Albion Venture Capital Trust PLC
Annual Report and Financial
Statements for the year
ended 31 March 2015
Albion Venture Capital Trust PLC
A member of the Association of Investment Companies
This report is printed on Amadeus offset a totally recycled paper produced using 100% recycled waste
at a mill that has been awarded the ISO 14001 certifi cate for environmental management. The pulp is
bleached using a totally chlorine free (TCF) process.
236915 Albion Venture Cap cov.indd 1
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236915 Albion Venture Cap pp01-pp05 25/06/2015 13:42 Page 1
Contents
Page
2 Company information
3 Investment objective 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
25 Statement of corporate governance
30 Directors’ remuneration report
32 Independent Auditor’s report
35 Income statement
36 Balance sheet
37 Reconciliation of movements in shareholders’ funds
38 Cash flow statement
39 Notes to the Financial Statements
52 Notice of Annual General Meeting
56 Dividend history for Albion Prime VCT PLC
Albion Venture Capital Trust PLC 1
236915 Albion Venture Cap pp01-pp05 25/06/2015 13:42 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
AIFM 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 Robertson Hare LLP
1st Floor
4 Staple Inn
London, WC1V 7QH
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 (www.theaic.co.uk).
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 Company, and information for
Tel: 020 7601 1850 (lines are open 9.00am – 5.30pm; Mon – Fri, calls may
financial advisers, please contact Albion Ventures LLP:
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
236915 Albion Venture Cap pp01-pp05 25/06/2015 13:42 Page 3
Investment objective and policy
The investment strategy of Albion Venture Capital Trust PLC (the “Company”) is to manage 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 £14.5 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. Each Prime shareholder received 0.8801 shares in the Company for each Prime share that they held at
the date of the Merger.
Financial calendar
Record date for first dividend 10 July 2015
Annual General Meeting 11.30 am on 31 July 2015
Payment of first dividend 31 July 2015
Announcement of half-yearly results for the six months ended 30 September 2015 November 2015
Payment of second dividend (subject to Board approval) 31 December 2015
Albion Venture Capital Trust PLC 3
236915 Albion Venture Cap pp01-pp05 25/06/2015 13:42 Page 4
Financial highlights
the year ended 31 March 2015
the year ended 31 March 2015
5.3p Basic and diluted total return per share for
5.0p Total tax-free dividend per share paid during
71.6p Net asset value per share as at 31 March 2015
206.4p Net asset value plus dividends since launch to
7.6% Tax free yield on share price (dividend per
6.3% Annualised return since launch (without tax
annum/share price as at 31 March 2015)
31 March 2015
relief)
Ordinary share net asset value total return relative to the FTSE All-Share Index
total return (both with dividends reinvested)
400
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
Mar
15
FTSE All-Share Index total return
Ordinary share 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
236915 Albion Venture Cap pp01-pp05 25/06/2015 13:42 Page 5
Financial highlights (continued)
31 March 2015 31 March 2014
(pence per share) (pence per share)
Dividends paid 5.00 5.00
Revenue return 2.07 1.70
Capital return 3.26 0.30
Net asset value 71.62 71.30
Total shareholder return to 31 March 2015 Ordinary shares C shares(i)
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
31 March 2015 5.00 5.00
–––––––––––– ––––––––––––
Total dividends paid to 31 March 2015 134.80 123.25
Net asset value as at 31 March 2015 71.62 71.62
–––––––––––– ––––––––––––
Total shareholder return to 31 March 2015 206.42 194.87
–––––––––––– ––––––––––––
(i) The C shares merged with the Ordinary shares on an equal basis in 2001.
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 56.
In addition to the dividends summarised above, the Board has declared a first dividend for the year ending
31 March 2016 of 2.50 pence per share to be paid on 31 July 2015 to shareholders on the register as at
10 July 2015.
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
236915 Albion Venture Cap pp06-pp17 25/06/2015 13:44 Page 6
Chairman’s statement
Introduction
The results for the year to 31 March 2015 show a total return
of 5.3 pence per share, against 2.0 pence for the previous year
and net assets of 71.6 pence per share compared to 71.3
pence per share at 31 March 2014, following the payment of
total tax-free dividends of 5 pence per share. The Company
raised approximately £2.9 million during the year under the
Albion VCTs Top Up Offers 2013/2014 and approximately £1.6
million under the Albion VCTs Prospectus Top Up Offers
2014/2015, with a subsequent £3.6 million after the year end.
It is encouraging that the Company’s total return is now more
than covering its dividend of 5 pence. This has been partly
through an increase in the income generated by the investment
portfolio, which has risen 15 per cent. from the previous year.
It also shows the benefits from the merger with Albion Prime
VCT, which resulted in cost savings of around £120,000 per
annum. Perhaps most important
though, has been an
improvement of the hotel portfolio after a number of years of
decline, combined with continued growth in investment areas
such as education and renewable energy and a strong
showing from our healthcare investments.
Investment performance and progress
In general, we have been continuing the task of repositioning
the portfolio towards greater emphasis on the healthcare and
renewable energy sectors, together with a reduced reliance on
sectors that are exposed to the consumer and business cycle.
Renewable energy currently accounts for just over 20 per cent.
of the portfolio, while healthcare accounted for 13 per cent. of
the portfolio. Once the three care homes which are currently
under construction are completed, however, healthcare will
account for close to 30 per cent. of the portfolio. Hotels,
meanwhile, have declined to 27 per cent. of the portfolio.
The hotel sector has shown some improvement during the
year. In particular a strong revival in passenger numbers at
Stansted airport has led to increased profitability at Kew
Green. The Crown Hotel in Harrogate also had a decent year.
Elsewhere in the consumer-facing sector, we saw a successful
exit from the Tower Bridge Health Club in November where
we received proceeds which, when added to interest income,
gave a 2.6x return on our investment. We also saw good
growth at our Kensington Club offset by a continued
competitive environment at Weybridge.
In the Healthcare sector, we sold the successful Oakland Care
Centre during the year with total proceeds, including income,
amounting to twice cost, while we sold our Taunton
Psychiatric hospital (Orchard Portman Group) for 1.6x cost.
Meanwhile, we are developing three new care homes in
Oxford, Hillingdon and a site just south of Reading.
6 Albion Venture Capital Trust PLC
As a result of a strong performance in our renewable energy
portfolio, with an uplift in the year of over £1 million, this sector
has now reached its target of 20 per cent. of the investment
portfolio, though further revaluations may push it slightly above
this level. We now have three hydro-electric plants in
operation, which between them supply sufficient power for
3,000 homes, in addition to four brownfield wind turbines in
Wales, a biogas plant and roof mounted solar panels on
domestic buildings.
Radnor House School continues to grow with over 400 pupils
in place for September 2015. During the year the school also
acquired Combe Bank School near Sevenoaks in Kent, which
is a Grade I listed house set in over 30 acres of freehold land
and which currently has 210 pupils. Education will continue to
be an important part of our investment activities.
Risks and uncertainties
Despite its current growth, 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 the
Manager see this as 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.
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 2015 to £750,000. This
compares to a total value bought in for the previous
six months to 31 March 2015 of £394,000. 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.
236915 Albion Venture Cap pp06-pp17 25/06/2015 13:44 Page 7
Chairman’s statement (continued)
Results and dividends
As at 31 March 2015, the net asset value was £46.9 million or
71.6 pence per share, compared to £42.7 million or
71.3 pence per share as at 31 March 2014, after the payment
of total tax-free dividends of 5 pence per share. The results
comprised 2.1 pence per share revenue return (2014:
1.7 pence per share) and a 3.3 pence per share capital return
after taking into account capitalised expenses (2014:
0.3 pence per share). The revenue return before taxation was
£1.5 million compared to £1.1 million for the year to 31 March
2014. The Company will pay a first dividend for the year ending
31 March 2016, of 2.5 pence per share on 31 July 2015 to
shareholders on the register on 10 July 2015, which is in line
with the Company’s current objective of paying a dividend of 5
pence per share annually.
Outlook and prospects
Trading in a number of our sectors has been promising and
we are 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.
David Watkins
Chairman
25 June 2015
Albion Venture Capital Trust PLC 7
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Strategic report
Investment objective and policy
The Company’s investment policy is to provide investors with
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 2015.
Details of the principal investments made by the Company are
shown in the Portfolio of investments on pages 16 and 17.
Split of portfolio by sector
Education
6% (5%)
Cash
19% (17%)
Renewable energy
22% (14%)
Healthcare
13% (18%)
Health and fitness
clubs
6% (8%)
Pubs
6% (8%)
Residential property
development
1% (1%)
Hotels
27% (29%)
Comparatives for 31 March 2014 are shown in brackets
Source: Albion Ventures LLP
Direction of portfolio
The sector analysis of the Company’s investment portfolio
shows that renewable energy now accounts for 22 per cent. of
the portfolio compared to 14 per cent. at the end of the previous
financial year, in line with the Board’s target exposure for the
sector. Healthcare has 13 per cent. of the portfolio compared
to 18 per cent. at the end of the previous financial year, following
two disposals, but, once current care home projects are
complete, it is expected to rise to around 30 per cent.
8 Albion Venture Capital Trust PLC
Results and dividend
£’000
Net revenue return for the year
ended 31 March 2015 1,314
Realised and unrealised capital gain
for the year 2,068
Dividend of 2.50 pence per share paid
on 31 July 2014 (1,576)
Dividend of 2.50 pence per share paid
on 31 December 2014 (1,590)
Unclaimed dividends returned to the Company 41
––––––––––––
Transferred to reserves 257
––––––––––––
Net assets as at 31 March 2015 46,928
––––––––––––
Net asset value per share as
at 31 March 2015 71.62p
––––––––––––
The Company paid dividends totalling 5.00 pence per share
during the year ended 31 March 2015 (2014: 5.00 pence per
share). 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 for the year ending
31 March 2016. This dividend will be paid on 31 July 2015 to
shareholders on the register as at 10 July 2015.
As shown in the Income statement on page 35 of the Financial
Statements, the Company’s investment income has increased
to £1,989,000 (2014: £1,718,000) and the total revenue return
to equity holders also increased to £1,314,000 (2014:
£999,000), principally driven by the Company’s successful
renewable energy development programme. Revenue return
has increased due to increased loan stock interest and the
decrease in other expenses, to 2.07 pence per share (2014:
1.70 pence per share).
The capital gain on investments for the year was £2,569,000
(2014: £626,000), offset by management fees charged to
capital, net of the related taxation impact, resulting in a capital
return of 3.26 pence per share (2014: 0.30 pence per share).
The total return was 5.33 pence per share (2014: 2.00 pence
per share).
The Balance sheet on page 36 shows that the net asset value
has increased over the last year to 71.62 pence per share
(2014: 71.30 pence per share), primarily reflecting the revenue
return of 2.07 pence per share and the capital return of
3.26 pence per share, offset by the payment of the
5.00 pence per share dividend during the year.
236915 Albion Venture Cap pp06-pp17 25/06/2015 13:44 Page 9
Strategic report (continued)
The cash flow for the Company has been a net inflow of
£1,497,000 for the year (2014: outflow £4,391,000), reflecting
cash inflows from operations, disposal proceeds and the issue
of Ordinary shares under the Albion VCTs Top Up Offers, offset
by dividends paid, new investments in the year and the
buyback of shares.
During the year, unclaimed dividends older than twelve years
of £41,000 (2014: £27,000) were returned to the Company in
accordance with the terms of the Articles of Association.
(including disposals) of £1,031,000
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
valuations
(2014:
£649,000). The renewable energy sector was also strong with
an increase in valuations of £1,047,000. The hotel sector, after
a number of years of declining valuations, saw an increase of
£266,000; and there was an increase in the valuation of
Radnor House School of £165,000; and we disposed of one
of our health and fitness clubs, at Tower Bridge, with total
realised gains of £526,000.
