Annual Report and Financial
Statements for the year
ended 31 March 2014
14
Albion Venture Capital Trust PLC
232642 Albion Venture Cap pp01-pp05 26/06/2014 12:12 Page 1
Contents
Page
2 Company information
3 Investment objectives and policy
3 Background to the Company
3 Financial calendar
4 Financial highlights
6 Chairman’s statement
8 Strategic report
14 The Board of Directors
15 The Manager
16 Portfolio of investments
18 Portfolio companies
20 Directors’ report
24 Statement of corporate governance
29 Directors’ remuneration report
31 Independent Auditor’s report
34 Income statement
35 Balance sheet
36 Reconciliation of movements in shareholders’ funds
37 Cash flow statement
38 Notes to the Financial Statements
51 Notice of Annual General Meeting
54 Dividend history for Albion Prime VCT PLC
Albion Venture Capital Trust PLC 1
232642 Albion Venture Cap pp01-pp05 26/06/2014 12:12 Page 2
Company information
Company number 03142609
Directors D J Watkins MBA (Harvard), Chairman (US citizen)
J M B L Kerr ACMA
J Warren ACCA
E Dinesen R (Danish) FSR
Manager, company secretary Albion Ventures LLP
and registered office 1 King’s Arms Yard
London, EC2R 7AF
Registrar Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol, BS99 6ZZ
Auditor BDO LLP
55 Baker Street
London, W1U 7EU
Taxation adviser PricewaterhouseCoopers LLP
1 Embankment Place
London, WC2N 6RH
Legal adviser Bird & Bird LLP
15 Fetter Lane
London, EC4A 1JP
Albion Venture Capital Trust 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 5849 (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 Fund, 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
Email: info@albion-ventures.co.uk
Website: www.albion-ventures.co.uk
be recorded)
Please note that these contacts are unable to provide financial or
taxation advice.
2 Albion Venture Capital Trust PLC
232642 Albion Venture Cap pp01-pp05 26/06/2014 12:12 Page 3
Investment objectives and policy
The investment strategy of Albion Venture Capital Trust PLC (the “Company”) is to reduce the risk normally associated with
investments in smaller unquoted companies whilst maintaining an attractive yield, through allowing investors the opportunity to
participate in a balanced portfolio of asset-backed businesses. The Company’s investment portfolio will thus be structured to
provide a balance between income and capital growth for the longer term.
This is achieved as follows:
● qualifying unquoted investments are predominantly in specially-formed companies which provide a high level of asset backing
for the capital value of the investment;
● the Company invests alongside selected partners with proven experience in the sectors concerned;
● investments are normally structured as a mixture of equity and loan stock. The loan stock represents the majority of the
finance provided and is secured on the assets of the portfolio company. Funds managed or advised by Albion Ventures LLP
typically own 50 per cent. of the equity of the portfolio company;
● other than the loan stock issued to funds managed or advised by Albion Ventures LLP, portfolio companies do not normally
have external borrowings.
The Company offers tax-paying investors substantial tax benefits at the time of investment, on payment of dividends and on the
ultimate disposal of the investment.
Background to the Company
The Company is a venture capital trust which raised a total of £39.7 million through an issue of Ordinary shares in the spring of
1996 and through an issue of C shares in the following year. The C shares merged with the Ordinary shares in 2001. The Company
has raised a further £8.7 million under the Albion VCTs Top Up Offers since 2011.
On 25 September 2012, the Company acquired the assets and liabilities of Albion Prime VCT PLC (“Prime”) in exchange for
new shares in the Company (“the Merger”). On the same day, Prime was placed into members’ voluntary liquidation pursuant
to a scheme of reconstruction under Section 110 of the Insolvency Act 1986.
All of the assets and liabilities of Prime totalling £14,338,000 were transferred to the Company in exchange for the issue of
19,307,001 new Ordinary shares in the capital of the Company at a deemed issue price of 74.2638 pence per share. Each
Prime shareholder received 0.8801 shares in the Company for each Prime share that they held at the date of the Merger as
described in note 10.
Financial calendar
Record date for first dividend 11 July 2014
Annual General Meeting 25 July 2014
Payment of first dividend 31 July 2014
Announcement of half-yearly results for the six months ended 30 September 2014 November 2014
Payment of second dividend (subject to Board approval) 31 December 2014
Albion Venture Capital Trust PLC 3
232642 Albion Venture Cap pp01-pp05 26/06/2014 12:12 Page 4
Financial highlights
31 March 2014
the year ended 31 March 2014 and 2.5p first
tax free dividend per share declared for the
year to 31 March 2015
2.0p Basic and diluted total return per share as at
5.0p Total tax-free dividend per share paid during
71.3p Net asset value per share as at 31 March 2014
6.2% Annualised return since launch (without tax
201.1p Net asset value plus dividends since launch to
31 March 2014
relief)
Ordinary shares Net Asset Value total return relative to the FTSE All-Share Index
total return (both with dividends reinvested)
350
300
250
200
150
100
)
e
r
a
h
s
r
e
p
e
c
n
e
p
(
n
r
u
t
e
R
Mar
96
Mar
97
Mar
98
Mar
99
Mar
00
Mar
01
Mar
02
Mar
03
Mar
04
Mar
05
Mar
06
Mar
07
Mar
08
Mar
09
Mar
10
Mar
11
Mar
12
Mar
13
Mar
14
FTSE All-Share total return
Ordinary Shares NAV total return
Source: Albion Ventures LLP
Methodology: The net asset value return to the shareholder, including original amount invested (rebased to 100) from launch,
assuming that dividends were re-invested at net asset value of the Company at the time the shares were quoted ex-dividend.
Transaction costs are not taken into account.
4 Albion Venture Capital Trust PLC
232642 Albion Venture Cap pp01-pp05 26/06/2014 12:12 Page 5
Financial highlights (continued)
31 March 2014 31 March 2013
(pence per share) (pence per share)
Dividends paid 5.00 5.00
Revenue return 1.70 2.00
Capital return 0.30 –
Effect of merger (see note 10) – (0.90)
Net asset value 71.30 74.20
Total shareholder net asset value return to 31 March 2014 Ordinary shares C shares
Total dividends paid during the year ended:31 March 1997 2.00 –
31 March 1998 5.20 2.00
31 March 1999 11.05 8.75
31 March 2000 3.00 2.70
31 March 2001 8.55 4.80
31 March 2002 7.60 7.60
31 March 2003 7.70 7.70
31 March 2004 8.20 8.20
31 March 2005 9.75 9.75
31 March 2006 11.75 11.75
31 March 2007 10.00 10.00
31 March 2008 10.00 10.00
31 March 2009 10.00 10.00
31 March 2010 5.00 5.00
31 March 2011 5.00 5.00
31 March 2012 5.00 5.00
31 March 2013 5.00 5.00
31 March 2014 5.00 5.00
–––––––––––– ––––––––––––
Total dividends paid to 31 March 2014 129.80 118.25
Net asset value as at 31 March 2014 71.30 71.30
–––––––––––– ––––––––––––
Total shareholder net asset value return to 31 March 2014 201.10 189.55
–––––––––––– ––––––––––––
The financial summary above is for the Company, Albion Venture Capital Trust PLC only. Details of the financial
performance of Albion Prime VCT PLC, which has been merged into the Company, can be found on page 54.
In addition to the dividends summarised above, the Board has declared a first dividend for the year ending
31 March 2015 of 2.50 pence per share to be paid on 31 July 2014 to shareholders on the register as at
11 July 2014.
Notes
● Dividends paid before 5 April 1999 were paid to qualifying shareholders inclusive of the associated tax credit. The dividends for the
year to 31 March 1999 were maximised in order to take advantage of this tax credit.
● All dividends paid by the Company are paid free of income tax to qualifying shareholders. 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.
Albion Venture Capital Trust PLC 5
232642 Albion Venture Cap pp06-pp17 26/06/2014 12:15 Page 6
Chairman’s statement
Introduction
The results for the year to 31 March 2014 are the first to
show a full year’s combined results of Albion Venture Capital
Trust PLC and Albion Prime VCT PLC since they merged in
September 2012. The results show a total return of 2 pence
per share, the same as the previous year, and net assets of
71.3 pence per share compared to 74.2 pence per share at
31 March 2013, following the payment of total tax-free
dividends of 5 pence per share. The Company raised
approximately £1.94 million during the year under the Albion
VCT Top Up Offers 2012/2013 and approximately £1.40
million for the Albion VCT Top Up Offer 2013/2014, with a
subsequent £1.90 million after the year end.
It is disappointing that the total return for the year remains
below the Company’s target dividend of 5 pence per annum.
On the one hand, the merger with Albion Prime VCT PLC
has created cost efficiencies, with “other expenses”
(excluding write off of previously accrued income) falling.
Income, however, is also lower than we would have hoped
for. This was largely due to the sales of the strongly cash
generative cinema portfolio at the end of 2012 and the Bear
Hotel in Hungerford and Nelson House Hospital in March
2013. The total return was affected by the soft performance
of our hotels and health and fitness clubs. We address this
further below.
Investment performance and progress
In general, we continue the task of repositioning the portfolio
towards greater emphasis on the healthcare and renewable
energy sectors and reduced reliance on sectors that are
exposed to the consumer and business cycle. Renewable
energy currently account(s) for 14 per cent. of the portfolio with
a target of 20 per cent., while healthcare accounts for 18 per
cent. of the portfolio. Hotels, meanwhile, have declined to
below 30 per cent. of the portfolio.
The hotel sector continued to be challenging, with market
conditions at Stansted Airport proving particularly difficult,
leading to a further write-down in the third party valuation of
our hotel there. Prospects for the current year, however, are
more promising with signs of a revival in passenger numbers
at the airport leading to an improvement in the hotel’s trading.
The Crown Hotel in Harrogate experienced a soft year in 2013
but is expecting its current financial year to be a record year.
In addition, the Stanwell Hotel is now trading profitably at an
operating level, with a strong increase in revenue over previous
years. In summary, we are more hopeful for this sector’s
current year prospects.
6 Albion Venture Capital Trust PLC
The health and fitness clubs also saw an aggregate reduction
in their third party professional valuations, following previous
underperformance at our Kensington and Weybridge clubs.
The management team has now been changed, and the new
team has had a considerable and positive initial
impact on
the units’ performance. We would therefore hope for a revival
of these clubs’ fortunes over the next two years. Our Tower
Bridge club continued to trade strongly and enjoyed a
pleasing uplift in its third party valuation.
In the healthcare sector, Oakland Care Centre, which
operates a care home in Chingford, continued to perform
strongly, as did the Taunton Hospital. We are reviewing a
number of further care home opportunities and we see
provision of quality residential care for private payers in
London and the Home Counties as being an important focus
for future investment activity.
Our renewable energy portfolio continues to grow towards a
target of 20 per cent. of the Company’s total investment
portfolio. The income that it generates is also growing, with a
target of 10 per cent. per annum on investment cost once all
the individual energy units are generating electricity. During
the course of the year we invested £1.6 million in Chonais
Holdings, which is constructing a 2MW run-of-river hydro unit
in North West Scotland and £387,000 in Green Highland
Renewables (Ledgowan), which is constructing a hydro unit
nearby. In general, the renewable energy units have been
operating at or above budget, with a particularly strong
performance from Dragon Hydro, which owns our first
operational hydroelectricity unit, in North Wales.
Radnor House School continues to perform well with 350
pupils currently in place for September and capacity for a
further 100 pupils over the next two years.
Our pub portfolio is stable and cash generative with a small
amount of additional investment in Bravo Inns II to purchase
and refurbish further units in the North West, taking the
combined Bravo Inns and Bravo Inns II portfolio to 35 pubs.
Risks and uncertainties
The outlook for the UK economy continues to be the key risk
affecting your Company.
Importantly, however, your
Company remains conservatively financed with no bank
borrowings. The Company’s policy remains that its portfolio
companies should not normally have external borrowings,
and for the Company to have a first charge over portfolio
companies’ assets; the Board and Manager see this an
important factor in the control of investment risk. However,
on an exceptional basis, certain portfolio companies may
take on external borrowings, where the Board considers this
will offer a significant benefit to the Company.
232642 Albion Venture Cap pp06-pp17 26/06/2014 12:15 Page 7
Chairman’s statement (continued)
A detailed analysis of the other risks and uncertainties facing
the business is set out on pages 12 and 13 of the Strategic
report.
Share buy-backs
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. Thereafter, it is still the Board’s policy to buy
back shares in the market, subject to the overall criterion
that such purchases are in the Company’s interest. The
Company will limit the sum available for share buy-backs for
the six month period to 30 September 2014 to £750,000.
This compares to a total value bought in for the previous
six months to 31 March 2014 of £487,000. Subject to the
constraints referred to above and subject to first purchasing
shares held by the market makers, the Board will target 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.
2 pence per share) and a 0.3 pence per share capital return
after taking into account capitalised expenses (2013: flat). The
revenue return before taxation was £1,119,000 compared to
£1,114,000 for the year to 31 March 2013. The Company will
pay a first dividend of 2.50 pence per share on 31 July 2014
to shareholders on the register on 11 July 2014, which is in
line with the Company’s current objective of paying a dividend
of 5 pence per share annually.
Outlook and prospects
Trading at our hotels and health and fitness clubs is
improving. After a challenging period for some of our more
consumer oriented sectors, we are cautiously optimistic that
the brighter outlook for the UK economy, combined with the
more balanced nature of the current portfolio, should benefit
the Company moving forward.
Results and dividends
As at 31 March 2014, the net asset value was £42.66 million
or 71.3 pence per share, compared to £41.68 million or
74.2 pence per share as at 31 March 2013, after the payment
of total tax-free dividends of 5 pence per share. The results
comprised 1.7 pence per share revenue return (2013:
David Watkins
Chairman
25 June 2014
Albion Venture Capital Trust PLC 7
232642 Albion Venture Cap pp06-pp17 26/06/2014 12:15 Page 8
Strategic report
The Directors present the Strategic report of the Company
for the year ended 31 March 2014 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.
Investment objective and policy
The Company’s investment policy is to reduce the risk normally
associated with investments in smaller, unquoted companies
whilst maintaining an attractive yield, through allowing
investors the opportunity to participate in a balanced portfolio
of asset-backed businesses. The Company’s investment
portfolio will thus be structured to provide a balance between
income and capital growth for the longer term.
This is achieved as follows:
● qualifying unquoted investments are predominantly in
specially-formed companies which provide a high level of
asset backing for the capital value of the investment;
● the Company invests alongside selected partners with
proven experience in the sectors concerned;
● investments are normally structured as a mixture of equity
and loan stock. The loan stock normally represents the
majority of the finance provided and is secured on the
assets of the portfolio company. Funds managed or
advised by Albion Ventures LLP typically own 50 per
cent. of the equity of the portfolio company; and
● other than the loan stock issued to funds managed or
advised by Albion Ventures LLP, portfolio companies do
not normally have external borrowings.
Current portfolio sector allocation
The following pie chart shows the split of the portfolio
valuation by industrial or commercial sector as at 31 March
2014. Details of the principal investments made by the
Company are shown in the Portfolio of investments on
pages 16 and 17.
8 Albion Venture Capital Trust PLC
Split of portfolio by sector
Education
5% (2013 - 4%)
Cash & cash
equivalents
17% (2013 - 28%)
Renewable energy
14% (2013 - 7%)
Healthcare
18% (2013 - 12%)
Residential property
development
1% (2013 - 1%)
Hotels
29% (2013 - 31%)
Health and fitness
clubs
8% (2013 - 10%)
Pubs
8% (2013 - 7%)
Source: Albion Ventures LLP
Direction of portfolio
The sector analysis of the VCT’s investment portfolio shows
that renewable energy now accounts for 14 per cent. of the
portfolio compared to 7 per cent. at the end of the previous
financial year, with a view to increasing this to the Board’s
target exposure for the sector of 20 per cent. as new
opportunities arise. Healthcare has also risen, now
accounting for 18 per cent. of the portfolio compared to
12 per cent. at the end of the previous financial year.
Results and dividend policy
Ordinary
shares
£’000
Net revenue return for the year ended
31 March 2014 999
Dividend of 2.50 pence per share
paid on 31 July 2013 (1,469)
Dividend of 2.50 pence per share
paid on 31 December 2013 (1,460)
Unclaimed dividends returned to the Company 27
––––––––––––
Transferred from other distributable reserve (1,903)
––––––––––––
Realised and unrealised capital
gain for the year transferred to reserves 165
––––––––––––
Net assets as at 31 March 2014 42,658
––––––––––––
Net asset value per share as at
31 March 2014 71.30p
––––––––––––
The Company paid dividends totalling 5.00 pence per share
(2013: 5.00 pence per share) during the year ended 31
March 2014. The dividend objective of the Board is to
provide Shareholders with a strong, predictable dividend
flow, with a dividend target of 5.00 pence per share per year.
