equity held | 10.0% |
| Other funds managed and advised by Albion Ventures LLP have invested in this company and have a combined equity holding of 50.0 per cent. |
| Hilson Moran Holdings Limited | |||
|---|---|---|---|
| Multi-disciplinary engineering consultancy. | |||
| Website: www.hilsonmoran.com | |||
| Audited results for year ended | 31 December 2012 | Investment information: | |
| £'000 | £'000 | ||
| Turnover | 16,381 | Income recognised in the year | 60 |
| Loss before tax | (193) | Accounting cost | 675 |
| Loss after tax | (193) | Loan stock valuation | 476 |
| Net assets | 1,590 | Equity valuation | 754 |
| Basis of valuation | Earnings multiple | Voting equity held | 15.0% |
| Other funds managed and advised by Albion Ventures LLP have invested in this company and have a combined equity holding of 50.0 per cent. |
Net assets of portfolio companies where a recent third party valuation has taken place may have a higher valuation in King's Arms Yard VCT PLC accounts than in its own, where the portfolio company does not have a policy of revaluing its fixed assets.
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 2013.
The principal activity of the Company during the year is that of a venture capital trust making investments, mainly in unquoted companies. The Company has received approval by HM Revenue & Customs ("HMRC") as a venture capital trust in accordance with 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. In order to maintain its status under Venture Capital Trust legislation, a venture capital trust company must comply on a continuing basis with the provisions of Section 274 of the Income Tax Act 2007 and further details of this can be found in the Strategic report on pages 11 and 12. Approval for the year ended 31 December 2013 is subject to review should there be any subsequent enquiry under corporation tax self assessment.
The Company was not at any time up to the date of this report a close company within the meaning of Section 439 of the Corporation Tax Act 2010.
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.
The Company's ordinary shares of 1 penny are listed on the London Stock Exchange.
The Statement of corporate governance, which is required by DTR 7.2 is set out on pages 27 to 31 and forms part of this Report.
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 15.
The Company's share capital comprises Ordinary shares which carry a right to receive dividends and each share carries one vote (except for treasury shares, which have no right to dividend and no voting rights). The Directors are not aware of any restrictions on the transfer of shares or on voting rights. On a winding up, after meeting the liabilities of the Company, the surplus assets will be paid to Ordinary shareholders in proportion to their shareholdings.
The Company's Ordinary shares are designed for individuals who are professionally advised private investors, seeking, over the long term, investment exposure to a diversified portfolio of unquoted investments. The investments are spread over a number of sectors, to produce a regular and predictable source of income together with the prospect of longer term capital growth.
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. During the year, the Company issued 209,979 new Ordinary shares, details of which can be found in note 15.
The Company is currently participating in the Albion VCTs Top Up Offers 2013/2014 for which a prospectus has recently been published, copies of which are available on the Company's website at www.albion-ventures.co.uk.
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 2013 and at the date of this Report, the Company was not aware of any beneficial interest exceeding 3 per cent. 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 2013 and up to the date of this Report.
The revenue return attributable to Shareholders for the year was £1,147,000 (2012: £28,000).
During the year, the Company paid a first dividend of 0.5 pence per share (2012: 0.5 pence per share) and a second dividend of 0.5 pence per share (2012: 0.5 pence 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 2014 to be paid on 30 April 2014 to shareholders on the register on 11 April 2014.
In accordance with "Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2009" issued by the Financial Reporting Council, 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. 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 19. 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 31 December 2013 are shown in note 21.
A summary of the principle risks faced by the Company is set out in the Strategic report on pages 13 to 15 .
The management and administration of the Company is undertaken by the Manager, Albion Ventures LLP. 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.
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.
The Manager Albion Ventures LLP, reviews the anti-bribery policies and procedures of all portfolio companies.
The Directors have considered diversity in relation to the composition of the Board and have concluded that its membership is diverse in relation to experience and balance of skills. 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 11 men and 11 women working at Albion Ventures LLP.
The Company is managed by Albion Ventures LLP and hence has no employees other than its Directors.
Directors' retirement and re-election is subject to the Articles of Association and the UK Corporate Governance Code. At the forthcoming Annual General Meeting, Thomas Chambers 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.
As provided for in the Company's Articles of Association, the Company continues to maintain Directors' and Officers' liability insurance.
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 per cent. 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 per cent. of the year end closing net asset value, for accounting periods commencing after 31 December 2011.
The Investment Management Agreement was for an initial period expiring on 31 December 2013. Thereafter it 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 per cent. of the amount invested) and to fees charged for the monitoring of investments (up to a maximum of £20,000 per annum). The maximums are increased by the Retail Prices Index each year.
At the Annual General Meeting held on 24 May 2013, 88 per cent. of the votes cast by Shareholders approved a change to the Management agreement for the inclusion of a management performance incentive fee. As the Company's net asset value per share, including the payment of dividends, for the year ended 31 December 2013 exceeds the Starting NAV of 20 pence per share as set out in the Performance Incentive Fee Arrangement; the Start Date for the arrangement has been triggered and is therefore 1 January 2014. No performance fee is due for the period ended 31 December 2013. As set out in the circular, the performance hurdle will be equal to the greater of the Starting NAV per share (which is defined as 20 pence per share) increased by the increase in RPI plus 2 per cent. per annum from the Start Date (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 the 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.
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 per cent. investment requirement for Venture Capital Trust status, the writing of new investments in accordance with the investment policy, the long term prospects of current investments, a review of the 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 considered the impact on your Company of the AIFMD, an EU Directive that came into force in July 2013 to regulate the Managers of Alternative Investment Funds. The Board has agreed to appoint Albion Ventures LLP as the Company's AIFM as required by the AIFMD. This will not impact on the day-to-day investment activities.
The Company currently conducts its affairs so that its shares can be recommended by financial intermediates 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 new investments between the Albion Ventures LLP VCTs will be in accordance with the Allocation agreement which is based, inter alia, on the ratio of funds available for investment, subject to the investment policy of each VCT and a limited number of provisions to protect each participating VCT.
The Audit Committee annually reviews and evaluates the standard and quality of service provided by the Auditor, Grant Thornton UK LLP, as well as value for money in the provision of these services.
Grant Thornton UK LLP have indicated their willingness to continue as Auditor to the Company and a resolution to re-appoint Grant Thornton UK LLP as Auditor will be proposed at the Annual General Meeting on 23 May 2014.
The Annual General Meeting will be held at the City of London Club, 19 Old Broad Street, London EC2N 1DS at 11.00am on 23 May 2014. The Notice of Annual General Meeting can be found on page 55.
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.albionventures.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.
This ordinary resolution proposes to renew the Directors' authority to allot additional shares of the Company up to an aggregate nominal amount of £214,545 which represents approximately 10 per cent. 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 17,880,000 treasury shares representing 8.5 per cent. of the total Ordinary share capital in issue as at 31 December 2013.
During the year Ordinary shares were allocated under the terms of the Dividend Reinvestment Scheme as described in detail in note 15.
Since the year ended 31 December 2013, shares were allotted under the Albion VCT Top Up Offers 2013/2014 as described in detail in note 21.
This special resolution proposes to renew the Directors' authority to allot equity securities for cash up to an aggregate nominal amount of £214,545 (being 10 per cent. of the Company's current issued share capital) without first being required to offer such securities to existing shareholders. This will enable the Company to operate its Dividend Reinvestment Scheme and also includes the sale on a non pre-emptive basis of any shares the Company holds in treasury for cash. The Directors consider that it may in certain circumstances be in the best interests of the Company to allot shares for cash otherwise than pro rata to existing shareholders.
This special resolution proposes to renew the existing power of the Company to purchase its own shares up to a maximum number of 14.99 per cent. of the total number of shares currently in issue at or between the minimum and maximum prices specified in resolution 9.