The Company continues with its objective to invest in
asset-based unquoted companies throughout the United
Kingdom, 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.
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 objective. The Directors are satisfied that the results
shown in the following key performance indicators give a good
indication that the Company is achieving its investment
objective and policy. These are:
1. 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.
2. Net asset value per share and cumulative net asset value
total shareholder return
Net asset value increased by 7.5 per cent. (after adding back
the 5.00 pence per share in dividends paid) to 71.62 pence
per share for the year ended 31 March 2015.
Details of significant events which have occurred since the end
of the financial year are listed in note 21. Details of transactions
with the Manager are shown in note 5.
Cumulative NAV total shareholder return increased by
2.6 per cent. to 206.42 pence per share for the year ended
31 March 2015.
Net asset value per share and cumulative NAV total shareholder return
250
200
150
100
95.0
99.9
e
r
a
h
s
r
e
p
r
e
c
n
e
P
191.3
183.7
171.9
159.2
148.5
136.8
127.8
118.4
110.2
205.0
204.7
190.1
191.4
195.3
197.9
199.0
201.1
206.4
50
0
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
71.6
1
9
9
6
1
9
9
7
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
2
0
1
5
NAV
Total shareholder return
* Total shareholder return is net asset value plus cumulative dividends paid since launch to date.
Albion Venture Capital Trust PLC 9
236915 Albion Venture Cap pp06-pp17 25/06/2015 13:44 Page 10
Strategic report (continued)
3. Dividend distributions
e
r
a
h
s
r
e
p
e
c
n
e
P
140
120
100
80
60
40
20
0
Dividends paid
109.8
104.8
94.8
84.8
134.8
129.8
124.8
119.8
114.8
74.8
67.8
58.8
50.3
42.3
34.8
27.3
11.0
6
8
9
9
1
5.0
5
7
9
9
1
18.8
7.8
9
9
9
1
8.6
0
0
0
2
7.5
1
0
0
2
7.5
2
0
0
2
8
3
0
0
2
8.5
4
0
0
2
9
5
0
0
2
7
6
0
0
2
10
7
0
0
2
10
8
0
0
2
10
9
0
0
2
5
0
1
0
2
5
1
1
0
2
5
2
1
0
2
5
3
1
0
2
5
4
1
0
2
5
5
1
0
2
Dividends paid in the period
Cumulative dividend
Dividends paid in respect of the year ended 31 March 2015
were 5.00 pence per share (2014: 5.00 pence per share), in
line with the Board’s dividend objective. Cumulative dividends
paid since inception amount to 134.80 pence per Ordinary
share and 123.25 pence per historic C share.
As part of the EU rules relating to State Aid, new rules are
being introduced under the Finance Act 2015, which would
include the prohibition, under certain circumstances, of
investment in companies which have been trading for more
than 12 years.
4. Ongoing charges
The ongoing charges ratio for the year to 31 March 2015 was
2.5 per cent. (2014: 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.
5. 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, details
of which are provided in the Directors’ report on page 21.
Given the profile of the kind of company that the Company
invests in, the Directors do not believe that updates to the
Finance Act would create a material change in the way the
Company is currently run. However, until the final legislation
has been published, this remains a risk for the Company.
The relevant tests to measure compliance have been carried
out and independently reviewed for the year ended 31 March
2015. These showed that the Company has complied with all
tests and continues to do so.
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. The Directors
do not currently have any intention to utilise 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
10 Albion Venture Capital Trust PLC
236915 Albion Venture Cap pp06-pp17 25/06/2015 13:44 Page 11
Strategic report (continued)
and administrative support to the Company. Further details
regarding the terms of engagement of the Manager and the
way the Board has evaluated the performance of the Manager
are shown below.
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 £47,658 (2014: £46,539) increased
annually by RPI. These fees are payable quarterly in arrears.
The cap on total annual normal expenses, including the
management fee, have been reduced from 3.5 per cent to
3.0 per cent. of the net asset value. The total annual normal
expenses for the year to 31 March 2015 was 2.5 per cent.
(2014: 2.5 per cent.).
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 investments, a review of the Management
agreement and
therein, and
benchmarking the performance of the Manager to other
service providers. The Board believes that it is in the interests
of shareholders as a whole, and of the Company, to continue
the appointment of the Manager for the forthcoming year.
the services provided
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 appointed Albion Ventures LLP as the Company’s AIFM
as required by the AIFMD. Albion Ventures LLP’s registration
as an AIFM was approved by the Financial Conduct Authority
on 3 June 2014.
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 2015, no incentive
fee became due to the Manager (2014: £nil).
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.
No further performance fee will become due until the hurdle
rate comprising net asset value, plus dividends from 31 March
2004, has been reached. As of 31 March 2015 the total return
from 31 March 2004 amounted to 153.1 pence per share
which compared to the hurdle of 193.4 pence per share at
that date.
Investment and co-investment
The Company co-invests with other Albion Ventures LLP
venture capital trusts and funds. Allocation of investments is
on the basis of an allocation agreement which is based, inter
alia, on the ratio of funds available for investment.
Albion Venture Capital Trust PLC 11
236915 Albion Venture Cap pp06-pp17 25/06/2015 13:44 Page 12
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
Changes
in economic conditions,
including, for example, interest rates,
rates of inflation, industry conditions,
competition, political and diplomatic
events and other
factors could
substantially and adversely affect the
Company’s prospects in a number
of ways.
To reduce this risk, in addition to investing equity in portfolio
companies, the Company often invests in secured loan stock
and has a policy of not normally permitting any external bank
borrowings within portfolio companies. Additionally, the
Manager has been rebalancing the sector exposure of the
portfolio with a view to reducing reliance on consumer led
sectors.
Investment risk
This is the risk of investment in poor
quality assets which reduces the capital
and income returns to shareholders, and
negatively impacts on the Company’s
reputation. By nature, smaller unquoted
businesses, such as those that qualify for
venture capital trust purposes, are more
fragile than larger, long established
businesses.
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.
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.
12 Albion Venture Capital Trust PLC
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
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.
takes account of comments
invites and
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 judgements 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 judgements 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
investments are at cost (reviewed for impairment) or
underpinned by independent third party professional
valuations.
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 Robertson
Hare LLP (previously PricewaterhouseCoopers LLP) as its
taxation adviser. Robertson Hare 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.
236915 Albion Venture Cap pp06-pp17 25/06/2015 13:44 Page 13
Strategic report (continued)
Risk
Possible consequence
Risk management
Compliance risk
The Company is listed on The London
Stock Exchange and is required to
comply with the rules of the UK Listing
Authority, as well as with the Companies
Act, Accounting Standards and other
legislation. Failure to comply with these
regulations could result in a delisting of
the Company’s shares, or other penalties
under the Companies Act or from
financial reporting oversight bodies.
Internal control
risk
Failures in key controls, within the Board
or within the Manager’s business, could
put assets of the Company at risk or
result
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 Company is subject to
compliance checks via the Manager’s Compliance Officer.
The Manager reports monthly to its Board on any issues
arising from compliance or regulation. These controls are also
reviewed as part of the quarterly Manager Board meetings,
and also as part of the review work undertaken by the
Manager’s Compliance Officer. The report on controls is
evaluated by Internal Audit during its reports.
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 2015 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 28.
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.
Financial risk
By its nature, as a venture capital trust,
the Company is exposed to investment
risk (which comprises investment price
risk and cash flow interest rate risk),
credit risk and liquidity risk.
The Company’s policies for managing these risks and its
financial instruments are outlined in full in note 19 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
financial instruments for speculative purposes.
Reputational risk
Arises from broader performance and
ethical issues, including investment in
that are
businesses and sectors
inconsistent with the values of Board
and the VCT or, the Boards of portfolio
companies take actions which similarly
are inconsistent with the values of the
VCT.
The Board clearly articulates to the Investment Manager its
broader aims and standards including those sectors which
are consistent with the values of the Board. The Board
regularly reviews the performance and investment strategy of
the Investment Manager. The Investment Manager periodically
attends Board meetings of the VCT’s portfolio companies and
across the portfolio receives periodic management information
and is alert to potential threats to reputation.
This Strategic report of the Company for the year ended 31 March 2015 has been prepared in accordance with the requirements
of section 414A of the Companies Act 2006 (the “Act”). The purpose of this report is to provide Shareholders with sufficient
information to enable them to assess the extent to which the Directors have performed their duty to promote the success of
the Company in accordance with section 172 of the Act.
On behalf of the Board,
David Watkins
Chairman
25 June 2015
Albion Venture Capital Trust PLC 13
236915 Albion Venture Cap pp06-pp17 25/06/2015 13:44 Page 14
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 in mid-1995
when the company went into administration to become
Chief Financial Officer and one of the principal shareholders of
The Distinguished Programs Group LLC, an insurance
distribution and underwriting group. At the end of 2012 he sold
his shares in The Distinguished Programs Group LLC, but
remains as Vice Chairman. From 1986 to 1990, he was a
member of the Council of the London Stock Exchange.
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 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 the 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
236915 Albion Venture Cap pp06-pp17 25/06/2015 13:44 Page 15
The Manager
Albion Ventures LLP is authorised and regulated by the
Financial Conduct Authority and is the Manager and AIFM of
the Company alongside a further five venture capital trusts and
currently has total funds under management of approximately
£270 million.
The following are specifically responsible for the management
and administration of the VCTs managed by Albion Ventures
LLP:
Patrick Reeve, MA, ACA, qualified as a chartered
accountant. He joined Close Brothers Group in 1989, after
spending three years at Cazenove & Co., 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 three of the Albion
Venture Capital Trusts, 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, having graduated in Industrial
Economics followed by a Masters in Corporate Strategy, spent
five years at N M Rothschild & Sons specialising in mergers
and acquisitions; principally in the natural resources and then
healthcare sectors, before joining Albion Ventures in 2013,
where he currently concentrates on renewable energy projects
and healthcare.
Dr. Andrew Elder, MA, FRCS, initially practised as a surgeon
for six years, specialising in neurosurgery, before joining the
Boston Consulting Group (BCG) as a consultant in 2001.
Whilst at BCG he specialised in healthcare strategy, gaining
experience with many large, global clients across the full
spectrum
biotechnology,
pharmaceuticals, service and care providers, software and
telecommunications. He joined Albion Ventures in 2005 and
became a partner in 2009. He has an MA plus Bachelors of
Medicine and Surgery from Cambridge University and is a
Fellow of the Royal College of Surgeons (England).
Emil Gigov, BA (Hons), FCA, graduated from the European
Business School, London, with a BA (Hons) Degree in
European Business Administration in 1994. He then joined
KPMG in their financial services division and qualified as a
chartered accountant in 1997. Following this he transferred to
KPMG Corporate Finance where he specialised in the leisure,
media and marketing services sectors acting on acquisitions,
disposals and fundraising mandates. He joined Albion
Ventures in 2000 and has since made and exited investments
in a number of industry sectors, including healthcare,
education, technology, leisure and engineering. Emil became
a partner in Albion Ventures in 2009.
David Gudgin, BSc (Hons), ACMA, qualified as a
management accountant with ICL before spending 3 years at
the BBC. In 1999 he joined 3i plc as an investor in European
technology based in London and Amsterdam. In 2002 he
moved to Foursome Investments (now Frog Capital) as the
lead investor of an environmental technology and a later stage
healthcare
including
of
IPOs,
leading
investments
development capital fund. David joined Albion Ventures LLP
in 2005 and became a partner in 2009. He is also Managing
Director of Albion Community Power PLC. David has a BSc
in Economics from Warwick University.