As noted in the Chairman’s statement, the Board has
declared a first dividend of 2.50 pence per share. This
dividend will be paid on 31 July 2014 to shareholders on the
register as at 11 July 2014.
232642 Albion Venture Cap pp06-pp17 26/06/2014 12:15 Page 9
Strategic report (continued)
As shown in the Income statement on page 34 of the
Financial Statements, the Company’s investment income has
increased to £1,718,000 (2013: £1,563,000) and the total
revenue return to equity holders also increased to £999,000
(2013: £931,000), largely as a result of the merger with Albion
Prime VCT PLC. With a larger number of shares in issue
following the merger there was a small decrease on revenue
return to 1.70 pence per share (2013: 2.00 pence per share).
The capital gain on investments for the year was £626,000
(2013: £384,000), offset by management fees charged to
capital, net of the related taxation impact, resulting in a
capital return of 0.30 pence per share (2013: nil).
The total return was 2.00 pence per share (2013: 2.00 pence
per share).
The Balance sheet on page 35 shows that the net asset
value has decreased over the last year to 71.30 pence per
share (2013: 74.20 pence per share), primarily reflecting the
payment of the 5.00 pence per share dividend during the
year, offset by the net return for the year of 2.00 pence.
The cash flow for the Company has been a net outflow of
£4,391,000 for the year (2013: inflow £8,940,000), reflecting
dividends paid, new investments in the year and the buyback
of shares, offset by cash inflows from operations, disposal
proceeds and the issue of Ordinary shares under the Albion
VCTs Top Up Offers.
During the year, unclaimed dividends older than twelve years
of £27,000 (2013: £33,000) were returned to the Company
in accordance with the terms of the Articles of Association.
Review of business and future changes
A review of the Company’s business during the year and
investment performance and progress is contained in the
Chairman’s statement on page 6. The healthcare sector
performed particularly well again this year with an increase in
valuation of £649,000 (2013: £760,000). The hotel sector
continued to be challenging, resulting in a devaluation of
£478,000 arising from the independent third party valuations.
However prospects for the current year are brighter. In
addition, there were increases in valuations in the renewable
energy sector and for Radnor House School. Two of the
three health and fitness clubs saw reductions during the year,
however after a change of manager there are signs of
improved performance.
The Company continues with its objective to invest in
unquoted companies throughout the United Kingdom with
particular emphasis on the healthcare and renewable energy
sectors with a view to providing both capital growth and a
reliable dividend income to shareholders over the longer
term. The Directors do not foresee any major changes in the
activity undertaken by the Company in the current year.
Details of significant events which have occurred since the
end of the financial year are listed in note 22. Details of
transactions with the Manager are shown in note 5.
Future prospects
The Company’s performance record reflects the resilience 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
deliver attractive returns to shareholders in the future. Further
details on the Company’s outlook and prospects can be
found in the Chairman’s statement on page 7.
Key performance indicators
The Directors believe that the following key performance
indicators, which are typical for venture capital trusts and
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. These are:
Net asset value total return relative to FTSE All Share Index
total return
The graph on page 4 shows the Company’s net asset value
total return against the FTSE All-Share Index total return, in
both instances with dividends reinvested. Details on the
performance of the net asset value and return per share for
the year are shown below.
Net asset value per share and cumulative net asset value
total shareholder return
Net asset value per share and
cumulative NAV total shareholder return*
250.0
200.0
150.0
100.0
0.00
5.00
e
r
a
h
s
r
e
p
e
c
n
e
P
34.80
27.30
18.75
11.00
84.80 94.80
104.80 109.80
114.80 119.80 124.80 129.80
74.80
67.80
58.80
50.30
42.30
95.0
94.9
99.2
99.6
100.5 102.0 106.2 108.9 113.1 115.9 116.5 120.2
109.9
85.3
81.6
80.5
78.1
74.2
71.3
50.0
0.0
6
9
9
1
7
9
9
1
8
9
9
1
9
9
9
1
0
0
0
2
1
0
0
2
2
0
0
2
3
0
0
2
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
0
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
NAV
Cumulative dividend
* Cumulative NAV total shareholder return is net asset value plus
cumulative dividends paid since launch to date.
Albion Venture Capital Trust PLC 9
232642 Albion Venture Cap pp06-pp17 26/06/2014 12:15 Page 10
Strategic report (continued)
Net asset value decreased by 4 per cent. to 71.30 pence per
share for the year ended 31 March 2014.
(1) The Company’s income must be derived wholly or
mainly from shares and securities;
Cumulative NAV total shareholder return increased by 1.1 per
cent. to 201.10 pence per share for the year ended 31 March
2014.
Dividend distributions
Dividends paid
e
r
a
h
s
r
e
p
e
c
n
e
P
140
120
100
80
60
40
20
0
129.80
124.80
119.80
114.80
109.80
104.80
94.80
84.80
74.80
67.80
58.80
50.30
42.30
34.80
27.30
18.80
11.00
5.00 5.00
6.00
7.75
8.55
7.50
7.50
8.00
8.50
9.00
7.00
10.00
10.00
10.00
5.00
5.00
5.00
5.00
5.00
7
9
9
1
8
9
9
1
9
9
9
1
0
0
0
2
1
0
0
2
2
0
0
2
3
0
0
2
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
0
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
Dividends paid in the period
Cumulative dividend
Dividends paid in respect of the year ended 31 March 2014
were 5.00 pence per share (2013: 5.00 pence per share), in
line with the Board’s dividend objective. Cumulative
dividends paid since inception amount to 129.80 pence per
Ordinary share and 118.25 pence per C share.
Ongoing charges
The ongoing charges ratio for the year to 31 March 2014 was
2.5 per cent. (2013: 2.5 per cent.). The ongoing charges ratio
has been calculated using the Association of Investment
Companies’ (AIC) recommended methodology. This figure
shows shareholders the total recurring annual running
expenses (including investment management fees charged
to capital reserve) as a percentage of the average net assets
attributable to shareholders. The Directors expect the
ongoing charges ratio for the year ahead to be approximately
2.5 per cent.
Maintenance of VCT qualifying status
The Company continues to comply with H.M. Revenue &
Customs (“HMRC”) rules in order to maintain its status under
Venture Capital Trust legislation as highlighted below.
VCT Regulation
The investment policy is designed to ensure that the
Company continues to qualify and is approved as a VCT by
HMRC. In order to maintain its status under Venture Capital
Trust legislation, a VCT must comply on a continuing basis
with the provisions of Section 274 of the Income Tax Act
2007 as follows:
(2) At least 70 per cent. of the HMRC value of its
investments must have been represented throughout
the year by shares or securities that are classified as
‘qualifying holdings’;
(3) At least 30 per cent. by HMRC value of its total
qualifying holdings must have been represented
throughout the year by holdings of ‘eligible shares’. For
funds raised after 5 April 2011 the figure is 70 per cent.;
(4) At no time in the year must the Company’s holdings in
any one company (other than another VCT) have
exceeded 15 per cent. by HMRC value of its
investments;
(5) The Company must not have retained greater than
15 per cent. of its income earned in the year from
shares and securities;
(6) Eligible shares must comprise at least 10 per cent. by
HMRC value of the total of the shares and securities that
the Company holds in any one portfolio company; and
(7) The Company’s shares, throughout the year, must have
been listed in the Official List of the Stock Exchange.
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 March 2014. 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. Details of the sectors in
which the Company is invested can be found in the pie chart
on page 8.
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 state-aided providers of risk capital, including VCTs,
in the 12 month period up to and including the most recent
such investment.
10 Albion Venture Capital Trust PLC
232642 Albion Venture Cap pp06-pp17 26/06/2014 12:15 Page 11
Strategic report (continued)
Gearing
As defined by the Articles of Association, the Company’s
maximum exposure in relation to gearing is restricted to
10 per cent. of the adjusted share capital and reserves. As at
31 March 2014, the Company’s maximum permitted
exposure was £4,110,000 (2013: £4,168,000) and its actual
short term and long term gearing at this date was £nil (2013:
£nil) The Directors do not currently have any intention to
utilise long term gearing for the Company.
On an exceptional basis, certain portfolio companies may
take on external borrowings, where the Board considers this
will offer a significant benefit to the Company.
Operational arrangements
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.
Management agreement
Under the Management agreement, the Manager provides
investment management, secretarial and administrative
services to the Company. The Management agreement can
be terminated by either party on 12 months’ notice. The
Management agreement is subject to earlier termination in
the event of certain breaches or on the insolvency of either
party. The Manager is paid an annual fee equal to 1.9 per
cent. of the net asset value of the Company, and an annual
secretarial and administrative fee of £46,539 (2013:
£44,883) increased annually by RPI. These fees are payable
quarterly in arrears. Total annual normal expenses, including
the management fee, are limited to 3.5 per cent. of the net
asset value.
In line with common practice, the Manager is also entitled to
an arrangement fee, payable by each portfolio company, of
approximately 2 per cent. on each investment made and any
applicable monitoring fees.
Management performance incentive
In order to provide the Manager with an incentive to maximise
the return to investors, the Company has entered into a
management performance incentive arrangement with the
Manager. Under the incentive arrangement, the Company will
pay an incentive fee to the Manager of an amount equal to 8
per cent. of the excess total return above 5 per cent. per
annum, paid out annually in cash as an addition to the
management fee. Any shortfall of the target return will be
carried forward into subsequent periods and the incentive fee
will only be paid once all previous and current target returns
have been met. For the year to 31 March 2014, no incentive
fee became due to the Manager (2013: £nil).
No further performance fee will become due until the
hurdle rate comprising net asset value, plus dividends
from 31 March 2014, has been reached. As of 31 March
2014 the total return from 31 March 2004 amounted to
147.8 pence per share which compared to the hurdle of
184.2 pence per share at that date.
Evaluation of the Manager
The Board has evaluated the performance of the Manager
based on the returns generated by the Company, the
continuing achievement of the 70 per cent. investment
requirement for Venture Capital Trust status, the long term
prospects of current
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.
investments, a review of
Alternative Investment Fund Managers Directive
(“AIFMD”)
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.
Social and community issues, employees and
human rights
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.
Further policies
The Company has adopted a number of further policies
relating to:
● Environment
● Global greenhouse gas emissions
● Anti-bribery
● Diversity
and these are set out in the Directors’ report on page 21.
Albion Venture Capital Trust PLC 11
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Strategic report (continued)
Risk management
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
Investment 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.
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.
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.
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.
includes an
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
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
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.
the
As described in note 2 of the Financial Statements, the
unquoted equity investments, 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. All
other unquoted loan stock is measured at amortised
cost. The values of all of the investments are at cost
(reviewed for impairment) or 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
adviser. PricewaterhouseCoopers LLP reports quarterly to
the Board to independently confirm compliance with the
venture capital trust legislation, to highlight areas of risk and
to inform on changes in legislation. Each investment in a
new portfolio company is also pre-cleared with H.M.
Revenue & Customs.
12 Albion Venture Capital Trust PLC
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Strategic report (continued)
Risk
Possible consequence
Risk management
Compliance risk
Internal control 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.
Failures in key controls, within the Board
or within the Manager’s business, could
put assets of the Company at risk or
result
inaccurate
reduced or
information being passed to the Board
or to shareholders.
in
Board members and the Manager have experience of
operating at senior levels within or advising quoted
businesses. In addition, the Board and the Manager receive
regular updates on new regulation from its auditor, lawyers
and other professional bodies.
The 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. John
Kerr, as 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 27.
Measures are in place to mitigate information risk in order
to ensure the integrity, availability and confidentiality of
information used within the business.
Reliance upon
third parties risk
The Company is reliant upon the
services of Albion Ventures LLP for the
provision of investment management
and administrative functions.
There are provisions within the management agreement for
the change of Manager under certain circumstances (for
further detail, see the management agreement paragraph
on page 11). In addition, the Manager has demonstrated to
the Board that there is no undue reliance placed upon any
one individual within Albion Ventures LLP.
The Company’s policies for managing these risks and its
financial instruments are outlined in full in note 20 to the
Financial Statements.
All of the Company’s
income and expenditure
is
denominated in sterling and hence the Company has no
foreign currency risk. The Company is financed through
equity and does not have any borrowings. The Company
does not use derivative
for
speculative purposes.
instruments
financial
Financial risk
By its nature, as a venture capital trust,
the Company is exposed to investment
risk (which comprises investment price
risk and cash flow interest rate risk),
credit risk and liquidity risk.
On behalf of the Board,
David Watkins
Chairman
25 June 2014
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The Board of Directors
The following are the Directors of the Company, all of whom
operate in a non-executive capacity:
David Watkins MBA (Harvard), Chairman (appointed
9 February 1996)
David Watkins worked for Goldman Sachs from 1972 until
1991 where he was head of Euromarkets Syndication and
Head of European Real Estate. He subsequently joined
Mountleigh Group PLC where he worked as a director on the
restructuring of the business prior to the Group being placed
into administration. After a period operating his own
corporate finance business, he joined Baring Securities in
1994 as Head of Equity Capital Markets - London, before
leaving
into
administration to become Chief Financial Officer and one of
the principal shareholders of his current company, The
Distinguished Programs Group LLC, an
insurance
distribution and underwriting group. From 1986 to 1990, he
was a member of the Council of the London Stock
Exchange.
in mid-1995 when the company went
John Kerr ACMA (appointed 9 February 1996)
John Kerr has worked as a venture capitalist and also in
manufacturing and service industries. He held a number of
finance and general management posts in the UK and USA,
before joining SUMIT Equity Ventures, an independent
Midlands based venture capital company, where he was
managing director from 1985 to 1992. He then became chief
executive of Price & Pierce Limited, which acted as the UK
agent for overseas producers of forestry products, before
leaving in 1997 to become finance director of Ambion Brick,
a building materials company bought out from Ibstock PLC.
After retiring in 2002, he now works as a consultant. He is an
external member of the Manager's investment committee.
Jeff Warren ACCA (appointed 2 October 2007)
Jeff Warren ACCA has 30 years’ financial management
experience, including high level corporate governance and
regulatory environment experience. In 1992 he resigned as
Finance Director of Mountleigh Group PLC, which was
subsequently placed into administration, and joined Bristol &
West Building Society as CFO. Following the acquisition of
Bristol & West by Bank of Ireland, he continued as Finance
Director until he was promoted to CEO of Bristol & West PLC
in 1999, and subsequently also took responsibility for the
Bank of Ireland UK Branch network. In 2003 he moved to
take on a role at Group level in Dublin, as Group Chief
Development Officer, reporting to the Bank of Ireland CEO. In
2004 he returned to the UK and has since held a number of
non-executive roles, including 4 months as a non-executive
Director of Courts Plc until that company was placed into
administration in December 2004.
Ebbe Dinesen R (Danish) FSR (appointed
26 September 2012)
Ebbe Dinesen qualified as a chartered accountant in
Denmark before working in senior positions in Danish
industry. In 1985 he came to the United Kingdom and
became CEO of Carlsberg UK in 1987. He later became CEO
of Carlsberg-Tetley PLC (now Carlsberg UK) and became
executive chairman of that company in 2001. He stepped
down in 2006. He was chairman of the British Brewers from
2002 to 2006. Ebbe Dinesen was Danish vice-consul for The
Midlands from 1987 to 2006. In 2000 he was knighted by the
Queen of Denmark.
All Directors are members of the Audit Committee and John
Kerr is Chairman.
All Directors are members of the Nomination Committee and
David Watkins is Chairman.
All Directors are members of the Remuneration Committee
and Jeff Warren is Chairman.
14 Albion Venture Capital Trust PLC
232642 Albion Venture Cap pp06-pp17 26/06/2014 12:15 Page 15
The Manager
Albion Ventures LLP is authorised and regulated by the
Financial Conduct Authority and is the Manager of Albion
Venture Capital Trust PLC. In addition to Albion Venture
Capital Trust PLC, it manages a further five venture capital
trusts, and currently has total funds under management of
approximately £245 million.
The following are specifically responsible for the management
and administration of the VCTs managed by Albion Ventures
LLP, including Albion Venture Capital Trust 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 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, is a director of
Albion Enterprise VCT, Albion Development and Albion
Technology & General VCT, 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 PLC, 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 (Hons), having graduated in
Industrial Economics, followed by a Masters in Corporate
Strategy, spent five years at N M Rothschild & Sons,
specialising in mergers and acquisitions principally in the
natural resources and then healthcare sectors, before joining
Albion Ventures in 2013, where he currently concentrates on
renewable energy projects.
Dr Andrew Elder, MA, FRCS,
initially practised as a
surgeon for six years, specialising in neurosurgery, before
joining the Boston Consulting Group (BCG) as a consultant in
2001. Whilst at BCG he specialised in healthcare strategy,
gaining experience with many large, global clients across the
full spectrum of healthcare
including biotechnology,
pharmaceuticals, service and care providers, software and
telecommunications. He joined Albion Ventures in 2005 and
became a partner in 2009. He has an MA plus Bachelors of
Medicine and Surgery from Cambridge University and is a
fellow of the Royal College of Surgeons (England).