The Board considers that it may, in certain circumstances, be advantageous for the Company to be able to purchase its own shares; occasional market purchases by the Company of its own shares can enhance the net asset value per share for the Company's remaining shareholders, and the power will be exercised only if, in the opinion of the Board, a purchase by the Company of its own shares would be in the interests of the Company's shareholders and would enhance the Company's net asset value per share.
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 these resolutions is intended to apply equally to shares to be held by the Company as treasury shares in accordance with the Regulations. Up to 10 per cent. of shares in issue can be held in treasury.
During the financial year under review, the Company purchased 13,638,000 Ordinary shares all of which are held in treasury. Further information is shown in note 15.
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 proposes to permit Directors to sell treasury shares at the higher of the prevailing current share price and the price bought in at.
Resolutions numbered 7 to 10 replace the authorities given to the Directors at the Annual General Meeting held on 24 May 2013, and will expire 18 months from the date these resolutions are passed or at the conclusion of the next Annual General Meeting of the Company, whichever is the earlier.
Your Board believes that the passing of the resolutions proposed at the Annual General Meeting are in the best interests of the Company and its shareholders as a whole and unanimously recommends that you vote in favour of all the proposed resolutions, as the Directors intend to do in respect of their own beneficial shareholdings.
The Directors are responsible for preparing the Annual Report and Financial Statements in accordance with applicable law and regulations. They are also responsible for ensuring the Annual Report includes information required by the Listing Rules of the Financial Conduct Authority.
Company law requires the Directors to prepare Financial Statements for each financial year. Under that law the Directors have elected to prepare the 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 of the Company for that year.
In preparing those Financial Statements, the Directors are required to:
● select suitable accounting policies and then apply them consistently;
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions, to disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the Financial Statements comply with the Companies Act 2006. 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 the Annual Report and Financial Statements are made available on a website. Financial Statements are published on the Company's web page on the Manager's website (www.albion-ventures.co.uk) in accordance with legislation in the United Kingdom governing the preparation and dissemination of Financial Statements, and other information included in annual reports, 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 that:
– the Financial Statements, which have been prepared in accordance with applicable UK Generally Accepted Accounting Practice, give a true and fair view of the assets, liabilities, financial position and profit of the Company; and
– 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 of the principal risks and uncertainties that it faces.
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 provision of s418 of the Companies Act 2006.
By order of the Board
Company Secretary
1 King's Arms Yard London, EC2R 7AF 28 March 2014
This Statement of corporate governance, which is required by DTR 7.2, forms part of the Directors' report.
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 2012.
The Board of Kings Arms Yard VCT PLC 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 relevant provisions of the 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 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 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.
Mr Robin Field is the Chairman. All the Directors of the Company are considered independent Directors. 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, the fact that all Directors are non-executive, the size of the business and its lack of complexity, 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 Thomas Chambers will resign and offer himself for re-election.
Information regarding the terms of appointment of the nonexecutive 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 its membership is diverse in relation to experience and balance of skills.
The Board met four times during 2013 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 and to approve the terms of the Albion VCTs Top Up Offer 2013/2014.
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 authority over the management of the investment portfolio, the organisation of custodial, 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 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 of the Company amongst the Directors for the effective governance of the Company. The Board considers any skills gaps in existence and takes action to remedy these where necessary. Diversity within the Board is achieved through the appointment of directors with different sector backgrounds and skills. For any Board appointments, full consideration will be given to the matter of diversity, including gender.
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, Mr Thomas Chambers who is subject to re-election at the forthcoming Annual General Meeting, 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 Mr 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 2013; all members attended.
The independent Auditors, Grant Thornton UK LLP, attended the Audit Committee at which the Annual Report and Financial Statements for the year ended 31 December 2013 were discussed. Grant Thornton also met with the Audit Committee prior to the meeting without the presence of the Manager.
Grant Thornton have been the Company's independent Auditor since 11 October 2007.
Written terms of reference have been constituted for the Audit Committee and can be found on the Company's website at www.albion-ventures.co.uk within the 'Our Funds' section by clicking on Kings Arms Yard VCT PLC.
During the year under review, the Audit Committee discharged its responsibilities including:
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 discussed with the external Auditor at the audit planning meeting 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 period.
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 a review of several iterations 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 performance, business model and strategy.
The Audit 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 and effectiveness of audit procedures as well as the robustness of their quality assurance procedures. In advance of each audit, the Audit Committee obtains confirmation from the external Auditor that they are independent and of the level of non-audit fees, if any, earned by them and their affiliates.
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 2013, 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 Grant Thornton UK LLP in the financial year to 31 December 2013. The Audit Committee considers Grant Thornton UK 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 Grant Thornton UK LLP is re-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:
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 ensure 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 and 24. 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 23 May 2014 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 are able to access the latest information on the Company via the Albion Ventures LLP website www.albionventures.co.uk under the "Our Funds" section by clicking on Kings Arms Yard VCT PLC.
For help relating to dividends payments, shareholdings, share certificates or changes to personal details please contact Computershare Investor Services PLC:
Tel: 0870 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.
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.
The Company's shares are quoted 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 Senior Independent Director and the appointment of separate Remuneration and Nomination Committees, the Company has complied throughout the year ended 31 December 2013 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 28 March 2014
This report is submitted in accordance with Section 420 of the Companies Act 2006 ("the Act") and describes how the Board has applied the principles relating to the Directors' remuneration. As required by the Act, ordinary resolutions will be proposed at the Annual General Meeting of the Company to be held on 23 May 2014 for the approval of the Directors' Remuneration Policy and the Annual Remuneration Report as set out below.
The Company's independent Auditor, Grant Thornton UK 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.
The Board has reviewed the level of Directors' fees, particularly in respect of the enlarged Company following the merger of Kings Arms Yard VCT 2 PLC, and concluded that to reflect the increase in the amount and quality of work required of the Directors it was appropriate, with the exception of the Chairman, to increase Directors' fees by £2,500 with effect from 1 January 2014.
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.
In accordance with the new reporting requirements, an Ordinary resolution for the approval of the Remuneration policy of the Company, to remain in force for a three year period, will be put to the members at the Annual General Meeting and will be effective from that date.
There are no notice periods stipulated in the service contracts or appointment letters with any of the Directors. No compensation is payable to Directors on leaving office. 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'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. Directors' fees payable during the year totalled £70,000 (2012: £70,000) as set out below and in note 6 to the Financial Statements.
In addition to Directors' remuneration, the Company pays an annual premium in respect of Directors' & Officers' Liability Insurance of £10,000 (2012: £10,000).
Save for the increase in Directors' fees as explained above and assuming this policy is approved by Shareholders at the forthcoming Annual General Meeting; it is the intended that this policy will continue to apply in the forthcoming financial year and in subsequent years. An ordinary resolution to approve the Directors' Remuneration policy will be put to shareholders at least once every three years.
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 23 May 2014, Mr Thomas Chambers 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, 94% 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.
As the Company has no employees other than the Directors, it is not considered meaningful to present a table comparing remuneration paid to employees with distributions to shareholders.
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 81.78p 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 2008. The Directors consider the FTSE All-Share Index to be the most appropriate benchmark for 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 reinvested at the share price of the Company at the time the shares were quoted ex-dividend. Transaction costs are not taken into account.
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 | |
| 2013 | 2012 | |
| £ | £ | |
| R A Field (Chairman) (1) | 22,500 | 22,500 |
| T W Chambers (2) | 17,500 | 17,500 |
| M G Fiennes | 15,000 | 15,000 |
| A P M Lamb | 15,000 –––––––––– |
15,000 –––––––––– |
| 70,000 –––––––––– |
70,000 –––––––––– |
(1) £7,500 is included in the total above for R A Fields' capacity as Chairman.
(2) £2,500 is included in the total above for T W Chambers' capacity as Audit Committee Chairman.
