Albion Enterprise VCT PLC: Half-yearly report
Albion Enterprise VCT PLC
As required by the UK Listing Authority's Disclosure and Transparency Rule 4.2, Albion Enterprise VCT PLC today makes public its information relating to the Half-yearly Financial Report (which is unaudited) for the six months to 30 September 2011. This announcement was approved by the Board of Directors on 24 November 2011.
The full Half-yearly Financial Report (which is unaudited) for the six months to 30 September 2011, will shortly be sent to shareholders. Copies of the full Half-yearly Financial Report will be shown via the Albion Ventures LLP website www.albion-ventures.co.uk under the "Our Funds" section by clicking Albion Enterprise VCT PLC.
Investment objectives
The aim of Albion Enterprise VCT PLC (the 'Company') is to provide investors with a regular and predictable source of income, combined with the prospect of longer term capital growth. The Company intends to achieve this by investing around 50 per cent. of the net funds raised in an asset-based portfolio of lower risk, ungeared businesses, principally operating in the leisure sector and related areas (the ''Asset-Based Portfolio''). The balance of the net funds raised, other than funds retained for liquidity purposes, will be invested in a growth portfolio of higher growth businesses across a variety of sectors of the UK economy. These will range from lower risk, income producing businesses to higher risk technology companies (the ''Growth Portfolio''). Funds awaiting investment in Qualifying Investments or retained for liquidity purposes will be held in gilts, on deposit or invested in floating rate notes or similar instruments, in the latter two cases with banks with a Moody's credit rating of 'A' or above.
The Company's investment portfolio will thus be structured to provide a balance between income and capital growth for the longer term. The Asset-Based Portfolio is designed to provide stability and income whilst still maintaining the potential for capital growth. The Growth Portfolio is intended to provide highly diversified exposure through its portfolio of investments in unquoted UK companies.
Financial calendar
| Record date for second dividend | 3 February 2012 |
| Payment date for second dividend | 29 February 2012 |
| Financial year end | 31 March 2012 |
Financial highlights (unaudited)
| Unaudited six months ended 30 September 2011 | Unaudited six months ended 30 September 2010 | Audited year ended 31 March 2011 | |
| (pence per share) | (pence per share) | (pence per share) | |
| Net asset value | 85.40 | 88.10 | 87.13 |
| Dividends paid | 1.50 | 1.50 | 3.00 |
| Revenue return | 0.62 | 0.72 | 1.23 |
| Capital (loss)/return | (0.87) | 0.62 | 0.67 |
| Net asset value total return to shareholders since launch: | (pence per share) |
| Dividends paid during the period ended: | |
| 31 March 2008 | 0.70 |
| 31 March 2009 | 1.65 |
| 31 March 2010 | 2.00 |
| 31 March 2011 | 3.00 |
| 30 September 2011 | 1.50 |
| Total dividends paid to 30 September 2011 | 8.85 |
| Net asset value as at 30 September 2011 | 85.40 |
| Total net asset value return to 30 September 2011 | 94.25 |
In addition to the above dividends, the Company will pay a second dividend of 1.50 pence per share on 29 February 2012 to shareholders on the register at 3 February 2012.
Notes
- The dividend of 0.7 pence per share paid during the period ended 31 March 2008 and first dividend of 0.4 pence per share paid during the year ended 31 March 2009 were paid to shareholders who subscribed in the 2006/2007 offer only.
- All dividends paid by the Company are free of income tax. It is an H. M. Revenue & Customs requirement that dividend vouchers indicate the tax element should dividends have been subject to income tax. Investors should ignore this figure on their dividend voucher and need not disclose any income they receive from a VCT on their tax return.
- The net asset value of the Company is not its share price as quoted on the official list of the London Stock Exchange. The share price of the Company can be found in the Investment Companies - VCTs section of the Financial Times on a daily basis.
- Investors are reminded that it is common for shares in VCTs to trade at a discount to their net asset value.
Interim management report
Introduction
The Company's results for the six months to 30 September 2011 show a small negative return of 0.25 pence per share. This slightly disappointing result has been driven by a cautious view of two of our higher growth businesses and masks a strong performance elsewhere within the portfolio. Although income is slightly below the same period last year, as a result of the sale of our high yielding investment in Geronimo Inns, the income is ahead of the six month period to 31 March 2011. Net asset value, after payment of the first dividend of 1.50 pence per share on 31 August 2011, was 85.40 pence per share.
