Albion Venture Capital Trust PLC
Annual Report and Financial
Statements for the year
ended 31 March 2016
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
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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
15 The Board of Directors
16 The Manager
17 Portfolio of investments
19 Portfolio companies
21 Directors’ report
25 Statement of Directors’ responsibilities
26 Statement of corporate governance
31 Directors’ remuneration report
33 Independent Auditor’s report
38 Income statement
39 Balance sheet
40 Statement of changes in equity
41 Statement of cash flows
42 Notes to the Financial Statements
55 Notice of Annual General Meeting
59 Dividend history for C Shares and Albion Prime VCT PLC
Albion Venture Capital Trust PLC 1
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
Country of incorporation United Kingdom
Legal form Public Limited Company
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 Philip Hare & Associates
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: 0370 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.
With effect from 1 January 2016 new tax legislation under The Organisation for Economic Co-operation and Development (OECD)
Common Reporting Standard for Automatic Exchange of Financial Account Information (“The Common Reporting Standard”)
is being introduced. The legislation will require venture capital trust companies to provide personal information to HMRC on
certain investors who purchase shares in the trusts. As an affected company, Albion Venture Capital Trust PLC will have to
provide information annually to HMRC in respect of any non-UK based certificated shareholders and corporate entities.
All new non-UK based certificated shareholders, excluding those whose shares are held in CREST, who are entered onto the
share register from 1 January 2016, will be sent a certification form for the purposes of collecting this information.
For further information, please see HMRC’s Quick Guide: Automatic Exchange of Information – information for account holders
https://www.gov.uk/government/publications/exchange-of-information-account-holders.
2 Albion Venture Capital Trust PLC
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 £21.1 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
Payment of first dividend
Annual General Meeting
8 July 2016
29 July 2016
11:00am on 8 August 2016
Announcement of half-yearly results for the six months ended 30 September 2016
November 2016
Payment of second dividend (subject to Board approval)
30 December 2016
Albion Venture Capital Trust PLC 3
Financial highlights
the year ended 31 March 2016
the year ended 31 March 2016
5.6p Basic and diluted total return per share for
5.0p Total tax-free dividend per share paid during
72.0p Net asset value per share as at 31 March 2016
211.8p Total shareholder return since launch to
7.5% Tax free yield on share price (dividend per
6.3% Annualised return since launch (without tax
annum/share price as at 31 March 2016)
31 March 2016
relief)
Net asset value total return relative to the FTSE All-Share Index total return
(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
Mar
16
FTSE All-Share Index total return
Net asset value total return
Source: Albion Ventures LLP
Methodology: Net asset value total return, 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
Financial highlights (continued)
31 March 2016 31 March 2015
(pence per share) (pence per share)
Dividends paid 5.0 5.0
Revenue return 2.0 2.1
Capital return 3.6 3.2
Net asset value 72.0 71.6
Total shareholder return to 31 March 2016 Ordinary shares
Total dividends paid during the year ended : 31 March 1997 2.00
31 March 1998 5.20
31 March 1999 11.05
31 March 2000 3.00
31 March 2001 8.55
31 March 2002 7.60
31 March 2003 7.70
31 March 2004 8.20
31 March 2005 9.75
31 March 2006 11.75
31 March 2007 10.00
31 March 2008 10.00
31 March 2009 10.00
31 March 2010 5.00
31 March 2011 5.00
31 March 2012 5.00
31 March 2013 5.00
31 March 2014 5.00
31 March 2015 5.00
31 March 2016 5.00
––––––––––––
Total dividends paid to 31 March 2016 139.80
Net asset value as at 31 March 2016 72.00
––––––––––––
Total shareholder return to 31 March 2016 211.80
––––––––––––
The financial summary above is for the Company, Albion Venture Capital Trust PLC Ordinary shares only. Details
of the financial performance of the C shares and Albion Prime VCT PLC, which have been merged into the
Company, can be found on pages 59 and 60.
In addition to the dividends summarised above, the Board has declared a first dividend for the year ending
31 March 2017 of 2.5 pence per share to be paid on 29 July 2016 to shareholders on the register as at
8 July 2016.
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
Chairman’s statement
Introduction
The results for the year to 31 March 2016 show a total return of
5.6 pence per share, against 5.3 pence per share for the
previous year, and net assets of 72.0 pence per share
compared to 71.6 pence per share at 31 March 2015,
following the payment of total tax-free dividends of 5 pence
per share. The Company raised approximately £4.3 million
during the year under the Albion VCTs Prospectus Top Up
Offers 2014/2015 and approximately £5.6 million under the
Albion VCTs Prospectus Top Up Offers 2015/2016, with a
subsequent £0.3 million after the year end.
It is encouraging that the Company’s total return continues
for the second year to more than cover its dividend of
5 pence per share. This has been partly through an increase
in the income generated by the investment portfolio, which
has risen 12 per cent. from the previous year. The principal
element, however, has come from capital uplifts; in particular
the sale of our Kensington Health Club realised a strong uplift
in value, while the opening of the first of our three care homes
which have been under construction led to a substantial uplift
in the third party valuation.
Investment performance and progress
In general, we have been continuing the task of repositioning
the portfolio, aimed at a reduced reliance on sectors that are
exposed to the consumer and business cycle. Renewable
energy now accounts for 19 per cent. of the portfolio, while
healthcare accounts for 22 per cent. and education for
7 per cent.