Emil Gigov, BA (Hons), FCA, graduated from the European
Business School, London, with a BA (Hons) Degree in
European Business Administration in 1994. He then joined
KPMG in their financial services division and qualified as a
chartered accountant in 1997. Following this he transferred
to KPMG Corporate Finance where he specialised in the
leisure, media and marketing services sectors acting on
acquisitions, disposals and fundraising mandates. He joined
Albion Ventures in 2000 and has since made and exited
investments in a number of industry sectors, including,
healthcare, education, technology, leisure and engineering.
Emil became a partner in Albion Ventures in 2009.
leading
investments
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 partner in 2009. He is also managing
director of Albion Community Power PLC. 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 Finance Director. 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), began by advising quoted UK
companies on IPOs, takeovers and other corporate
transactions, first with Charterhouse Securities and then ING
Barings. Companies ranged in valued from £10 million to £1
billion, across the healthcare and technology sectors among
others. After moving to Albion Ventures in 2004, Ed started
investing in the technology, healthcare, financial and business
services sectors. Ed became a partner in 2009 and is
responsible for a number of Albion's technology investments.
He graduated from University College London with a first
class degree in Philosophy.
Dr Christoph Ruedig, MA, MBA, initially practised as a
radiologist before spending 3 years at Bain & Company. In
2006 he joined 3i plc working for their healthcare venture
capital arm
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 and became a partner in June
2014. He holds a degree in medicine from Ludwig-
Maximilians University, Munich and an MBA from INSEAD.
Henry Stanford, MA, ACA, qualified as a chartered
accountant with Arthur Andersen before joining the corporate
finance department of Close Brothers Group in 1992,
becoming an assistant director in 1996. He moved to Albion
Ventures in 1998, where he has been responsible for much
of the asset based portfolio. Henry became a partner of
Albion Ventures in 2009. He holds an MA degree in Classics
from Oxford University.
Robert Whitby-Smith, BA (Hons), MSI, 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 in 2005, Robert has assisted
in the workout of portfolios formerly managed by other fund
managers (now named Crown Place VCT and Kings Arms
Yard VCT) 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 in 2007, Marco has been involved in
hotel, cinema, pub, residential property and garden centre
investments and is, more recently, responsible for a number
of renewable energy investments. Marco graduated from
Cambridge University with a first class degree in economics
and is a Chartered Surveyor. Marco became an Investment
Director in June 2014.
Albion Venture Capital Trust PLC 15
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Portfolio of investments
The following list is a summary of investments as at 31 March 2014:
As at 31 March 2014 As at 31 March 2013
% voting Change in
rights held Cumulative Cumulative value
% by all AVL* Accounting movement Accounting movement for the
voting managed cost** in value Value cost** in value Value year
Portfolio company rights companies £’000 £’000 £’000 £’000 £’000 £’000 £’000***
Hotels
Kew Green VCT (Stansted) Limited 45.2 50.0 6,723 656 7,379 6,723 1,034 7,757 (378)
The Crown Hotel Harrogate Limited 24.1 50.0 4,245 (1,329) 2,916 4,245 (1,233) 3,012 (96)
The Stanwell Hotel Limited 39.2 50.0 4,677 (2,339) 2,338 4,614 (2,335) 2,279 (4)
Total investment in the
hotel sector 15,645 (3,012) 12,633 15,582 (2,534) 13,048 (478)
Healthcare
Oakland Care Centre Limited 31.6 50.0 2,998 1,611 4,609 2,998 1,176 4,174 435
Active Lives Care Ltd 100.0 100.0 1,800 – 1,800 – – – –
Taunton Hospital Limited 7.2 50.0 958 260 1,218 775 47 822 214
Total investment in the
healthcare sector 5,756 1,871 7,627 3,773 1,223 4,996 649
Renewable energy
Chonais Holdings Limited 16.1 50.0 1,611 6 1,617 – – – 6
Alto Prodotto Wind Limited 7.4 50.0 670 231 901 670 187 857 44
The Street by Street Solar
Programme Limited 6.5 50.0 676 163 839 650 94 744 69
Erin Solar Limited 18.6 50.0 520 3 523 – – – 3
Regenerco Renewable
Energy Limited 4.5 50.0 427 36 463 427 24 451 12
Green Highland Renewables
(Ledgowan) Limited 20.8 50.0 387 – 387 – – – –
Dragon Hydro Limited 7.3 30.0 311 61 372 141 1 142 60
TEG Biogas (Perth) Limited 4.9 50.0 306 23 329 306 21 327 1
Harvest AD Limited n/a**** n/a 307 – 307 – – – –
AVESI Limited 7.4 50.0 230 16 246 230 – 230 16
Greenenerco Limited 3.9 50.0 135 49 184 135 – 135 49
Total investment in the
renewable energy sector 5,580 588 6,168 2,559 327 2,886 260
Pubs
The Charnwood Pub
Company Limited 14.8 50.0 3,532 (1,889) 1,643 3,532 (1,897) 1,635 8
Bravo Inns II Limited 6.4 50.0 1,085 38 1,123 935 7 942 30
Bravo Inns Limited 7.6 50.0 589 (156) 433 596 (155) 441 –
The Dunedin Pub Company
VCT Limited 8.3 50.0 75 (2) 73 80 (3) 77 1
Total investment in the
pub sector 5,281 (2,009) 3,272 5,143 (2,048) 3,095 39
Health and fitness clubs
The Weybridge Club Limited 14.3 50.0 2,136 (650) 1,486 2,136 (208) 1,928 (442)
Kensington Health Clubs Limited 13.8 50.0 1,889 (800) 1,089 1,889 (535) 1,354 (265)
Tower Bridge Health Clubs Limited 8.4 50.0 347 321 668 403 172 575 149
Total investment in the health
and fitness club sector 4,372 (1,129) 3,243 4,428 (571) 3,857 (558)
Education
Radnor House School
(Holdings) Limited 7.1 50.0 1,381 850 2,231 1,381 426 1,807 526
Total investment in the
education sector 1,381 850 2,231 1,381 426 1,807 526
Residential property
development
G&K Smart Developments
VCT Limited + 42.9 50.0 276 (40) 236 1,488 (1,144) 344 30
Total investment in the
residential property
development sector 276 (40) 236 1,488 (1,144) 344 30
Other leisure
Premier Leisure (Suffolk) Limited 9.9 47.3 468 (298) 170 468 (303) 165 5
Total investment in the
other leisure sector 468 (298) 170 468 (303) 165 5
Total fixed asset
investments 38,759 (3,179) 35,580 34,821 (4,623) 30,198 473
* Albion Ventures LLP
** Amounts shown as accounting cost represent the acquisition cost in the case of investments originally made by the Company and/or the fair value attributed
to the investments acquired from Albion Prime VCT PLC on the Merger on 25 September 2012, as adjusted for changes in value since acquisition.
*** As adjusted for additions and disposals during the year.
**** Loan stock investment only
+ Closing cost is net of £1,074,000 written off in respect of G&K Smart Developments VCT Limited which is still held at the balance sheet date.
16 Albion Venture Capital Trust PLC
232642 Albion Venture Cap pp06-pp17 26/06/2014 12:15 Page 17
Portfolio of investments (continued)
Total change on value on investments for the year 473
Realised gain in current year 50
Movement in loan stock accrued interest 103
Total gains on investments as per Income statement 626
Accounting Opening Disposal Total realised Gain on
Fixed asset investment realisations during cost* carrying value** proceeds gain/(loss) opening value
the year to 31 March 2014 £’000 £’000 £’000 £’000 £’000
The Bear Hungerford Limited*** – – 40 40 40
Radnor House School (Holdings) Limited
(redemption premium repaid) – 103 111 111 8
Wickenhall Mill VCT Limited*** – – 2 2 2
G&K Smart Developments VCT Limited** 1,212 138 138 (1,074) –
Tower Bridge Health Clubs Limited
(loan stock repayment) 55 55 55 – –
Bravo Inns Limited (loan stock repayment) 8 8 8 – –
The Dunedin Pub Company VCT Limited
(loan stock repayment) 5 5 5 – –
Total 1,280 309 359 (921) 50
* The cost includes the original cost from Albion Venture Capital Trust PLC and the carried over value on merger from Albion Prime VCT PLC as at
25 September 2012.
** Includes an amount of £1,074,000 written off in respect of investment still held at the balance sheet date.
*** This refers to additional proceeds from the sale which was realised in the prior year.
Albion Venture Capital Trust PLC 17
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Portfolio companies
The top ten investments held by the Company, by total aggregate value of equity and loan stock are as shown below.
The most recently audited results are included for each portfolio company. Valuations are often based upon the most recent
information available, which may include management accounts. The audited results are therefore not necessarily the figures
used for the valuation.
Kew Green VCT (Stansted) Limited
The company developed and operates a limited service hotel under the “Holiday Inn Express”
brand at Stansted Airport on a 125 year lease. The hotel opened in January 2005 with 183
bedrooms. A 71 bedroom extension opened in July 2007, taking the hotel to 254 bedrooms.
Audited results: year to 31 August 2013
£’000 Investment information £’000
Turnover 4,155 Income recognised in the year 430
EBITDA 528 Total cost 6,723
Loss before tax (238) Total equity valuation 3,601
Net assets 4,291 Total loan stock valuation 3,778
Basis of valuation: Net asset value supported by third party valuation Voting rights 45.2 per cent.
Website: www.expressstanstedairport.co.uk
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.
Oakland Care Centre Limited
The company has acquired a freehold site on which it has developed a new, purpose built care home catering
for the needs of up to 45 residents.
Abbreviated audited results: year to 30 September 2013
£’000 Investment information £’000
Turnover 2,162 Income recognised in the year 301
EBITDA 853 Total cost 2,998
Profit before tax 118 Total equity valuation 2,539
Net assets 996 Total loan stock valuation 2,070
Basis of valuation: Net asset value supported by third party valuation Voting rights 31.6 per cent.
Website: www.bayfieldcourt.co.uk
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 Crown Hotel Harrogate Limited
The company acquired the historic 114 bedroom Crown Hotel in Harrogate, Yorkshire in November 2005. A substantial
refurbishment was carried out and the hotel is once again recognised as one of the leading hotels in Harrogate.
Audited results: year to 31 March 2014
£’000 Investment information £’000
Turnover 2,395 Income recognised in the year 117
EBITDA 272 Total cost 4,245
Loss before tax (973) Total equity valuation –
Net liabilities (6,636) Total loan stock valuation 2,916
Basis of valuation: Net asset value supported by third party valuation Voting rights 24.1 per cent.
Website: www.crownhotelharrogate.com
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 Stanwell Hotel Limited
The company acquired the 19 bedroom Stanwell Hall Hotel near Heathrow in August 2007. Planning consent was
subsequently obtained to extend the hotel to 52 bedrooms and the hotel re-opened at the end of April 2010.
Audited results: year to 31 August 2013
£’000 Investment information £’000
Turnover 1,152 Income recognised in the year –
EBITDA 27 Total cost 4,677
Loss before tax (908) Total equity valuation –
Net liabilities (4,641) Total loan stock valuation 2,338
Basis of valuation: Net asset value supported by third party valuation Voting rights 39.2 per cent.
Website: www.thestanwell.com
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.
Radnor House School (Holdings) Limited
Radnor House is a co-educational independent day school in Twickenham, which opened in September 2011. It
is located in historic buildings on the banks of the River Thames in South West London. In its first Ofsted
inspection the school was graded Outstanding in all categories, placing it in the top 0.5% of all schools in the UK
inspected by Ofsted.
Audited results: year to 31 August 2013
£’000 Investment information £’000
Turnover 3,602 Income recognised in the year 63
EBITDA 1,105 Total cost 1,381
Profit before tax 168 Total equity valuation 1,166
Net liabilities (156) Total loan stock valuation 1,065
Basis of valuation: Net asset value supported by third party valuation Voting rights 7.1 per cent.
Website: www.radnorhouse.org
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.
18 Albion Venture Capital Trust PLC
232642 Albion Venture Cap pp18-pp19 26/06/2014 12:22 Page 19
Portfolio companies (continued)
Active Lives Care Ltd
A company to develop and operate a purpose built elderly care home offering 72 bedrooms in Cumnor Hill, Oxford.
The company was incorporated on 8 November 2013 and has not yet filed accounts at Companies House.
Investment information £’000
Income recognised in the year –
Total cost 1,800
Total equity valuation –
Total loan valuation 1,800
Basis of valuation: Cost Voting rights 100 per cent.
After the year end 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 Charnwood Pub Company Limited
The company is a pub company which owns and operates 10 freehold public houses in central England.
Abbreviated audited results: 31 March 2013
£’000 Investment information £’000
Turnover 3,857 Income recognised in the year 39
EBITDA 430 Total cost 3,532
Loss before tax (288) Total equity valuation –
Net liabilities (1,746) Total loan stock valuation 1,643
Basis of valuation: Net asset value supported by third party valuation Voting rights 14.8 per cent.
Website: www.charnwoodpubco.co.uk
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.
Chonais Holdings Limited
A company that is developing and will operate a 2 megawatt hydro-power scheme in the Scottish Highlands.
The company was incorporated on 26 June 2013 and has not yet filed accounts at Companies House.
Investment information £’000
Income recognised in the year 5
Total cost 1,611
Total equity valuation 870
Total loan valuation 747
Basis of valuation: Cost Voting rights 16.1 per cent.
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 Weybridge Club Limited
The company owns a 30 acre freehold site near to the centre of Weybridge, Surrey, which has been developed into
a premium health and fitness club.
Audited results: year to 30 September 2013
£’000 Investment information £’000
Turnover 1,732 Income recognised in the year 129
EBITDA 412 Total cost 2,136
Loss before tax (480) Total equity valuation –
Net liabilities (3,770) Total loan stock valuation 1,486
Basis of valuation: Net asset value supported by third party valuation Voting rights 14.3 per cent.
Website: www.theweybridgeclub.com
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.
Bravo Inns II Limited
The company was formed in September 2007 and owns and operates 25 freehold pubs in the north of England. The
pubs are trading well with considerable demand for the value offering.
Abbreviated audited results: year to 31 March 2013
£’000 Investment information £’000
Turnover 4,871 Income recognised in the year 92
EBITDA 654 Total cost 1,085
Loss before tax (378) Total equity valuation 372
Net assets 2,678 Total loan stock valuation 751
Basis of valuation: Net asset value supported by third party valuation Voting rights 6.4 per cent.
Website: www.bravoinns.com
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 Albion Venture
Capital Trust PLC’s accounts than in their own, where the portfolio company does not have a policy of revaluing its fixed assets.
Albion Venture Capital Trust PLC 19
232642 Albion Venture Cap pp20-pp30 26/06/2014 12:34 Page 20
Directors’ report
The Directors submit their Annual Report and the audited
Financial Statements on the affairs of Albion Venture Capital
Trust PLC (the “Company”) for the year ended 31 March 2014.
BUSINESS REVIEW
Principal activity and status
The principal activity of the Company is that of a venture capital
trust. It has been approved by H.M. Revenue & Customs
(“HMRC”) as a venture capital trust in accordance with 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. Approval for the year ended
31 March 2014 is subject to review should there be any
subsequent enquiry under corporation tax self assessment.
The Company is not a close company for taxation purposes
and its shares are listed on The London Stock Exchange.
Under current tax legislation, shares in the Company provide
tax-free capital growth and income distribution, in addition to
the income tax relief some investors would have obtained
when they invested in the original share offers.
Capital structure
Details of the issued share capital, together with details of the
movements in the Company’s issued share capital during the
year are shown in note 16. The 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, combined with
the prospect of longer term capital growth.
All Ordinary shares (except for treasury shares, which have
no right to dividend) rank pari passu for voting rights and
each Ordinary share is entitled to one vote. The Directors are
not aware of any restrictions on the transfer of shares or on
voting rights.
Shareholders are entitled to receive dividends and the return
on capital on winding up or other return on capital based on
the surpluses attributable to the shares.
Issue and buy-back of Ordinary shares
During the year the Company issued a total of 4,902,202
Ordinary shares (2013: 1,543,530 Ordinary shares), of which
4,608,012 Ordinary shares (2013: 1,352,841 Ordinary
shares) were issued under the Albion VCTs Top Up Offers;
and 294,190 Ordinary shares (2013: 190,689 Ordinary
shares) were issued under the Company’s Dividend
Reinvestment Scheme. The Company launched the Albion
VCTs Top Up Offers 2013/2014 in November 2013. This
20 Albion Venture Capital Trust PLC
closed on 14 March 2014 and shares issued are detailed in
Note 16. The Company is currently engaged in the Albion
VCTs Prospectus Top Up Offers 2013/2014 for which a
prospectus has been published, copies of which are
available
at
www.albion-ventures.co.uk. The Prospectus Offers remains
open for the 2014/2015 tax year and are expected to close
no later than 30 September 2014.