Vikash Hansrani, BA (Hons), ACA, qualified as a chartered
accountant with RSM Tenon plc and latterly worked in its
corporate finance team. He joined Albion Ventures in 2010,
where he is currently Finance Director. He is also Finance
Director of Albion Community Power PLC. He has a BA in
Accountancy & Finance from Nottingham Business School.
Robert Henderson, BA (Hons), ACA, graduated from
Newcastle University with a first class degree in business
management. Prior to joining Albion Ventures in 2015, he
qualified as a Chartered Accountant with KPMG, spending
four years working in Transactions & Restructuring primarily in
turnaround and M&A situations.
Ed Lascelles, BA (Hons), began by advising quoted UK
companies on
takeovers and other corporate
transactions, first with Charterhouse Securities and then ING
Barings. Companies ranged in value from £10 million to £1
billion, across the healthcare and technology sectors among
others. After moving to Albion Ventures in 2004, Ed started
investing in the technology, healthcare, financial and business
services sectors. Ed became 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, MBA,
initially practiced 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 2011 and
became a partner in 2014. He holds a degree in medicine from
Ludwig-Maximilians University, Munich and an MBA
from INSEAD.
Henry Stanford, MA, ACA, qualified as a chartered
accountant with Arthur Andersen before joining the corporate
finance department of Close Brothers Group in 1992,
becoming an assistant director in 1996. He moved to Albion
Ventures in 1998, where he has been responsible for much of
the asset based portfolio. Henry became a partner in Albion
Ventures in 2009. He holds an MA degree in Classics from
Oxford University.
Robert Whitby-Smith, BA (Hons), FCA. After graduating in
History at Reading University, Robert qualified as a chartered
accountant 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 PLC and Kings Arms Yard VCT PLC)
and is responsible for investments primarily in the advanced
manufacturing, digital media and technology sectors. Robert
became a partner in Albion Ventures in 2009.
Marco Yu, MPhil, MA, MRICS, spent two and a half years at
Bouygues (UK), before moving to EC Harris in 2005 where he
advised senior lenders on large capital projects. Since joining
Albion Ventures in 2007, Marco has been involved in hotel,
cinema, pub, residential property and garden centre investments
and is, more recently, responsible for a number of renewable
energy investments. He became an Investment Director in 2014.
Marco graduated from Cambridge University with a first class
degree in economics and is a Chartered Surveyor.
Albion Venture Capital Trust PLC 15
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Portfolio of investments
As at 31 March 2015 As at 31 March 2014
% 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 6,723 758 7,481 6,723 656 7,379 102
The Crown Hotel Harrogate Limited 24.1 50.0 4,245 (1,219) 3,026 4,245 (1,329) 2,916 110
The Stanwell Hotel Limited 39.2 50.0 4,677 (2,285) 2,392 4,677 (2,339) 2,338 54
Total investment in the
hotel sector 15,645 (2,746) 12,899 15,645 (3,012) 12,633 266
Renewable energy
Chonais Holdings Limited 16.1 50.0 3,074 361 3,435 1,611 6 1,617 356
Green Highland Renewables
(Ledgowan) Limited 20.8 50.0 1,363 268 1,631 387 – 387 268
Alto Prodotto Wind Limited 7.4 50.0 670 309 979 670 231 901 78
The Street by Street Solar
Programme Limited 6.5 50.0 676 249 925 676 163 839 86
Regenerco Renewable
Energy Limited 4.5 50.0 451 108 559 427 36 463 73
Erin Solar Limited 18.6 50.0 520 (12) 508 520 3 523 (14)
Infinite Ventures (Goathill) Limited 11.5 31.0 480 – 480 – – – –
TEG Biogas (Perth) Limited 4.9 50.0 404 74 478 306 23 329 51
Dragon Hydro Limited 7.3 30.0 311 158 469 311 61 372 97
Harvest AD Limited n/a**** n/a 307 – 307 307 – 307 –
AVESI Limited 7.4 50.0 242 49 291 230 16 246 34
Greenenerco Limited 3.9 50.0 135 67 202 135 49 184 18
Total investment in the
renewable energy sector 8,633 1,631 10,264 5,580 588 6,168 1,047
Healthcare
Shinfield Lodge Care Limited 25.0 29.2 3,000 24 3,024 – – – 24
Active Lives Care Limited 14.5 33.8 1,800 68 1,868 1,800 – 1,800 68
Ryefield Court Care Limited 10.7 23.7 991 40 1,031 – – – 40
Total investment in the
healthcare sector 5,791 132 5,923 1,800 – 1,800 132
Education
Radnor House School (Holdings)
Limited 7.1 50.0 2,125 981 3,106 1,381 850 2,231 165
Total investment in the
education sector 2,125 981 3,106 1,381 850 2,231 165
Pubs
The Charnwood Pub
Company Limited + 14.8 50.0 1,850 (429) 1,421 3,532 (1,889) 1,643 (104)
Bravo Inns II Limited 6.4 50.0 1,085 24 1,109 1,085 38 1,123 (13)
Bravo Inns Limited 7.6 50.0 589 (158) 431 589 (156) 433 (3)
Total investment in the
pub sector 3,524 (563) 2,961 5,206 (2,007) 3,199 (120)
Health and fitness clubs
Kensington Health Clubs Limited 9.8 50.0 1,905 (548) 1,357 1,889 (800) 1,089 251
The Weybridge Club Limited 14.3 50.0 2,165 (850) 1,315 2,136 (650) 1,486 (201)
Total investment in the health
and fitness club sector 4,070 (1,398) 2,672 4,025 (1,450) 2,575 50
Residential property
development
G&K Smart Developments
VCT Limited 42.9 50.0 276 (40) 236 276 (40) 236 –
Total investment in the
residential property
development sector 276 (40) 236 276 (40) 236 –
Other leisure
Premier Leisure (Suffolk) Limited + 9.9 47.4 175 (7) 168 468 (298) 170 (2)
Total investment in the
other leisure sector 175 (7) 168 468 (298) 170 (2)
Total fixed asset
investments 40,239 (2,010) 38,229 34,381 (5,369) 29,012 1,538
* 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
+ The accounting cost as shown above is after deducting realised losses of £1,564,000 for The Charnwood Pub Company Limited and £293,000 for Premier
Leisure (Suffolk) Limited which are still held at the Balance sheet date.
The comparative cost and valuations for 31 March 2014 do not agree to the Annual Report and Financial Statements for the year ended 31 March 2014 as the
above list does not include brought forward investments that were fully disposed of in the year.
16 Albion Venture Capital Trust PLC
236915 Albion Venture Cap pp06-pp17 25/06/2015 13:44 Page 17
Portfolio of investments (continued)
Total change in value of investments for the year 1,538
Movement in loan stock accrued interest (96)
Unrealised gains sub-total 1,442
Realised gain in current year 1,127
Total gains on investments as per Income statement 2,569
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 2015 £’000 £’000 £’000 £’000 £’000
Oakland Care Centre Limited 3,535 5,147 5,750 2,215 603
Orchard Portman Group (Taunton Hospital Limited) 1,314 1,574 1,870 556 296
Tower Bridge Health Clubs Limited 347 668 873 526 205
Radnor House School Limited (loan stock repayment
and redemption premium) 54 89 95 41 6
The Bear Hungerford Limited*** – – 16 16 16
Infinite Ventures (Goathill) Limited (loan stock
repayment) 200 200 200 – –
The Dunedin Pub Company VCT Limited (loan stock
repayment) 75 73 74 (1) 1
Premier Leisure (Suffolk) Limited** 293 – – (293) –
The Charnwood Pub Company Limited** (loan stock
repayment) 1,712 148 148 (1,564) –
Total 7,530 7,899 9,026 1,496 1,127
* 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.
** The accounting cost as shown above represents realised losses of investments 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.
Abbreviated audited results: year to 31 August 2014
£’000 Investment information £’000
Turnover 4,144 Income recognised in the year 426
EBITDA 890 Total cost 6,723
Profit before tax 104 Total valuation 7,481
Net assets 4,344 Voting rights 45.2 per cent.
Basis of valuation: Net asset value supported by third party valuation Voting rights for all AVL managed companies 50.0 per cent.
Website: www.expressstanstedairport.co.uk
Chonais Holdings Limited
A company that owns and operates a 2 megawatt hydro-power scheme in the Scottish Highlands.
Abbreviated audited results: period to 30 September 2014
£’000 Investment information £’000
Turnover 5 Income recognised in the year 168
EBITDA (4) Total cost 3,074
Loss before tax (1) Total valuation 3,435
Net assets 2,702 Voting rights 16.1 per cent.
Basis of valuation: Net asset value supported by third party valuation Voting rights for all AVL managed companies 50.0 per cent.
Radnor House School (Holdings) Limited
Radnor House is a group of co-educational independent day schools with sites in South West London and Sevenoaks
in Kent. The group provides personalised education to students aged 3-18 and has the capacity to accommodate some
1,000 children.
Audited results: year to 31 August 2014
£’000 Investment information £’000
Turnover 5,017 Income recognised in the year 127
EBITDA 1,721 Total cost 2,125
Profit before tax 852 Total valuation 3,106
Net assets 323 Voting rights 7.1 per cent.
Basis of valuation: Net asset value supported by third party valuation Voting rights for all AVL managed companies 50.0 per cent.
Website: www.radnorhouse.org
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 2,834 Income recognised in the year 195
EBITDA 448 Total cost 4,245
Loss before tax (708) Total valuation 3,026
Net liabilities (7,438) Voting rights 24.1 per cent.
Basis of valuation: Net asset value supported by third party valuation Voting rights for all AVL managed companies 50.0 per cent.
Website: www.crownhotelharrogate.com
Shinfield Lodge Care Limited
The company will own and operate a care home in Shinfield, Berkshire. The acquisition of the site completed on 6 March 2015.
Investment information £’000
Income recognised in the year 25
The company was incorporated on 14 October 2014 and has
Total cost 3,000
not yet filed accounts at Companies House
Total valuation 3,024
Voting rights 25.0 per cent.
Cost Voting rights for all AVL managed companies 29.2 per cent.
Basis of valuation
18 Albion Venture Capital Trust PLC
236915 Albion Venture Cap pp18-pp19 25/06/2015 13:44 Page 19
Portfolio companies (continued)
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 2014
£’000 Investment information £’000
Turnover 1,426 Income recognised in the year –
EBITDA 143 Total cost 4,677
Loss before tax (718) Total valuation 2,392
Net liabilities (5,359) Voting rights 39.2 per cent.
Basis of valuation: Net asset value supported by third party valuation Voting rights for all AVL managed companies 50.0 per cent.
Website: www.thestanwell.com
Active Lives Care Limited
A company that is developing and will operate a purpose built elderly care home offering 72 bedrooms in Cumnor Hill, Oxford.
Investment information £’000
Income recognised in the year 68
The company was incorporated on 8 November 2013 and has Total cost 1,800
not yet filed accounts at Companies House. Total valuation 1,868
Voting rights 14.5 per cent.
Basis of valuation: Cost Voting rights for all AVL managed companies 33.8 per cent.
Green Highlands Renewables (Ledgowan) Limited
The Company will operate a 1MW hydroelectricity plant near Ledgowan in Western Scotland.
Abbreviated audited results: year to 30 September 2014
£’000 Investment information £’000
Turnover – Income recognised in the year 81
EBITDA (11) Total cost 1,363
Loss before tax (12) Total valuation 1,631
Net assets 919 Voting rights 20.8 per cent.
Basis of valuation Net asset value supported by third party valuation Voting rights for all AVL managed companies 50.0 per cent.
The Charnwood Pub Company Limited
The company which owns and operates 9 freehold public houses in central England.