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:
| 31 December | 31 December | |
|---|---|---|
| 2013 | 2012 | |
| R A Field (Chairman) | 208,993 | 208,993 |
| M G Fiennes | 132,500 | 132,500 |
| T W Chambers | 383,781 | 383,781 |
| A P M Lamb | 121,182 –––––––––––– |
118,796 –––––––––––– |
| 846,456 –––––––––––– |
844,070 –––––––––––– |
|
There have been no changes in the holdings of the Directors between 31 December 2013 and the date of this report.
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.
Robin Field has made an application for £10,000 worth of Kings Arms Yard VCT PLC shares for the current tax year under the Albion VCTs Top Up Offers 2013/2014 prospectus and these shares are due to be allotted to him on 5 April 2014. Robin Field also intends to apply for £110,000 worth of shares under the Offers for the next tax year.
The Directors' remuneration report was approved by the Board of Directors and signed on its behalf by order of the Board.
Company Secretary
1 King's Arms Yard London EC2R 7AF 28 March 2014
We have audited the Financial Statements of Kings Arms Yard VCT PLC for the year ended 31 December 2013 which comprise the Income statement, Balance sheet, Reconciliation of movements in shareholders' funds, Cash flow statement and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
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.
As explained more fully in the Directors' responsibilities statement set out on page 25, 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 Auditing Practices Board's Ethical Standards for Auditors.
A description of the scope of an audit of Financial Statements is provided on the Financial Reporting Council's website at www.frc.org.uk/apb/scope/private.cfm.
Our audit approach was based on a thorough understanding of the Company's business and is risk-based. The day-to-day management of the Company's investment portfolio, the custody of its investments and the maintenance of the Company's accounting records is outsourced to a third-party service provider. Accordingly, our audit work is focussed on obtaining an understanding of, and evaluating, internal controls at the Company and the third-party service provider, and inspecting records and documents held by the third-party service provider. We undertook substantive testing on significant transactions, balances and disclosures, the extent of which was based on various factors such as our overall assessment of the control environment, the effectiveness of controls over individual systems and the management of specific risks. Our audit approach included the use of the work of auditor's experts to assist with the audit of the valuation of investments, in particular challenging the reasonableness of both the valuation model used and the key assumptions made. We have evaluated the adequacy of the work of these experts in respect of our audit.
We apply the concept of materiality in planning and performing our audit, in evaluating the effect of any identified misstatements and in forming our opinion. For the purpose of determining whether the Financial Statements are free from material misstatement we define materiality as the magnitude of a misstatement or an omission from the Financial Statements or related disclosures that would make it probable that the judgement of a reasonable person, relying on the information would have been changed or influenced by the misstatement or omission. We also determine a level of performance materiality which we use to determine the extent of testing needed to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the Financial Statements as a whole.
We established materiality for the Financial Statements as a whole to be £392,000, which is 1 per cent. of the Company's net assets. For the Income statement we determined that misstatements, for a lesser amount than materiality for the Financial Statements as a whole, would make it probable that the judgement of a reasonable person, relying on the information, would have been changed or influenced by a misstatement or omission. Accordingly, we established materiality for the Income statement to be £98,000.
We have determined the threshold at which we communicate misstatements to the Audit Committee to be £19,600. In addition, we communicate misstatements below that threshold that, in our view, warrant reporting on qualitative grounds.
Without modifying our opinion, we highlight the following matters that are, in our judgement, likely to be most important to users' understanding of our audit. Our audit procedures relating to these matters were designed in the context of our audit of the Financial Statements as a whole and not to express an opinion on individual transactions, balances or disclosures.
Investments are the largest asset in the Financial Statements and they are designated as being at fair value through profit or loss in accordance with FRS 26, "Financial instruments: recognition and measurement". Measurement of the value of unquoted investments includes significant assumptions and judgements. We therefore identified the valuation of unquoted investments as the significant risk requiring special audit consideration.
Our audit work included, but was not restricted to; obtaining an understanding of how the valuations were performed by the independent investment manager, Albion Ventures LLP; consideration of whether the valuations were made in accordance with published guidance, in particular, the International Private Equity and Venture Capital Valuation Guidelines; discussions with the
independent investment manager; reviewing and challenging the reasonableness of both the valuation model used and the assumptions made by the independent investment manager including corroboration of financial inputs to investee management accounts and other publicly available data; verification that the change in the fair value of the investments had been correctly recognised in the Income statement and an assessment of the effectiveness of the Audit Committee's review and approval of the valuation of the investments.
The Company's accounting policy on the valuation of unquoted investments is included in note 1 and its disclosures about unquoted investments held at the year-end are included in note 11.
In our opinion the Financial Statements:
In our opinion:
We have nothing to report in respect of the following:
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 were 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:
Christopher Smith (Senior Statutory Auditor) for and on behalf of Grant Thornton UK LLP Statutory Auditor, Chartered Accountants London 28 March 2014
| Year ended 31 December 2013 | Year ended 31 December 2012 | ||||||
|---|---|---|---|---|---|---|---|
| Revenue | Capital | Total | Revenue | Capital | Total | ||
| Note | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Gains on investments | 2 | – | 4,080 | 4,080 | – | 6,964 | 6,964 |
| Investment income | 3 | 1,624 | – | 1,624 | 511 | – | 511 |
| Investment management fees | 4 | (190) | (571) | (761) | (175) | (526) | (701) |
| Other expenses | 5 | (289) | – | (289) | (273) | – | (273) |
| Foreign exchange rate gain/(cost) movement | 5 | 2 –––––––––– |
– –––––––––– |
2 –––––––––– |
(35) –––––––––– |
– –––––––––– |
(35) –––––––––– |
| Return on ordinary activities before tax | 1,147 | 3,509 | 4,656 | 28 | 6,438 | 6,466 | |
| Tax on ordinary activities | 7 | – –––––––––– |
– –––––––––– |
– –––––––––– |
– –––––––––– |
– –––––––––– |
– –––––––––– |
| Return attributable to shareholders | 1,147 –––––––––– |
3,509 –––––––––– |
4,656 –––––––––– |
28 –––––––––– |
6,438 –––––––––– |
6,466 –––––––––– |
|
| Basic and diluted return per | |||||||
| share (pence)* | 9 | 0.58 –––––––––– |
1.77 –––––––––– |
2.35 –––––––––– |
– –––––––––– |
3.10 –––––––––– |
3.10 –––––––––– |
* excluding treasury shares
The accompanying notes on pages 40 to 54 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 are no recognised gains or losses other than the results for the year disclosed above. Accordingly a Statement of total recognised gains and losses has not been prepared.
The difference between the reported profit 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 2013 | 31 December 2012 | |
|---|---|---|
| Note | £'000 | £'000 |
| Fixed asset investments 11 |
33,904 –––––––––––– |
25,794 –––––––––––– |
| Current assets | ||
| Trade and other debtors 13 |
801 | 1,505 |
| Current asset investments 13 |
3,750 | 5,476 |
| Cash at bank and in hand 17 |
1,225 –––––––––––– |
6,697 |
| 5,776 | –––––––––––– 13,678 |
|
| Creditors: amounts falling due within one year 14 |
(418) –––––––––––– |
(642) –––––––––––– |
| Net current assets | 5,358 –––––––––––– |
13,036 –––––––––––– |
| Net assets | 39,262 –––––––––––– |
38,830 –––––––––––– |
| Capital and reserves | ||
| Called up share capital 15 |
2,099 | 2,097 |
| Share premium | 82 | 27 |
| Investment holding reserve | 1,711 | (2,569) |
| Other distributable reserve | 35,370 –––––––––––– |
39,275 –––––––––––– |
| Total equity shareholders' funds | 39,262 –––––––––––– |
38,830 –––––––––––– |
| Basic and diluted net asset value per share (pence)* 16 |
20.45 –––––––––––– |
18.90 –––––––––––– |
* excluding treasury shares
The accompanying notes on pages 40 to 54 form an integral part of these Financial Statements.