Company’s
website
the
on
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 on page 7 of the
Chairman’s statement.
Substantial interests and shareholder profile
As at the date of this report, the Company was aware that
J M Finn Nominees had a beneficial interest of 3.04 per cent.
(2013: 3.35 per cent.) of the issued share capital. There have
been no disclosures in accordance with Disclosure and
Transparency Rule 5 made to the Company during the year
ended 31 March 2014, and to the date of this report.
Results and dividends
Detailed information on the results and dividends for the year
ended 31 March 2014 can be found in the Strategic report
on pages 8 and 9.
Going concern
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
significant cash and liquid resources, its portfolio of
investments is well diversified in terms of sector, and the
major cash outflows of the Company (namely investments,
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 20. The Company’s business
activities, together with details of its performance are shown
in the Strategic report and this Directors’ report.
Post balance sheet events
Details of events that have occurred since 31 March 2014 are
shown in note 22.
232642 Albion Venture Cap pp20-pp30 26/06/2014 12:34 Page 21
Directors’ report (continued)
Principal risks and uncertainties
A summary of the principal risks faced by the Company is set
out on pages 12 and 13 of the Strategic report.
of their immediate family) are shown in the Directors’
remuneration report on page 29.
Environment
The management and administration of the Company is
undertaken by the Manager. Albion Ventures LLP recognises
the importance of its environmental responsibilities, monitors
its impact on the environment, and designs and implements
policies to reduce any damage that might be caused by its
activities. Initiatives designed to minimise the Company’s
impact on the environment include recycling and reducing
energy consumption as shown in the financial statements of
Albion Ventures LLP.
Global greenhouse gas emissions
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 Companies Act 2006 (Strategic Report and
Directors’ Reports) regulations 2013, including those within
our underlying investment portfolio.
Anti-bribery policy
The Company has adopted a zero tolerance approach to
bribery, and will not tolerate bribery under any circumstances
in any transaction the Company is involved in.
Albion Ventures LLP reviews the anti-bribery policies and
procedures of all portfolio companies.
Diversity
The Board currently consists of four male Directors. The
Board’s policy on the recruitment of new directors is to
attract a range of backgrounds, skills and experience and to
ensure that appointments are made on the grounds of merit
against clear and objective criteria and to bear in mind
gender and other diversity within the Board.
More details on the Directors can be found in the Board of
Directors section on page 14.
The Manager has an equal opportunities policy and currently
employees 12 men and 10 women working at
Albion Ventures LLP.
Employees
The Company is managed by Albion Ventures LLP and
hence has no employees other than its Directors.
Directors
The Directors who held office throughout the year, and their
interests in the shares of the Company (together with those
Directors’ indemnity
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.
Re-election of 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, David Watkins and John
Kerr will retire and offer themselves for re-election as both have
been Directors of the Company for more than nine years. The
Board does not consider that the length of service reduces
their ability to act independently of the Manager. Jeff Warren
will also retire and offer himself for re-election.
Advising ordinary retail investors
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 VCT 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.
Investment and co-investment
The Company co-invests with other venture capital trusts and
funds managed by Albion Ventures LLP. Allocation of
investments is on the basis of an allocation agreement which is
based, inter alia, on the ratio of funds available for investment.
Auditor
The Audit Committee annually reviews and evaluates the
standard and quality of service provided by the Auditor, as
well as value for money in the provision of these services.
A resolution to re-appoint BDO LLP will be put to the Annual
General Meeting.
Annual General Meeting
The Annual General Meeting will be held at the City of
London Club, 19 Old Broad Street, London EC2N 1DS at
Albion Venture Capital Trust PLC 21
232642 Albion Venture Cap pp20-pp30 26/06/2014 12:34 Page 22
Directors’ report (continued)
11:00 am on 25 July 2014. The notice of the Annual General
Meeting is at the end of this document.
conclusion of the next Annual General Meeting of the
Company, whichever is earlier. Members should note that this
resolution also relates to treasury shares.
The proxy form enclosed with this Annual Report and
Financial Statements permits shareholders to disclose votes
‘for’, ‘against’, and ‘withheld’. A ‘vote withheld’ is not a vote
in law and will not be counted in the proportion of the votes
for and against the resolution. A summary of proxies lodged
at the Annual General Meeting will be published at
www.albion-ventures.co.uk within the ‘Our Funds’ section by
clicking on Albion Venture Capital Trust 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 or the Listing Rules of the
Financial Conduct Authority.
Power to allot shares
Ordinary resolution number 9 will request the authority to allot
up to an aggregate nominal amount of £134,349 representing
approximately 20 per cent. of the issued Ordinary share
capital of the Company as at the date of this report.
The Directors current intention is to allot shares under the
Dividend Reinvestment Scheme, any Albion VCTs Top Up
Offers and reissuing treasury shares where it is in the
Company’s interest to do so. The Company currently holds
4,695,440 Ordinary treasury shares representing 7.3 per
cent. of the total Ordinary share capital in issue as at 31
March 2014.
This resolution replaces the authority given to the Directors at
the Annual General Meeting in 2013. The authority sought at
the
forthcoming Annual General Meeting will expire
18 months from the date this resolution is passed or at the
conclusion of the next Annual General Meeting of the
Company, whichever is earlier.
Dis-application of pre-emption rights
Special resolution number 10 will request the authority for the
Directors to allot equity securities for cash without first being
required to offer such securities to existing members. This will
include the sale on a non pre-emptive basis of any shares the
Company holds in treasury for cash. The authority relates to a
maximum aggregate of £134,349 of the nominal value of the
share capital representing 20 per cent. of the issued Ordinary
share capital of the Company as at the date of this Report.
Purchase of own shares
Special resolution number 11 will request the authority to
purchase approximately 14.99 per cent. of the Company's
issued Ordinary share capital at, or between, the minimum
and maximum prices specified in resolution 11. Shares
bought back under this authority may be cancelled.
The Board believes that it is helpful for the Company to
continue to have the flexibility to buy its own shares and this
resolution seeks authority from shareholders to do so.
This resolution would renew the 2013 authority, which was on
similar terms. During the financial year under review, the
Company purchased 543,000 Ordinary shares for treasury at
an aggregate consideration of £364,000, including stamp duty
and 729,000 Ordinary shares for cancellation at an aggregate
consideration of £487,000, representing 2 per cent. of the
issued share capital of the Company as at 31 March 2014.
The authority sought at the Annual General Meeting will
expire 18 months from the date this resolution is passed or
at the conclusion of the next Annual General Meeting,
whichever is earlier.
Treasury shares
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 by these resolutions is intended
to apply equally to shares to be held by the Company as
treasury shares in accordance with the Regulations.
Special resolution number 12 will request the authority to
permit Directors to sell treasury shares at the higher of the
prevailing current share price and the price at which they
were bought in at.
Recommendation
The Board believes that the passing of the resolutions above
is 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.
This resolution replaces the authority given to the Directors at
the Annual General Meeting in 2013. The authority sought at
the
forthcoming Annual General Meeting will expire
18 months from the date this resolution is passed or at the
Directors’ responsibilities
The Directors are responsible for preparing the Strategic
report, the Directors' report, the Directors' remuneration
22 Albion Venture Capital Trust PLC
232642 Albion Venture Cap pp20-pp30 26/06/2014 12:34 Page 23
Directors’ report (continued)
report and the Financial Statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare Financial
Statements for each financial year. Under that law the
Directors 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 period.
In preparing these Financial Statements the Directors are
required to:
● select suitable accounting policies and then apply
them consistently;
● make judgments and accounting estimates that are
reasonable and prudent; and
● state whether applicable UK accounting standards
have been followed, subject to any material departures
disclosed and explained in the Financial Statements;
● prepare the Financial Statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business; and
● prepare a Strategic report, a Director’s report and
Director’s remuneration report which comply with the
requirements of the Companies Act 2006.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company's transactions and disclose with reasonable
accuracy at any time the financial position of the Company
and enable them to ensure that the Financial Statements
comply with the Companies Act 2006. 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.
Website publication
The Directors are responsible for ensuring the Annual Report
and the Financial Statements are made available on a
website. Financial Statements are published on the
the Manager’s website
Company’s webpage on
(www.albion-ventures.co.uk) in accordance with legislation in
the United Kingdom governing
the preparation and
dissemination of Financial Statements, which may vary from
legislation in other jurisdictions. The directors' responsibility
extends to the ongoing integrity of the Financial Statements
contained therein.
Directors’ responsibilities pursuant to Disclosure and
Transparency Rule 4 of the UK Listing Authority
The Directors confirm, to the best of their knowledge:
● that the Financial Statements have been prepared in
accordance with UK Generally Accepted Accounting
Practice and give a true and fair view of the assets,
liabilities, financial position and profit or loss of the
Company; and
● that the Annual Report includes a fair review of the
development and performance of the business and the
position of the Company, together with a description of
the principal risks and uncertainties that it faces.
Disclosure of information to the Auditor
In the case of the persons who are Directors of the Company
at the date of approval of this report:
● so far as each of the Directors are aware, there is no
relevant audit information of which the Company’s
Auditor is unaware; and
● each of the Directors has taken all the steps that he
ought to have taken as a Director to make himself
aware of any relevant audit information and to establish
that the Company’s Auditor is aware of that information.
This disclosure is given and should be interpreted in
accordance with the provisions of s418 of the Companies
Act 2006.
By Order of the Board
Albion Ventures LLP
Company Secretary
1 King’s Arms Yard
London, EC2R 7AF
25 June 2014
Albion Venture Capital Trust PLC 23
232642 Albion Venture Cap pp20-pp30 26/06/2014 12:34 Page 24
Statement of corporate governance
Background
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 Albion Venture Capital Trust 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 principles set out in the UK
Corporate Governance Code, as well as setting out
additional principles and recommendations on issues that are
of specific relevance to Albion Venture Capital Trust PLC.
The Board considers that reporting against the principles and
recommendations of the AIC Code, and by reference to the
AIC Guide
the UK Corporate
incorporates
Governance Code), will provide better information to
shareholders than reporting under the Code alone.
(which
The Company has complied with the recommendations of
the AIC Code and the relevant provisions of the UK
Corporate Governance Code, except as set out below.
Application of the Principles of the Code
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.
Board of Directors
The Board consists solely of independent 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.
David Watkins is the Chairman and Jeff Warren is the Senior
Independent Director.
John Kerr is an external member of the Investment
Committee of Albion Ventures LLP. The Board has reviewed
and approved this role and concluded it does not affect his
independence.
David Watkins and John Kerr have both been Directors of the
Company for more than nine years and, in accordance with
the recommendations of the AIC code, are subject to annual
re-election. The Board does not have a policy of limiting the
tenure of any Director as the Board does not consider that a
Director’s length of service reduces his ability to act
independently of the Manager. Jeff Warren will also retire and
offer himself for re-election.
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 14.
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 direct 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 UK Corporate
Governance 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 considered that its
membership is diverse in relation to its experience and
balance of skills. Further details on the policy regarding the
recruitment of new directors can be found in the Nomination
Committee section on page 27.
The Board met five times during the year as part of its regular
programme of Board meetings. All of the Directors attended
each meeting. A sub-committee of the Board comprising at
least two Directors met during the year to allot shares issued
under the Dividend Reinvestment Scheme and the Albion
VCTs Top Up Offers. A sub-committee of the Board also met
during the year to approve the terms and contents of the
Offers documents under the Albion VCTs Top Up Offers
2013/2014, Albion VCTs Prospectus Top Up Offers
2013/2014 and to allot Shares under the Offers.
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.
24 Albion Venture Capital Trust PLC
232642 Albion Venture Cap pp20-pp30 26/06/2014 12:34 Page 25
Statement of corporate governance (continued)
The Manager has authority over the management of the
investment portfolio, the organisation of custodial services,
accounting, secretarial and administrative services. The main
issues reserved for the Board include:
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.
● the appointment, evaluation, removal and remuneration
of the Manager;
● the consideration and approval of future developments
or changes to the investment policy, including risk and
asset allocation;
● consideration of corporate strategy and corporate
events that arise;
● application of the principles of the UK Corporate
Governance Code, corporate governance and
internal control;
● review of sub-committee recommendations, including
the
the
appointment and remuneration of the Auditor;
to shareholders
recommendation
for
● evaluation of non-audit services provided by the
external Auditor;
● approval of the appropriate dividend to be paid
to shareholders;
● the performance of the Company, including monitoring of
the discount of the net asset value and the share price;
● share buy-back and treasury share policy; and
● monitoring shareholder profile and considering
shareholder communications.
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.
Committees’ and Directors’ performance evaluation
Performance of the Board and the Directors is assessed on
the following:
● attendance at Board and Committee meetings;
● the contribution made by individual Directors at, and
outside of, Board and Committee meetings; and
● completion of a detailed internal assessment process
and annual performance evaluation conducted by the
Chairman. The Senior Independent Director reviews
the Chairman’s annual performance evaluation.
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. Diversity within the Board is achieved through the
appointment of directors with different sector backgrounds
and skills.
Directors’ retirement and re-election is subject to the Articles
of Association and the AIC Code. Directors are subject to
re-election every three years and Directors who have served
longer than nine years and non-independent Directors, to
re-election every year.
In light of the structured performance evaluation, David
Watkins, Jeff Warren and John Kerr, who are subject to
re-election at the forthcoming Annual General Meeting, are
considered to be effective Directors who demonstrate strong
commitment to the role. The Board believes it to be in the
best interest of the Company to re-elect these Directors at
the forthcoming Annual General Meeting.
Remuneration Committee
Jeff Warren is Chairman of the Remuneration Committee and
all of the Directors are members of this Committee. The
Committee meets once a year and held one formal meeting
during the year which was fully attended by all the Directors.
on
found
The terms of reference for the Remuneration Committee can
be
at
www.albion-ventures.co.uk within the ‘Our Funds’ section by
clicking on Albion Venture Capital Trust PLC and looking
under the Corporate Governance section.
Company’s website
the
Audit Committee
The Audit Committee consists of all Directors. John Kerr is
Chairman of the Audit Committee. In accordance with the
Code, all members of the Audit Committee have recent and
relevant financial experience and therefore it is considered
appropriate for the whole Board to be part of the Audit
Committee. The Committee met twice during the year ended
31 March 2014; all members attended.
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 Albion Venture Capital Trust PLC.
During the year under review, the Committee discharged its
responsibilities including:
● formally reviewing the Annual Report and Financial
Interim
Statements,
Management Statements and
the associated
announcements, with particular focus on the main areas
requiring judgment and on critical accounting policies;
the Half-yearly Report,
the
Albion Venture Capital Trust PLC 25
232642 Albion Venture Cap pp20-pp30 26/06/2014 12:34 Page 26
Statement of corporate governance (continued)
● reviewing the effectiveness of the internal controls
system and examination of the Internal Controls Report
produced by the Manager;
● meeting with the external Auditor and reviewing
their findings;
● highlighting the key risks and specific issues relating to
the Financial Statements including the reasonableness
of valuations, compliance with accounting standards
and UK law, corporate governance and listing and
disclosure rules as well as going concern. These issues
were addressed through detailed review, discussion
and challenge by the Board of these matters, as well as
by reference to underlying technical information;
● advising the Board on whether the Annual Report and
Financial Statements, taken as a whole, is fair, balanced
and understandable and provides the information
necessary for shareholders to assess the Company’s
performance, business model and strategy;
● reviewing the performance of the Manager and making
recommendations regarding their re-appointment to
the Board; and
● (after the year end) reporting to the Board on how it has
discharged its responsibilities.
Financial Statements
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
major conflicts arose between the Audit Committee and the
external Auditor in respect of their work during the period.
over revenue recognition to ensure that amounts received are
in line with expectation and budget.
Following a detailed review of the Annual Report and
Financial Statements and consideration of the key areas of
risk identified, the Board as a whole have concluded that, 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.
Relationship with the External Auditor
The Committee reviews the performance and continued
suitability of the Company’s external Auditor on an annual
basis. They assess the external Auditor’s independence,
qualification, extent of relevant experience, effectiveness of
audit procedures as well as the robustness of their quality
assurance procedures. In advance of each audit, the
Committee obtains confirmation from the external Auditor
that they are independent and of the level of non-audit fees
earned by them and their affiliates. There were no non-audit
fees charged to the Company during the year.
As part of its work, the Audit Committee has undertaken a
formal evaluation of the external Auditor against the
following criteria;
– Qualification
– Expertise
– Resources
– Effectiveness
– Independence
– Leadership
The key accounting and reporting issues considered by the
Committee were:
The valuation of the Company’s investments
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 Committee recommended investment
valuations to the Board for approval.
Revenue recognition
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
In order to form a view of the effectiveness of the external
audit process, the 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 March 2014, 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 Auditor’s skills match all the relevant and
appropriate criteria.