Abbreviated audited results: 31 March 2014
£’000 Investment information £’000
Turnover 3,515 Income recognised in the year –
EBITDA (18) Total cost* 1,850
Loss before tax (543) Total valuation 1,421
Net liabilities (2,289) Voting rights 14.8 per cent.
Basis of valuation: Net asset value supported by third party valuation Voting rights for all AVL managed companies 50.0 per cent.
Website: www.charnwoodpubco.co.uk
*An amount of £1,564,000 has been written off during the year.
Kensington Health Clubs Limited
The company has developed a 29,000 square foot health and fitness club on a
999 year lease in West London which opened in December 2007.
Audited results: year to 30 September 2014
£’000 Investment information £’000
Turnover 1,957 Income recognised in the year 64
EBITDA 530 Total cost 1,905
Loss before tax (826) Total valuation 1,357
Net liabilities (2,446) Voting rights 9.8 per cent.
Basis of valuation: Net asset value supported by third party valuation Voting rights for all AVL managed companies 50.0 per cent.
Website: olympia.thirtysevendegrees.co.uk
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
236915 Albion Venture Cap pp20-pp31 25/06/2015 13:43 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 2015.
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. 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 and further details of this can be found
on page 21 of this Directors’ report. Approval for the year
ended 31 March 2015 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 official list of The London
Stock Exchange.
Under current tax legislation, shares in the Company provide
tax-free capital growth and income distribution, in addition to
the income 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 15. 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 6,874,236
Ordinary shares (2014: 4,902,202), of which 6,442,577
Ordinary shares (2014: 4,608,012) were issued under the
20 Albion Venture Capital Trust PLC
issued under
Albion VCTs Top Up Offers; and 431,659 Ordinary shares
(2014: 294,190) were
the Company’s
Dividend Reinvestment Scheme. The Company is currently
engaged in the Albion VCTs Prospectus Top Up Offers
2014/2015 for which a prospectus has been published, copies
of which are available on the Company’s website at
www.albion-ventures.co.uk.
The Company operates a policy of buying back shares either
for cancellation or for holding in treasury. Details regarding the
current buy-back policy can be found on page 6 of the
Chairman’s statement.
Substantial interests and shareholder profile
As at 31 March 2015 and at the date of this report, the
Company was not aware of any shareholder who had a
beneficial interest exceeding 3 per cent. of voting rights (2014:
J M Finn Nominees 3.04 per cent.). There have been no
in accordance with Disclosure Rule and
disclosures
Transparency Rule 5 made to the Company during the year
ended 31 March 2015, and to the date of this report.
Future developments of the business
Details on the future developments of the business can be
found on page 7 of the Chairman’s statement and on page 9
of the Strategic report.
Results and dividends
Detailed information on the results and dividends for the year
ended 31 March 2015 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 19. The Company’s business activities,
together with details of its performance are shown in the
Strategic report and this Directors’ report.
236915 Albion Venture Cap pp20-pp31 25/06/2015 13:43 Page 21
Directors’ report (continued)
Post balance sheet events
Details of events that have occurred since 31 March 2015 are
shown in note 21.
Principal risks and uncertainties
A summary of the principal risks faced by the Company is set
out on pages 12 to 13 of the Strategic report.
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:
(1) The Company’s income must be derived wholly or
mainly from shares and securities;
(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 the time of investment, or addition to an investment,
the Company’s holdings in any one company (other
than another VCT) must not 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) The Company’s shares, throughout the year, must have
been listed on a regulated European market.
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 2015. The Company
has complied with all tests and continues to do so.
‘Qualifying holdings’ include shares or securities (including
loans with a five year or greater maturity period) in companies
which operate a ‘qualifying trade’ wholly or mainly in the
United Kingdom. Eligible shares must comprise at least
10 per cent. by HMRC value of the total of the shares and
securities that the Company holds in any one portfolio
company. ‘Qualifying trade’ excludes, amongst other
sectors, dealing in property or shares and securities,
insurance, banking and agriculture. Details of the sectors in
which the Company is invested can be found in the pie chart
on page 8.
Portfolio company gross assets must not exceed £15 million
immediately prior to the investment and £16 million
immediately thereafter. No company may receive 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.
Environment
The management and administration of the Company is
undertaken by the Manager, Albion Ventures LLP. Albion
Ventures LLP recognises the importance of its environmental
responsibilities, monitors its impact on the environment, and
designs and implements policies to reduce any damage that
might be caused by its activities. Initiatives designed to
minimise the Company’s impact on the environment include
recycling and reducing energy consumption.
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 13 men and 10 women.
Employees
The Company is managed by Albion Ventures LLP and
hence has no employees other than its Directors.
Albion Venture Capital Trust PLC 21
236915 Albion Venture Cap pp20-pp31 25/06/2015 13:43 Page 22
Directors’ report (continued)
Directors
The Directors who held office throughout the year, and their
interests in the shares of the Company (together with those
of their immediate family) are shown in the Directors’
remuneration report on page 30.
All Directors are members of the Audit Committee, of which
John Kerr is Chairman.
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.
Advising ordinary retail investors
The Company currently conducts its affairs so that its shares
can be recommended by financial intermediaries to ordinary
retail investors in accordance with the FCA’s rules in relation
to non-mainstream investment products and intends to
continue to do so for the foreseeable future. The FCA’s
restrictions which apply to non-mainstream investment
products do not apply to the Company’s shares because
they are shares in a 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.
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
11:30 am on 31 July 2015. The notice of the Annual General
Meeting is at the end of this document.
22 Albion Venture Capital Trust PLC
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.
Authority to allot shares
Ordinary resolution number 7 will request the authority to allot
up to an aggregate nominal amount of £153,047 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 and any Albion VCTs Top Up
Offers. The Company currently holds 5,841,440 Ordinary
treasury shares representing 8.2 per cent. of the total
Ordinary share capital in issue as at 31 March 2015.
This resolution replaces the authority given to the Directors at
the Annual General Meeting in 2014. 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 8 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 £153,047 of the nominal value of
the share capital representing approximately 20 per cent. of
the issued Ordinary share capital of the Company as at the
date of this Report.
This resolution replaces the authority given to the Directors at
the Annual General Meeting in 2014. 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. Members should note that this
resolution also relates to treasury shares.
236915 Albion Venture Cap pp20-pp31 25/06/2015 13:43 Page 23
Directors’ report (continued)
Purchase of own shares
Special resolution number 9 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 9. 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 2014 authority, which was
on similar terms. During the financial year under review, the
Company purchased 1,146,000 Ordinary shares for treasury
at an aggregate consideration of £760,000, including stamp
duty, representing 1.6 per cent. of the issued share capital of
the Company as at 31 March 2015.
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
in accordance with
Company as
the Regulations.
treasury shares
Special resolution number 10 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 these resolutions, as the Directors intend to do in
respect of their own shareholdings.
Directors’ responsibilities
The Directors are responsible for preparing the Strategic
report, the Directors' report, the Directors' remuneration
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 judgements and accounting estimates that are
reasonable and prudent;
● 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.
Following reviews of the Annual Report and Financial
Statements and consideration of the key areas of risk
identified, the Directors have concluded that, as a whole, the
Annual Report and 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.
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
Company’s webpage on the Investment Manager’s website
(www.albion-ventures.co.uk) in accordance with legislation in
the United Kingdom governing the preparation and
dissemination of Financial Statements, which may vary from
legislation in other jurisdictions. The maintenance and
Albion Venture Capital Trust PLC 23
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
that
information.
the Company’s Auditor
is aware of
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 2015
236915 Albion Venture Cap pp20-pp31 25/06/2015 13:43 Page 24
Directors’ report (continued)
integrity of the Manager’s website is, so far as it relates to the
Company, the responsibility of the Manager.
The work carried out by the Auditor does not involve
consideration of the maintenance and integrity of this website
and, accordingly, the Auditor accepts no responsibility for
any changes that have occurred to the Financial Statements
since they were initially presented on the website.
Directors’ responsibilities pursuant to Disclosure Rule
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.
24 Albion Venture Capital Trust PLC
236915 Albion Venture Cap pp20-pp31 25/06/2015 13:43 Page 25
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 updated UK Corporate Governance Code was published
in September 2014 and will be effective for periods beginning
1 April 2015. The Company will therefore be required to
comply with the new Code in the next financial year. The
updated Code integrates and replaces the current guidance
for Directors on internal controls, going concern and liquidity
risk and places additional responsibilities on the Board and
the Audit Committee. Steps are being taken to ensure
compliance with all relevant parts of the updated Code.
The Board has also considered the principles and
recommendations of the AIC Code of Corporate Governance
(“AIC Code”) by reference to the AIC Corporate Governance
Guide for Investment Companies (“AIC Guide”). The AIC
Code, as explained by the AIC Guide, addresses all the
principles set out in the UK Corporate Governance Code, as
well
and
recommendations on issues that are of specific relevance to
the Company.
additional principles
setting
out
as
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.
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 28.
The Board met four 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
Offer Documents under the Albion VCTs Prospectus Top Up
Offers 2014/2015.
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.
Albion Venture Capital Trust PLC 25
236915 Albion Venture Cap pp20-pp31 25/06/2015 13:43 Page 26
Statement of corporate governance (continued)
The Board has a formal schedule of matters reserved for it and
the agreement between the Company and its Manager sets
out the matters over which the Manager has authority and
limits beyond which Board approval must be sought.
The Manager has authority over the management of the
investment portfolio, the organisation of custodial services,
accounting, secretarial and administrative services. The main
issues reserved for the Board include:
● 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
26 Albion Venture Capital Trust PLC
Directors. Diversity within the Board is achieved through the
appointment of directors with different sector backgrounds
and skills.
Directors are offered training, both at the time of joining the
Board and on other occasions where required. The Board
also undertakes a proper and thorough evaluation of its
committees on an annual basis.
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 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.
be
found on
The terms of reference for the Remuneration Committee
the Company’s website at
can
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.
Audit Committee
The Audit Committee consists of all Directors and John Kerr
is Chairman. 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 2015;
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 and
looking under the Corporate Governance section.
During the year under review, the Committee discharged its
responsibilities including:
236915 Albion Venture Cap pp20-pp31 25/06/2015 13:43 Page 27
Statement of corporate governance (continued)
● formally reviewing the Annual Report and Financial
Statements, the Half-yearly Report, the Interim
Management Statements and
the associated
announcements, with particular focus on the main
areas
critical
judgement
accounting policies;
and on
requiring
● 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;
● reviewing the performance of the Manager and making
recommendations regarding their re-appointment to
the Board;
● 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; and
● 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. The Audit Committee considered whether
these issues were properly considered at the planning stage
of the audit and such issues were discussed with the external
Auditor at the planning stage of the audit 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.
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
judgements 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 over
revenue recognition to ensure that amounts received are in
line with expectation and budget.
Following rigorous reviews of the Annual Report and Financial
Statements and consideration of the key areas of risk
identified, the Audit Committee and Board has concluded
that, as a whole, the Financial Statements are fair, balanced
and understandable and that they provide the information
necessary for shareholders to assess the Company’s
performance, business model and strategy.
Relationship with the External Auditor
The Audit Committee reviews the performance and continued
suitability of the Company’s external Auditor on an annual
basis. They assess the external Auditor’s independence,
qualification, extent of relevant experience, 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. No non-audit services were
provided during the financial year ended 31 March 2015.
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
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 2015, and assessments made by
individual Directors.
In 2007 the Audit Committee undertook a tendering exercise
for provision of audit services. As a result of this process,
BDO LLP was appointed as Auditor with effect from 2008.
The Audit Committee annually reviews and evaluates the
Albion Venture Capital Trust PLC 27
236915 Albion Venture Cap pp20-pp31 25/06/2015 13:43 Page 28
Statement of corporate governance (continued)
standard and quality of service provided by the Auditor, as
well as value for money in the provision of these services.