The Financial Statements were approved by the Board of Directors and authorised for issue on 28 March 2014 and were signed on its behalf by:
Robin Field Chairman Company number: 03139019
| Called-up | Share | Investment | Other | ||
|---|---|---|---|---|---|
| share | premium | holding | distributable | ||
| capital | account | reserve | reserve | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | |
| As at 31 December 2012 | 2,097 | 27 | (2,569) | 39,275 | 38,830 |
| Loss for the period on investments | – | – | – | (17) | (17) |
| Transfer of previously unrealised losses on disposal of | |||||
| investments | – | – | 183 | (183) | – |
| Investment holding gain on valuation of investments | – | – | 4,097 | – | 4,097 |
| Investment management fee allocated to capital | – | – | – | (571) | (571) |
| Purchase of own shares into treasury | – | – | – | (2,317) | (2,317) |
| Surplus of accrued merger costs | – | 22 | – | – | 22 |
| Shares issued under the Dividend Reinvestment Scheme | 2 | 33 | – | – | 35 |
| Revenue gain on ordinary activities after taxation | – | – | – | 1,147 | 1,147 |
| Net dividends paid | – –––––––––– |
– –––––––––– |
– –––––––––– |
(1,964) –––––––––– |
(1,964) –––––––––– |
| At 31 December 2013 | 2,099 –––––––––– |
82 –––––––––– |
1,711 –––––––––– |
35,370 –––––––––– |
39,262 –––––––––– |
| At 31 December 2011 | 2,095 | – | (4,984) | 37,875 | 34,986 |
| Return for the period on investments | – | – | – | 5,585 | 5,585 |
| Transfer of previously unrealised losses on disposal of | |||||
| investments | – | – | 1,035 | (1,035) | – |
| Investment holding gain on valuation of investments | – | – | 1,379 | – | 1,379 |
| Investment management fee allocated to capital | – | – | – | (526) | (526) |
| Purchase of own shares into treasury | – | – | – | (633) | (633) |
| Shares issued under the Dividend Reinvestment Scheme | 2 | 27 | – | – | 29 |
| Revenue gain on ordinary activities after taxation | – | – | – | 28 | 28 |
| Net dividends paid | – –––––––––– |
– –––––––––– |
– –––––––––– |
(2,017) –––––––––– |
(2,017) –––––––––– |
| At 31 December 2012 | 2,097 –––––––––– |
27 –––––––––– |
(2,569) –––––––––– |
39,275 –––––––––– |
38,830 –––––––––– |
The accompanying notes on pages 40 to 54 form an integral part of these Financial Statements.
Unrealised gains and losses arising on investments held at fair value are transferred to the investment holding reserve.
The total distributable reserves are £35,370,000 (2012: £36,706,000), comprising other distributable reserve net of investment holding losses.
| Note | Year ended 31 December 2013 £'000 |
Year ended 31 December 2012 £'000 |
|---|---|---|
| Net cash flow from operating activities 18 |
483 –––––––––––– |
(350) –––––––––––– |
| Capital expenditure and financial investments | ||
| Purchase of fixed asset investments | (4,508) | (6,296) |
| Disposal of fixed asset investments | 680 | 10,360 |
| Cash received from investments previously sold or written off | 420 –––––––––––– |
404 –––––––––––– |
| Net cash flow from investing activities | (3,408) –––––––––––– |
4,468 –––––––––––– |
| Management of liquid resources | ||
| Purchase of current asset investments | (250) | (5,474) |
| Disposal of current asset investments | 1,926 –––––––––––– |
1,976 –––––––––––– |
| Net cash flow from liquid resources | 1,676 –––––––––––– |
(3,498) –––––––––––– |
| Equity dividends paid (net of costs of issuing shares under the | ||
| Dividend Reinvestment Scheme and unclaimed dividends)* | (1,906) –––––––––––– |
(2,012) –––––––––––– |
| Net cash flow before financing | (3,155) –––––––––––– |
(1,392) –––––––––––– |
| Financing | ||
| Cost of Merger (paid on behalf of the Company and Kings Arms | ||
| Yard VCT 2 PLC) | – | (37) |
| Purchase of own shares (including costs) 15 |
(2,317) –––––––––––– |
(632) –––––––––––– |
| Net cash flow from financing | (2,317) –––––––––––– |
(669) –––––––––––– |
| Cash flow in the year 17 |
(5,472) –––––––––––– |
(2,061) –––––––––––– |
The accompanying notes on pages 40 to 54 form an integral part of these Financial Statements.
* The equity dividends paid shown in the cash flow are different to the dividends posted to reserves due to the release of dividend creditors recoverable by the Company and the non-cash effect of the Dividend Reinvestment Scheme.
A summary of the principal accounting policies which have been applied consistently in the current and in prior periods, is set out below.
The Financial Statements have been prepared in accordance with the historical cost convention, modified to include the revaluation of investments, in accordance with applicable UK law and accounting standards and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' ("SORP") issued by The Association of Investment Companies ("AIC") in January 2009. The accounts are prepared on a going concern basis.
As permitted by FRS 2 "Accounting for Subsidiary Undertakings", holdings in excess of 50 per cent. of the equity of a portfolio company may be excluded from consolidation where the holding is held exclusively for subsequent resale.
The results of UniServity Limited, where the Company holds in excess of 50 per cent. of that company's equity are, therefore, excluded from consolidation as the interest in UniServity Limited is held exclusively for subsequent resale and has not previously been consolidated.
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.
Upon initial recognition (using trade date accounting) investments are designated by the Company as 'at fair value through profit or loss' and are included at their initial fair value, which is cost (excluding expenses incidental to the acquisition which are written off to the Income statement).
Subsequently, the investments are valued at 'fair value', which is measured as follows:
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:
It is not the Company's policy to exercise control or significant influence over portfolio companies. Therefore, in accordance with the exemptions under FRS 9 "Associates and Joint Ventures", those undertakings in which the Company holds more than 20 per cent., but less than 50 per cent., of the equity of an investment company, and the investment company is not a subsidiary, are not regarded as associated undertakings.
Contractual future contingent receipts on disposal of fixed asset investments held as current assets are designated at fair value through profit or loss and are subsequently measured at fair value.
In accordance with FRS 26, fixed term deposits used for cash management are designated as fair value through profit or loss. These investments are classified as current asset investments as they are investments held for the short term.
Gains and losses arising from changes in the fair value of the investments are included in the Income statement for the year as a capital item and are allocated to Investment holding reserves.
Dividends receivable on quoted equity shares are recognised on the ex-dividend date. Income receivable on unquoted equity and non-equity shares and loan notes is recognised when the Company's right to receive payment and expect settlement is established. Fixed income returns on non-equity shares and debt securities are recognised on an effective interest rate basis, provided there is no reasonable doubt that payment will be received in due course. Income from fixed interest securities and deposit interest is included on an effective interest basis.
All expenses, including expenses incidental to the acquisition or disposal of an investment, are accounted for on an accruals basis and are charged wholly to the Income statement except for 75 per cent. of management fees which are allocated to capital to the extent that these relate to an enhancement in the value of the investments. This is in line with the Board's expectation that over the long term 75 per cent. of the Company's investment returns will be in the form of capital gains.
Costs associated with the issue of shares are charged to the share premium account. Costs associated with the buy back of shares are charged to other distributable reserve, which now includes the special reserve to which these costs were previously charged.
Taxation is applied on a current basis in accordance with FRS 16 "Current tax". Taxation associated with capital expenses is applied in accordance with the SORP. In accordance with FRS 19 "Deferred tax", deferred taxation is provided in full on timing differences that result in an obligation at the Balance sheet date to pay more tax or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the Financial Statements. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered.
The Directors have considered the requirements of FRS 19 and do not believe that any provision should be made for 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.
Increases and decreases in the valuation of investments held at the year end against cost are included in this reserve.
The special reserve, treasury share reserve and profit and loss account have been presented as a single reserve named other distributable reserve.