As part of its annual review procedures, the Committee has
obtained sufficient assurance from their own evaluation and
the audit feedback documentation. Based on the assurance
obtained, the Committee has recommended to the Board
26 Albion Venture Capital Trust PLC
232642 Albion Venture Cap pp20-pp30 26/06/2014 14:20 Page 27
Statement of corporate governance (continued)
that a resolution to re-appoint BDO LLP be proposed at the
Annual General Meeting.
control arising during the year. The Audit Committee assists
the Board in discharging its review responsibilities.
Nomination Committee
The Nomination Committee consists of all Directors, with
David Watkins as Chairman.
The Board’s policy on the recruitment of new directors is to
attract a range of backgrounds, skills and experience and to
ensure that appointments are made on the grounds of merit
against clear and objective criteria and bear in mind gender
and other diversity within the Board.
The nomination committee did not meet during the year.
Terms of reference for the Nomination Committee can be found
on the Company’s website at www.albion-ventures.co.uk
within the ‘Our Funds’ section by clicking on Albion Venture
Capital Trust PLC.
Internal control
In accordance with the UK Corporate Governance 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 UK Corporate Governance Code published in
September 1999 and updated in 2005 (the “Turnbull
guidance”). The Board is responsible for the Company’s
system of internal control and for reviewing its effectiveness.
However, such a system is designed to manage, rather than
eliminate the risks of failure to achieve the Company’s
business objectives and can only provide reasonable and not
absolute assurance against material misstatement 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 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
The main features of the internal control system with respect
to financial reporting, implemented throughout the year are:
● segregation of duties between the preparation of
valuations and recording into accounting records;
valuations of
the asset-backed
● independent
investments within the portfolio undertaken annually;
● reviews of valuations are carried out by the Managing
Partner and reviews of financial reports are carried out
by the Finance Director of Albion Ventures LLP;
● bank and stock reconciliations are carried out monthly
by the Manager in accordance with FCA requirements;
● all published financial reports are reviewed by Albion
Ventures LLP Compliance department;
● the Board reviews financial information; and
● a separate Audit Committee of the Board reviews
published financial information.
As the Board has delegated the investment management
and administration to Albion Ventures LLP, the Board feels
that it is not necessary to have its own internal audit function.
Instead, the Board had access to PKF Littlejohn LLP, which,
as internal Auditor for Albion Ventures LLP, undertakes
periodic examination of the business processes and controls
environment at Albion Ventures LLP, and ensures that any
recommendations to implement improvements in controls
are carried out. PKF Littlejohn LLP report formally to the
Board of Albion Venture Capital Trust PLC on an annual
basis. The Board will continue to monitor its system of
internal control in order to provide assurance that it operates
as intended.
Conflicts of interest
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 has two independent Directors authorise those
conflicts. Procedures to disclose and authorise conflicts of
interest have been adhered to throughout the year.
Capital structure and Articles of Association
Details regarding the Company’s capital structure, substantial
interests and Directors’ powers to buy and issue shares are
detailed in full on pages 20 and 22 of the Directors’ report.
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.
Albion Venture Capital Trust PLC 27
232642 Albion Venture Cap pp20-pp30 26/06/2014 12:34 Page 28
Statement of corporate governance (continued)
Relationships with shareholders
The Company’s Annual General Meeting on 25 July 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.
Statement of compliance
The Directors consider that the Company has complied
throughout the year ended 31 March 2014 with all the relevant
provisions set out in the Code issued in September 2012, and
with the AIC Code of Corporate Governance. The Company
continues to comply with the Code as at the date of this report.
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.
David Watkins
Chairman
25 June 2014
Shareholders are able to access the latest information on the
Company via
the Albion Ventures LLP website
www.albion-ventures.co.uk under the “Our Funds” section.
For help relating to dividend payments, shareholdings and
share certificates please contact Computershare Investor
Services PLC:
Tel: 0870 873 5849 (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.
For enquiries relating to the performance of the Fund, and
for financial
contact
Albion Ventures LLP:
information please
advisers’
Tel: 020 7601 1850 (lines are open 9.00am – 5.30pm,
Mon – Fri, calls may be recorded)
Email: info@albion-ventures.co.uk
Website: www.albion-ventures.co.uk
Please note that these contacts are unable to provide
financial or taxation advice.
The Company’s share buy-back programme operates in the
market through brokers. In order to sell shares, as they are
quoted on the London Stock Exchange, investors should
approach a broker to undertake the sale. Banks may be able
to assist shareholders with a referral to a broker within their
banking group.
28 Albion Venture Capital Trust PLC
232642 Albion Venture Cap pp20-pp30 26/06/2014 12:34 Page 29
Directors’ remuneration report
Introduction
This report is submitted in accordance with Section 420 of
the Companies Act 2006 and describes how the Board has
applied the principles relating to the Directors’ remuneration.
Ordinary resolutions will be proposed at the Annual General
Meeting of the Company to be held on 25 July 2014 for the
approval of the Directors’ Remuneration Policy and the
Annual Remuneration Report as set out below.
The Company’s independent Auditor, BDO LLP, is required to
give its opinion on certain information included in this report,
as indicated below. The Auditor’s opinion is included in the
Independent Auditor’s Report.
Annual statement from the Chairman of the
Remuneration Committee
The Remuneration Committee comprises all of the Directors
with Jeff Warren as Chairman.
The Remuneration Committee met once during the year to
review Directors responsibilities and salaries against the
market and concluded that the current level of remuneration
was appropriate, save for John Kerr, the Audit Committee
Chairman, where it was concluded that to reflect the increase
in the amount and quality of work required, his fee be
increased by £3,000 with effect from 1 April 2014.
Directors’ remuneration policy
The Company’s policy is that fees payable to non-executive
Directors should reflect their expertise, responsibilities and
time spent on Company matters. In determining the level of
non-executive
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 AGM and will be
effective from that date.
The maximum level of non-executive Directors’ remuneration
is fixed by the Company’s Articles of Association, not to
exceed £100,000 per annum; amendment to this is by way
of a special resolution subject to ratification by shareholders.
Assuming this policy is approved by Shareholders at the
forthcoming Annual General Meeting, it is intended that this
policy will continue for the year ended 31 March 2015 and
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
forthcoming Annual General Meeting David Watkins, Jeff
Warren and John Kerr will retire and be proposed for
re-election.
None of the Directors have a service contract with the
Company, and as such there is no policy on termination
payments. There is no notice period and no payments for
loss of office were made during the period. 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.
Shareholders’ views in respect of Directors’ remuneration are
regarded highly 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, 99% of shareholders voted for the resolution
approving the Directors’ Remuneration Report which shows
significant Shareholder support.
Directors
The Directors who held office throughout the year and their
interests in the shares of the Company (together with those
of their immediate family) are as follows:
D J Watkins
J M B L Kerr
J Warren
E Dinesen
31 March 2014 31 March 2013
(Number of shares) (Number of shares)
10,000 10,000
13,109 13,109
20,000 20,000
21,180 18,403
Partners and staff of Albion Ventures LLP hold a total of
160,253 shares in the Company as at 31 March 2014.
Annual report on remuneration
The remuneration of individual Directors’ is determined by the
Remuneration Committee within the framework set by the
Board. The Committee comprises all Directors, and is
chaired by Jeff Warren. The Committee meets at least once
a year and met once during the year under review with full
attendance from all of its members.
It is responsible for reviewing the remuneration of the
Directors and the Company’s remuneration policy to ensure
that it reflects the duties, responsibilities and value of time
Albion Venture Capital Trust PLC 29
232642 Albion Venture Cap pp20-pp30 26/06/2014 12:34 Page 30
Directors’ remuneration report (continued)
spent by the Directors on the business of the Company and
makes recommendations to the Board accordingly.
There are no options, issued or exercisable, in the Company
which would distort the graphical representation that follows.
Directors’ remuneration
The following items have been audited.
Ordinary shares price total return relative to the
FTSE All-Share Index (in both cases with dividends reinvested)
The following table shows an analysis of the remuneration of
individual Directors, exclusive of National Insurance:
2014 2013
£’000 £’000
D J Watkins 20 20
J M B L Kerr 20 20
E Dinesen 20 10
J Warren 20 20
J N Rounce
(resigned 25 September 2012) – 10
–––––––––––– ––––––––––––
80 80
–––––––––––– ––––––––––––
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.
Each Director of the Company was remunerated personally
through the Manager’s payroll which has been recharged to
the Company.
350
300
250
200
150
100
)
e
r
a
h
s
r
e
p
e
c
n
e
p
(
n
r
u
t
e
R
Mar
96
Mar
97
Mar
98
Mar
99
Mar
00
Mar
01
Mar
02
Mar
03
Mar
04
Mar
05
Mar
06
Mar
07
Mar
08
Mar
09
Mar
10
Mar
11
Mar
12
Mar
13
Mar
14
FTSE AII-Share Index total return
Ordinary Shares price total return
Source: Albion Ventures LLP
Methodology: The share price return to the shareholder, including original amount invested
(rebased to 100), assuming that dividends were re-invested at the share price of the
Company at the time the shares were quoted ex-dividend. Transaction costs are not taken
into account.
Relative importance of spend on pay
As the Company has no employees other than the Directors,
the Committee does not consider it meaningful to present a
table comparing remuneration paid to employees with
distribution to shareholders.
In addition to Directors’ remuneration, the Company pays an
annual premium in respect of Directors’ & Officers’ Liability
Insurance of £10,213 (2013: £9,063).
By Order of the Board
Performance graph
The graph that follows shows the Company’s share price
total return against the FTSE All-Share Index total return, in
both instances with dividends reinvested, since launch. 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.
Albion Ventures LLP
Company Secretary
1 King’s Arms Yard
London, EC2R 7AF
25 June 2014
30 Albion Venture Capital Trust PLC
232642 Albion Venture Cap pp31-pp37 26/06/2014 14:22 Page 31
Independent Auditor’s Report to the
Members of Albion Venture Capital Trust PLC
We have audited the financial statements of Albion Venture Capital Trust PLC for the year ended 31 March 2014 which
comprise the income statement, the balance sheet, the reconciliation of movements in shareholders’ funds, the 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).
Opinion on financial statements
In our opinion the financial statements:
● give a true and fair view of the state of the company’s affairs as at 31 March 2014 and of its profit for the year then
ended;
● have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
● have been prepared in accordance with the requirements of the Companies Act 2006.
Our assessment of risks of material misstatement and our audit approach to these risks
We identified the following risks that we consider to have had the greatest impact on our audit strategy and scope:
● The assessment of the carrying value of investments, particularly unquoted investments.
This is a key accounting estimate where there is an inherent risk of management override arising from the investment
valuations being prepared by the Investment Manager, who is remunerated based on the net asset value of the funds,
derived using those valuations.
We reviewed and challenged the appropriateness of the assumptions used in the valuation of unquoted investments and
we assessed the impact of the estimation uncertainty concerning these assumptions and the disclosure of these
uncertainties in the financial statements. Our audit procedures included reviewing the historical financial statements and
recent management information available for the unquoted investments used to support assumptions about
maintainable earnings used in the valuations, considering the multiples applied by reference to independent market data
and challenging the adjustments made to such market data in arriving at the valuations adopted. Where alternative
assumptions could reasonably be applied, we developed our own point estimates and considered the overall impact of
such sensitisations on the portfolio of investments in determining whether the valuations as a whole are reasonable and
unbiased.
Where other valuation approaches were adopted, in addition to challenging the assumptions used, we considered the
appropriateness of the valuation techniques adopted by reference to both the circumstances of the investee company
and the International Private Equity and Venture Capital Valuation guidelines.
● Revenue recognition
Revenue consists of dividends receivable from investee companies and interest earned on loans to investee companies
and cash balances. Revenue recognition is considered to be a significant audit risk as it is often a key factor in
demonstrating the performance of the portfolio. In particular, as the company invests in unquoted companies, dividends
receivable can be difficult to predict.
We considered the controls relating to revenue recognition and undertook testing of interest income by comparing actual
income to expectations generated using the interest rates in the loan instruments. We considered whether the
accounting policy had been applied correctly by management in determining provisions against income where recovery
is considered doubtful, considering management information relevant to the ability of the investee company to service
the loan and the reasons for any arrears of loan interest. We also reviewed the recognition and classification of any
accrued income, considering the appropriateness of the classification of income between revenue and capital in the
Income Statement.
We also tested dividends receivable through comparing actual income to expectations set based on independent
published data on dividends declared by the investee companies held. We tested the categorisation of dividends
received from investee companies between revenue and capital.
The Audit Committee’s consideration of these matters is set out on pages 25 to 27.
Albion Venture Capital Trust PLC 31
232642 Albion Venture Cap pp31-pp37 26/06/2014 12:35 Page 32
Independent Auditor’s Report to the
Members of Albion Venture Capital Trust PLC (continued)
Purpose of this report
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.
Respective responsibilities of directors and auditor
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an
opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and
Ireland). Those standards require us to comply with the Financial Reporting Council’s (FRC’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements and our application of materiality
A description of
www.frc.org.uk/auditscopeukprivate.
the scope of an audit of
financial statements
is provided on
the FRC’s website at
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements.
For planning, we consider materiality to be the magnitude by which misstatements, including omissions, could influence the
economic decisions of reasonable users that are taken on the basis of the financial statements. In order to reduce to an
appropriately low level the probability that any misstatements exceed materiality we use a lower materiality level, performance
materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances
of their occurrence, when evaluating their effect on the Financial Statements.
We determined materiality for the financial statements as a whole to be £710,000. In determining this, we based our
assessment on a percentage of fixed asset investments held at fair value which reflects the underlying level of precision within
the valuation of the investment portfolio and the range of reasonably possible alternative valuations that could be expected to
apply to the unquoted investments. On the basis of our risk assessment, together with our assessment of the company’s
control environment, our judgement was that performance materiality for the financial statements should be approximately 75
per cent. of materiality for the financial statements as a whole, namely £530,000. Our objective in adopting this approach is
to ensure that total detected and undetected audit differences do not exceed our materiality of £710,000 for the financial
statements as a whole.
International Standards on Auditing (UK & Ireland) also require the auditor to set a lower materiality for particular classes of
transaction, balances or disclosures for which misstatements of lesser amounts than materiality for the financial statements
as a whole could reasonably be expected to influence the economic decisions of users taken on the basis of the financial
statements. In this context, we set a lower level of materiality to apply to those classes of transactions and balances which
impact on the costs and the net realised returns of the company. We determined materiality for this area to be £110,000.
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £5,000, as well
as differences below that threshold that, in our view, warranted reporting on qualitative grounds.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
● the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the
Companies Act 2006;
● the information given in the strategic report and directors’ report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
32 Albion Venture Capital Trust PLC
232642 Albion Venture Cap pp31-pp37 26/06/2014 12:35 Page 33
Independent Auditor’s Report to the
Members of Albion Venture Capital Trust PLC (continued)
● the information given in the corporate governance statement set out on pages 24 to 28 of the annual report with respect
to internal control and risk management systems in relation to financial reporting processes and about share capital
structures is consistent with the financial statements.
Matters on which we are required to report by exception
Under International Standards on Auditing (UK and Ireland), we are required to report to you if, in our opinion, information in
the annual report is:
● materially inconsistent with the information in the audited financial statements; or
● apparently materially incorrect based on, or materially inconsistent with, our knowledge of the company acquired in the
course of performing our audit; or
● is otherwise misleading.
In particular, we are required to consider whether we have identified any inconsistencies between our knowledge acquired
during the audit and the directors’ statement that they consider the annual report is fair, balanced and understandable and
whether the annual report appropriately discloses those matters that we communicated to the Audit Committee which we
consider should have been disclosed.
Under the Companies Act 2006 we are required to report to you if, in our opinion:
● adequate accounting records have not been kept, or returns adequate for our audit have not been received from
branches not visited by us; or
● the financial statements and the part of the directors’ remuneration report to be audited are not in agreement with the
accounting records and returns; or
● certain disclosures of directors’ remuneration specified by law are not made; or
● we have not received all the information and explanations we require for our audit; or
● a corporate governance statement has not been prepared by the company.
Under the Listing Rules we are required to review:
● the directors’ statement, set out on page 20 in relation to going concern; and
● the part of the corporate governance statement relating to the company’s compliance with the nine provisions of the UK
Corporate Governance Code specified for our review;
We have nothing to report in respect of these matters.
Rhodri Whitlock (Senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
London
United Kingdom
25 June 2014
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127)
Albion Venture Capital Trust PLC 33
Income statement
Year ended 31 March 2014 Year ended 31 March 2013
Revenue Capital Total Revenue Capital Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Gains on investments 3 – 626 626 – 384 384
Investment income 4 1,718 – 1,718 1,563 – 1,563
Investment management fees 5 (201) (601) (802) (171) (514) (685)
Other expenses 6 (398) – (398) (278) – (278)
–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––
Return/(loss) on ordinary activities
before tax 1,119 25 1,144 1,114 (130) 984
Tax (charge)/credit on ordinary activities 8 (120) 140 20 (183) 129 (54)
–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––
Return/(loss) attributable to shareholders 999 165 1,164 931 (1) 930
–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––
Basic and diluted return
per share (pence)* 11 1.70 0.30 2.00 2.00 – 2.00
–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––
* excluding treasury shares
The accompanying notes on pages 38 to 50 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.