Taking these sectors in turn, our renewable energy
investments are now mature, and will not be subject to
further investment other than our biogas plant, Earnside
Energy, which is currently expanding its capacity. It is
intended to hold these cash-generative investments for the
longer term with the aim of providing low risk diversification
for the investment portfolio as a whole, combined with a
strong source of income.
Shinfield Court, outside Reading, which has been one of our
three care homes under construction, opened in April 2016
and is filling at rates, and at a pace, which are both
encouraging. This resulted in a strong uplift following a third
party valuation. Active Lives Care (trading as Cumnor Hill
House), which is based in Oxford opened in June 2016; and
Ryefield Court, based in Hillingdon in West London, is
expected to open in July. Current indications are positive
for both.
In education, Radnor House School continues to grow with
over 400 pupils due for
the September 2016 term.
Meanwhile, Combe Bank School, which was acquired last
6 Albion Venture Capital Trust PLC
year, has now been renamed Radnor House Sevenoaks.
Having begun the year with 210 pupils, it is now anticipated
that the pupil roll in September will be significantly higher.
We continue to review our hotel portfolio with a view to selling
up to two of our units by this time next year. Trading at
Stansted has been strong, in line with the general uplift in
passenger numbers at the airport and this has been reflected
in the valuation. With regard to our pubs, our North West
portfolio, within Bravo Inns, continues to perform according
to plan and to provide strong cash generation for the
Company; while we have now sold the underlying pubs
within Charnwood Pub Company.
Risks and uncertainties
The outlook for the UK economy, where growth is slow,
continues to be the key risk affecting your Company. The
recent referendum calling for Britain to withdraw from the
European Union is likely to have an effect on the Company
and its investments, although the extent of this is not
quantifiable at this time.
If the referendum has a material adverse effect on the UK
economy, the Company’s investment portfolio will be
affected. We would expect the effects of this to be felt most
in those sectors which are most exposed to the consumer
and business cycle.
The regulatory environment in which the Company operates
has had significant input from rules developed within the
European Union and the Company has no way of currently
evaluating what changes may occur in a separate UK
regulatory environment.
Withdrawal from the European Union may create new
instabilities in markets generally and these instabilities may
affect the valuation and market liquidity of the Company’s
existing investments as well as affect the availability or pricing
of new investments.
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.
Chairman’s statement (continued)
Changes in VCT legislation
The July 2015 budget introduced a number of changes to
VCT legislation, including restrictions over the age of
investments; a prohibition on management buyouts or the
purchase of existing businesses; and an overall lifetime
investment cap of £12 million from tax-advantaged funds into
any portfolio company. While these changes are significant,
the Manager’s assessment is that had they been in place
previously, they would have affected only a relatively small
number of the investments that we have made into new
portfolio companies over recent years. The Board’s current
view is that there will be no material change in our investment
policy as a result.
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 total value
bought in for the previous six months to 31 March 2016 was
£273,000. 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.
Results and dividends
As at 31 March 2016, the net asset value was £57.0 million
or 72.0 pence per share, compared to £46.9 million or 71.6
pence per share as at 31 March 2015, after the payment of
total tax-free dividends of 5 pence per share. The results
comprised a total return of 5.6 pence per share for the year
(2015: 5.3 pence per share), which is made up of a
2.0 pence per share revenue return (2015: 2.1 pence per
share) and a 3.6 pence per share capital return after taking
into account capitalised expenses (2015: 3.2 pence per
share). The revenue return before taxation was £1.7 million
compared to £1.5 million for the year to 31 March 2015. The
Company will pay a first dividend of 2.5 pence per share for
the year ending 31 March 2017 on 29 July 2016 to
shareholders on the register on 8 July 2016, which is in line
with the Company’s current objective of paying a dividend of
5 pence per share annually.
Outlook and prospects
We are pleased with the progress made during the course of
the year, in particular the building up of our healthcare
portfolio. Looking forwards, we are reviewing a number of
interesting areas for investment and would anticipate further
progress in the current year.
David Watkins
Chairman
27 June 2016
Albion Venture Capital Trust PLC 7
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.
but other than a further investment of £1 million in Earnside
Energy shortly after the year end to expand its capacity, no
further investments are being made in this sector. Hotels
accounted for 23 per cent. compared to 27 per cent. at the
previous year end and the Company is looking to reduce this
further.
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 2016.
Details of the principal investments made by the Company are
shown in the Portfolio of investments on pages 17 and 18.
Split of portfolio by sector
Education
7% (6%)
Cash and cash
equivalents
21% (19%)
Renewable energy
19% (22%)
Other
1% (1%)
Healthcare
22% (13%)
Hotels
23% (27%)
Health and fitness
clubs
2% (6%)
Pubs
5% (6%)
Comparatives for 31 March 2015 are shown in brackets
Source: Albion Ventures LLP
Direction of portfolio
The sector analysis of the Company’s investment portfolio
shows that healthcare now accounts for 22 per cent. of the
portfolio, compared to 13 per cent. at the end of the previous
financial year, following further investments in the Company’s
three care homes (and a revaluation of Shinfield). This is likely
to increase as the care homes are revalued in the future.