Investment progress and prospects
During the period some £1.9 million was invested in one new and four existing investee companies. This included £225,000 in Abcodia, a company spin-out from University College London, which owns a unique serum bank, the largest of its kind in the world, for use in disease diagnosis and screening. Meanwhile, £700,000 and £651,000 were invested in Radnor House School and Nelson House Hospital respectively as further tranches of the original investments made last year.
As regards the existing portfolio, and as referred to above, partial provisions were made against Mi-Pay (payment processing services to mobile network operators) and Masters Pharmaceuticals (international pharmaceutical distribution). Although both these businesses have broad international franchises, and Mi-Pay in particular continues to show strong growth, both companies have been behind their forecasts and required additional investment. Against that, in the growth portfolio, Process Systems Enterprise has seen good progress in its activity of process simulation, particularly in the petrochemical industry. In addition, Radnor House School, which owns and operates a new independent school on the Thames at Twickenham, opened in September and now has over twice the number of pupils originally budgeted for.
Two areas that are of particular interest for the VCT are the healthcare and environmental sectors, where progress in our companies in these areas has been promising. In addition, the VCT still has good cash resources at a time when there are a number of promising investment opportunities under review and when alternative sources of finance have become scarce.
Pie charts showing the current split in the investment portfolio by sector and by nature of the investment and the split between asset-based and growth, are attached to the end of this announcement.
Albion VCTs Linked Top Up Offer 2011/2012
The Company has announced the launch of the second Albion VCTs Linked Top Up Offer 2011/2012. In aggregate the Albion VCTs will again be aiming to raise up to £15 million across seven of the VCTs managed by Albion Ventures, of which the Company's share will be approximately £2.25 million. The proceeds for the Offer will be to provide further resources at a time when a number of attractive new opportunities are being seen. An Investor Guide and Offer Document have been sent to shareholders.
Risks and uncertainties
The outlook for the UK and international economies continues to be the key risk affecting your company. Indications are that growth has leveled off, both in the UK and in the Eurozone, which will impact some of the markets in which our investee companies operate. However, your Company's balanced mix of asset-based and high growth investments is designed to be an "all weather" portfolio, while investment risk is further mitigated through our policy of ensuring that portfolio companies have no external bank borrowings.
Other risks and uncertainties remain unchanged and are detailed in note 14.
Related party transactions
Details for material related party transactions for the reporting period can be found in note 12 to this Half-yearly Financial Report.
Results and dividends
As at 30 September 2011 the net asset value of the Company was 85.40 pence per share or £27.4 million, compared to 87.13 pence or £27.5 million on 31 March 2011. The revenue return on ordinary activities before taxation was £257,000 compared with £290,000 for the six months to 30 September 2010. The Directors declare a second dividend for the year of 1.50 pence per share, payable on 29 February 2012 to shareholders on the register as at 3 February 2012.
Maxwell Packe
Chairman
24 November 2011
Responsibility statement
The Directors, being Maxwell Packe, Lord St John of Bletso, Lady Balfour of Burleigh and Patrick Reeve, are responsible for preparing the Half-yearly Financial Report. The Directors have chosen to prepare this Half-yearly Financial Report for the Company in accordance with United Kingdom Generally Accepted Accounting Practice ("UK GAAP").
In preparing these summarised Financial Statements for the six months to 30 September 2011, we the Directors of the Company, confirm that to the best of our knowledge:
(a) the summarised set of Financial Statements has been prepared in accordance with the pronouncement on interim reporting issued by the Accounting Standards Board;
(b) the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year);
(c) the summarised set of Financial Statements gives a true and fair view in accordance with UK GAAP of the assets, liabilities, financial position and profit and loss of the Company for the six months ended 30 September 2011 and comply with UK GAAP and Companies Act 1985 and 2006 and;
(d) the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).
The accounting policies applied to the Half-yearly Financial Report have been consistently applied in current and prior periods and are those applied in the Annual Report and Financial Statements for the year ended 31 March 2011.
This Half-yearly Financial Report has not been audited or reviewed by the auditors.