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 is not required.
The difference between the reported return/(loss) on ordinary activities before tax and the historical profit/(loss) is due to the
fair value movements on investments. As a result a note on historical cost profit and losses has not been prepared.
34 Albion Venture Capital Trust PLC
Balance sheet
31 March 2014 31 March 2013
Note £’000 £’000
Fixed asset investments 12 35,580 30,198
Current assets
Trade and other debtors 14 48 24
Current asset investments 14 – 50
Cash at bank and in hand 18 7,505 11,896
–––––––––––– ––––––––––––
7,553 11,970
Creditors: amounts falling due within one year 15 (475) (487)
–––––––––––– ––––––––––––
Net current assets 7,078 11,483
–––––––––––– ––––––––––––
Net assets 42,658 41,681
–––––––––––– ––––––––––––
Capital and reserves
Called up share capital 16 645 603
Share premium 3,525 8
Capital redemption reserve 7 –
Unrealised capital reserve (3,343) (4,890)
Realised capital reserve 10,527 11,909
Other distributable reserve 31,297 34,051
–––––––––––– ––––––––––––
Total equity shareholders’ funds 42,658 41,681
–––––––––––– ––––––––––––
Basic and diluted net asset value per share (pence)* 17 71.30 74.20
–––––––––––– ––––––––––––
* excluding treasury shares
The accompanying notes on pages 38 to 50 form an integral part of these Financial Statements.
These Financial Statements were approved by the Board of Directors and authorised for issue on 25 June 2014, and were
signed on its behalf by
David Watkins
Chairman
Company number: 03142609
Albion Venture Capital Trust PLC 35
232642 Albion Venture Cap pp31-pp37 26/06/2014 12:35 Page 36
Reconciliation of movements in shareholders’ funds
Called-up Capital Unrealised Realised Other
share Share redemption capital capital distributable
capital premium reserve reserve* reserve* reserve* Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000
As at 1 April 2013 603 8 – (4,890) 11,909 34,051 41,681
Return/(loss) for the year – – – 576 (411) 999 1,164
Transfer of previously unrealised
gains on realisations of investments – – – 971 (971) – –
Purchase of treasury shares – – – – – (364) (364)
Issue of equity (net of costs) 49 3,517 – – – – 3,566
Purchase of shares for cancellation (7) – 7 – – (487) (487)
Net dividends paid (note 9) – – – – – (2,902) (2,902)
–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––
As at 31 March 2014 645 3,525 7 (3,343) 10,527 31,297 42,658
–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––
As at 1 April 2012 19,733 1,005 1,914 (3,067) 10,087 (1,286) 28,386
(Loss)/return for the year – – – (694) 693 931 930
Transfer of previously unrealised
gains on disposals of investments – – – (1,129) 1,129 – –
Purchase of treasury shares – – – – – (720) (720)
Issue of equity (net of costs) 772 383 – – – – 1,155
Reduction in share capital and
cancellation of capital redemption
and share premium reserves** (29,556) (5,955) (1,914) – – 37,425 –
Shares issued to acquire
net assets of Albion Prime VCT PLC
(net of merger costs)*** 9,654 4,575 – – – – 14,229
Net dividends paid (note 9) – – – – – (2,299) (2,299)
–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––
As at 31 March 2013 603 8 – (4,890) 11,909 34,051 41,681
–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––
* Included within the aggregate of these reserves is an amount of £38,481,000 (2012: £41,070,000) which is
considered distributable.
** The reduction in the nominal value of shares from 50 pence to 1 penny, the cancellation of capital redemption and share
premium reserves (as approved by shareholders at the General Meeting held on 17 September 2012 and by order of the Court
dated 30 January 2013) has increased the value of the other distributable reserve.
*** The assets and liabilities transferred through the acquisition of Albion Prime VCT PLC are shown in note 10. In addition,
£109,000 of the merger costs attributable to Albion Venture Capital Trust PLC has been deducted from the share premium
account in so far as they relate to the issue of new shares.
36 Albion Venture Capital Trust PLC
232642 Albion Venture Cap pp31-pp37 26/06/2014 12:35 Page 37
Cash flow statement
Year ended Year ended
31 March 2014 31 March 2013
Note £’000 £’000
Operating activities
Loan stock income received 1,534 1,416
Deposit interest received 131 66
Dividend income received 22 –
Investment management fees paid (817) (629)
Other cash payments (289) (281)
–––––––––––– ––––––––––––
Net cash flow from operating activities 19 581 572
Taxation
UK corporation tax (paid)/received (99) (161)
Capital expenditure and financial investments
Purchase of fixed asset investments (5,182) (420)
Disposal of fixed asset investments 550 9,624
–––––––––––– ––––––––––––
Net cash flow from investing activities (4,632) 9,204
Equity dividends paid
(net of costs of issuing shares under the Dividend
Reinvestment Scheme and unclaimed dividends) (2,719) (2,210)
–––––––––––– ––––––––––––
Net cash flow before financing (6,869) 7,405
–––––––––––– ––––––––––––
Financing
Issue of share capital (net of costs) 3,359 1,033
Purchase of own shares (including costs) (876) (695)
Cash acquired from Albion Prime VCT PLC 10 – 1,450
Cost of Merger (paid on behalf of the Company and Albion Prime VCT PLC) (5) (253)
–––––––––––– ––––––––––––
Net cash flow from financing 2,478 1,535
–––––––––––– ––––––––––––
Cash flow in the year 18 (4,391) 8,940
–––––––––––– ––––––––––––
Albion Venture Capital Trust PLC 37
232642 Albion Venture Cap pp38-pp54 26/06/2014 12:29 Page 38
Notes to the Financial Statements
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.
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 as part of an
investment portfolio are not accounted for using the equity
method. In these circumstances the investment is accounted
for according to FRS 26 “Financial instruments Recognition
and Measurement” and measured at fair value through profit
and loss.
Current asset investments
Contractual future contingent receipts on the disposal of fixed
asset investments are designated at fair value through profit or
loss and are subsequently measured at fair value.
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 the 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 accrual basis using the
rate of interest agreed with the bank.
Investment management fees and other expenses
All expenses have been accounted for on an accruals basis.
Expenses are charged through the 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 and 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.
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
Unquoted equity investments, debt issued at a discount and
convertible bonds
In accordance with FRS 26 “Financial Instruments Recognition
and Measurement”, unquoted equity, debt issued at a discount
and convertible bonds are designated as fair value through
profit or loss (“FVTPL”). Fair value is determined by the
Directors in accordance with the International Private Equity
and Venture Capital Valuation Guidelines (IPEVCV guidelines).
Fair value movements 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.
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.
Unquoted equity derived instruments
Unquoted equity derived instruments are only valued 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 measured at amortised cost using
the Effective Interest Rate method (“EIR”) less impairment.
Movements in the amortised cost relating to interest income
are reflected in the revenue column of the Income statement,
and hence are reflected in the other distributable 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 movements arising from revaluations of the
fair value of the security.
For all unquoted loan stock, whether fully performing, 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 held less estimated
selling costs.
38 Albion Venture Capital Trust PLC
232642 Albion Venture Cap pp38-pp54 26/06/2014 12:29 Page 39
Notes to the Financial Statements (continued)
2. Accounting policies (continued)
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
Share premium account
This reserve accounts for the difference between the price
paid for shares and the nominal value of the shares, less issue
costs and transfers to the other distributable reserve.
Capital redemption reserve
This reserve accounts for amounts by which the issued share
capital is diminished through the repurchase and cancellation
of the Company’s own shares.
Unrealised capital reserve
Increases and decreases in the valuation of investments held
at the year end against cost are included in this reserve.
Realised capital reserve
The following are disclosed in this reserve:
● gains and losses compared to cost on the realisation of
investments, or permanent diminutions in value;
● expenses, together with the related taxation effect,
charged in accordance with the above policies; and
● dividends paid to equity holders.
Other distributable reserve
This reserve accounts for movements from the revenue
column of the Income statement, the payment of dividends,
shares and other non capital
the buyback of
realised movements.
Dividends
In accordance with FRS 21 “Events after the balance sheet
date”, dividends by the Company are accounted for in the
period in which the dividend is declared.
Albion Venture Capital Trust PLC 39
232642 Albion Venture Cap pp38-pp54 26/06/2014 12:29 Page 40
Notes to the Financial Statements (continued)
3. Gains on investments
Year ended Year ended
31 March 2014 31 March 2013
£’000 £’000
Unrealised gains on fixed asset investments held at fair value through profit or loss 1,113 293
Impairments on fixed asset investments held at amortised cost (537) (987)
–––––––––––––– ––––––––––––––
Unrealised gains/(losses) sub-total 576 (694)
–––––––––––––– ––––––––––––––
Realised gains on fixed asset investments held at fair value through profit or loss 40 1,133
Realised gains/(losses) on fixed asset investments held at amortised cost 10 (105)
–––––––––––––– ––––––––––––––
Realised gains on fixed asset investments sub-total 50 1,028
Realised gains on current asset investments held at fair value through profit or loss – 50
–––––––––––––– ––––––––––––––
Realised gains sub-total 50 1,078
–––––––––––––– ––––––––––––––
626 384
–––––––––––––– ––––––––––––––
Investments measured at amortised cost are unquoted loan stock investments as described in note 2.
4. Investment income
Year ended Year ended
31 March 2014 31 March 2013
£’000 £’000
Income recognised on investments held at fair value through profit or loss
Dividend income 27 –
Income from convertible bonds and discounted debt 203 112
–––––––––––––– ––––––––––––––
230 112
Income recognised on investments held at amortised cost
Return on loan stock investments 1,369 1,379
Bank deposit interest 119 72
–––––––––––––– ––––––––––––––
1,488 1,451
–––––––––––––– ––––––––––––––
1,718 1,563
–––––––––––––– ––––––––––––––
Interest income earned on impaired investments at 31 March 2014 amounted to £294,000 (2013: £311,000). These investments are
all held at amortised cost.
5. Investment management fees
Year ended Year ended
31 March 2014 31 March 2013
£’000 £’000
Investment management fee charged to revenue 201 171
Investment management fee charged to capital 601 514
–––––––––––––– ––––––––––––––
802 685
–––––––––––––– ––––––––––––––
Further details of the Management agreement under which the investment management fee is paid are given in the Strategic report on
page 11.
During the year, services of a total value of £849,000 (2013: £730,000), were purchased by the Company from Albion Ventures LLP;
this includes £802,000 (2013: £685,000) of investment management fee and £47,000 (2013: £45,000) administration fee. At the
financial year end, the amount due to Albion Ventures LLP in respect of these services disclosed within accruals and deferred income
was £214,000 (2013: £201,000).
Albion Ventures LLP is, from time to time, eligible to receive transaction fees and Directors’ fees from portfolio companies. During the
year ended 31 March 2014, fees of £167,000 attributable to the investments of the Company were received pursuant to these
arrangements (2013: £87,000).
Albion Ventures LLP, the Manager, holds 2,534 Ordinary shares as a result of fractional entitlements arising from the merger of Albion
Prime VCT PLC into Albion Venture Capital Trust PLC on 25 September 2012. These shares will be sold and the proceeds retained for
the benefit of the Company.
40 Albion Venture Capital Trust PLC
232642 Albion Venture Cap pp38-pp54 26/06/2014 12:29 Page 41
Notes to the Financial Statements (continued)
5. Investment management fees (continued)
During the year the Company raised new funds through the Albion VCTs Top Up Offers 2012/2013 and Albion VCTs Top Up Offers
2013/2014 as detailed in note 16. The total cost of the issue of these shares was 3.0 per cent. of the sums subscribed. Of these costs,
an amount of £5,450 (2013: £3,854) was paid to the Manager, Albion Ventures LLP in respect of receiving agent services. There were
no sums outstanding in respect of receiving agent services at the year end.
6. Other expenses
Year ended Year ended
31 March 2014 31 March 2013
£’000 £’000
Directors’ fees (including NIC) 87 87
Secretarial and administration fee 47 45
Other administrative expenses 88 105
Impairment of accrued interest 139 –
Tax services 12 15
Auditor’s remuneration for statutory audit services (exc. VAT) 25 26
–––––––––––––– ––––––––––––––
398 278
–––––––––––––– ––––––––––––––
7. Directors’ fees
The amounts paid to and on behalf of Directors during the year are as follows:
Year ended Year ended
31 March 2014 31 March 2013
£’000 £’000
Directors’ fees 80 80
National insurance 7 7
–––––––––––––– ––––––––––––––
87 87
–––––––––––––– ––––––––––––––
Further information regarding Directors’ remuneration can be found in the Directors’ remuneration report on page 29.
8. Tax (charge)/credit on ordinary activities
Year ended 31 March 2014 Year ended 31 March 2013
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
UK corporation tax in respect of
current year (246) 140 (106) (264) 129 (135)
UK corporation tax in respect of
prior year 126 – 126 81 – 81
––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––
Total (120) 140 20 (183) 129 (54)
––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––
Factors affecting the tax charge:
Year ended Year ended
31 March 2014 31 March 2013
£’000 £’000
Return on ordinary activities before taxation 1,144 984
–––––––––––––– ––––––––––––––
Tax on profit at the standard rate of 23% (2013: 24%) (263) (236)
Factors affecting the charge:
Non-taxable gains 144 92
Income not taxable 6 –
Consortium relief in respect of prior years 126 81
Marginal relief 7 9
–––––––––––––– ––––––––––––––
20 (54)
–––––––––––––– ––––––––––––––
The tax charge for the year shown in the Income statement is lower than the standard rate of corporation tax in the UK of 23 per cent.
(2013: 24 per cent.). The differences are explained above.
Consortium relief is recognised in the accounts in the period in which the claim is submitted to HMRC and is shown as tax in respect of prior year.
Notes
(i) Venture Capital Trusts are not subject to corporation tax on capital gains.
(ii) Tax relief on expenses charged to capital has been determined by allocating tax relief to expenses by reference to the applicable corporation tax rate
and allocating the relief between revenue and capital in accordance with the SORP.
(iii) No deferred tax asset or liability has arisen in the year.
Albion Venture Capital Trust PLC 41
232642 Albion Venture Cap pp38-pp54 26/06/2014 12:29 Page 42
Notes to the Financial Statements (continued)
9. Dividends
Year ended Year ended
31 March 2014 31 March 2013
£’000 £’000
First dividend paid 31 July 2012 – 2.50 pence per share – 928
Second dividend paid 31 December 2012 – 2.50 pence per share – 1,404
First dividend paid on 31 July 2013 – 2.50 pence per share 1,469 –
Second dividend paid on 31 December 2013 – 2.50 pence per share 1,460 –
Unclaimed dividends (27) (33)
–––––––––––––– ––––––––––––––
2,902 2,299
–––––––––––––– ––––––––––––––
In addition to the dividends summarised above, the Board has declared a first dividend for the year ending 31 March 2015 of
2.50 pence per share. This dividend will be paid on 31 July 2014 to shareholders on the register as at 11 July 2014. The total dividend
will be approximately £1,562,000.
During the year, unclaimed dividends older than twelve years of £27,000 (2013: £33,000) were returned to the Company in accordance
with the terms of the Articles of Association.
10. Acquisition of the assets and liabilities of Albion Prime VCT PLC
On 25 September 2012, the following assets and liabilities of Albion Prime VCT PLC (“Prime”) were transferred to the Company in
exchange for the issue to Prime shareholders of 19,307,001 shares in the Company, at an issue price of 74.2638 pence per share:
£’000
Fixed asset investments 13,123
Debtors 16
Cash at bank and in hand 1,450
Creditors (162)
Merger costs (89)
––––––––––––––
14,338
––––––––––––––
Shareholders should note that under accounting standards, the calculation of the net asset value per share uses the total shares in
issue (less treasury shares), whereas the calculation of the total return uses the weighted average shares in issue during the period.
Due to the amount of shares issued last year as a result of the merger with Albion Prime VCT PLC, the difference between the total
shares in issue (less treasury shares) and the weighted average share in issue during that period resulted in the total return per share
being higher than if the shares in issue (less treasury shares) had been applied to the movement in the Balance sheet since merger.
On 25 September 2012, Prime was placed into members’ voluntary liquidation pursuant to a scheme of reconstruction under
section 110 of the Insolvency Act 1986.
The net asset values (“NAVs”) per share of each fund used for the purposes of conversion at the calculation date of 24 September
2012 were 74.2638 pence per share and 65.3663 pence per share for the Company and Prime respectively. The conversion ratio for
each Prime share was 0.8801 Albion Venture Capital Trust PLC share for each Prime share.