Renewable energy accounts for 19 per cent. of the portfolio,
8 Albion Venture Capital Trust PLC
Results and dividends Ordinary shares
£’000
Net revenue return for the year
ended 31 March 2016 1,403
Net capital gain for the year
ended 31 March 2016 2,612
––––––––––––
Total return for the year
ended 31 March 2016 4,015
Dividend of 2.50 pence per share
paid on 31 July 2015 (1,789)
Dividend of 2.50 pence per share
paid on 31 December 2015 (1,782)
Unclaimed dividends returned to
the Company 22
––––––––––––
Transferred to reserves 466
––––––––––––
Net assets as at 31 March 2016 56,955
––––––––––––
Net asset value per share as
at 31 March 2016 (pence) 72.0
––––––––––––
The Company paid dividends totalling 5.0 pence per share
during the year ended 31 March 2016 (2015: 5.0 pence per
share). The dividend objective of the Board is to provide
Shareholders with a strong, predictable dividend flow, with a
dividend target of 5.0 pence per share per year.
As noted in the Chairman’s statement, the Board has
declared a first dividend of 2.5 pence per share for the year
ending 31 March 2017. This dividend will be paid on 29 July
2016 to shareholders on the register as at 8 July 2016.
As shown in the Income statement on page 38 of the
Financial Statements, the Company’s investment income has
increased to £2,236,000 (2015: £1,989,000) and the total
increased to
revenue return to equity holders also
£1,403,000 (2015: £1,314,000), principally driven by the
Company’s successful renewable energy development
programme. Income continues to more than cover on-going
expenses. Although total income has increased, revenue
return per share has decreased slightly, to 2.0 pence per
share (2015: 2.1 pence per share), due to the number of
shares issued during the year.
The capital gain on investments for the year was £3,203,000
(2015: £2,569,000), offset by management fees charged to
Strategic report (continued)
capital and the related taxation impact, resulting in a capital
return of 3.6 pence per share (2015: 3.2 pence per share).
The total return was 5.6 pence per share (2015: 5.3 pence
per share).
The Balance sheet on page 39 shows that the net asset
value has increased over the last year to 72.0 pence per
share (2015: 71.6 pence per share), primarily reflecting the
total return exceeding the level of dividends paid during the
year.
The cash flow for the Company has been a net inflow of
£1,328,000 for the year (2015: inflow £1,497,000), 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 buy-back of shares.
During the year, unclaimed dividends older than twelve years
of £22,000 (2015: £41,000) were returned to the Company
in accordance with the terms of the Articles of Association.
Review of business and future changes
A review of the Company’s business during the year and
investment performance and progress is contained in the
Chairman’s statement on page 6. The healthcare sector
performed particularly well again this year with an increase in
valuations of £1,517,000 (2015: £1,031,000). The renewable
energy sector was also strong with an increase in valuations
of £670,000 (2015: £1,047,000). The hotel sector saw an
increase of £524,000 (2015: £266,000), although The
Stanwell Hotel saw a decrease during the year of £254,000.
The education sector saw an increase in the valuation of
Radnor House School of £337,000. The health and fitness
clubs sector saw mixed results after we disposed of our
Kensington health club investment for a gain on opening
value of £843,000, whilst The Weybridge Club decreased in
valuation by £492,000. The Charnwood Pub decreased in
value by £234,000 during the year which led to the pub
sector as a whole decreasing by £209,000 (2015: £121,000).
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.
Details of significant events which have occurred since the
end of the financial year are listed in note 20. Details of
transactions with the Manager are shown in note 5.
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 22.
As part of the Government’s wider review of the VCT regime,
new rules have been introduced under the Finance Act (No.2)
2015 which received Royal Assent on 18 November 2015,
which include:
● Restrictions over the age of investments;
● A prohibition on management buyouts or the purchase
of existing businesses; and
● An overall lifetime investment cap of £12 million from
tax-advantaged funds into any portfolio company.
While these changes are significant, the Manager’s
assessment is that had they been in place previously they
would have affected only a relatively small minority of the
investments that we have made into new portfolio companies
over recent years. The Board’s current view is that there will
be no material change in our investment policy as a result.
The relevant tests to measure compliance have been carried
out and independently reviewed for the year ended 31 March
2016. These showed that the Company has complied with all
tests and continues to do so.
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.
Key performance indicators
The Directors believe that the following key performance
indicators, which are typical for venture capital trusts and
used by the Board in its 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.
Albion Venture Capital Trust PLC 9
Strategic report (continued)
2. Net asset value per share and total shareholder return
Net asset value per share and 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
211.8
206.4
50
0
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
2
0
1
6
NAV
Cumulative dividend
* Total shareholder return is net asset value plus cumulative dividends paid since launch to date.
Net asset value increased by 7.5 per cent. (after adding back
the 5.0 pence per share in dividends paid) to 72.0 pence per
share for the year ended 31 March 2016.
Total shareholder return increased by 2.6 per cent. to 211.8
pence per share for the year ended 31 March 2016.
3. Dividend distributions
Dividends paid in respect of the year ended 31 March 2016
were 5.00 pence per share (2015: 5.00 pence per share),
in line with the Board’s dividend objective. Cumulative
dividends paid since inception amount to 139.80 pence per
Ordinary share and 128.25 pence per historic C share.
4. Ongoing charges
The ongoing charges ratio for the year to 31 March 2016 was
2.5 per cent. (2015: 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. The cap on total annual normal expenses, including the
management fee, is 3.0 per cent. of the net asset value.
e
r
a
h
s
r
e
p
e
c
n
e
P
140
120
100
80
60
40
20
0
5.0
7
9
9
1
Dividends paid
139.8
134.8
129.8
124.8
119.8
114.8
109.8
104.8
94.8
84.8
74.8
67.8
58.8
50.3
42.3
34.8
18.8
27.3
11.0
8
9
9
1
9
9
9
1
0
0
0
2
1
0
0
2
2
0
0
2
3
0
0
2
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
0
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
Dividends paid in the period
Cumulative dividend
10 Albion Venture Capital Trust PLC
Strategic report (continued)
Gearing
As defined by the Articles of Association, the Company’s
maximum exposure in relation to gearing is restricted to
10 per cent. of the adjusted share capital and reserves. 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.
per share which compared to the hurdle of 203.1 pence per
share at that date.