In accordance with FRS 21 "Events after the balance sheet date", dividends declared by the Company and payable to equity shareholders are accounted for in the period in which the dividend has been paid or approved by shareholders at an annual general meeting.
| Year ended 31 December 2013 31 December 2012 £'000 |
Year ended £'000 |
|
|---|---|---|
| Unrealised gains on fixed asset investments held at fair value through profit or loss Unrealised gains on deferred consideration held at fair value through profit or loss |
4,097 – –––––––––––––– |
1,375 4 –––––––––––––– |
| Unrealised gains subtotal | 4,097 –––––––––––––– |
1,379 –––––––––––––– |
| Realised gains on fixed asset investments held at fair value through profit or loss Realised losses on current asset investments held at fair value through profit or loss Realised gains in respect of escrow receipts from previously sold investments and |
3 (50) |
5,572 – |
| distributions from investments in liquidation | 30 –––––––––––––– |
13 –––––––––––––– |
| Realised (losses)/gains subtotal | (17) –––––––––––––– |
5,585 –––––––––––––– |
| 4,080 –––––––––––––– |
6,964 –––––––––––––– |
| Year ended | Year ended | |
|---|---|---|
| 31 December 2013 31 December 2012 | ||
| £'000 | £'000 | |
| Income recognised on investments held at fair value through profit or loss | ||
| Dividends | 826 | – |
| Listed fixed interest securities | 76 | 72 |
| Interest from loans to portfolio companies | 574 –––––––––––––– |
354 –––––––––––––– |
| 1,476 | 426 | |
| Income recognised on investments measured at amortised cost | ||
| Bank deposit interest | 148 –––––––––––––– |
85 –––––––––––––– |
| 1,624 –––––––––––––– |
511 –––––––––––––– |
|
Interest income earned on impaired investments at 31 December 2013 was £nil (2012: £nil).
| Year ended | Year ended | |
|---|---|---|
| 31 December 2013 31 December 2012 | ||
| £'000 | £'000 | |
| Investment management fees charged to revenue | 190 | 175 |
| Investment management fees charged to capital | 571 –––––––––––––– |
526 –––––––––––––– |
| 761 –––––––––––––– |
701 –––––––––––––– |
Further details of the Management agreement under which the investment management fee is paid are given in the Directors' report on page 23.
During the year, services with a value of £761,000 (2012: £701,000) and £50,000 (2012: £50,000) were purchased by the Company from Albion Ventures LLP in respect of management and administration fees respectively. At the financial year end, the amount due to Albion Ventures LLP in respect of these services disclosed as accruals was £195,000 (2012: £185,000).
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 2013, fees of £190,000 attributable to the investments of the Company were received pursuant to these arrangements (2012: £255,000).
Albion Ventures LLP holds 1,084 shares as a result of the fractional entitlements arising from the merger of Kings Arms Yard VCT 2 PLC on 30 September 2011. These shares will be sold for the benefit of the Company at a future date.
Albion Ventures LLP also holds 6,403 shares purchased to clear a dissenting shareholder in respect of the merger of Kings Arms Yard VCT 2 PLC on 30 September 2011.
| Year ended 31 December 2013 31 December 2012 £'000 |
Year ended £'000 |
|
|---|---|---|
| Administrative and secretarial services to the Manager | 50 | 50 |
| Directors' fees (note 6) | 68 | 75 |
| Auditor's remuneration | ||
| Fees for statutory audit of the Financial Statements (excluding VAT) | 24 | 23 |
| Fees for taxation advice (excluding VAT) | – | 3 |
| Fees for taxation compliance (excluding VAT) | – | 2 |
| Legal and professional expenses | 24 | 1 |
| Other expenses | 123 –––––––––––––– |
119 –––––––––––––– |
| 289 | 273 | |
| Foreign exchange (gain)/cost movement | (2) –––––––––––––– |
35 –––––––––––––– |
| 287 –––––––––––––– |
308 –––––––––––––– |
The Company acquired control of UniServity Limited on 19 December 2012 and for the reasons given on page 40, this investment is not consolidated. Grant Thornton UK LLP is the Auditor of both the Company and UniServity Limited. UniServity Limited's accounting reference date is 31 July. For the year ended 31 July 2013 fees for UniServity Limited in relation to audit and taxation compliance services were £17,450 (2012: £16,750) and £8,540 (2012: £4,200) respectively.
| Year ended | ||
|---|---|---|
| 31 December 2013 31 December 2012 | ||
| £'000 | £'000 | |
| Amount payable to Directors | 70 | 70 |
| National insurance | 5 | 5 |
| Tax and national insurance recovered from past directors | (7) –––––––––––––– |
– –––––––––––––– |
| 68 –––––––––––––– |
75 –––––––––––––– |
Further information regarding Directors' remuneration can be found in the Directors' remuneration report on pages 32 and 33.
| Year ended 31 December 2013 31 December 2013 £'000 |
Year ended £'000 |
|
|---|---|---|
| UK Corporation tax payable | – –––––––––––––– |
– –––––––––––––– |
| Reconciliation of profit on ordinary activities to taxation charge | ||
| Year ended | Year ended | |
| 31 December 2013 31 December 2012 | ||
| £'000 | £'000 | |
| Return on ordinary activities before taxation | 4,656 –––––––––––––– |
6,466 –––––––––––––– |
| Tax charge on profit at the standard UK corporation tax rate of 23.25% (2012: 24.5%) | (1,082) | (1,584) |
|---|---|---|
| Effects of: | ||
| Non-taxable items | 948 | 1,706 |
| Non-taxable income | 192 | – |
| Non-deductable expenses | (4) | – |
| Unutilised management expenses | (54) –––––––––––––– |
(122) –––––––––––––– |
| – | – | |
| –––––––––––––– | –––––––––––––– |
The UK government changed the rate of corporation tax from 24 per cent. to 23 per cent. with effect from 1 April 2013. The effective rate of tax for the year ended 31 December 2013 is 23.25 per cent. (91 days at 24 per cent. and 275 days at 23 per cent.). 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 trading losses of £9,918,000 (2012: £9,687,000) that are available for offset against future profits. A deferred tax asset of £2,281,000 (2012: £2,325,000) 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 | Year ended | |
|---|---|---|
| 31 December 2013 31 December 2012 | ||
| £'000 | £'000 | |
| First dividend of 0.5 pence per share paid on 25 May 2012 | – | 1,047 |
| Second dividend of 0.5 pence per share paid on 28 September 2012 | – | 1,048 |
| Unclaimed dividends returned to Company during the year | – | (78) |
| First dividend of 0.5 pence per share paid on 31 May 2013 | 992 | – |
| Second dividend of 0.5 pence per share paid on 30 September 2013 | 979 | – |
| Unclaimed dividends returned to Company during the year | (7) –––––––––––––– |
– –––––––––––––– |
| 1,964 –––––––––––––– |
2,017 –––––––––––––– |
The Directors have declared a first dividend of 0.5 pence per share for the year ending 31 December 2014, which will amount to approximately £983,000. This dividend will be paid on 30 April 2014 to shareholders on the register on 11 April 2014.
| Year ended 31 December 2013 | Year ended 31 December 2012 | |||||
|---|---|---|---|---|---|---|
| Revenue | Capital | Total | Revenue | Capital | Total | |
| Return attributable to shareholders (£'000) Weighted average shares in issue |
1,147 | 3,509 | 4,656 | 28 | 6,438 | 6,466 |
| (excluding treasury shares) Return attributable per equity share |
198,148,213 | 208,673,002 | ||||
| (pence) | 0.58 | 1.77 | 2.35 | – | 3.10 | 3.10 |
The weighted average number of Ordinary shares is calculated excluding the treasury shares of 17,880,000 (2012: 4,242,000).
There are no convertible instruments, derivatives or contingent share agreements in issue so basic and diluted return per share are the same.