11. Basic and diluted return per share
Year ended 31 March 2014 Year ended 31 March 2013
Revenue Capital Total Revenue Capital Total
The return per share has been based
on the following figures:
Return/(loss) attributable to
equity shares (£’000) 999 165 1,164 931 (1) 930
Weighted average shares in issue
(excluding treasury shares) 58,689,669 46,973,203
Return attributable per equity
share (pence) 1.70 0.30 2.00 2.00 – 2.00
––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––
The weighted average number of shares is calculated excluding treasury shares of 4,695,440 (2013: 4,152,440).
There are no convertible instruments, derivatives or contingent share agreements in issue, and therefore no dilution affecting the return
per share. The basic return per share is therefore the same as the diluted return per share.
42 Albion Venture Capital Trust PLC
232642 Albion Venture Cap pp38-pp54 26/06/2014 12:29 Page 43
Notes to the Financial Statements (continued)
12. Fixed asset investments
31 March 2014 31 March 2013
£’000 £’000
Investments held at fair value through profit or loss
Unquoted equity 11,093 8,489
Unquoted debt issued at a discount and convertible bonds 5,790 2,231
–––––––––––––– ––––––––––––––
16,883 10,720
–––––––––––––– ––––––––––––––
Investments held at amortised cost
Unquoted loan stock 18,697 19,478
–––––––––––––– ––––––––––––––
35,580 30,198
–––––––––––––– ––––––––––––––
£’000
Opening valuation 30,198
Purchases at cost 5,218
Disposal proceeds (359)
Realised gains 50
Movement in loan stock accrued income (103)
Unrealised gains 576
––––––––––––––
Closing valuation 35,580
––––––––––––––
Movement in loan stock accrued income
Opening accumulated movement in loan stock accrued income 268
Movement in loan stock accrued income (103)
––––––––––––––
Closing accumulated movement in loan stock accrued income 165
––––––––––––––
Movement in unrealised losses
Opening accumulated unrealised losses (4,890)
Transfer of previously unrealised gains to realised reserve on realisations of investments 971
Unrealised gain in current year 576
––––––––––––––
Closing accumulated unrealised losses (3,343)
––––––––––––––
Historic cost basis
Opening book cost 34,821
Purchases at cost 5,218
Sales at cost* (1,280)
––––––––––––––
Closing book cost 38,759
––––––––––––––
* Includes an amount of £1,074,000 written off in respect of G&K Smart Developments VCT Limited which is still held at the Balance
sheet date.
The Directors believe that the carrying value of loan stock measured at amortised cost is not materially different to fair value.
The Company does not hold any assets as a result of the enforcement of security during the period, and believes that the carrying
values for both impaired and past due assets are covered by the value of security held for these loan stock investments.
Unquoted equity investments and convertible and discounted debts are valued in accordance with the IPEVCV guidelines as follows:
31 March 2014 31 March 2013
Valuation methodology £’000 £’000
Cost (reviewed for impairment) 4,633 506
Net asset value supported by third party or desktop valuation 12,250 10,214
–––––––––––––– ––––––––––––––
16,883 10,720
–––––––––––––– ––––––––––––––
Full valuations are prepared by independent RICS qualified surveyors in full compliance with the RICS Red Book. Desktop reviews are
carried out by similarly RICS qualified surveyors by updating previously prepared full valuations for current trading and market indices.
Fair value investments had the following movements between valuation methodologies between 31 March 2013 and 31 March 2014:
Value as at 31 March 2014
Change in valuation methodology (2013 to 2014) £’000 Explanatory note
Cost (reviewed for impairment) to net asset value 246 More recent information available
supported by third party valuation
Albion Venture Capital Trust PLC 43
232642 Albion Venture Cap pp38-pp54 26/06/2014 12:29 Page 44
Notes to the Financial Statements (continued)
12. Fixed asset investments (continued)
The valuation method used will be the most appropriate valuation methodology for an investment within its market, with regard to the
financial health of the investment and the September 2009 IPEVCV Guidelines. The Directors believe that, within these parameters,
there are no other methods of valuation which would be reasonable as at 31 March 2014.
The amended FRS 29 ‘Financial Instruments: Disclosures’ requires the Company to disclose the valuation methods applied to its
investments measured at fair value through profit or loss in a fair value hierarchy according to the following definitions:
Fair value hierarchy Definition of valuation method
Level 1 Unadjusted quoted (bid) prices applied
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.
All of the company’s fixed asset investments as at 31 March 2014 which are valued at fair value through profit or loss, are all valued
according to Level 3 methods.
Investments held at fair value through profit or loss (level 3) had the following movements in the year to 31 March 2014:
31 March 2014 31 March 2013
Convertible and Convertible and
discounted discounted
Equity bonds Total Equity bonds Total
£’000 £’000 £’000 £’000 £’000 £’000
Opening balance 8,489 2,231 10,720 8,490 1,315 9,805
Additions 415 4,638 5,053 3,187 913 4,100
Debt/equity swap 1,257 (1,257) – – – –
Disposal proceeds (40) – (40) (4,662) – (4,662)
Accrued loan
stock interest – (3) (3) – – –
Realised gains 40 – 40 1,184 – 1,184
Unrealised gains 932 181 1,113 290 3 293
–––––––––––––– –––––––––––––– –––––––––––––– –––––––––––––– –––––––––––––– ––––––––––––––
Closing balance 11,093 5,790 16,883 8,489 2,231 10,720
–––––––––––––– –––––––––––––– –––––––––––––– –––––––––––––– –––––––––––––– ––––––––––––––
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. After due consideration and noting that the valuation methodology applied to
100 per cent. of the level 3 investments (by valuation) is based on cost or independent third party market information, the Directors do
not believe that changes to reasonable possible alternative assumptions for the valuation of the portfolio as a whole would lead to a
significant change in the fair value of the portfolio.
13. Significant interests
The principal activity of the Company is to select and hold a portfolio of investments in unquoted securities. Although the Company,
through the Manager, will, in some cases, be represented on the board of the portfolio company, it will not take a controlling interest
or become involved in the management. The size and structure of the companies with unquoted securities may result in certain holdings
in the portfolio representing a participating interest without there being any partnership, joint venture or management consortium
agreement. The Company has interests of greater than 20 per cent. of the nominal value of any class of the allotted shares in the
portfolio companies as at 31 March 2014 as described below:
Country of % class and
Company incorporation Principal activity voting rights
G&K Smart Developments VCT Limited Great Britain Residential property developer 42.9% Ordinary shares
Green Highland Renewables (Ledgowan) Limited Great Britain Hydroelectric power generator 20.8% Ordinary shares
Kew Green VCT (Stansted) Limited Great Britain Hotel owner and operator 45.2% Ordinary shares
Oakland Care Centre Limited Great Britain Care home 31.6% Ordinary shares
The Crown Hotel Harrogate Limited Great Britain Hotel owner and operator 24.1% Ordinary shares
The Stanwell Hotel Limited Great Britain Hotel owner and operator 39.2% Ordinary shares
The investments listed above are held as part of an investment portfolio, and therefore, as permitted by FRS 9, they are measured at
fair value and not accounted for using the equity method.
Active Lives Ltd whose holding is in excess of 50 per cent. of that company’s equity, is excluded from consolidation as the interest in
Active Lives Ltd is only being temporarily controlled and is not material to the view given by the Financial Statements.
44 Albion Venture Capital Trust PLC
232642 Albion Venture Cap pp38-pp54 26/06/2014 12:29 Page 45
Notes to the Financial Statements (continued)
14. Current assets
31 March 2014 31 March 2013
Trade and other debtors £’000 £’000
Prepayments and accrued income 17 24
Other debtors 12 –
UK corporation tax receivable 19 –
–––––––––––––– ––––––––––––––
48 24
–––––––––––––– ––––––––––––––
The Directors consider that the carrying amount of debtors is not materially different to their fair value.
31 March 2014 31 March 2013
Current asset investments £’000 £’000
Contingent future receipts from the disposal of fixed asset investments – 50
–––––––––––––– ––––––––––––––
– 50
–––––––––––––– ––––––––––––––
The fair value hierarchy applied to contingent future receipts on disposal of fixed asset investments is Level 3.
15. Creditors: amounts falling due within one year
31 March 2014 31 March 2013
£’000 £’000
Trade creditors 13 40
UK Corporation tax payable – 100
Other creditors 192 –
Accruals and deferred income 270 347
–––––––––––––– ––––––––––––––
475 487
–––––––––––––– ––––––––––––––
The Directors consider that the carrying amount of creditors is not materially different to their fair value.
Other creditors include an amount of £118,000 held on behalf of a portfolio company.
16. Called up share capital
31 March 2014 31 March 2013
£’000 £’000
Allotted, called up and fully paid
64,490,852 Ordinary shares of 1p each (2013: 60,317,650) 645 603
–––––––––––––– ––––––––––––––
Voting rights
59,795,412 Ordinary shares of 1p each (net of treasury shares) (2013: 56,165,210)
The Company purchased 543,000 Ordinary shares (2013: 1,073,067) to be held in treasury at a cost of £364,000 (2013: £720,000)
representing 0.8 per cent. of its issued share capital as at 31 March 2014. The shares purchased for treasury were funded from other
distributable reserve.
During the period the Company purchased 729,000 Ordinary shares for cancellation (2013: nil) at a cost of £487,000 including stamp
duty (2013: nil), representing 1.1 per cent. of its issued share capital as at 31 March 2014. The shares purchased for cancellation were
funded from the other distributable reserve.
The Company holds a total of 4,695,440 shares (2013: 4,152,440) in treasury, representing 7.3 per cent. of the issued Ordinary share
capital as at 31 March 2014.
Albion Venture Capital Trust PLC 45
232642 Albion Venture Cap pp38-pp54 26/06/2014 12:30 Page 46
Notes to the Financial Statements (continued)
16. Called up share capital (continued)
Under the terms of the Dividend Reinvestment Scheme Circular dated 10 July 2008, the following Ordinary shares were allotted during
the year:
Aggregate Net Opening market
nominal value consideration price per share
Number of of shares received Issue price on allotment date
Date of allotment shares allotted £’000 £’000 (pence per share) (pence per share)
31 July 2013 144,173 1 100 71.70 67.50
31 December 2013 150,017 2 105 70.50 67.25
–––––––––––––– –––––––––––––– ––––––––––––––
294,190 3 205
–––––––––––––– –––––––––––––– ––––––––––––––
During the year the following Ordinary shares were allotted under the Albion VCT’s Top Up Offers 2012/2013 and the Albion VCT’s Top
Up Offers 2013/2014:
Aggregate Net Opening market
nominal value consideration price per share
Number of of shares received Issue price on allotment date
Date of allotment shares allotted £’000 £’000 (pence per share) (pence per share)
5 April 2013 2,505,191 25 1,872 76.80 68.50
12 June 2013 99,020 1 74 76.80 67.50
31 January 2014 1,123,737 11 794 72.00 67.25
31 January 2014 859,027 9 606 72.40 67.25
31 January 2014 21,037 – 15 71.30 67.25
–––––––––––––– –––––––––––––– ––––––––––––––
4,608,012 46 3,361
–––––––––––––– –––––––––––––– ––––––––––––––
17. Basic and diluted net asset values per share
31 March 2014 31 March 2013
Basic and diluted net asset values per share (pence) 71.30 74.20
–––––––––––––– ––––––––––––––
The basic and diluted net asset values per share at the year end are calculated in accordance with the Articles of Association and are
based upon total shares in issue (less treasury shares) of 59,795,412 Ordinary shares (2013: 56,165,210).
There are no convertible instruments, derivatives or contingent share agreements in issue.
18. Analysis of changes in cash during the year
Year ended Year ended
31 March 2014 31 March 2013
£’000 £’000
Opening cash balances 11,896 2,956
Net cash flow (4,391) 8,940
–––––––––––––– ––––––––––––––
Closing cash balances 7,505 11,896
–––––––––––––– ––––––––––––––
19. Reconciliation of net return on ordinary activities before taxation to net cash flow from operating activities
Year ended Year ended
31 March 2014 31 March 2013
£’000 £’000
Revenue return on ordinary activities before taxation 1,119 1,114
Investment management fee charged to capital (601) (514)
Movement in accrued amortised loan stock interest 103 (70)
Increase in debtors (8) (13)
Increase/(decrease) in creditors (32) 55
–––––––––––––– ––––––––––––––
Net cash flow from operating activities 581 572
–––––––––––––– ––––––––––––––
46 Albion Venture Capital Trust PLC
232642 Albion Venture Cap pp38-pp54 26/06/2014 12:30 Page 47
Notes to the Financial Statements (continued)
20. Capital and financial instruments risk management
The Company’s capital comprises Ordinary shares as described in note 16. The Company is permitted to buy-back its own shares for
cancellation or treasury purposes, and this is described in more detail on page 7 of the Chairman’s statement.
The Company’s financial instruments comprise equity and loan stock investments in unquoted companies, contingent receipts on
disposal of fixed assets investments, cash balances and short term debtors and creditors which arise from its operations. The main
purpose of these financial instruments is to generate cashflow and 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 risks arising from the Company’s operations are:
●
●
●
Investment (or market) risk (which comprises investment price and cash flow interest rate risk);
credit risk; and
liquidity risk.
The Board regularly reviews and agrees policies for managing each of these risks. There have been no changes in the nature of the
risks that the Company has faced during the past year and, apart from where noted below, there have been no changes in the
objectives, policies or processes for managing risks during the past year. The key risks are summarised below.
Investment risk
As a venture capital trust, it is the Company’s specific nature to evaluate and control the investment risk of its portfolio in unquoted
investments, details of which are shown on pages 16 and 17. 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 investment portfolio which is £35,580,000
(2013: £30,198,000). Fixed asset investments form 83 per cent. of the net asset value as at 31 March 2014 (2013: 72.5 per cent.).
More details regarding the classification of fixed asset investments are shown in note 12.
Investment price risk
Investment price risk is the risk that the fair value of future investment cash flows will fluctuate due to factors specific to an investment
instrument or to a market in similar instruments. To mitigate the investment price risk for the Company as a whole, the strategy of the
Company is to invest in a broad spread of industries with approximately two-thirds of the unquoted 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. Details of the industries in which investments have been made are contained in the Portfolio of investments section on
pages 16 and 17.
Valuations are based on the most appropriate valuation methodology for an investment within its market, with regard to the financial
health of the investment and the IPEVCV Guidelines.
As required under FRS 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 and current asset investments (keeping all other
variables constant) would increase or decrease the net asset value and return for the year by £3,558,000 (2013: £3,025,000).
Cash flow interest rate risk
It is the Company’s policy to accept a degree of interest rate risk on its financial assets through the effect of interest rate changes. On
the basis of the Company’s analysis, it is estimated that a rise of one percentage point in all interest rates would have increased total
return before tax for the year by approximately £80,000 (2013: £55,000). Furthermore, it is considered that a fall of interest rates below
current levels during the year would have been very unlikely.
Albion Venture Capital Trust PLC 47
232642 Albion Venture Cap pp38-pp54 26/06/2014 12:30 Page 48
Notes to the Financial Statements (continued)
20. Capital and financial instruments risk management (continued)
The weighted average interest rate applied to the Company’s fixed rate assets during the year was approximately 5.80 per cent.
(2013: 6.30 per cent.). The weighted average period to maturity for the fixed rate assets is approximately 3.34 years (2013: 3.16 years).
The Company’s financial assets and liabilities, all denominated in pounds sterling, consist of the following:
31 March 2014 31 March 2013
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 – – 11,093 11,093 – – 8,489 8,489
Convertible and
discounted bonds 3,378 279 2,133 5,790 1,866 – 365 2,231
Unquoted loan stock 18,697 – – 18,697 19,478 – – 19,478
Current asset investments – – – – – – 50 50
Debtors* – – 24 24 – – 20 20
Current liabilities* – – (475) (475) – – (387) (387)
Cash – 7,505 – 7,505 11,217 679 – 11,896
––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––
Total net assets 22,075 7,784 12,775 42,634 32,561 679 8,537 41,777
––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––
* The debtors and current liabilities do not reconcile to the balance sheet as prepayments and tax receivable/(payable) are not included
in the above table.
Credit risk
Credit risk is the risk that the counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered
into with the Company. The Company is exposed to credit risk through its debtors, investment in unquoted loan stock, and through
the holding of cash on deposit with banks.
The Manager evaluates credit risk on loan stock prior to investment, and as part of its ongoing monitoring of investments. In doing this,
it takes into account the extent and quality of any security held. Typically loan stock instruments have a 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 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 as at 31 March 2014 was limited to £24,487,000 (2013: £21,709,000) of unquoted loan stock
instruments (all of which is secured on the assets of the portfolio company) and £7,505,000 cash deposits with banks
(2013: £11,896,000).
The credit profile of the unquoted loan stock is described under liquidity risk below.