By order of the Board of Directors
M Packe
Chairman
24 November 2011
Portfolio of investments
The following is a summary of qualifying fixed asset investments as at 30 September 2011:
| % voting rights | % voting rights of AVL* managed companies | Investment at cost £'000 | Cumulative movement in carrying value £'000 | Total carrying value £'000 | |
| Asset-based investments | |||||
| Bravo Inns II Limited | 14.5 | 50.0 | 1,793 | (58) | 1,735 |
| Radnor House School (Holdings) Limited | 9.8 | 50.0 | 1,700 | 24 | 1,724 |
| Nelson House Hospital Limited | 18.9 | 50.0 | 1,612 | 1 | 1,613 |
| Regenerco Renewable Energy Limited | 21.5 | 50.0 | 1,195 | - | 1,195 |
| Taunton Hospital Limited | 15.8 | 50.0 | 1,000 | 2 | 1,002 |
| Alto Prodotto Wind Limited | 23.2 | 50.0 | 1,000 | - | 1,000 |
| Greenenerco Limited | 50.0 | 50.0 | 1,000 | - | 1,000 |
| TEG Biogas (Perth) Limited | 16.4 | 50.0 | 953 | 6 | 959 |
| The Sreet by Street Solar Programme Limited | 21.5 | 50.0 | 860 | - | 860 |
| Orchard Portman Hospital Limited | 10.2 | 50.0 | 664 | 3 | 667 |
| Bravo Inns Limited | 8.4 | 50.0 | 751 | (287) | 464 |
| The Charnwood Pub Company Limited | 1.2 | 50.0 | 290 | (116) | 174 |
| AVESI Limited | 21.5 | 50.0 | 172 | - | 172 |
| CS (Norwich) Limited | 6.3 | 50.0 | 100 | 4 | 104 |
| Total asset-based investments | 13,090 | (421) | 12,669 | ||
| Growth investments | |||||
| Masters Pharmaceuticals Limited | 6.2 | 16.9 | 1,239 | (131) | 1,108 |
| Prime Care Holdings Limited | 12.5 | 49.9 | 1,016 | (123) | 893 |
| Mirada Medical Limited | 16.7 | 50.0 | 389 | 386 | 775 |
| DySIS Medical Limited | 6.2 | 16.7 | 925 | (180) | 745 |
| Opta Sports Data Limited | 2.8 | 14.2 | 653 | 3 | 656 |
| Mi-Pay Limited | 8.1 | 43.1 | 986 | (335) | 651 |
| Memsstar Limited | 5.5 | 28.1 | 384 | 44 | 428 |
| Process Systems Enterprise Limited | 3.1 | 15.9 | 295 | 112 | 407 |
| Oxsensis Limited | 3.8 | 20.6 | 503 | (217) | 286 |
| Abcodia Limited | 6.4 | 21.4 | 225 | - | 225 |
| Lowcosttravelgroup Limited | 1.0 | 26.0 | 270 | (212) | 58 |
| Total growth investments | 6,885 | (653) | 6,232 | ||
| Total qualifying investments | 19,975 | (1,074) | 18,901 |
The following is a summary of current asset investments as at 30 September 2011:
| Investment at cost £'000 | Cumulative movement in carrying value £'000 | Total carrying value £'000 | |
| Royal Skandia Collective Bond | 1,000 | 2 | 1,002 |
| Total current asset investments | 1,000 | 2 | 1,002 |
* AVL is Albion Ventures LLP
Summary income statement
| Unaudited six months ended 30 September 2011 | Unaudited six months ended 30 September 2010 | Audited year ended 31 March 2011 | ||||||||
| Note | Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | |
| (Losses)/gains on investments | 3 | - | (80) | (80) | - | 374 | 374 | - | 588 | 588 |
| Investment income | 4 | 436 | - | 436 | 470 | - | 470 | 852 | - | 852 |
| Investment management fees | (86) | (257) | (343) | (83) | (249) | (332) | (168) | (505) | (673) | |
| Other expenses | (93) | - | (93) | (97) | - | (97) | (190) | - | (190) | |
| Return/(loss) on ordinary activities before taxation | 257 | (337) | (80) | 290 | 125 | 415 | 494 | 83 | 577 | |
| Tax (charge)/credit on ordinary activities | (60) | 60 | - | (73) | 64 | (9) | (121) | 121 | - | |
| Return/(loss) attributable to equityholders | 197 | (277) | (80) | 217 | 189 | 406 | 373 | 204 | 577 | |
| Basic and diluted return/(loss) per share (pence)* | 6 | 0.62 | (0.87) | (0.25) | 0.72 | 0.62 | 1.34 | 1.23 | 0.67 | 1.90 |
* excluding treasury shares
Comparative figures have been extracted from the unaudited Half-yearly Financial Report for the six months ended 30 September 2010 and the audited statutory accounts for the year ended 31 March 2011.