The current audit engagement partner has served five years
in this role following the completion of the 31 March 2015
audit. The Audit Engagement rotation requirement allows a
maximum rotation period of five years, and therefore a new
audit engagement partner will be assigned to the audit for the
year ending 31 March 2016.
Based on the assurance obtained, the Audit Committee
recommended to the Board a resolution to re-appoint BDO
LLP as Auditor at the forthcoming Annual General Meeting.
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.
be
found on
The terms of reference for the Nomination Committee
can
the Company’s website 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.
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, acknowledging that such a system is designed to
manage, rather than eliminate, the risks of failure to achieve
the Company’s business objectives, such controls can only
provide reasonable and not absolute assurance against
material misstatement or loss.
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
and Financial Statements. This assessment considers all
significant aspects of internal control arising during the year.
The Audit Committee assists the Board in discharging its
review responsibilities.
The main features of the internal control system with respect
to financial reporting, implemented throughout the year are:
● segregation of duties between the preparation of
valuations and recording in accounting records;
● independent third party valuations of the majority of the
asset-backed investments within the portfolio are
undertaken annually;
● reviews of valuations are carried out by the Managing
Partner and reviews of financial reports are carried out
by the Finance Director of Albion Ventures LLP;
● bank and stock reconciliations are carried out monthly
the
in accordance with
the Manager
by
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
financial information due to be published.
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, it has access to PKF Littlejohn LLP, which, as
internal Auditor for Albion Ventures LLP undertakes periodic
examination of the business processes and controls
environment at Albion Ventures LLP, and ensures that any
recommendations to implement improvements in controls
are carried out. During the year, the Audit Committee and the
Board reviewed internal audit reports prepared by PKF
Littlejohn LLP. The Board and the Audit Committee will
continue to monitor its system of internal control in order to
provide assurance that it operates as intended.
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
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
28 Albion Venture Capital Trust PLC
236915 Albion Venture Cap pp20-pp31 25/06/2015 13:43 Page 29
Statement of corporate governance (continued)
interest has two independent Directors authorise those
conflicts. Procedures to disclose and authorise conflicts of
interest have been adhered to throughout the year.
Shareholders can access holdings and valuation information
regarding any of their shares held with Computershare by
registering on Computershare’s website.
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, 22 and 23 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.
For enquiries relating to the performance of the Company,
and for financial advisers’ information please contact Albion
Ventures LLP:
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
Any amendments to the Company’s Articles of Association
are by way of a special resolution subject to ratification by
shareholders.
Please note that these contacts are unable to provide
financial or taxation advice.
Relationships with shareholders
The Company’s Annual General Meeting on 31 July 2015, will
be used as an opportunity to communicate with investors. The
Board, including the Chairman of the Audit Committee, will be
available to answer questions at the Annual General Meeting.
At the Annual General Meeting, the level of proxies lodged on
each resolution, the balance for and against the resolution,
and the number of votes withheld, are announced after the
resolution has been voted on by a show of hands.
The Annual General Meeting will also include a presentation
from the Manager on the portfolio and on the Company, and
a presentation from a portfolio company.
Shareholders are able to access the latest information on the
Company via the Albion Ventures LLP website www.albion-
ventures.co.uk under the “Our Funds” section.
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.
Statement of compliance
The Directors consider that the Company has complied
throughout the year ended 31 March 2015 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.
For help relating to dividend payments, shareholdings and
share certificates please contact Computershare Investor
Services PLC:
David Watkins
Chairman
25 June 2015
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
Albion Venture Capital Trust PLC 29
236915 Albion Venture Cap pp20-pp31 25/06/2015 16:44 Page 30
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.
An Ordinary resolution will be proposed at the Annual
General Meeting of the Company to be held on 31 July 2015
for the approval of the Annual Remuneration Report as set
out below. The current Remuneration Policy was approved
by the Shareholders (98.0 per cent. of shareholders voted for
and 2.0 per cent. voted against the resolution) at the Annual
General Meeting held on 25 July 2014, and it will remain in
place for a three year period.
The Company’s independent Auditor, BDO LLP, is required to
give its opinion on certain information included in this report
as indicated. 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.
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. There is no performance related pay criteria
applicable to non-executive Directors.
This policy will continue for the year ended 31 March 2016.
An ordinary
the Directors’
Remuneration Policy will be put to shareholders at least once
every three years.
to approve
resolution
forthcoming Annual General Meeting David Watkins 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. The Company has no
employees other than the Directors.
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, 98.0 per cent. of shareholders voted for and
2.0 per cent. voted against 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:
31 March 2015 31 March 2014
(Number of shares) (Number of shares)
D J Watkins 10,000 10,000
J M B L Kerr 13,109 13,109
J Warren 20,000 20,000
E Dinesen 22,633 21,180
There have been no changes in the holdings of the Directors
between 31 March 2015 and the date of this Report.
There are no guidelines or requirements in respect of Directors
share holdings. The following items have not been audited.
Partners and staff of Albion Ventures LLP hold a total of
163,596 shares in the Company as at 31 March 2015.
The maximum level of non-executive Directors’ remuneration
is £100,000 per annum which is fixed by the Company’s
Articles of Association.
Partners and staff of Albion Ventures LLP were issued with a
further 26,880 shares under the Albion VCTs Prospectus Top
Up Offers 2014/2015 on 2 April 2015.
The Company’s Articles of Association provide for the
resignation and, if approved, re-election of the Directors every
three years at the Annual General Meeting. In accordance
with the recommendations of the AIC Code, Directors who
have served the Company for longer than nine years are
subject to annual re-election, and any non-independent
Directors are also subject to annual re-election. At the
Annual 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.
30 Albion Venture Capital Trust PLC
236915 Albion Venture Cap pp20-pp31 25/06/2015 13:43 Page 31
Directors’ remuneration report (continued)
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
spent by the Directors on the business of the Company and
makes recommendations to the Board accordingly.
Directors’ remuneration
The following items have been audited.
The following table shows an analysis of the remuneration of
individual Directors, exclusive of National Insurance:
2015 2014
£’000 £’000
D J Watkins 20 20
J M B L Kerr 23 20
J Warren 20 20
E Dinesen 20 20
–––––––––––– ––––––––––––
83 80
–––––––––––– ––––––––––––
There are no options, issued or exercisable, in the Company
which would distort the graphical representation that follows.
Ordinary share price total return relative to the FTSE All-Share Index
(in both cases with dividends reinvested)
400
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
Mar
15
FTSE AII-Share Index total return
Ordinary share 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.
During the year, John Kerr’s remuneration increased by
£3,000 to reflect the increase in the amount of work required
as Audit Committee Chairman.
The Company does not confer any share options, long term
incentives or retirement benefits to any Director, nor does it
make a contribution to any pension scheme on behalf of
the Directors.
Directors pay compared to distribution to shareholders
2015 2014 Percentage
£’000 £’000 change
Directors fees 83 80 3.75
Total distribution to
shareholders including
dividends and share
buybacks 3,926 3,780 3.86
Each Director of the Company was remunerated personally
through the Manager’s payroll which has been recharged to
the Company.
By Order of the Board
In addition to Directors’ remuneration, the Company pays an
annual premium in respect of Directors’ & Officers’ Liability
Insurance of £9,192 (2014: £10,213).
Albion Ventures LLP
Company Secretary
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.
1 King’s Arms Yard
London, EC2R 7AF
25 June 2015
Albion Venture Capital Trust PLC 31
236915 Albion Venture Cap pp32-pp38 25/06/2015 13:42 Page 32
Independent Auditor’s report to the
Members of Albion Venture Capital Trust PLC
Our opinion on the financial statements
In our opinion the Albion Venture Capital Trust PLC financial statements for the year ended 31 March 2015, which have been
prepared by the directors in accordance with applicable law and United Kingdom Accounting Standards:
● give a true and fair view of the state of the company’s affairs as at 31 March 2015 and of its profit for the year then ended;
● have been properly prepared in accordance with United Kingdom Accounting Standards; and
● have been prepared in accordance with the requirements of the Companies Act 2006.
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.
What our opinion covers
Our audit opinion on the financial statements covers the:
● Income Statement;
● Balance Sheet;
● Reconciliation of Movements in Shareholders’ Funds;
● Cash Flow Statement; and
● related notes
Respective responsibilities of directors and auditor
As explained more fully in the report of the directors, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on
the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the FRC’s Ethical Standards for Auditors.
A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s (FRC) website
at www.frc.org.uk/auditscopeukprivate
Our approach
Our audit approach was developed by obtaining an understanding of the Company’s activities, the key functions undertaken
on behalf of the Board by the Investment Manager and Administrator and, the overall control environment. Based on this
understanding we assessed those aspects of the company’s transactions and balances which were most likely to give rise to
a material misstatement. Below are those risks which we considered to have the greatest impact on our audit strategy and
our audit response:
Risk area
Audit response
Valuation of investments:
Valuation of investments is a
key accounting estimate where
there is an inherent risk of
management override arising
from the investment valuations
the
being
Investment Manager, who is
remunerated based on the net
asset value of the company.
prepared
by
We considered the design and implementation of controls in place over the valuation of
investments and also reviewed the assumptions and underlying evidence supporting
the year end valuations. In doing so, we reviewed the valuation reports prepared by the
Investment Manager for all unquoted investments considering whether, in our
professional judgement, the methodology is the most appropriate in the circumstances
under the IPEV guidelines and, for a risk-determined sample of the investments we:
● Re-performed the calculation of the investment valuation;
● Verified key inputs to the valuation to independent information;
● Benchmarked key inputs and estimates to independent information and our
own research;
32 Albion Venture Capital Trust PLC
236915 Albion Venture Cap pp32-pp38 25/06/2015 13:42 Page 33
Independent Auditor’s report to the
Members of Albion Venture Capital Trust PLC (continued)
Risk area
Audit response
Revenue recognition:
Revenue consists of loan stock
interest, dividends receivable
from portfolio companies and
interest earned cash balances.
Revenue
is a
under
presumed
International Standards on
Auditing (UK & Ireland).
recognition
risk
● Where appropriate, performed sensitivity analyses on the valuation calculations
where, in our opinion, there was sufficient evidence to suggest reasonable
alternative inputs might exist;
● Challenged the Investment Manager regarding significant judgements made; and
● Considered the economic environment in which the investment operates to identify
factors that could impact the investment valuation.
● We assessed the design and the implementation of the controls relating to revenue
recognition and we developed expectations for interest income receivable based on
loan instruments and investigated any variations in amounts recognised to ensure
they were valid;
● We 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 portfolio
company to service the loan and the reasons for any arrears of loan interest;
● We 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; and
● We tested dividends receivable to cash received, as well as to supporting
documentation and management accounts of the portfolio companies.
The Audit Committee’s consideration of their key issues is set out on page 27.
Materiality in context
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements.
For planning, we consider materiality to be the magnitude by which misstatements, including omissions, could influence the
economic decisions of reasonable users that are taken on the basis of the financial statements. Importantly, misstatements
below this level will not necessarily be evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the Financial Statements.
The application of these key considerations gives rise to two levels of materiality, the quantum and purpose of which are
tabulated below.
Materiality
measure
Purpose
Key considerations and
benchmarks
Financial statement
materiality
Assessing whether the financial statements
as a whole present a true and fair view
● The value of net assets
● The level of judgement inherent in
Quantum
(£)
760,000
the valuation
● The range of reasonable
alternative valuation
● Revenue return before taxation
150,000
Specific materiality
– classes of
transactions and
balances which
impact on net
realised returns
Assessing those classes of transactions,
balances or disclosures
for which
misstatements of lesser amounts than
materiality for the financial statements as a
whole could reasonably be expected to
influence the economic decisions of users
taken on the basis of the financial statements.