Investment and co-investment
The Company co-invests with other venture capital trusts
and funds managed by Albion Ventures LLP. Allocation of
investments is on the basis of an allocation agreement which
is based, inter alia, on the ratio of funds available for
investment.
Operational arrangements
The Company has delegated the investment management of
the portfolio to Albion Ventures LLP, which is authorised and
regulated by the Financial Conduct Authority. Albion Ventures
LLP also provides company secretarial and other accounting
and administrative support to the Company.
Management agreement
Under the Management agreement, the Manager provides
investment management, secretarial and administrative
services to the Company. The Management agreement can
be terminated by either party on 12 months’ notice. The
Management agreement is subject to earlier termination in
the event of certain breaches or on the insolvency of either
party. The Manager is paid an annual fee equal to 1.9 per
cent. of the net asset value of the Company, and an annual
secretarial and administrative fee of £48,087 (2015: £47,658)
increased annually by RPI. These fees are payable quarterly
in arrears.
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 2016, no incentive fee became due
to the Manager (2015: £nil).
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 2016 the
total return from 31 March 2004 amounted to 158.5 pence
Evaluation of the Manager
The Board has evaluated the performance of the Manager
based on the returns generated by the Company, the
continued compliance under venture capital trust legislation,
the long term prospects of current investments, a review of
the Management agreement and the services provided
therein, and benchmarking the performance of the Manager
to other service providers. The Board believes that it is in the
interests of shareholders as a whole, and of the Company, to
continue the appointment of the Manager for the forthcoming
year.
Alternative Investment Fund Managers Directive
(“AIFMD”)
The Board has appointed Albion Ventures LLP as the
Company’s AIFM as required by the AIFMD.
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 pages 22
and 23.
Albion Venture Capital Trust PLC 11
Strategic report (continued)
Risk management
The Board carries out a robust assessment of principal risks 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
VCT approval
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.
The Company’s current approval as a
venture capital trust allows investors to
take advantage of tax reliefs on initial
investment and ongoing tax free capital
gains and dividend income. Failure to
meet the qualifying requirements could
result in investors losing the tax relief on
initial investment and loss of tax relief on
any tax-free income or capital gains
received. In addition, failure to meet the
qualifying requirements could result in a
loss of listing of the shares.
To reduce this risk, the Board has appointed the Manager,
which has a team with significant experience in venture
capital
trust management, used to operating within the
requirements of the venture capital trust legislation. In addition,
to provide further formal reassurance, the Board has appointed
Philip Hare & Associates LLP as its taxation adviser. Philip
Hare & Associates LLP report quarterly to the Board to
independently confirm compliance with the venture capital
trust legislation, to highlight areas of risk and to inform
on changes in legislation. Each investment in a new
portfolio company is also pre-cleared with H.M. Revenue &
Customs.
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. The success of investments
in certain sectors is also subject to
regulatory risk, such as those affecting
companies involved in UK renewable
energy.
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.
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
from
also
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
investments held by the Company are classified 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. The values of all investments are at cost (reviewed
for impairment) or supported by independent third party
professional valuations.
Strategic report (continued)
Risk
Possible consequence
Risk management
Compliance risk 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 also
evaluated by the internal auditors.
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
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,
Chairman of the Audit Committee, met with the internal audit
Partner of PKF Littlejohn LLP in January 2016 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 Guidance on Risk Management, Internal Control and
Related Financial and Business Reporting are detailed on
page 29.
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 18 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.
Albion Venture Capital Trust PLC 13
Taking into account the processes for mitigating risks,
monitoring costs, share price discount, the Manager’s
compliance with the investment objective, policies and
business model and the balance of the portfolio the Directors
have concluded that there is a reasonable expectation that
the Company will be able to continue in operation and meet
its liabilities as they fall due over the three year period to
31 March 2019.
This Strategic report of the Company for the year ended
31 March 2016 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.
The Strategic report was approved by the Board of Directors
on 27 June 2016 and was signed on its behalf by:
David Watkins
Chairman
27 June 2016
Strategic report (continued)
Viability statement
In accordance with the FRC UK Corporate Governance Code
published in September 2014 and principle 21 of the AIC
Code of Corporate Governance published by the AIC in
February 2015, the Directors have assessed the prospects of
the Company over three years to 31 March 2019. The
Directors have taken a three year period as the Code does
not specify a time period, except that it must be longer than
12 months. The Directors believe that three years is a
reasonable period in which they can assess the future of the
Company to continue to operate and meet its liabilities, as
they fall due and is also the period used by the Board in the
strategic planning process and is considered reasonable for
a business of our nature and size.
The Directors have carried out a robust assessment of the
principal risks facing the Company as explained above,
including those that could threaten its business model, future
performance, solvency or liquidity. The Board also considered
the risk management processes in place to avoid or reduce
the impact of the underlying risks. The Board focused on the
major factors which affect the economic, regulatory and
political environment. The Board deliberated over the
importance of the Manager and the processes that it has in
place for dealing with the principal risks.