The accompanying notes form an integral part of this Half-yearly Financial Report.
The total column of this Summary 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 continuing operations.
There are no recognised gains or losses other than the results for the periods disclosed above. Accordingly, a Statement of total recognised gains and losses is not required.
The difference between the reported loss on ordinary activities before tax and the historical profit is due to the fair value movements on investments. As a result a note on historical cost profit and losses has not been prepared.
Summary balance sheet
| Note | Unaudited 30 September 2011 £'000 | Unaudited 30 September 2010 £'000 | Audited 31 March 2011 £'000 | |
| Fixed asset investments | 18,901 | 14,602 | 18,164 | |
| Current assets | ||||
| Trade and other debtors | 316 | 102 | 144 | |
| Current asset investments | 1,002 | 2,518 | 2,507 | |
| Cash at bank | 9 | 7,339 | 9,722 | 7,002 |
| 8,657 | 12,342 | 9,653 | ||
| Creditors: amounts falling due within one year | (188) | (238) | (284) | |
| Net current assets | 8,469 | 12,104 | 9,369 | |
| Net assets | 27,370 | 26,706 | 27,533 | |
| Capital and reserves | ||||
| Called up share capital | 7 | 16,213 | 15,204 | 15,937 |
| Share premium | 733 | 6 | 535 | |
| Unrealised capital reserve | (1,151) | (371) | (518) | |
| Special reserve | 11,987 | 13,435 | 11,987 | |
| Treasury shares reserve | (284) | (64) | (207) | |
| Realised capital reserve | (518) | (1,721) | (874) | |
| Revenue reserve | 390 | 217 | 673 | |
| Total equity shareholders' funds | 27,370 | 26,706 | 27,533 | |
| Basic and diluted net asset value per share (pence)* | 85.40 | 88.10 | 87.13 |
* excluding treasury shares
Comparative figures have been extracted from the unaudited Half-yearly Financial Report for the six months ended 30 September 2010 and the audited statutory accounts for the year ended 31 March 2011.
The accompanying notes form an integral part of this Half-yearly Financial Report.
These Financial Statements were approved by the Board of Directors, and authorised for issue on 24 November 2011 and were signed on its behalf by
M Packe
Chairman
Company number 05990732
Summary reconciliation of movements in shareholders' funds
| Called up Share capital | Share premium £'000 | Unrealised Capital reserve* | Special reserve* | Treasury Shares reserve* | Realised Capital reserve* | Revenue reserve* | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| As at 1 April 2011 (audited) | 15,937 | 535 | (518) | 11,987 | (207) | (874) | 673 | 27,533 |
| Issue of share capital (net of costs) | 276 | 198 | - | - | - | - | - | 474 |
| Capitalised investment management fees | - | - | - | - | - | (257) | - | (257) |
| Tax relief on costs charged to capital | - | - | - | - | - | 60 | - | 60 |
| Purchase of own treasury shares | - | - | - | - | (77) | - | - | (77) |
| Net realised gains on investments | - | - | - | - | - | 132 | - | 132 |
| Unrealised losses on investments | - | - | (212) | - | - | - | - | (212) |
| Transfer of previously unrealised gains on sale of investments | - | - | (421) | - | - | 421 | - | - |
| Revenue return attributable to shareholders | - | - | - | - | - | - | 197 | 197 |
| Dividends paid | - | - | - | - | - | - | (480) | (480) |
| As at 30 September 2011 (unaudited) | 16,213 | 733 | (1,151) | 11,987 | (284) | (518) | 390 | 27,370 |
| As at 1 April 2010 (audited) | 15,189 | - | (797) | 13,473 | (39) | (1,368) | 300 | 26,758 |
| Issue of share capital (net of costs) | 15 | 6 | - | - | - | - | - | 21 |
| Capitalised investment management fees | - | - | - | - | - | (249) | - | (249) |
| Tax relief on costs charged to capital | - | - | - | - | - | 64 | - | 64 |
| Purchase of own treasury shares | - | - | - | - | (25) | - | - | (25) |