Albion Venture Capital Trust PLC 33
236915 Albion Venture Cap pp32-pp38 25/06/2015 13:42 Page 34
Independent Auditor’s report to the
Members of Albion Venture Capital Trust PLC (continued)
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £10,000, 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 the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
● the information given in the Corporate Governance Statement set out on pages 28 and 29 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 the ISAs (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 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 2015
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
34 Albion Venture Capital Trust PLC
236915 Albion Venture Cap pp32-pp38 25/06/2015 13:42 Page 35
Income statement
Year ended 31 March 2015 Year ended 31 March 2014
Revenue Capital Total Revenue Capital Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Gains on investments 3 – 2,569 2,569 – 626 626
Investment income 4 1,989 – 1,989 1,718 – 1,718
Investment management fees 5 (212) (636) (848) (201) (601) (802)
Other expenses 6 (273) – (273) (398) – (398)
–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––
Return on ordinary activities
before tax 1,504 1,933 3,437 1,119 25 1,144
Tax (charge)/credit on ordinary activities 8 (190) 135 (55) (120) 140 20
–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––
Return attributable to shareholders 1,314 2,068 3,382 999 165 1,164
–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––
Basic and diluted return
per share (pence)* 10 2.07 3.26 5.33 1.70 0.30 2.00
–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––
* excluding treasury shares
The accompanying notes on pages 39 to 51 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 on ordinary activities before tax and the historical profit is due to the fair value
movements on investments. As a result a note on historical cost profit and losses has not been prepared.
Albion Venture Capital Trust PLC 35
236915 Albion Venture Cap pp32-pp38 25/06/2015 13:42 Page 36
Balance sheet
31 March 2015 31 March 2014
Note £’000 £’000
Fixed asset investments 11 38,229 35,580
Current assets
Trade and other debtors 13 166 48
Cash at bank and in hand 17 9,002 7,505
–––––––––––– ––––––––––––
9,168 7,553
Creditors: amounts falling due within one year 14 (469) (475)
–––––––––––– ––––––––––––
Net current assets 8,699 7,078
–––––––––––– ––––––––––––
Net assets 46,928 42,658
–––––––––––– ––––––––––––
Capital and reserves
Called up share capital 15 714 645
Share premium 8,228 3,525
Capital redemption reserve 7 7
Unrealised capital reserve (2,269) (3,343)
Realised capital reserve 11,522 10,527
Other distributable reserve 28,726 31,297
–––––––––––– ––––––––––––
Total equity shareholders’ funds 46,928 42,658
–––––––––––– ––––––––––––
Basic and diluted net asset value per share (pence)* 16 71.62 71.30
–––––––––––– ––––––––––––
* excluding treasury shares
The accompanying notes on pages 39 to 51 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 2015, and were
signed on its behalf by
David Watkins
Chairman
Company number: 03142609
36 Albion Venture Capital Trust PLC
236915 Albion Venture Cap pp32-pp38 25/06/2015 13:43 Page 37
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 2014 645 3,525 7 (3,343) 10,527 31,297 42,658
Return for the year – – – 1,442 626 1,314 3,382
Transfer of previously unrealised
gains/(losses) on realisations of
investments – – – (368) 368 – –
Purchase of treasury shares – – – – – (760) (760)
Issue of equity 69 4,827 – – – – 4,896
Cost of issue of equity – (124) – – – – (124)
Net dividends paid (note 9) – – – – – (3,125) (3,125)
–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––
As at 31 March 2015 714 8,228 7 (2,269) 11,522 28,726 46,928
–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––
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/(losses) on realisations of
investments – – – 971 (971) – –
Purchase of treasury shares – – – – – (364) (364)
Purchase of shares for
cancellation (7) – 7 – – (487) (487)
Issue of equity 49 3,606 – – – – 3,655
Cost of issue of equity – (89) – – – – (89)
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
–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––
* Included within the aggregate of these reserves is an amount of £37,979,000 (2014: £38,481,000) which is considered
distributable.
Albion Venture Capital Trust PLC 37
236915 Albion Venture Cap pp32-pp38 25/06/2015 13:43 Page 38
Cash flow statement
Year ended Year ended
31 March 2015 31 March 2014
Note £’000 £’000
Operating activities
Loan stock income received 1,764 1,534
Deposit interest received 76 131
Dividend income received 57 22
Investment management fees paid (828) (817)
Other cash payments (271) (289)
–––––––––––– ––––––––––––
Net cash flow from operating activities 18 798 581
Taxation
UK corporation tax received/(paid) 64 (99)
Capital expenditure and financial investments
Purchase of fixed asset investments (9,042) (5,182)
Disposal of fixed asset investments 8,833 550
–––––––––––– ––––––––––––
Net cash flow from investing activities (209) (4,632)
Equity dividends paid
(net of costs of issuing shares under the Dividend
Reinvestment Scheme and unclaimed dividends) (2,873) (2,719)
–––––––––––– ––––––––––––
Net cash flow before financing (2,220) (6,869)
–––––––––––– ––––––––––––
Financing
Issue of share capital 4,478 3,360
Cost of issue of equity (1) (1)
Purchase of own shares (including costs) (760) (876)
Cost of Merger (paid on behalf of the Company and Albion Prime VCT PLC) – (5)
–––––––––––– ––––––––––––
Net cash flow from financing 3,717 2,478
–––––––––––– ––––––––––––
Cash flow in the year 17 1,497 (4,391)
–––––––––––– ––––––––––––
38 Albion Venture Capital Trust PLC
236915 Albion Venture Cap pp39-pp56.qxp 25/06/2015 13:41 Page 39
Notes to the Financial Statements
1. Accounting convention
The Financial Statements have been prepared in accordance
with the historical cost convention, modified to include the
revaluation of investments, in accordance with applicable
United Kingdom law and accounting standards and with the
Statement of Recommended Practice “Financial Statements
of Investment Trust Companies and Venture Capital Trusts”
(“SORP”) issued by the Association of Investment Companies
(“AIC”) in January 2009. Accounting policies have been
applied consistently in current and prior periods.
2. Accounting policies
Investments
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.
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
the capital value of
the investment.
is reflected
time
in
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 are charged through the realised
capital reserve.
Albion Venture Capital Trust PLC 39
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Notes to the Financial Statements (continued)
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;
● expenses, together with the related taxation effect,
charged in accordance with the above policies; and
● dividends paid to equity holders where paid out by capital.
Other distributable reserve
This reserve accounts for movements from the revenue
column of the Income statement, the payment of dividends,
the buyback
non-capital
of
realised movements.
shares
other
and
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 paid or approved at the Annual
General Meeting.
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.
Deferred tax assets and liabilities are not discounted.
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.
40 Albion Venture Capital Trust PLC
236915 Albion Venture Cap pp39-pp56.qxp 25/06/2015 13:41 Page 41
Notes to the Financial Statements (continued)
3. Gains on investments
Year ended Year ended
31 March 2015 31 March 2014
£’000 £’000
Unrealised gains on fixed asset investments held at fair value through profit or loss 1,210 1,113
Unrealised reversals of impairments/(impairments) on fixed asset investments held at
amortised cost 232 (537)
–––––––––––––– ––––––––––––––
Unrealised gains sub-total 1,442 576
–––––––––––––– ––––––––––––––
Realised gains on fixed asset investments held at fair value through profit or loss 1,121 40
Realised gains on fixed asset investments held at amortised cost 6 10
–––––––––––––– ––––––––––––––
Realised gains sub-total 1,127 50
–––––––––––––– ––––––––––––––
2,569 626
–––––––––––––– ––––––––––––––
Investments measured at amortised cost are unquoted loan stock investments as described in note 2.
4. Investment income
Year ended Year ended
31 March 2015 31 March 2014
£’000 £’000
Income recognised on investments held at fair value through profit or loss
Dividend income 51 27
Income from convertible bonds and discounted debt 472 203
–––––––––––––– ––––––––––––––
523 230
Income recognised on investments held at amortised cost
Return on loan stock investments 1,388 1,369
Bank deposit interest 78 119
–––––––––––––– ––––––––––––––
1,466 1,488
–––––––––––––– ––––––––––––––
1,989 1,718
–––––––––––––– ––––––––––––––
Interest income earned on impaired investments at 31 March 2015 amounted to £306,000 (2014: £294,000). These investments are
all held at amortised cost.
5. Investment management fees
Year ended Year ended
31 March 2015 31 March 2014
£’000 £’000
Investment management fee charged to revenue 212 201
Investment management fee charged to capital 636 601
–––––––––––––– ––––––––––––––
848 802
–––––––––––––– ––––––––––––––
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 £896,000 (2014: £849,000), were purchased by the Company from Albion Ventures LLP;
this includes £848,000 (2014: £802,000) of investment management fee and £48,000 (2014: £47,000) 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 £235,000 (2014: £214,000).
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 2015, fees of £360,000 attributable to the investments of the Company were received pursuant to these
arrangements (2014: £167,000).
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. In addition, Albion Ventures LLP holds a further 5,301
Ordinary shares in the Company.
Albion Venture Capital Trust PLC 41
236915 Albion Venture Cap pp39-pp56.qxp 25/06/2015 13:41 Page 42
Notes to the Financial Statements (continued)
6. Other expenses
Year ended Year ended
31 March 2015 31 March 2014
£’000 £’000
Directors’ fees (inc. NIC) 90 87
Secretarial and administration fee 48 47
Other administrative expenses 110 100
Impairment of accrued interest – 139
Auditor’s remuneration for statutory audit services (exc. VAT) 25 25
–––––––––––––– ––––––––––––––
273 398
–––––––––––––– ––––––––––––––
7. Directors’ fees
The amounts paid to and on behalf of Directors during the year are as follows:
Year ended Year ended
31 March 2015 31 March 2014
£’000 £’000
Directors’ fees 83 80
National insurance 7 7
–––––––––––––– ––––––––––––––
90 87
–––––––––––––– ––––––––––––––
Further information regarding Directors’ remuneration can be found in the Directors’ remuneration report on page 31.
8. Tax (charge)/credit on ordinary activities
Year ended 31 March 2015 Year ended 31 March 2014
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
UK corporation tax in respect of
current year (305) 135 (170) (246) 140 (106)
UK corporation tax in respect of
prior year 115 – 115 126 – 126
––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––
Total (190) 135 (55) (120) 140 20
––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––
Factors affecting the tax charge:
Year ended Year ended
31 March 2015 31 March 2014
£’000 £’000
Return on ordinary activities before taxation 3,437 1,144
–––––––––––––– ––––––––––––––
Tax on profit at the standard rate of 21% (2014: 23%) (722) (263)
Factors affecting the charge:
Non-taxable gains 539 144
Income not taxable 11 6
Consortium relief in respect of prior years 115 126
Marginal relief 2 7
–––––––––––––– ––––––––––––––
(55) 20
–––––––––––––– ––––––––––––––
The tax charge for the year shown in the Income statement is lower than the standard rate of corporation tax in the UK of 21 per cent.
(2014: 23 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.
42 Albion Venture Capital Trust PLC
236915 Albion Venture Cap pp39-pp56.qxp 25/06/2015 13:41 Page 43
Notes to the Financial Statements (continued)
9. Dividends
Year ended Year ended
31 March 2015 31 March 2014
£’000 £’000
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
First dividend paid on 31 July 2014 – 2.50 pence per share 1,576 –
Second dividend paid on 31 December 2014 – 2.50 pence per share 1,590 –
Unclaimed dividends (41) (27)
–––––––––––––– ––––––––––––––
3,125 2,902
–––––––––––––– ––––––––––––––
In addition to the dividends summarised above, the Board has declared a first dividend for the year ending 31 March 2016 of 2.50
pence per share. This dividend will be paid on 31 July 2015 to shareholders on the register as at 10 July 2015. The total dividend will
be approximately £1,767,000.