The Board assessed the ability of the Company to raise
finance. As explained in this Strategic report the Company’s
income more than covers ongoing expenses. This income
should increase as our asset-backed investments continue to
mature. The portfolio is well balanced and geared towards
long term growth delivering dividends and capital growth to
shareholders. In assessing the prospects of the Company the
Directors have considered the cash flow by looking at the
Company’s income and expenditure projections and funding
pipeline over the assessment period of three years and they
appear realistic.
14 Albion Venture Capital Trust PLC
The Board of Directors
The following are the Directors of the Company, all of whom
operate in a non-executive capacity:
David Watkins MBA (Harvard), Chairman (appointed
9 February 1996)
David Watkins worked for Goldman Sachs from 1972 until
1991 where he was head of Euromarkets Syndication and
Head of European Real Estate. He subsequently joined
Mountleigh Group PLC where he worked as a director on the
restructuring of the business prior to the Group being placed
into administration. After a period operating his own
corporate finance business, he joined Baring Securities in
1994 as Head of Equity Capital Markets – London, before
leaving
into
administration to become Chief Financial Officer and one of
the principal shareholders for 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.
in mid-1995 when the company went
John Kerr ACMA (appointed 9 February 1996)
John Kerr has worked as a venture capitalist and also in
manufacturing and service industries. He held a number of
finance and general management posts in the UK and USA,
before joining SUMIT Equity Ventures, an independent
Midlands based venture capital company, where he was
managing director from 1985 to 1992. He then became chief
executive of Price & Pierce Limited, which acted as the UK
agent for overseas producers of forestry products, before
leaving in 1997 to become finance director of Ambion Brick,
a building materials company bought out from Ibstock PLC.
After retiring in 2002, he now works as a consultant. He is an
external member of the Manager's investment committee.
Jeff Warren ACCA (appointed 2 October 2007)
Jeff Warren 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.
Albion Venture Capital Trust PLC 15
The Manager
Albion Ventures LLP, is authorised and regulated by the Financial
Conduct Authority and is the Manager of Albion Venture Capital Trust
PLC. In addition, it manages a further five venture capital trusts, the
UCL Technology Fund LP and provides management services to
Albion Community Power PLC. It currently has total assets under
management or administration of approximately £450 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
before joining Cazenove & Co where he spent three years in the
corporate finance department. He joined Close Brothers Group plc
in 1989, working in both the development capital and corporate
finance divisions before establishing Albion Ventures (formerly Close
Ventures Limited) in 1996. He is the managing partner of Albion
Ventures and is also a director of Albion Development VCT PLC,
Albion Enterprise VCT PLC and Albion Technology & General VCT
PLC, all managed by Albion Ventures. He is also chief executive of
Albion Community Power PLC, a member of the Audit Committee of
University College London, a director of the Association of
Investment Companies, and is on the Council of the BVCA.
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 of healthcare including
biotechnology, pharmaceuticals, service and care providers,
software and telecommunications. He joined Albion Ventures in 2005
and became a partner in 2009. He has an MA plus Bachelors of
Medicine and Surgery from Cambridge University and is a Fellow of
the Royal College of Surgeons (England).
Emil Gigov, BA (Hons), FCA, graduated from the European
Business School, London, with a BA (Hons) Degree in European
Business Administration in 1994. He then joined KPMG in their
financial services division and qualified as a chartered accountant in
1997. Following this he transferred to KPMG Corporate Finance
where he specialised in the leisure, media and marketing services
sectors acting on acquisitions, disposals and fundraising mandates.
He joined Albion Ventures in 2000 and has since made and exited
investments in a number of industry sectors, including healthcare,
education, technology, leisure and engineering. Emil became a
partner in Albion Ventures in 2009.
David Gudgin, BSc (Hons), ACMA, qualified as a management
accountant with ICL before spending 3 years at the BBC. In 1999 he
joined 3i plc as an investor in European technology based in London
and Amsterdam. In 2002 he moved to Foursome Investments (now
Frog Capital) as the lead investor of an environmental technology and
16 Albion Venture Capital Trust PLC
a later stage 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 IPOs, takeovers and other corporate transactions, first with
Charterhouse Securities and then ING Barings. Companies ranged
in value from £10 million to £1 billion, across the healthcare and
technology sectors among others. After moving to Albion Ventures in
2004, Ed started investing in the technology, healthcare, financial
and business services sectors. Ed became 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 leading investments
in biotechnology, pharmaceuticals and medical technology. Most
recently he has worked for General Electric UK, where he was
responsible for mergers and acquisitions in the medical technology
and healthcare IT sectors. He joined Albion Ventures in 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.