| Net realised gains on investments | - | - | - | - | - | 28 | - | 28 |
| Unrealised gains on investments | - | - | 346 | - | - | - | - | 346 |
| Transfer of previously unrealised losses on sale of investments | - | - | 80 | - | - | (80) | - | - |
| Revenue return attributable to shareholders | - | - | - | - | - | - | 217 | 217 |
| Dividends paid | - | - | - | (38) | - | (116) | (300) | (454) |
| As at 30 September 2010 (unaudited) | 15,204 | 6 | (371) | 13,435 | (64) | (1,721) | 217 | 26,706 |
| As at 1 April 2010 (audited) | 15,189 | - | (797) | 13,473 | (39) | (1,368) | 300 | 26,758 |
| Issue of share capital (net of costs) | 748 | 535 | - | - | - | - | - | 1,283 |
| Capitalised investment management fees | - | - | - | - | - | (505) | - | (505) |
| Tax relief on costs charged to capital | - | - | - | - | - | 121 | - | 121 |
| Purchase of own treasury shares | - | - | - | - | (168) | - | - | (168) |
| Net realised gains on investments | - | - | - | - | - | 91 | - | 91 |
| Unrealised gains on investments | - | - | 497 | - | - | - | - | 497 |
| Transfer of previously unrealised gains on sale of investments | - | - | (218) | - | - | 218 | - | - |
| Revenue return attributable to shareholders | - | - | - | - | - | - | 373 | 373 |
| Dividends paid | - | - | - | - | - | - | (917) | (917) |
| Transfer from Special reserve to realised capital reserve | - | - | - | (569) | - | 569 | - | - |
| Transfer from Special reserve to Revenue reserve | - | - | - | (917) | - | - | 917 | - |
| As at 31 March 2011 (audited) | 15,937 | 535 | (518) | 11,987 | (207) | (874) | 673 | 27,533 |
* Included within these reserves is an amount of £10,424,000 (30 September 2010: £11,496,000; 31 March 2011: £11,061,000) which is considered distributable. The Special reserve has been treated as distributable in determining the amounts available for distribution.
Summary cash flow statement
| Note | Unaudited six months ended 30 September 2011 £'000 | Unaudited six months ended 30 September 2010 £'000 | Audited year ended 31 March 2011 £'000 | |
| Operating activities | ||||
| Investment income received | 381 | 306 | 767 | |
| Deposit interest received | 36 | 90 | 150 | |
| Investment management fees paid | (166) | (169) | (670) | |
| Other cash payments | (120) | (73) | (170) | |
| Net cash flow from operating activities | 8 | 131 | 154 | 77 |
| Taxation | ||||
| UK corporation tax | - | 6 | 6 | |
| Capital expenditure and financial investments | ||||
| Purchase of fixed asset investments | (2,119) | (3,112) | (8,737) | |
| Disposal of fixed asset investments | 889 | - | 3,161 | |
| Net cash flow from investing activities | (1,230) | (3,112) | (5,576) | |
| Management of liquid resources | ||||
| Purchase of current asset investments | (1,000) | (3,004) | (3,009) | |
| Disposal of current asset investments | 2,517 | 3,851 | 3,054 | |
| Net cash flow from management of liquid resources | 1,517 | 847 | 45 | |
| Equity dividends paid (net of costs of shares issued under the Dividend Reinvestment Scheme) | (445) | (433) | (861) | |
| Net cash flow before financing | (27) | (2,538) | (6,309) | |
| Financing | ||||
| Issue of ordinary share capital | 457 | - | 1,210 | |
| Purchase of own shares | (81) | (21) | (164) | |
| Expenses of issue of ordinary share capital | (12) | - | (16) | |
| Net cash flow from financing | 364 | (21) | 1,030 | |
| Cash flow in the period | 9 | 337 | (2,559) | (5,279) |
Notes to the unaudited summarised Financial Statements
1. Accounting convention
The Financial Statements have been prepared in accordance with the historical cost convention, modified to include the revaluation of investments, in accordance with applicable United Kingdom law and accounting standards 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. Accounting policies have been applied consistently in current and prior periods.