On 30 September 2011, Kings Arms Yard VCT 2 PLC was placed into members' voluntary liquidation pursuant to a scheme of reconstruction under section 110 of the Insolvency Act 1986. The liquidators held the final creditors meeting on 27 December 2012 and the company was dissolved on 8 April 2013.
| 31 December 2013 31 December 2012 £'000 |
£'000 | |
|---|---|---|
| Investments held at fair value through profit or loss | ||
| Unquoted equity | 18,349 | 17,411 |
| Unquoted loan stock | 11,000 | 8,243 |
| Quoted equity | 4,555 –––––––––––––– |
140 –––––––––––––– |
| 33,904 –––––––––––––– |
25,794 –––––––––––––– |
|
| 31 December 2013 31 December 2012 | ||
| £'000 | £'000 | |
| Opening valuation | 25,794 | 23,957 |
| Purchases at cost | 4,675 | 5,148 |
| Disposal proceeds | (680) | (10,298) |
| Realised gains | 3 | 5,572 |
| Movement in loan stock accrued income | 15 | 40 |
| Unrealised gains | 4,097 –––––––––––––– |
1,375 –––––––––––––– |
| Closing valuation | 33,904 –––––––––––––– |
25,794 –––––––––––––– |
| Movement in loan stock accrued income | ||
| Opening accumulated movement in loan stock accrued income | 47 | 7 |
| Movement in loan stock accrued income | 15 –––––––––––––– |
40 –––––––––––––– |
| Closing accumulated movement in loan stock accrued income | 62 –––––––––––––– |
47 –––––––––––––– |
| Movement in unrealised losses | ||
| Opening accumulated unrealised losses | (2,569) | (4,979) |
| Transfer of previously unrealised (losses)/gains to realised reserve on disposal of investments | 170 | 1,035 |
| Movement in unrealised gains | 4,097 –––––––––––––– |
1,375 –––––––––––––– |
| Closing accumulated unrealised losses | 1,698 –––––––––––––– |
(2,569) –––––––––––––– |
| Historical cost basis | ||
| Opening book cost | 28,315 | 28,928 |
| Purchases at cost | 4,675 | 5,148 |
| Sales at cost | (846) –––––––––––––– |
(5,761) –––––––––––––– |
| Closing book cost | 32,144 –––––––––––––– |
28,315 –––––––––––––– |
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.
All fixed asset investments are held at fair value through profit or loss. Loan stocks of £8,238,000 and £661,000 yield a fixed and floating rate of interest respectively. Loan stocks of £2,101,000 are non-interest bearing.
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.
Unquoted investments are valued in accordance with the IPEVCV guidelines as follows:
| £'000 |
|---|
| 4,826 |
| 8,245 |
| 5,457 |
| 399 |
| 6,101 |
| 557 |
| 69 –––––––––––––– |
| 25,654 –––––––––––––– |
Full 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 2012 and 31 December 2013.
| Change in investment valuation methodology (2012 to 2013) | Value as at 31 December 2013 £'000 |
Explanatory note |
|---|---|---|
| Cost reviewed for impairment to net assets supported by | ||
| third party valuation | 3,498 | Third party valuations prepared |
| Cost reviewed for impairment to earnings multiple | 1,230 | Trading update since last investment round |
| Price of recent investment to revenue multiple | 630 | Trading update since last investment round |
| Earnings multiple to cost reviewed for impairment | 100 | More recent information available |
The valuation will be the most appropriate valuation methodology for an investment within its market, with regard to the financial health of the investment and the IPEVCV Guidelines. The Directors believe that, within these parameters, the methods used are the most appropriate methods of valuation as at 31 December 2013.
FRS 29 'Financial Instruments: Disclosures' requires the Company to disclose the inputs to the valuation methods applied to its investments at fair value through profit or loss in a fair value hierarchy according to the following definitions:
| Fair value hierarchy | Definition of valuation method |
|---|---|
| Level 1 | Unadjusted quoted (bid) prices applied where an active market exists |
| Level 2 | Inputs to valuation are from observable sources and are directly or indirectly derived from prices |
| Level 3 | Inputs to valuations not based on observable market data |
Fixed asset investments at fair value through profit or loss as at 31 December 2013 are categorised in accordance with FRS 29 as follows:
| 31 December 2013 | |||||
|---|---|---|---|---|---|
| Level 1 £'000 |
Level 2 £'000 |
Level 3 £'000 |
Total £'000 |
||
| Unquoted equity | – | – | 18,349 | 18,349 | |
| Unquoted loan stock | – | – | 11,000 | 11,000 | |
| Quoted equity | 4,555 | – | – | 4,555 | |
| –––––––––––––– 4,555 –––––––––––––– |
–––––––––––––– – –––––––––––––– |
–––––––––––––– 29,349 –––––––––––––– |
–––––––––––––– 33,904 –––––––––––––– |
Fixed asset investments at fair value through profit or loss as at 31 December 2012 are categorised in accordance with FRS 29 as follows:
| 31 December 2012 | |||||
|---|---|---|---|---|---|
| Level 1 | Level 2 | Level 3 | Total | ||
| £'000 | £'000 | £'000 | £'000 | ||
| Unquoted equity | – | – | 17,411 | 17,411 | |
| Unquoted loan stock | – | – | 8,243 | 8,243 | |
| Quoted equity | 140 –––––––––––––– |
– –––––––––––––– |
– –––––––––––––– |
140 –––––––––––––– |
|
| 140 –––––––––––––– |
– –––––––––––––– |
25,654 –––––––––––––– |
25,794 –––––––––––––– |
| 31 December 2013 31 December 2012 | ||
|---|---|---|
| Level 3 reconciliation | £'000 | £'000 |
| Opening valuation | 25,654 | 23,654 |
| Purchases at cost | 4,627 | 5,148 |
| Disposal proceeds | (552) | (9,917) |
| Realised net gains on disposal | 162 | 4,790 |
| Transfer to Level 1 (Quoted equity) | (3,743) | – |
| Movement in loan stock accrued income | 15 | 40 |
| Investment holding gains | 3,186 –––––––––––––– |
1,939 –––––––––––––– |
| Closing valuation | 29,349 –––––––––––––– |
25,654 –––––––––––––– |
FRS 29 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 42 per cent. of the unquoted portfolio (Level 3) is based on third party independent evidence, price of recent investment and cost reviewed for impairment. The Directors believe that changes to reasonable possible alternative assumptions for the valuation of the remaining part of the portfolio could result in an increase of £1,635,000 or a decrease of £1,679,000 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 Company has interests of greater than 20 per cent. 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 2013 as described below.
| Number of shares |
Proportion of class |
|||
|---|---|---|---|---|
| Company | Class of share | |||
| Academia Inc | Preferred shares | 774,400 | 23.2% | |
| Cluster Seven Ltd | Ordinary shares | 5,999,437 | 28.6% | |
| Elateral Group Holdings Limited | Ordinary shares | 17,380,462 | 37.7% | |
| Lab M Holdings Limited | A Ordinary shares (voting rights diluted) | 2,280,000 | 60.0% | |
| B Ordinary shares (no voting rights) | 600 | 60.0% | ||
| Preferred ordinary shares (no voting rights) | 389,940 | 52.3% | ||
| Proveca Limited | D Ordinary shares | 24,793 | 35.8% | |
| Sift Limited | Ordinary shares | 31,984,427 | 40.2% | |
| UniServity Limited | Ordinary shares | 2,024,405 | 93.2% | |
| A Ordinary shares | 87,152 | 100.0% | ||
| B Ordinary shares | 45,500 | 100.0% |
As permitted by FRS 9, the investments listed above, which are measured at fair value, are held as part of an investment portfolio and their value to the Company is as part of a portfolio of investments. Therefore, these investments are not considered to be associated undertakings.
As permitted by FRS 2, UniServity Limited, whose holding is in excess of 50 per cent. of that company's equity, is excluded from consolidation as the interest in UniServity Limited is held exclusively for subsequent resale and has not previously been consolidated with the Company.