Portfolio of investments
As at 31 March 2016 As at 31 March 2015
% 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 6,315 1,603 7,918 6,723 758 7,481 846
The Crown Hotel Harrogate Limited 24.1 50.0 4,245 (1,288) 2,957 4,245 (1,219) 3,026 (68)
The Stanwell Hotel Limited 39.2 50.0 5,069 (2,539) 2,530 4,677 (2,285) 2,392 (254)
Total investment in the
hotel sector 15,629 (2,224) 13,405 15,645 (2,746) 12,899 524
Healthcare
Shinfield Lodge Care Limited 33.4 47.4 5,400 1,329 6,729 3,000 24 3,024 1,304
Active Lives Care Limited 21.1 47.6 3,320 198 3,518 1,800 68 1,868 130
Ryefield Court Care Limited 19.1 40.6 2,287 122 2,409 991 40 1,031 83
Total investment in the
healthcare sector 11,007 1,649 12,656 5,791 132 5,923 1,517
Renewable energy
Chonais River Hydro Limited 8.0 25.0 3,074 641 3,715 3,074 361 3,435 279
Gharagain River Hydro Limited 10.3 25.1 1,363 487 1,850 1,363 268 1,631 219
Alto Prodotto Wind Limited 7.4 50.0 670 354 1,024 670 309 979 45
The Street by Street Solar
Programme Limited 6.5 50.0 676 279 955 676 249 925 30
Infinite Ventures (Goathill) Limited 11.5 31.0 480 107 587 480 – 480 107
Regenerco Renewable
Energy Limited 4.5 50.0 451 127 578 451 108 559 18
Earnside Energy Limited 4.9 50.0 509 36 545 404 74 478 (38)
Erin Solar Limited 18.6 50.0 520 (11) 509 520 (12) 508 1
Dragon Hydro Limited 7.3 30.0 311 156 467 311 158 469 (3)
Harvest AD Limited – – 307 – 307 307 – 307 –
AVESI Limited 7.4 50.0 242 53 295 242 49 291 4
Greenenerco Limited 3.9 50.0 135 76 211 135 67 202 8
Total investment in the
renewable energy sector 8,738 2,305 11,043 8,633 1,631 10,264 670
Education
Radnor House School (Holdings)
Limited 7.1 50.0 2,523 1,317 3,840 2,125 981 3,106 337
Total investment in the
education sector 2,523 1,317 3,840 2,125 981 3,106 337
Pubs
Bravo Inns II Limited 6.4 50.0 1,085 51 1,136 1,085 24 1,109 28
The Charnwood Pub
Company Limited 14.8 50.0 1,196 (156) 1,040 1,850 (429) 1,421 (234)
Bravo Inns Limited 7.6 50.0 751 (160) 591 589 (158) 431 (3)
Total investment in the
pub sector 3,032 (265) 2,767 3,524 (563) 2,961 (209)
Health and fitness clubs
The Weybridge Club Limited 14.3 50.0 2,242 (1,343) 899 2,165 (850) 1,315 (492)
Total investment in the health
and fitness club sector 2,242 (1,343) 899 2,165 (850) 1,315 (492)
Other
G&K Smart Developments
VCT Limited 42.9 50.0 276 (40) 236 276 (40) 236 –
Premier Leisure (Suffolk) Limited 9.9 47.4 175 (6) 169 175 (7) 168 –
Total other investments 451 (46) 405 451 (47) 404 –
Total fixed asset investments 43,622 1,393 45,015 38,334 (1,462) 36,872 2,347
* 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.
The comparative cost and valuations for 31 March 2015 do not agree to the Annual Report and Financial Statements for the year ended 31 March 2015 as the
above list does not include brought forward investments that were fully disposed of in the year.
Albion Venture Capital Trust PLC 17
Portfolio of investments (continued)
Total change in value of investments for the year 2,347
Movement in loan stock accrued interest (4)
Unrealised gains sub-total 2,343
Realised gain in current year 860
Total gains on investments as per Income statement 3,203
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 2016 £’000 £’000 £’000 £’000 £’000
Kensington Health Clubs Limited 1,906 1,357 2,200 294 843
Kew Green VCT (Stansted) Limited (loan stock repayments) 408 408 408 – –
The Charnwood Pub Company Limited** (loan stock repayments) 669 163 163 (506) –
Radnor House School (Holdings) Limited (loan stock repayments) 64 64 64 – –
Tower Bridge Health Clubs limited*** – – 13 13 13
Orchard Portman Group*** – – 4 4 4
Total 3,047 1,992 2,852 (195) 860
* 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 is after deducting realised losses of £506,000 for The Charnwood Pub Company Limited which are still held at the Balance
sheet date.
*** Additional proceeds from the sale which was realised in the prior year.
18 Albion Venture Capital Trust PLC
Portfolio companies
The top ten investments held by the Company, by total aggregate value are as shown below.
The most recently audited results are included for each portfolio company where applicable. Valuations are often based upon
the most recent information available, which may include management accounts. The audited results are therefore not
necessarily the figures used for the valuation.
Kew Green VCT (Stansted) Limited
The company developed and operates a limited service hotel under the “Holiday Inn Express”
brand at Stansted Airport on a 125 year lease. The hotel opened in January 2005 with 183
bedrooms. A 71 bedroom extension opened in July 2007, taking the hotel to 254 bedrooms.
Audited results: year to 31 August 2015
£’000 Investment information £’000
Turnover 5,117 Income recognised in the year 351
EBITDA 1,035 Total cost 6,315
Profit before tax 243 Total valuation 7,918
Net assets 4,502 Voting rights 45.2 per cent.
Basis of valuation: Valuation supported by third party or desktop valuation Voting rights for all AVL managed
Website: www.expressstanstedairport.co.uk or advised companies 50.0 per cent.
Shinfield Lodge Care Limited
The company owns and operates a 66 bed care home in Shinfield, Berkshire. The acquisition of the site completed
on 6 March 2015 and construction started in April 2015. The home opened in April 2016.
Investment information £’000
Income recognised in the year 173
The company was incorporated on 14 October 2014 and has
Total cost 5,400
not yet filed accounts at Companies House
Total valuation 6,729
Voting rights 33.4 per cent.