2. Accounting policies
Investments
Fixed and current asset investments
Quoted and unquoted equity investments, debt issued at a discount and convertible bonds
In accordance with FRS 26 "Financial Instruments Recognition and Measurement", quoted and unquoted equity, debt issued at a discount and convertible bonds are designated as fair value through profit or loss ("FVTPL"). Investments listed on recognised exchanges are valued at the closing bid prices at the end of the accounting period. Unquoted investments' fair value is determined by the Directors in accordance with the September 2009 International Private Equity and Venture Capital Valuation Guidelines (IPEVCV guidelines).
Desk top reviews are carried out by independent RICS qualified surveyors by updating previously prepared full valuations for current trading and market indices. Full valuations are prepared by similarly qualified surveyors but in full compliance with the RICS Red Book.
Fair value movements on equity investments and gains and losses arising on the disposal of investments are reflected in the capital column of the Income statement in accordance with the AIC SORP and realised gains or losses on the sale of investments will be reflected in the realised capital reserve, and unrealised gains or losses arising from the revaluation of investments will be reflected in the unrealised capital reserve.
Warrants and unquoted equity derived instruments
Warrants and unquoted equity derived instruments are only valued if their exercise or contractual conversion terms would allow them to be exercised or converted as at the balance sheet date, and if there is additional value to the Company in exercising or converting as at the balance sheet date. Otherwise these instruments are held at nil value. The valuation techniques used are those used for the underlying equity investment.
Unquoted loan stock
Unquoted loan stock (excluding convertible bonds and debt issued at a discount) are classified as loans and receivables as permitted by FRS 26 and carried at amortised cost using the Effective Interest Rate method less impairment. Movements in amortised cost relating to interest income are reflected in the revenue column of the Income statement, and hence are reflected in the revenue reserve, and movements in respect of capital provisions are reflected in the capital column of the Income statement and are reflected in the realised capital reserve following sale, or in the unrealised capital reserve on revaluation.
For all unquoted loan stock, whether fully performing, re-negotiated, past due or impaired, the Board considers that the fair value is equal to or greater than the security value of these assets. For unquoted loan stock, the amount of the impairment is the difference between the asset's cost and the present value of estimated future cash flows, discounted at the original effective interest rate. The future cash flows are estimated based on the fair value of the security less the estimated selling costs.
Floating rate notes
In accordance with FRS 26, floating rate notes are designated as fair value through profit or loss. Floating rate notes are valued at market bid price at the balance sheet date. Floating rate notes are classified as current asset investments as they are investments held for the short term.
Investments are recognised as financial assets on legal completion of the investment contract and are de-recognised on legal completion of the sale of an investment.
Dividend income is not recognised as part of the fair value movement of an investment, but is recognised separately as investment income through the revenue reserve when a share becomes ex-dividend.
Loan stock accrued interest is recognised in the Balance sheet as part of the carrying value of the loans and receivables at the end of each reporting period.
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. of the equity are not regarded as associated undertakings.
Investment income
Unquoted equity income
Dividend income is included in revenue when the investment is quoted ex-dividend.
Unquoted loan stock and other preferred income
Fixed returns on non-equity shares and debt securities are recognised on a time apportionment basis using an effective interest rate over the life of the financial instrument. Income which is not capable of being received within a reasonable period of time is reflected in the capital value of the investment.
Bank interest income
Interest income is recognised on an accruals basis using the rate of interest agreed with the bank.
Floating rate note income
Floating rate note income is recognised on an accruals basis using the interest rate applicable to the floating rate note at that time.
Investment management fees and other expenses
All expenses have been accounted for on an accruals basis. Expenses are charged through the revenue account except the following which are charged through the realised capital reserve:
75 per cent. of management fees are allocated to the capital account to the extent that these relate to an enhancement in the value of the investments. This is in line with the Board's expectation that over the long term 75 per cent. of the Company's investment returns will be in the form of capital gains; and
expenses which are incidental to the purchase or disposal of an investment are charged through the realised capital reserve.