There is a deficit of £212,000 in respect of the aggregate share capital and reserves of UniServity Limited as at 31 July 2013 and a loss after tax of £328,000 for the year then ended. Details of transactions and balances with UniServity Limited are given in note 22. The investment in UniServity Limited has been included at a fair value that is £3,710,000 less than its original cost. No dividends were received during, or are receivable for the year ended 31 December 2013 from UniServity Limited.
| 31 December 2013 31 December 2012 | ||
|---|---|---|
| £'000 | £'000 | |
| Trade and other receivables/debtors greater than one year | – | 503 |
| Trade and other receivables/debtors less than one year | 657 | 938 |
| Prepayments and accrued income | 144 –––––––––––––– |
64 –––––––––––––– |
| 801 –––––––––––––– |
1,505 –––––––––––––– |
The Directors consider that the carrying amount of debtors is not materially different to their fair value.
| Current asset investments | 31 December 2013 31 December 2012 £'000 |
£'000 |
|---|---|---|
| RBS Euro Medium Term Note 6.375% 26/06/12 to 29/04/14 | – | 1,976 |
| Close Brothers Limited fixed term deposit 3.0% to 18/03/14 | 3,500 | 3,500 |
| The Co-operative Bank p.l.c. fixed term deposit 1.5625% to 09/01/14 | 250 –––––––––––––– |
– –––––––––––––– |
| 3,750 –––––––––––––– |
5,476 –––––––––––––– |
Current asset investments represent money held for investment.
| 31 December 2013 31 December 2012 | ||
|---|---|---|
| £'000 | £'000 | |
| Trade creditors | 13 | 18 |
| Accruals | 260 | 279 |
| Other creditors | 145 –––––––––––––– |
345 –––––––––––––– |
| 418 | 642 | |
| –––––––––––––– | –––––––––––––– |
The Directors consider that the carrying amount of creditors is not materially different to their fair value.
| £'000 | £'000 |
|---|---|
| 2,099 | 2,097 –––––––––––––– |
| 31 December 2013 31 December 2012 –––––––––––––– |
191,997,614 Ordinary shares of 1 penny (net of 17,880,000 treasury shares) (2012: 205,425,635).
The Company operates a share buy-back programme, as detailed in the Chairman's statement on page 6. During the year the Company purchased 13,638,000 Ordinary shares (2012: 4,242,000) representing 6.5 per cent. of the issued Ordinary share capital as at 31 December 2013, with a nominal value of £136,380 (2012: £42,420) at a cost of £2,317,000 (2012: £633,000), including stamp duty, to be held in treasury. The Company holds a total of 17,880,000 Ordinary shares in treasury, representing 8.5 per cent. of the issued Ordinary share capital as at 31 December 2013. The shares purchased for treasury were funded from other distributable reserve.
Under the terms of the Dividend Reinvestment Scheme, 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) |
Consideration received net of costs (£'000) |
Opening market price per share on allotment date (pence per share) |
|---|---|---|---|---|---|
| 31 May 2013 | 102,688 | 1 | 18.4 | 17 | 17.50 |
| 30 September 2013 | 107,291 –––––––––––––– |
1 –––––––––––––– |
18.6 | 18 –––––––––––––– |
18.00 |
| 209,979 –––––––––––––– |
2 –––––––––––––– |
35 –––––––––––––– |
The basic and diluted net asset value per share as at 31 December 2013 of 20.45 pence (2012: 18.90 pence) are based on net assets of £39,262,000 (2012: £38,830,000) divided by the 191,997,614 shares in issue (net of treasury shares) at that date (2012: 205,425,635).
| 31 December 2013 31 December 2012 | ||
|---|---|---|
| £'000 | £'000 | |
| Opening cash balances | 6,697 | 8,758 |
| Net cash flow | (5,472) –––––––––––––– |
(2,061) –––––––––––––– |
| Closing cash balances | 1,225 –––––––––––––– |
6,697 –––––––––––––– |
| 31 December 2013 31 December 2012 | |
|---|---|
| £'000 | £'000 |
| 1,147 | 28 |
| (2) | (35) |
| (571) | (526) |
| (15) | (40) |
| (80) | (17) |
| 4 | 240 –––––––––––––– |
| 483 | (350) –––––––––––––– |
| –––––––––––––– –––––––––––––– |
The Company's capital comprises Ordinary shares as described in note 15. The Company is permitted to buy back its own shares for cancellation or treasury purposes and this 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 prudent and realistic compared to prices being achieved in the market for sales of unquoted investments.
The maximum investment risk as at the Balance sheet date is the value of the fixed asset investment portfolio which is £33,904,000 (2012: £25,794,000). Fixed asset investments form 86 per cent. of the net asset value as at 31 December 2013 (2012: 66 per cent.).
More details regarding the classification of fixed asset investments are shown in note 11.
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 29 "Financial Instruments: Disclosures", 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 per cent. change based on the current economic climate. The impact of a 10 per cent. change has been selected as this is considered reasonable given the current level of volatility observed both on a historical basis and future expectations.
The sensitivity of a 10 per cent. increase or decrease in the valuation of the fixed asset investment portfolio (keeping all other variables constant) would increase or decrease the net asset value and return for the year by £3,390,000 (2012: £2,579,000).
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 a US dollar denominated security. 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.
At the year ended 31 December 2013, the Company held an investment and accrued income denominated in US dollars of £557,000 (2012: £582,000).
During the year to 31 December 2013, sterling depreciated by 2.0 per cent. (2012: depreciated by 4.3 per cent.) against the US dollar. It is difficult to forecast future changes in exchange rates, but the Company, based on the movement of US dollars over the last three years, reasonably expects that the US dollar rate could change by 2.1 per cent. If sterling depreciated by 2.1 per cent. this would affect the US dollar denominated security favourably by £12,000 and a sterling appreciation of 2.1 per cent. would affect the security adversely by £11,000.
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 £195,000 (2012: £222,000). Furthermore, it is considered that a fall of interest rates below current levels during the year would have been unlikely.
The weighted average interest rate applied to the Company's fixed rate fixed asset investments during the year was approximately 6.8 per cent. (2012: 2.7 per cent.). The weighted average period to expected maturity for the fixed rate fixed asset investments is approximately 8.1 years (2012: 9.2 years).
The Company's financial assets and liabilities as at 31 December 2013, denominated in pounds sterling, consist of the following:
| 31 December 2013 | 31 December 2012 | |||||||
|---|---|---|---|---|---|---|---|---|
| Non- | Non- | |||||||
| Fixed | Floating | interest | Fixed | Floating | interest | |||
| rate | rate | bearing | Total | rate | rate | bearing | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Unquoted equity | – | – | 18,349 | 18,349 | – | – | 17,411 | 17,411 |
| Quoted equity | – | – | 4,555 | 4,555 | – | – | 140 | 140 |
| Unquoted loan stock | 8,238 | 661 | 2,101 | 11,000 | 5,123 | 173 | 2,947 | 8,243 |
| Debtors * | – | – | 784 | 784 | – | – | 1,489 | 1,489 |
| Current liabilities | – | – | (418) | (418) | – | – | (642) | (642) |
| Cash and current asset investments |
3,831 –––––––––––– |
1,144 –––––––––––– |
– –––––––––––– |
4,975 –––––––––––– |
12,173 –––––––––––– |
– –––––––––––– |
– –––––––––––– |
12,173 –––––––––––– |
| Total net assets | 12,068 –––––––––––– |
1,805 –––––––––––– |
25,372 –––––––––––– |
39,245 –––––––––––– |
17,296 –––––––––––– |
173 –––––––––––– |
21,345 –––––––––––– |
38,814 –––––––––––– |
* The debtors 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 2013 was limited to £11,000,000 (2012: £8,243,000) of unquoted loan stock instruments, £3,500,000 fixed term deposit with Close Brothers Limited (2012: £3,500,000), £250,000 fixed term deposit with The Co-operative Bank p.l.c. (2012: £nil) and £1,225,000 (2012: £6,697,000) cash on deposit with banks.