Valuation supported by third party or desktop valuation Voting rights for all AVL managed companies 47.4 per cent.
www.shinfieldview.com
Basis of valuation
Website:
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 5-18 and has the capacity to accommodate some
1,000 children.
Audited results: year to 31 August 2015
£’000 Investment information £’000
Turnover 7,234 Income recognised in the year 184
EBITDA 1,350 Total cost 2,523
Profit before tax 171 Total valuation 3,840
Net assets 21,108 Voting rights 7.1 per cent.
Basis of valuation: Valuation supported by third party or desktop valuation Voting rights for all AVL managed companies 50.0 per cent.
Website: www.radnorhouse.org
Chonais Holdings Limited
A company that owns and operates a 2 megawatt hydro-power scheme in the Scottish Highlands.
Audited results: period to 30 September 2015
£’000 Investment information £’000
Turnover – Income recognised in the year 277
EBITDA (6) Total cost 3,074
Loss before tax (7) Total valuation 3,715
Net liabilities (7) Voting rights 8.0 per cent.
Basis of valuation: Valuation supported by third party or desktop valuation Voting rights for all AVL managed companies 25.0 per cent.
Active Lives Care Limited
A company that owns and operates a purpose built elderly care home offering 75 bedrooms
Cumnor Hill, Oxford, which opened in June 2016.
Abbreviated results: period to 31 December 2014
£’000 Investment information £’000
Income recognised in the year 130
Total cost 3,320
Total valuation 3,518
Net assets 1,182 Voting rights 21.1 per cent.
Basis of valuation: Cost Voting rights for all AVL managed companies 47.6 per cent.
Website: www.cumnorhillhouse.uk
in
Albion Venture Capital Trust PLC 19
Portfolio companies (continued)
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 2015
£’000 Investment information £’000
Turnover 2,834 Income recognised in the year 136
EBITDA 448 Total cost 4,245
Loss before tax (798) Total valuation 2,957
Net liabilities (7,439) Voting rights 24.1 per cent.
Basis of valuation: Valuation supported by third party or desktop valuation Voting rights for all AVL managed or
Website: www.crownhotelharrogate.com advised companies 50.0 per cent.
The Stanwell Hotel Limited
The company acquired the 19 bedroom Stanwell Hall Hotel near Heathrow in August 2007. Planning consent was
subsequently obtained to extend the hotel to 52 bedrooms and the hotel re-opened at the end of April 2010.
Audited results: year to 31 August 2015
£’000 Investment information £’000
Turnover 1,435 Income recognised in the year 29
EBITDA 109 Total cost 5,069
Loss before tax (753) Total valuation 2,530
Net liabilities (6,112) Voting rights 39.2 per cent.
Basis of valuation: Valuation supported by third party or desktop valuation Voting rights for all AVL managed companies 50.0 per cent.
Website: www.thestanwell.com
Ryefield Court Care Limited
A 60 bed care home located in Hillingdon, Middlesex which is expected to open in July 2016.
Abbreviated results: year to 30 April 2015
£’000 Investment information £’000
Income recognised in the year 83
Total cost 2,287
Net assets 629 Total valuation 2,409
Basis of valuation: Cost Voting rights 19.1 per cent.
Website: www.ryefieldcourt.uk Voting rights for all AVL managed companies 40.6 per cent.
Gharagain River Hydro Limited
The company operates a 1MW hydroelectricity plant near Ledgowan in Western Scotland.
Audited results: year to 30 September 2015
£’000 Investment information £’000
Turnover – Income recognised in the year 119
EBITDA (6) Total cost 1,363
Loss before tax (7) Total valuation 1,850
Net assets (7) Voting rights 10.3 per cent.
Basis of valuation: Valuation supported by third party or desktop valuation Voting rights for all AVL managed companies 25.1 per cent
Bravo Inns II Limited
The company owns and operates a group of freehold pubs in the north of England. The pubs are trading well with
considerable demand for the value offering.
Audited results: year to 31 March 2015
£’000 Investment information £’000
Turnover 6,311 Income recognised in the year 72
EBITDA 925 Total cost 1,085
Loss before tax (216) Total valuation 1,136
Net assets 3,017 Voting rights 6.4 per cent.
Basis of valuation: Valuation supported by third party or desktop valuation Voting rights for all AVL managed companies 50.0 per cent.
Website: www.bravoinns.com
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.
20 Albion Venture Capital Trust PLC
Directors’ report
The Directors submit their Annual Report and the audited
Financial Statements on the affairs of Albion Venture Capital
the year ended
Trust PLC
31 March 2016.
“Company”)
(the
for
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.
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 14,716,851
Ordinary shares (2015: 6,874,236), of which 14,107,902
Ordinary shares (2015: 6,442,577) were issued under the
Albion VCTs Top Up Offers; and 608,949 Ordinary shares
(2015: 431,659) were issued under the Company’s Dividend
Reinvestment Scheme. The Company engaged in the Albion
VCTs Prospectus Top Up Offers 2015/2016 which closed on
23 March 2016, as it was fully subscribed having reached its
£6 million limit under the offer pursuant to the Prospectus
dated 17 November 2015.
The Company operates a policy of buying back shares either
for cancellation or for holding in treasury. Details regarding
the current buy-back policy can be found on page 7 of the
Chairman’s statement.
Substantial interests and shareholder profile
As at 31 March 2016 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.