During the year, unclaimed dividends older than twelve years of £41,000 (2014: £27,000) were returned to the Company in accordance
with the terms of the Articles of Association.
10. Basic and diluted return per share
Year ended 31 March 2015 Year ended 31 March 2014
Revenue Capital Total Revenue Capital Total
The return per share has been based
on the following figures:
Return attributable to
equity shares (£’000) 1,314 2,068 3,382 999 165 1,164
Weighted average shares in
issue (excluding treasury shares) 63,464,790 58,689,669
Return attributable per equity
share (pence) 2.07 3.26 5.33 1.70 0.30 2.00
––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––
The weighted average number of shares is calculated excluding treasury shares of 5,841,440 (2014: 4,695,440).
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.
11. Fixed asset investments
31 March 2015 31 March 2014
£’000 £’000
Investments held at fair value through profit or loss
Unquoted equity 10,442 11,093
Unquoted debt issued at a discount and convertible bonds 7,069 5,790
–––––––––––––– ––––––––––––––
17,511 16,883
–––––––––––––– ––––––––––––––
Investments held at amortised cost
Unquoted loan stock 20,718 18,697
–––––––––––––– ––––––––––––––
38,229 35,580
–––––––––––––– ––––––––––––––
Albion Venture Capital Trust PLC 43
236915 Albion Venture Cap pp39-pp56.qxp 25/06/2015 13:41 Page 44
Notes to the Financial Statements (continued)
11. Fixed asset investments (continued)
31 March 2015 31 March 2014
£’000 £’000
Opening valuation 35,580 30,198
Purchases at cost 9,010 5,218
Disposal proceeds (9,026) (359)
Realised gains 1,127 50
Movement in loan stock accrued income 96 (103)
Unrealised gains 1,442 576
–––––––––––––– ––––––––––––––
Closing valuation 38,229 35,580
–––––––––––––– ––––––––––––––
Movement in loan stock accrued income
Opening accumulated movement in loan stock accrued income 165 268
Movement in loan stock accrued income 96 (103)
–––––––––––––– ––––––––––––––
Closing accumulated movement in loan stock accrued income 261 165
–––––––––––––– ––––––––––––––
Movement in unrealised losses
Opening accumulated unrealised losses (3,343) (4,890)
Transfer of previously unrealised (gains)/losses to realised reserve on realisations of investments (368) 971
Unrealised gains 1,442 576
–––––––––––––– ––––––––––––––
Closing accumulated unrealised losses (2,269) (3,343)
–––––––––––––– ––––––––––––––
Historic cost basis
Opening book cost 38,759 34,821
Purchases at cost 9,010 5,218
Sales at cost* (7,530) (1,280)
–––––––––––––– ––––––––––––––
Closing book cost* 40,239 38,759
–––––––––––––– ––––––––––––––
* Sales at cost includes realised losses of £1,564,000 for The Charnwood Pub Company Limited and £293,000 for Premier Leisure
(Suffolk) Limited which are 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 2015 31 March 2014
Valuation methodology £’000 £’000
Cost (reviewed for impairment) 3,176 4,633
Net asset value supported by third party or desktop valuation 14,335 12,250
–––––––––––––– ––––––––––––––
17,511 16,883
–––––––––––––– ––––––––––––––
Fair value investments had the following movements between valuation methodologies between 31 March 2014 and 31 March 2015:
Value as at 31 March 2015
Change in valuation methodology (2014 to 2015) £’000 Explanatory note
Cost (reviewed for impairment) to net asset value 1,898 More recent information available
supported by third party valuation
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 December 2012 IPEVCV Guidelines. The Directors believe that, within these parameters,
there are no other methods of valuation which would be reasonable as at 31 March 2015.
44 Albion Venture Capital Trust PLC
236915 Albion Venture Cap pp39-pp56.qxp 25/06/2015 13:41 Page 45
Notes to the Financial Statements (continued)
11. Fixed asset investments (continued)
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 2015 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 2015:
31 March 2015 31 March 2014
Convertible and Convertible and
discounted discounted
Equity bonds Total Equity bonds Total
£’000 £’000 £’000 £’000 £’000 £’000
Opening balance 11,093 5,790 16,883 8,489 2,231 10,720
Additions 1,340 3,107 4,447 415 4,638 5,053
Disposal proceeds (4,875) (200) (5,075) (40) – (40)
Loan stock conversion – (1,210) (1,210) – – –
Debt/equity swap 590 (590) – 1,257 (1,257) –
Accrued loan
stock interest – 135 135 – (3) (3)
Realised gains 1,121 – 1,121 40 – 40
Unrealised gains 1,173 37 1,210 932 181 1,113
–––––––––––––– –––––––––––––– –––––––––––––– –––––––––––––– –––––––––––––– ––––––––––––––
Closing balance 10,442 7,069 17,511 11,093 5,790 16,883
–––––––––––––– –––––––––––––– –––––––––––––– –––––––––––––– –––––––––––––– ––––––––––––––
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.
As noted in the Strategic report, the level of investment in the renewable energy sector has increased to 22 per cent. The majority of
the renewable investments are valued using a third party valuation. The underlying valuation of these investments is dependent on the
discounting of future cash flows over a period of approximately 25 years and is thus sensitive to changes in a number of assumptions,
the most significant being the discount rate used. The Directors do not consider that a change in the discount by one per cent., up or
down, would result in a material change in the fair value of the portfolio.
12. 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 2015 as described below:
Country of % class and
Company incorporation Principal activity voting rights
Kew Green VCT (Stansted) Limited Great Britain Hotel owner and operator 45.2% Ordinary shares
G&K Smart Developments VCT Limited Great Britain Residential property developer 42.9% Ordinary shares
The Stanwell Hotel Limited Great Britain Hotel owner and operator 39.2% Ordinary shares
Shinfield Lodge Care Limited Great Britain Care home for elderly residents 25.0% Ordinary shares
The Crown Hotel Harrogate Limited Great Britain Hotel owner and operator 24.1% Ordinary shares
Green Highland Renewables (Ledgowan) Limited Great Britain Hydroelectric power generator 20.8% 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.
Albion Venture Capital Trust PLC 45
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Notes to the Financial Statements (continued)
13. Current assets
31 March 2015 31 March 2014
Trade and other debtors £’000 £’000
Prepayments and accrued income 13 17
Other debtors 83 12
UK corporation tax receivable 70 19
–––––––––––––– ––––––––––––––
166 48
–––––––––––––– ––––––––––––––
The Directors consider that the carrying amount of debtors is not materially different to their fair value.
14. Creditors: amounts falling due within one year
31 March 2015 31 March 2014
£’000 £’000
Trade creditors 12 13
UK Corporation tax payable 170 –
Other creditors – 192
Accruals and deferred income 287 270
–––––––––––––– ––––––––––––––
469 475
–––––––––––––– ––––––––––––––
The Directors consider that the carrying amount of creditors is not materially different to their fair value.
15. Called up share capital
31 March 2015 31 March 2014
£’000 £’000
Allotted, called up and fully paid
71,365,088 Ordinary shares of 1p each (2014: 64,490,852) 714 645
–––––––––––––– ––––––––––––––
Voting rights
65,523,648 Ordinary shares of 1p each (net of treasury shares) (2014: 59,795,412)
The Company purchased 1,146,000 Ordinary shares (2014: 543,000) to be held in treasury at a cost of £760,000 (2014: £364,000)
representing 1.6 per cent. of its issued share capital as at 31 March 2015. The shares purchased for treasury were funded from other
distributable reserve.
During the year the Company did not purchase any shares for cancellation (2014: 729,000 shares at a cost of £487,000).
The Company holds a total of 5,841,440 shares (2014: 4,695,440) in treasury, representing 8.2 per cent. of the issued Ordinary share
capital as at 31 March 2015.
Under the terms of the Dividend Reinvestment Scheme Circular dated 10 July 2008, the following Ordinary shares of nominal value
1 penny per share were allotted during the year:
Aggregate Net Opening
nominal value consideration market price
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 2014 203,480 2 138 68.80 67.25
31 December 2014 228,179 2 151 67.42 66.00
–––––––––––––– –––––––––––––– ––––––––––––––
431,659 4 289
–––––––––––––– –––––––––––––– ––––––––––––––
46 Albion Venture Capital Trust PLC
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Notes to the Financial Statements (continued)
15. Called up share capital (continued)
During the year the following Ordinary shares were allotted under the Albion VCTs Top Up Offers 2013/2014, the Albion VCTs
Prospectus Top Up Offers 2013/2014 and the Albion VCTs Prospectus Top Up Offers 2014/2015:
Aggregate Net Opening
nominal value consideration market price
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 2014 17,201 – 12 72.40 67.25
5 April 2014 18,621 – 13 72.80 67.25
5 April 2014 2,648,140 26 1,878 73.10 67.25
4 July 2014 10,187 – 7 72.80 67.25
4 July 2014 5,464 – 4 73.20 67.25
4 July 2014 560,309 6 400 73.60 67.25
30 September 2014 871,469 9 604 71.50 67.25
30 January 2015 832,852 8 562 69.20 65.50
30 January 2015 1,478,334 15 997 68.80 65.50
–––––––––––––– –––––––––––––– ––––––––––––––
6,442,577 64 4,477
–––––––––––––– –––––––––––––– ––––––––––––––
16. Basic and diluted net asset value per share
31 March 2015 31 March 2014
Basic and diluted net asset value per share (pence) 71.62 71.30
–––––––––––––– ––––––––––––––
The basic and diluted net asset value 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 65,523,648 Ordinary shares (2014: 59,795,412).
There are no convertible instruments, derivatives or contingent share agreements in issue.
17. Analysis of changes in cash during the year
Year ended Year ended
31 March 2015 31 March 2014
£’000 £’000
Opening cash balances 7,505 11,896
Net cash flow 1,497 (4,391)
–––––––––––––– ––––––––––––––
Closing cash balances 9,002 7,505
–––––––––––––– ––––––––––––––
18. Reconciliation of net return on ordinary activities before taxation to net cash flow from operating activities
Year ended Year ended
31 March 2015 31 March 2014
£’000 £’000
Revenue return on ordinary activities before taxation 1,504 1,119
Investment management fee charged to capital (636) (601)
Movement in accrued amortised loan stock interest (96) 103
Decrease/(increase) in debtors 5 (8)
Increase/(decrease) in creditors 21 (32)
–––––––––––––– ––––––––––––––
Net cash flow from operating activities 798 581
–––––––––––––– ––––––––––––––
19. Capital and financial instruments risk management
The Company’s capital comprises Ordinary shares as described in note 15. The Company is permitted to buy-back its own shares for
cancellation or treasury purposes, and this is described in more detail on page 6 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 cash flow 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.
Albion Venture Capital Trust PLC 47
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Notes to the Financial Statements (continued)
19. Capital and financial instruments risk management (continued)
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 page 16. 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 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 £38,229,000
(2014: £35,580,000). Fixed asset investments form 81 per cent. of the net asset value as at 31 March 2015 (2014: 83 per cent.).
More details regarding the classification of fixed asset investments are shown in note 11.
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 page 16.
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 £3,830,000 (2014: £3,558,000).
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 £62,000 (2014: £80,000). Furthermore, it is considered that a fall of interest rates below
current levels during the year would have been very unlikely.
The weighted average effective interest rate applied to the Company’s fixed rate assets during the year was approximately
6.30 per cent. (2014: 5.80 per cent.). The weighted average period to maturity for the fixed rate assets is approximately 4.8 years
(2014: 3.3 years).