Performance incentive fee
In the event that a performance incentive fee crystallises, the fee will be allocated between revenue and realised capital reserves based upon the proportion to which the calculation of the fee is attributable to revenue and capital returns.
Taxation
Taxation is applied on a current basis in accordance with FRS 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 for deferred tax should be made.
Reserves
Unrealised capital reserve
Increases and decreases in the valuation of investments held at the period end against cost are included in this reserve.
Special reserve
The cancellation of the share premium account has created a special reserve that can be used to fund market purchases and subsequent cancellation of own shares, to cover gross realised losses, and for other distributable purposes.
Treasury shares reserve
This reserve accounts for amounts by which the distributable reserves of the Company are diminished through the repurchase of the Company's own shares for treasury.
Realised capital reserve
The following are disclosed in this reserve:
- gains and losses compared to cost on the realisation of investments;
- expenses, together with the related taxation effect, charged in accordance with the above policies; and
- dividends paid to equity holders.
Dividends
In accordance with FRS 21 "Events after the balance sheet date", dividends declared by the Company are accounted for in the period in which the dividend has been paid or approved by shareholders in an Annual General Meeting.
3. (Losses)/gains on investments
Unaudited six months ended 30 September 2011 £'000 | Unaudited six months ended 30 September 2010 £'000 | Audited year ended 31 March 2011 £'000 | |
| Unrealised (losses)/gains on fixed asset investments held at fair value through profit or loss account | (173) | 340 | 405 |
| Unrealised (impairments)/releases of impairments on investments held at amortised cost | (39) | 24 | 121 |
| Unrealised (losses)/gains on fixed asset investments | (212) | 364 | 526 |
| Unrealised (losses) on current asset investments held at fair value through profit or loss account | - | (18) | (29) |
| Unrealised (losses)/gains sub-total | (212) | 346 | 497 |
| Realised gains/(losses) on fixed asset investments held at fair value through profit or loss account | 78 | (1) | 43 |
| Realised gains/(losses) on fixed asset investments held at amortised cost | 61 | (18) | - |
| Realised (losses)/gains on current asset investments held at fair value through profit or loss account | (7) | 47 | 48 |
| Realised gains sub-total | 132 | 28 | 91 |
| Total | (80) | 374 | 588 |
Investments valued on amortised cost basis are unquoted loan stock instruments.
4. Investment income
Unaudited six months ended 30 September 2011 £'000 | Unaudited six months ended 30 September 2010 £'000 | Audited year ended 31 March 2011 £'000 | |
| Income recognised on investments held at fair value through profit or loss | |||
| Floating rate note and bond income | 13 | 36 | 70 |
| Interest on convertible bonds and debt issued at a discount | 52 | - | - |
| 65 | 36 | 70 | |
| Income recognised on investments held at amortised cost | |||
| Return on loan stock investments | 305 | 345 | 618 |
| Bank deposit interest | 66 | 89 | 164 |
| 371 | 434 | 782 | |
| 436 | 470 | 852 |
All of the Company's income is derived from operations based in the United Kingdom.
5. Dividends
Unaudited six months ended 30 September 2011 £'000 | Unaudited six months ended 30 September 2010 £'000 | Audited year ended 31 March 2011 £'000 | ||||
| Dividend of 1.50p per share paid on 7 August 2010 | - | 454 | 454 | |||
| Dividend of 1.50p per share paid on 28 February 2011 | - | - | 463 | |||
| Dividend of 1.50p per share paid on 31 August 2011 | 480 | - | - | |||
| 480 | 454 | 917 |
In addition to the dividends summarised above, the Board has declared a second dividend for the year ending 31 March 2012 of 1.50 pence per share to be paid on 29 February 2012 to shareholders on the register on 3 February 2012. This is expected to amount to approximately £481,000.
6. Basic and diluted return/(loss) per share
| Unaudited six months ended 30 September 2011 | Unaudited six months ended 30 September 2010 | Audited year ended 31 March 2011 | |||||||||
| Revenue | Capital | Total | Revenue | Capital | Total | Revenue | Capital | Total | |||
| Return/(loss) attributable to equity shares (£'000) | 197 | (277) | (80) | 217 | 189 | 406 | 373 | 204 | 577 | ||
| Weighted average shares in issue (excluding treasury shares) | 32,051,434 |
Latest directors dealings
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