As at the Balance sheet date, cash and liquid investments held by the Company are held with the NatWest Bank plc, Scottish Widows Bank plc (part of Lloyds Banking Group plc), Barclays Bank plc, Close Brothers Limited, The Co-operative Bank p.l.c 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 2013 (2012: £nil) and had cash of £1,225,000 (2012: £6,697,000) and current asset investments of £3,750,000 (2012: £5,476,000). Against this the Company has an investment commitment as at 31 December 2013 of £2,205,000 (2012: £188,000).
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 2013 are short term in nature and total £418,000 (2012: £642,000).
The carrying value of loan stock investments analysed by expected maturity dates is as follows:
| 31 December 2013 | 31 December 2012 | |||||||
|---|---|---|---|---|---|---|---|---|
| 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 | 1,882 | – | – | 1,882 | 301 | – | – | 301 |
| 1-2 years | 420 | – | – | 420 | 1,761 | – | – | 1,761 |
| 2-3 years | 1,033 | – | – | 1,033 | – | – | – | – |
| 3-5 years | 2,376 | – | – | 2,376 | 2,045 | 568 | – | 2,613 |
| 5 + years | 4,354 –––––––––––– |
935 –––––––––––– |
– –––––––––––– |
5,289 –––––––––––– |
3,108 –––––––––––– |
460 –––––––––––– |
– –––––––––––– |
3,568 –––––––––––– |
| Total | 10,065 –––––––––––– |
935 –––––––––––– |
– –––––––––––– |
11,000 –––––––––––– |
7,215 –––––––––––– |
1,028 –––––––––––– |
– –––––––––––– |
8,243 –––––––––––– |
Loan stock can be past due as a result of interest or capital not being paid in accordance with contractual terms.
Loan stock categorised as past due is loan stock valued at £935,000 yielding an average 8.6 per cent. which has interest past due by 9 months.
In view of the factors identified above, the Board considers that the Company is subject to low liquidity risk.
All the Company's financial assets and liabilities as at 31 December 2013 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 2013, the Company had the following financial commitments totalling £2,205,000 (2012: £188,000), 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 2013 (2012: £nil).
Since 31 December 2013, the Company has made post Balance sheet investments in the following:
On 10 March 2014, the Company announced an increase in the size of the Albion VCTs Top Up Offers 2013/2014, initially announced on 6 November 2013, in which the Company is participating. In aggregate, the six VCTs managed by Albion Ventures LLP will be aiming to raise approximately £27 million, of which the Company will be aiming to raise circa £4 million.
The funds raised by each company pursuant to its Offer will be added to the liquid resources available for investments so as to put each company into a position to take advantage of attractive investment opportunities over the next two to three years. Accordingly, the proceeds of the Offers will be applied in accordance with the respective companies' investment policy. An Investor Guide and Offers document have been sent to the shareholders and these, as well as a prospectus, has now been published and can 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 2013:
| Number of shares allotted |
Issue price (pence per share) |
Aggregate nominal value of shares (£'000) |
Consideration received (net of costs) (£'000) |
Opening market price per share on allotment date (pence per share) |
|---|---|---|---|---|
| 2,409,885 | 19.30 | 24 | 452 | 18.0 |
| 2,179,282 | 19.20 | 22 | 411 | 18.0 |
| 78,946 | 19.00 | 1 | 15 | 18.0 |
| 4,668,113 | 47 | 878 | ||
| –––––––––––––– | –––––––––––––– | –––––––––––––– –––––––––––––– |
–––––––––––––– –––––––––––––– |
During the year, the Company invested £100,000 in UniServity Limited loan stock.
Albion Ventures LLP, the Company's Manager and Company Secretary, received £16,000 from UniServity Limited in respect of monitoring and arrangement fees.
There are no other 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 23 May 2014 at 11.00am for the following purposes:
To consider and, if thought fit, to pass the following resolutions, of which numbers 1 to 7 will be proposed as ordinary resolutions and numbers 8 to 10 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 £214,545 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 7, 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 7 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 7" 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 number 9 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
Company Secretary
Registered office 1 King's Arms Yard London, EC2R 7AF 28 March 2014
Registered in England and Wales with 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;
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 21 May 2014.
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 21 May 2014. 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, 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 providers 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.
| 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 2013 | 31 December 2012 | 31 December 2011 | |
|---|---|---|---|
| (pence per share) | (pence per share) | (pence per share) | |
| Net asset value of Kings Arms Yard VCT PLC | 20.45 –––––––––––––– |
18.90 –––––––––––––– |
16.70 –––––––––––––– |
| Dividends paid to shareholders of | |||
| Kings Arms Yard VCT PLC | |||
| Dividends paid during the year | 1.00 | 1.00 | 0.67 |
| Cumulative dividend paid to 31 December 2013 | 61.33 –––––––––––––– |
60.33 –––––––––––––– |
59.33 –––––––––––––– |
| Total net asset value return (1) per 100p invested to | |||
| shareholders of Kings Arms Yard VCT PLC | |||
| (formerly SPARK VCT plc, Quester VCT PLC) | 81.78 | 79.23 | 76.03 |
| Total net asset value return including tax benefits (2) | 101.78 –––––––––––––– |
99.23 –––––––––––––– |
96.03 –––––––––––––– |
| Total net asset value return to former shareholders of: | |||
| Quester VCT 2 PLC, per 100p invested in shares of | |||
| that company | |||
| Total net asset value return | 67.88 | 65.27 | 61.99 |
| Total net asset value return including tax benefits (2) | 87.88 –––––––––––––– |
85.27 –––––––––––––– |
81.99 –––––––––––––– |
| Quester VCT 3 PLC, per 100p invested in shares of | |||
| that company | |||
| Total net asset value return | 41.47 | 38.97 | 35.82 |
| Total net asset value return including tax benefits (2) | 61.47 –––––––––––––– |
58.97 –––––––––––––– |
55.82 –––––––––––––– |
| 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 net asset value return | 37.65 | 34.38 | 30.29 |
| Total net asset value return including tax benefits (2) | 57.65 –––––––––––––– |
54.38 –––––––––––––– |
50.29 –––––––––––––– |
| Quester VCT 5 PLC (renamed SPARK VCT 3 plc), per | |||
| 100p invested in shares of that company | |||
| Total net asset value return | 48.43 | 43.66 | 27.81 |
| Total net asset value return including tax benefits (2) | 68.43 –––––––––––––– |
63.66 –––––––––––––– |
47.81 –––––––––––––– |
(1) Net asset value plus cumulative dividend per share to ordinary shareholders in the Company since the launch of the Company (then called Quester VCT plc) in April 1996.
(2) Return after 20 per cent. income tax relief but excluding capital gains deferral.
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 –––––––––––––– |
| Total dividends paid to 31 December 2013 | 61.329 |
| Net asset value as at 31 December 2013 | 20.450 –––––––––––––– |
| Total net asset value return to 31 December 2013 | 81.779 –––––––––––––– |
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 –––––––––––––– |
| Total dividends paid to 31 December 2013 | 46.920 |
| Net asset value as at 31 December 2013 | 20.959 –––––––––––––– |
| Total net asset value return to 31 December 2013 | 67.879 –––––––––––––– |
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 –––––––––––––– |
| Total dividends paid to 31 December 2013 | 21.395 |
| Net asset value as at 31 December 2013 | 20.074 –––––––––––––– |
| Total net asset value return to 31 December 2013 | 41.469 –––––––––––––– |
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 –––––––––––––– |
| Total dividends paid to 31 December 2013 | 11.462 |
| Net asset value as at 31 December 2013 | 26.188 –––––––––––––– |
| Total net asset value return to 31 December 2013 | 37.650 –––––––––––––– |
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 –––––––––––––– |
| Total dividends paid to 31 December 2013 | 10.164 |
| Net asset value as at 31 December 2013 | 38.269 –––––––––––––– |
| Total net asset value return to 31 December 2013 | 48.433 –––––––––––––– |
Kings Arms Yard VCT PLC
A member of the Association of Investment Companies
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