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Notes to the Financial Statements (continued)
19. Capital and financial instruments risk management (continued)
The Company’s financial assets and liabilities, all denominated in pounds sterling, consist of the following:
31 March 2015 31 March 2014
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 – – 10,442 10,442 – – 11,093 11,093
Convertible and
discounted bonds 6,483 279 307 7,069 3,378 279 2,133 5,790
Unquoted loan stock 20,718 – – 20,718 18,697 – – 18,697
Debtors* – – 91 91 – – 24 24
Current liabilities* – – (299) (299) – – (475) (475)
Cash – 9,002 – 9,002 – 7,505 – 7,505
––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––
Total net assets 27,201 9,281 10,541 47,023 22,075 7,784 12,775 42,634
––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––
* 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 2015 was limited to £27,787,000 (2014: £24,487,000) of unquoted loan stock
instruments (all of which is secured on the assets of the portfolio company), £9,002,000 cash deposits with banks (2014: £7,505,000)
and £83,000 of other debtors (2014: £12,000).
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 are as follows:
31 March 2015 31 March 2014
Cost Impairment Carrying value Cost Impairment Carrying value
£’000 £’000 £’000 £’000 £’000 £’000
Impaired loan stock 13,603 (3,494) 10,109 13,750 (3,601) 10,149
––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––
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.
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 £4,516,000 as at 31 March 2015 (2014: £4,110,000).
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Notes to the Financial Statements (continued)
19. Capital and financial instruments risk management (continued)
The Company has no committed borrowing facilities as at 31 March 2015 (2014: £nil) and had cash balances of £9,002,000 (2014:
£7,505,000). 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 £469,000 for the year to 31 March 2015 (2014: £475,000).
The carrying value of loan stock investments at 31 March 2015 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 1,513 1,421 211 3,145
1-2 years 285 8,688 3,737 12,710
2-3 years 105 – – 105
3-5 years 4,523 – – 4,523
Greater than 5 years 3,523 – 3,781 7,304
–––––––––––––– –––––––––––––– –––––––––––––– ––––––––––––––
Total 9,949 10,109 7,729 27,787
–––––––––––––– –––––––––––––– –––––––––––––– ––––––––––––––
Loan stock categorised as past due includes:
● Loan stock with a carrying value of £7,220,000 yielding an average of 10.17 per cent. on cost which has loan stock interest past
due between 2 and 5 months; and
● Loan stock with a carrying value of £509,000 which has loan stock interest past due of greater than 12 months but less than
2 years.
The carrying value of loan stock investments held at amortised cost at 31 March 2014 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 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
–––––––––––––– –––––––––––––– –––––––––––––– ––––––––––––––
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 2015 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.
20. Commitments and contingencies
The company had the following financial commitment in respect of the following investments:
● Shinfield Lodge Care Limited, £3,000,000
● Ryefield Court Care Limited, £2,358,000
● Active Lives Care Limited, £2,090,000
● Radnor House School (Holdings) Limited, £451,000
● Dragon Hydro Limited, £3,000
There are no contingent liabilities or guarantees given by the Company as at 31 March 2015 (31 March 2014: nil).
50 Albion Venture Capital Trust PLC
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Notes to the Financial Statements (continued)
21. Post balance sheet events
Since 31 March 2015 the Company has had the following post balance sheet events:
● Investment of £250,000 in Ryefield Court Care Limited
● Investment of £150,000 in Active Lives Care Limited
Shares issued under the Albion VCTs Prospectus Top Up Offers 2014/2015:
Aggregate Net
nominal value consideration
Number of of shares received Issue price
Date of allotment shares allotted £’000 £’000 (pence per share)
Opening
market price on
allotment date
(pence per share)
2 April 2015 5,158,657 52 3,568 71.30
–––––––––––––– –––––––––––––– –––––––––––––– ––––––––––––––
65.50
––––––––––––––
22. Related party transactions
Other than transactions with the Manager as disclosed in note 5, there are no related party transactions or balances
requiring disclosure.
Albion Venture Capital Trust PLC 51
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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 31 July 2015 at 11:30 am for the following
purposes:
To consider and, if thought fit, to pass the following resolutions, of which numbers 1 to 7 will be proposed as ordinary
resolutions and numbers 8 to 10 as special resolutions.
Ordinary Business
1. To receive and adopt the Company’s accounts for the year ended 31 March 2015 together with the report of the
Directors and Auditor.
2. To approve the Directors’ remuneration report for the year ended 31 March 2015.
3. To re-elect David Watkins as a Director of the Company.
4. To re-elect John Kerr as a Director of the Company.
5. 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.
6. To authorise the Directors to agree the Auditor’s remuneration.
Special Business
7. Authority to allot shares
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 £153,047 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.
8. Authority for the disapplication of pre-emption rights
That, subject to and conditional on the passing of resolution number 7, the Directors be empowered, pursuant to section
570 of the Act, to allot equity securities (within the meaning of section 560 of the Act) for cash pursuant to the authority
conferred by resolution number 7 as if section 561(1) of the Act did not apply to any such allotment, provided that this
power shall be limited to the allotment of equity securities:
(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 any top up offer; and
(d) otherwise than pursuant to paragraphs (a) to (c) above, up to an aggregate nominal amount of £153,047 for
Ordinary shares.
This authority shall expire 18 months from the date that this resolution is passed or, if earlier, the conclusion of the next
Annual General Meeting of the Company, 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 this power had not expired.
This power applies in relation to a sale of treasury shares as if all references in this resolution to an allotment included
any such sale and in the first paragraph of the resolution the words “pursuant to the authority conferred by resolution
number 7” were omitted in relation to such a sale.
52 Albion Venture Capital Trust PLC
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Notice of Annual General Meeting (continued)
“Rights issue” means an offer of equity securities to holders of shares in the capital of the Company on the register on
a record date fixed by the Directors in proportion as nearly as may be to the respective numbers of Ordinary shares held
by them, but subject to such exclusions or other arrangements as the Directors may deem necessary or expedient to
deal with any treasury shares, fractional entitlements or legal or practical issues arising under the laws of, or the
requirements of any recognised regulatory body or any stock exchange in, any territory or any other matter.
9. Authority to purchase own shares
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 shares hereby authorised to be purchased is 14.99 per cent. of the issued
Ordinary share capital of the Company as at the date of the passing of this resolution;
(b)
the minimum price which may be paid for a share shall be 1 penny (exclusive of expenses);
(c)
(d)
the maximum price (exclusive of expenses) which may be paid for a share shall be an amount being not more than
the higher of (i) 105 per cent. of the average of the middle market quotations (as derived from the Daily Official List
of the London Stock Exchange) for the shares for the five business days immediately preceding the date of
purchase and (ii) the higher of the price of the last independent trade and the highest current independent bid
relating to a share on the trading venue where the purchase is carried out; and
unless previously varied, revoked or renewed, the authority hereby conferred shall expire 18 months from the date
that this resolution is passed or, if earlier, at the conclusion of the Annual General Meeting of the Company to be
held after the passing of this resolution, save that the Company may, at any time prior to such expiry, enter into a
contract or contracts to purchase shares under such authority which would or might be completed or executed
wholly or partly after the expiration of such authority and may make a purchase of shares pursuant to any such
contract or contracts as if the authority conferred hereby had not expired.
Under section 724-732 of the Act, Ordinary shares purchased by the Company out of distributable profits can be held
as treasury shares, which may then be cancelled or sold for cash. The authority sought by this special resolution is
intended to apply equally to shares to be held by the Company as treasury shares in accordance with the Regulations.
10. Authority to sell treasury shares
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
25 June 2015
Albion Venture Capital Trust PLC is registered in England and Wales with number 03142609
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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 11.30 am on 29 July 2015.
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 11.30 am on 29 July 2015 (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. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so
for this AGM and any adjournment(s) by using the procedures described in the CREST Manual. CREST personal members or
other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer
to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a
“CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK and Ireland Limited’s
specifications, and must contain the information required for such instruction, as described in the CREST Manual (available via
www.euroclear.com/CREST). The message, regardless of whether it constitutes the appointment of a proxy or is an
amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be
received by the issuer’s agent by 11.30 am on 29 July 2015. For this purpose, the time of receipt will be taken to be the time
(as determined by the time stamp applied to the message by the CREST Application Host) from which the issuer’s agent is able
to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions
to proxies appointed through CREST should be communicated to the appointee through other means.
CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK and
Ireland Limited does not make available special procedures in CREST for any particular message. Normal system timings and
limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member
concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting
service provider, to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to
ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST
members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections
of the CREST Manual concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the
Uncertificated Securities Regulations 2001.
5. 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.
6. A copy of this Notice, and other information regarding the meeting, as required by section 311A of the Act, is available from
www.albion-ventures.co.uk under the “Our Funds” section.
7. Any member attending the meeting 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 meeting 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 meeting that the question be answered.
8. 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 the 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.
54 Albion Venture Capital Trust PLC
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Notice of Annual General Meeting (continued)
9. 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 section 527 and 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.
10. Members satisfying the thresholds in Section 338 of the Companies Act 2006 may require the Company to give, to members
of the Company entitled to receive notice of the AGM, notice of a resolution which those members intend to move (and which
may properly be moved) at the AGM. A resolution may properly be moved at the AGM unless (i) it would, if passed, be ineffective
(whether by reason of any inconsistency with any enactment of the Company’s constitution or otherwise); (ii) it is defamatory of
any person; or (iii) it is frivolous or vexatious. The business which may be dealt with at the AGM includes a resolution circulated
pursuant to this right. A request made pursuant to this right may be in hard copy or electronic form, must identify the resolution
of which notice is to be given, must be authenticated by the person(s) making it and must be received by the Company not
later than 6 weeks before the date of the AGM.
11. Members satisfying the thresholds in Section 388A of the Companies Act 2006 may request the Company to include in the
business to be dealt with at the AGM any matter (other than a proposed resolution) which may properly be included in the
business at the AGM.
A matter may properly be included in the business at the AGM unless (i) it is defamatory of any person or (ii) it is frivolous or
vexatious. A request made pursuant to this right may be in hard copy or electronic form, must identify the matter to be included
in the business, must be accompanied by a statement setting out the grounds for the request, must be authenticated by the
person(s) making it and must be received by the Company not later than 6 weeks before the date of the AGM.
12. As at 23 June 2015 being the latest practicable date prior to the publication of this Notice, the Company’s issued share capital
consists of 76,523,745 Ordinary shares with a nominal value of 1 penny each. The Company also holds 5,841,440 Ordinary
shares in treasury. Therefore, the total voting rights in the Company as at 23 June 2015 are 70,682,305.
Albion Venture Capital Trust PLC 55
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Dividend history for Albion Prime VCT PLC now merged
with Albion Venture Capital Trust PLC (unaudited)
Proforma(i)
Albion Prime VCT PLC
Total proforma shareholder return to 31 March 2015 (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
31 March 2015 4.40
––––––––––––
Total dividends paid to 31 March 2015 59.95
Proforma net asset value as at 31 March 2015 63.03
––––––––––––
Total proforma shareholder return to 31 March 2015 122.98
––––––––––––
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 2015. Albion Prime VCT
PLC was merged with Albion Venture Capital Trust PLC on 25 September 2012. This pro-forma 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.
The above table excludes the tax benefits investors received upon subscription for shares in the Company.
(iii)
56 Albion Venture Capital Trust PLC
Perivan Financial Print 236915
Albion Venture Capital Trust PLC
Annual Report and Financial
Statements for the year
ended 31 March 2015
Albion Venture Capital Trust PLC
A member of the Association of Investment Companies
This report is printed on Amadeus offset a totally recycled paper produced using 100% recycled waste
at a mill that has been awarded the ISO 14001 certifi cate for environmental management. The pulp is
bleached using a totally chlorine free (TCF) process.
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