The cost, impairment and carrying value of impaired loan stocks held at amortised cost at 31 March 2014 and 31 March 2013 are
as follows:
31 March 2014 31 March 2013
Cost Impairment Carrying value Cost Impairment Carrying value
£’000 £’000 £’000 £’000 £’000 £’000
Impaired loan stock 13,750 (3,601) 10,149 11,907 (3,021) 8,886
––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––
Impaired loan stock instruments have a first fixed charge or a fixed and floating charge over the assets of the portfolio company and
the Board consider the security value to be the carrying value.
As at the balance sheet date, the cash held by the Company is held with Lloyds Bank plc, Scottish Widows Bank plc (part of Lloyds
Banking Group), Barclays Bank plc and National Westminster Bank plc. Credit risk on cash transactions is mitigated by transacting
with counterparties that are regulated entities subject to prudential supervision, with high credit ratings assigned by international credit-
rating agencies.
The Company has an informal policy of limiting counterparty banking and floating rate note exposure to a maximum of 20 per cent. of
net asset value for any one counterparty.
48 Albion Venture Capital Trust PLC
232642 Albion Venture Cap pp38-pp54 26/06/2014 12:30 Page 49
Notes to the Financial Statements (continued)
20. Capital and financial instruments risk management (continued)
Liquidity risk
Liquid assets are held as cash on current, deposit or short term money market accounts. Under the terms of its Articles, the Company
has the ability to borrow up to 10 per cent. of its adjusted capital and reserves of the latest published audited balance sheet, which
amounts to £4,110,000 as at 31 March 2014 (2013: £4,168,000).
The Company has no committed borrowing facilities as at 31 March 2014 (2013: £nil) and had cash balances of £7,505,000
(2013: £11,896,000). The main cash outflows are for new investments, 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. All the Company’s financial liabilities are short term
in nature and total £475,000 for the year to 31 March 2014 (2013: £487,000).
The carrying value of loan stock investments at 31 March 2014 as analysed at each year end by expected maturity dates is as follows:
Fully
performing Impaired Past due Total
Redemption date £’000 £’000 £’000 £’000
Less than one year 443 1,716 375 2,534
1-2 years 2,355 604 3,862 6,821
2-3 years 1,375 7,829 65 9,269
3-5 years 3,061 – – 3,061
Greater than 5 years 2,376 – 426 2,802
–––––––––––––– –––––––––––––– –––––––––––––– ––––––––––––––
Total 9,610 10,149 4,728 24,487
–––––––––––––– –––––––––––––– –––––––––––––– ––––––––––––––
Loan stock categorised as past due includes:
●
●
●
Loan stock with a carrying value of £3,778,000 has interest overdue for 4 months, yielded 11.92 per cent. on cost;
Loan stock with a carrying value of £524,000 has loan stock interest past due of 12 months (through not paying all of its
contractual interest). This investment has yielded 6.7 per cent. on cost during the year;
Loan stock with a carrying value of £426,000 had loan stock interest reduced for the last 12 months, yielded 5.57 per cent.
on cost.
The carrying value of loan stock investments held at amortised cost at 31 March 2013 as analysed by expected maturity dates is
as follows:
Fully
performing Impaired Past due Total
Redemption date £’000 £’000 £’000 £’000
Less than one year 355 – 471 826
1-2 years 109 2,241 3,846 6,196
2-3 years 2,345 – 296 2,641
3-5 years 1,904 6,645 2,164 10,713
Greater than 5 years 1,103 – 230 1,333
––––––––––––––– –––––––––––––– –––––––––––––– ––––––––––––––
Total 5,816 8,886 7,007 21,709
–––––––––––––– –––––––––––––– –––––––––––––– ––––––––––––––
In view of the information shown, the Board considers that the Company is subject to low liquidity risk.
Fair values of financial assets and financial liabilities
All the Company’s financial assets and liabilities as at 31 March 2014 are stated at fair value as determined by the Directors, with the
exception of loans and receivables included within investments, cash, debtors and creditors which are carried at amortised cost, as
permitted by FRS 26. The Directors believe that the current carrying value of loan stock is not materially different to the fair value. There
are no financial liabilities other than creditors. 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.
Albion Venture Capital Trust PLC 49
232642 Albion Venture Cap pp38-pp54 26/06/2014 12:30 Page 50
Notes to the Financial Statements (continued)
21. Commitments and contingencies
The Company had the following financial commitment in respect of the following investments:
● Chonais Holdings Limited, £1,385,000
● Green Highland Renewables (Ledgowan) Limited, £903,000
● Dragon Hydro Limited, £3,000
There are no contingent liabilities or guarantees given by the Company as at 31 March 2014 (31 March 2013: nil).
22. Post balance sheet events
Since 31 March 2014 the Company has had the following post balance sheet events:
Shares issued under the Albion VCTs Top Up Offers 2013/2014:
Aggregate Net
Opening market
nominal value consideration Issue price incl. price per share on
Number of of shares received issue costs
allotment date
(pence per share)
Date of allotment shares allotted £’000 £’000 (pence per share)
5 April 2014 748,273 7 531 73.10
5 April 2014 18,621 – 13 72.80
5 April 2014 17,201 – 12 72.40
–––––––––––––– –––––––––––––– –––––––––––––– ––––––––––––––
67.25
67.25
67.25
––––––––––––––
Shares issued under the Albion VCTs Prospectus Offers 2013/2014:
Aggregate Net
Opening market
nominal value consideration Issue price incl. price per share on
allotment date
Number of of shares received issue costs
(pence per share)
Date of allotment shares allotted £’000 £’000 (pence per share)
5 April 2014 1,899,867 19 1,347 73.10
–––––––––––––– –––––––––––––– –––––––––––––– ––––––––––––––
67.25
––––––––––––––
● Investment of £992,000 in Albion Small Company Growth Limited
● Investment of £183,150 in Taunton Hospital Limited
● Investment of £312,098 in Green Highland Renewables (Ledgowan) Limited
23. Related party transactions
There are no related party transactions or balances requiring disclosure.
50 Albion Venture Capital Trust PLC
232642 Albion Venture Cap pp38-pp54 26/06/2014 12:30 Page 51
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Albion Venture Capital Trust PLC (the “Company”) will be held
at the City of London Club, 19 Old Broad Street, London EC2N 1DS on 25 July 2014 at 11:00 am for the following purposes:
To consider and, if thought fit, to pass the following resolutions, of which numbers 1 to 9 will be proposed as ordinary
resolutions and numbers 10 to 12 as special resolutions.
Ordinary Business
1. To receive and adopt the Company’s accounts for the year ended 31 March 2014 together with the report of the
Directors and Auditor.
2. To approve the Directors’ remuneration policy for the year ended 31 March 2014.
3. To approve the Directors’ remuneration report for the year ended 31 March 2014.
4. To re-elect David Watkins as a Director of the Company.
5. To re-elect John Kerr as a Director of the Company.
6. To re-elect Jeff Warren as a Director of the Company.
7. To re-appoint BDO LLP as Auditor of the Company to hold office from conclusion of the meeting to the conclusion of
the next meeting at which audited accounts are to be laid.
8. To authorise the Directors to agree the Auditor’s remuneration.
Special Business
9. That the Directors be generally and unconditionally authorised in accordance with section 551 of the Companies Act
2006 (the “Act”) to allot shares of nominal value 1 penny per share in the Company up to an aggregate nominal amount
of £134,349 representing 20 per cent. of the total Ordinary share capital, provided that this authority shall expire
18 months from the date that this resolution is passed, or at the conclusion of the next Annual General Meeting,
whichever is earlier, but so that the Company may, before the expiry of such period, make an offer or agreement which
would or might require shares to be allotted after the expiry of such period and the Directors may allot shares pursuant
to such an offer or agreement as if the authority had not expired.
10. That, subject to and conditional on the passing of resolution number 9, 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 9 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:
(a)
in connection with an offer of such securities by way of rights issue;
(b)
in connection with any Dividend Reinvestment Scheme introduced and operated by the Company;
(c)
in connection with a top up offer; and
(d)
otherwise than pursuant to paragraphs (a) to (c) above, up to an aggregate nominal amount of £134,349 for
Ordinary shares.
This authority shall expire 18 months from the date of this resolution, or at the conclusion of the next Annual General
Meeting, whichever is earlier, 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.
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
fractional entitlements or legal or practical difficulties under the laws of, or the requirements of any recognised regulatory
body or any stock exchange in, any territory.
Albion Venture Capital Trust PLC 51
232642 Albion Venture Cap pp38-pp54 26/06/2014 12:30 Page 52
Notice of Annual General Meeting (continued)
This power applies in relation to a sale of 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 “subject and conditional on the passing of resolution
number 9” were omitted.
11. 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:
(a)
the maximum aggregate number of Ordinary shares hereby authorised to be purchased is 14.99 per cent. of the
Ordinary shares in issue as at the date of the passing of this resolution;
(b)
the minimum price, exclusive of any expenses, which may be paid for an Ordinary share is 1 penny;
(c)
the maximum price, exclusive of any expenses, which may be paid for each Ordinary share is an amount equal to
the higher of (a) 105 per cent. of the average of the middle market quotations for an Ordinary share, as derived
from the London Stock Exchange Daily Official List, for the five business days immediately preceding the day on
which the Ordinary share is purchased; and (b) the amount stipulated by Article 5(1) of the Buy-back and
Stabilisation Regulation 2003;
(d)
the authority hereby conferred shall, unless previously revoked or varied, expire at the end of the next Annual
General Meeting, or 18 months from the date of the passing of the resolution, whichever is earlier; and
(e)
the Company may make a contract or contracts to purchase Ordinary shares under this authority before the expiry
of the authority which will or may be executed wholly or partly after the expiry of the authority, and may make a
purchase of shares in pursuance of any such contract or contracts.
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 11 is intended to apply equally to
shares to be held by the Company as treasury shares in accordance with the Regulations. These powers are intended
to permit Directors to sell treasury shares at a price not less than that at which they were purchased.
12. That the Directors be empowered to sell treasury shares at the higher of the prevailing current share price and the price
bought in at.
BY ORDER OF THE BOARD
Albion Ventures LLP
Company Secretary
Registered office
1 King’s Arms Yard
London, EC2R 7AF
Registered in England and Wales with number 03142609
25 June 2014
52 Albion Venture Capital Trust PLC
232642 Albion Venture Cap pp38-pp54 26/06/2014 12:30 Page 53
Notice of Annual General Meeting (continued)
Notes
1. Members entitled to attend, speak and vote at the Annual General Meeting (“AGM”) may appoint a proxy or proxies (who need
not be a member of the Company) to exercise these rights in their place at the meeting. A member may appoint more than
one proxy, provided that each proxy is appointed to exercise the rights attached to different shares. Proxies may only be
appointed by:
●
●
●
completing and returning the Form of Proxy enclosed with this Notice to Computershare Investor Services PLC, The
Pavilion, Bridgwater Road, Bristol, BS99 6ZZ;
going to www.investorcentre.co.uk and following the instructions provided there; or
by having an appropriate CREST message transmitted, if you are a user of the CREST system (including CREST
personal members).
Return of the Form of Proxy will not preclude a member from attending the meeting and voting in person. A member may not
use any electronic address provided in the Notice of this meeting to communicate with the Company for any purposes other
than those expressly stated.
To be effective the Form of Proxy must be completed in accordance with the instructions and received by the Registrars of the
Company by 11.00 am on 23 July 2014 being 2 working days before the AGM.
In accordance with good governance practice, the Company is offering shareholders use of an online service,
offered by the Company’s registrar, Computershare Investor Services, at www.investorcentre.co.uk. Shareholders
can use this service to vote or appoint a proxy online. The same voting deadline of 11.00 am on 23 July 2014 applies
as if you were using your Personalised Voting Form to vote or appoint a proxy by post to vote for you. Shareholders
will need to use the unique personal identification Investor Code that is printed in their Form of Proxy.
Shareholders should not show this information to anyone unless they wish to give proxy instructions on
their behalf.
2. Any person to whom this Notice is sent who is a person nominated under section 146 of the Companies Act 2006 (‘the Act’)
to enjoy information rights (a “Nominated Person”) may, under an agreement between him or her and the member by whom
he or she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the AGM. If a
Nominated Person has no such proxy appointment right or does not wish to exercise it, he or she may, under any such
agreement, have a right to give instructions to the member as to the exercise of voting rights. 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.
3. To be entitled to attend and vote at the AGM (and for the purpose of the determination by the Company of the votes they may
cast), members must be registered in the register of members of the Company at 11.00 am on 23 July 2014 (or, in the event
of any adjournment, on the date which is two working days before the time of the adjourned meeting). Changes to the register
of members after the relevant deadline shall be disregarded in determining the rights of any person to attend and vote at
the meeting.
4. Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of
its powers as a member provided that they do not do so in relation to the same shares.
5. Copies of contracts of service and letters of appointment between the Directors and the Company will be available for
inspection at the Registered Office of the Company during normal business hours from the date of this Notice until the
conclusion of the meeting, and at the place of the meeting for at least 15 minutes prior to the meeting until its conclusion. In
addition, a copy of the Articles of Association will be available for inspection at the Company’s Registered Office from the date
of this Notice until the conclusion of the meeting, and at the place of the meeting for at least 15 minutes prior to the meeting
until its conclusion.
6. Under section 527 of the Act members meeting the threshold requirements set out in that section have the right to require the
Company to publish on a website a statement setting out any matter relating to: (i) the audit of the Company’s accounts
(including the auditor’s report and the conduct of the audit) that are to be laid before the AGM; or (ii) any circumstances
connected with an auditor of the Company ceasing to hold office since the previous meeting at which the annual accounts and
reports were laid in accordance with section 437 of the Act. The Company may not require the members requesting any such
website publication to pay its expenses in complying with sections 527 or 528 of the Act. Where the Company is required to
place a statement on a website under section 527 of the Act, it must forward the statement to the Company’s auditor not later
than the time when it makes the statement available on the website. The business which may be dealt with at the AGM includes
any statement that the Company has been required under section 527 of the Act to publish on a website.
7. A copy of this Notice, and other information regarding the AGM, as required by section 311A of the Act, is available from
www.albion-ventures.co.uk, Our Funds, Albion Venture Capital Trust PLC.
8. Any member attending the AGM has the right to ask questions. The Company must cause to be answered any such question
relating to the business being dealt with at the AGM but no such answer need be given if (a) to do so would interfere unduly
with the preparation for the meeting or involve the disclosure of confidential information, (b) the answer has already been given
on a website in the form of an answer to a question, or (c) it is undesirable in the interests of the Company or the good order
of the AGM that the question be answered.
9. As at 24 June 2014 (being the latest practicable date prior to the publication of this Notice), the Company’s issued share capital
consists of 67,174,814 Ordinary shares. The Company holds 4,695,440 Ordinary shares in treasury. Therefore, the total voting
rights in the Company as at 24 June 2014 are 62,479,374.
Albion Venture Capital Trust PLC 53
232642 Albion Venture Cap pp38-pp54 26/06/2014 14:24 Page 54
Dividend history for Albion Prime VCT PLC now merged
with Albion Venture Capital Trust PLC (unaudited)
Proforma(i)
Albion Prime VCT PLC
Total shareholder net asset value return to 31 March 2014 (pence per share)
Total dividends paid during the year ended 31 March 1998 1.10
31 March 1999(ii) 6.40
31 March 2000 1.50
31 March 2001 4.25
31 March 2002 2.75
31 March 2003 2.00
31 March 2004 1.25
31 March 2005 2.20
31 March 2006 4.50
31 March 2007 4.00
31 March 2008 5.00
31 March 2009 4.50
31 March 2010 2.00
31 March 2011 3.00
31 March 2012 3.00
31 March 2013 3.70
31 March 2014 4.40
––––––––––––
Total dividends paid to 31 March 2014 55.55
Proforma net asset value as at 31 March 2014 62.75
––––––––––––
Total proforma shareholder net asset value return to 31 March 2014 118.30
––––––––––––
Notes
(i) The proforma shareholder returns presented above are based on the dividends paid to shareholders before the merger
and the pro-rata net asset value per share and pro-rata dividends per share paid to 31 March 2014. Albion Prime
VCT PLC was merged with Albion Venture Capital Trust PLC on 25th September 2012. This proforma is based upon
0.8801 Albion Venture Capital Trust PLC shares for every Albion Prime VCT PLC share which merged with
Albion Venture Capital Trust PLC on 25 September 2012.
(ii) Dividends paid before 5 April 1999 were paid to qualifying shareholders inclusive of the associated tax credit. The
dividends for the year to 31 March 1999 were maximised in order to take advantage of this tax credit.
(iii) The above table excludes the tax benefits investors received upon subscription for shares in the Company.
54 Albion Venture Capital Trust PLC
Perivan Financial Print 232642
Albion Venture Capital Trust PLC
A member of the Association of Investment Companies
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