There have been no disclosures in accordance with
Disclosure Rule and Transparency Rule 5 made to the
Company during the year ended 31 March 2016, 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 2016 can be found in the Strategic report
on pages 8 and 9.
Going concern
In accordance with the Guidance on Risk Management,
Internal Control and Related Financial and Business
Reporting issued by the Financial Reporting Council in
September 2014, the 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
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
considered it appropriate to adopt the going concern basis of
accounting.
(namely
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 18. The Company’s business
activities, together with details of its performance are shown
in the Strategic report and this Directors’ report.
Albion Venture Capital Trust PLC 21
Directors’ report (continued)
Post balance sheet events
Details of events that have occurred since 31 March 2016 are
shown in note 20.
reviewed for the year ended 31 March 2016. 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.
A “knowledge intensive” company is one which is carrying
out significant amounts of R&D from which the greater part of
its business will be derived, or where those R&D activities are
being carried out by staff with certain higher educational
attainments.
Portfolio company gross assets must not exceed £15 million
immediately prior to the investment and £16 million
immediately thereafter.
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.
Principal risks and uncertainties
A summary of the principal risks faced by the Company is set
out on pages 12 and 13 of the Strategic report.
Maintenance of VCT qualifying status
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;
(7) An investment in any company must not cause that
company to receive more than £5 million in State aid
risk finance in the 12 months up to the date of the
investment, nor more than £12 million in total
(£20 million for a “knowledge intensive” company);
(8) The Company must not invest in a company whose
trade is more than seven years old (ten years for a
“knowledge intensive” company) unless the company
previously received State aid risk finance in its first
seven years, or a turnover test is satisfied; and
(9) The Company’s investment in another company must
not be used to acquire another business, or shares in
another company.
These tests drive a spread of investment risk through
prohibiting holdings of more than 15 per cent. in any portfolio
company. The tests have been carried out and independently
22 Albion Venture Capital Trust PLC
Directors’ report (continued)
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 15.
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.
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
11:00am on 8 August 2016. The notice of the Annual
General Meeting is at the end of this document.
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 31.
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.
Ebbe Dinesen will retire by rotation in accordance with the
Articles and offer himself for re-election.
Advising ordinary retail investors
The Company currently conducts its affairs so that its shares
can be recommended by financial 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
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 ‘Investor Centre’
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 8 will request the authority to allot
up
to an aggregate nominal amount of £172,888
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 6,954,440 Ordinary
treasury shares representing 8.0 per cent. of the total
Ordinary share capital in issue as at 31 March 2016.
This resolution replaces the authority given to the Directors at
the Annual General Meeting in 2015. 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.
Albion Venture Capital Trust PLC 23
Directors’ report (continued)
Disapplication of pre-emption rights
Special resolution number 9 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 £172,888 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 2015. 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.
Purchase of own shares
Special resolution number 10 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 10. Shares
bought back under this authority may be cancelled.
Special resolution number 11 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.
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
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 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
27 June 2016
This resolution would renew the 2015 authority, which was
on similar terms. During the financial year under review, the
Company purchased 1,113,000 Ordinary shares for treasury
of nominal value of £11,000 at an aggregate consideration of
£733,000, including stamp duty, representing 1.3 per cent. of
the
the Company as at
31 March 2016. The maximum nominal value of treasury
shares held during the year was £69,500.
issued share capital of
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, 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 resolution is intended to apply
equally to shares to be held by the Company as treasury
shares.
24 Albion Venture Capital Trust PLC
Statement of Directors’ responsibilities
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
integrity of the Company’s webpage is the responsibility of
the Directors.
Directors’ responsibilities pursuant to Disclosure and
Transparency Rule 4 of the UK Listing Authority
The Directors confirm to the best of their knowledge:
● The Financial Statements which have been prepared in
accordance with UK Generally Accepted Accounting
Practice give a true and fair view of the assets,
liabilities, financial position and profit and loss of the
Company.
● The Annual Report includes a fair review of the
development and performance of the business and the
financial position of the Company, together with a
description of the principal risks and uncertainties that
they face.
By order of the Board
David Watkins
Chairman
27 June 2016
The Directors are responsible for preparing the Annual
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 are required to prepare 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 for 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 they have been prepared in accordance
with applicable UK accounting standards, 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;
● 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.
The Directors are responsible for ensuring that the Annual
Report and Financial Statements, taken as a whole, are fair,
balanced, and understandable and provides the information
necessary for shareholders to assess the Company’s
position, performance, business model and strategy.
Albion Venture Capital Trust PLC 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 2014.
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
26 Albion Venture Capital Trust PLC
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 Articles of Association require that all Directors will
submit themselves for re-election at least once every three
years, therefore
in accordance with the Articles of
Association; Ebbe Dinesen will resign and offer himself for
re-election.
The Directors have a range of business and financial skills
which are relevant to the Company; these are described in
the Board of Directors section of this Report, on page 15
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 29.
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 2015/2016.
The Chairman ensures that all Directors receive, in a timely
manner, all relevant management, regulatory and financial
information. The Board receives and considers reports
regularly from the Manager and other key advisers, and ad
hoc reports and information are supplied to the Board as
required. The Board has a formal schedule of matters
reserved for it and the agreement between the Company and
its Manager sets out the matters over which the Manager has
authority and limits beyond which Board approval must
be sought.
Statement of corporate governance (continued)
The Manager has authority over the management of the
investment portfolio, the organisation of custodial services,
accounting, secretarial and administrative services. The main
issues reserved for the Board include:
Directors are offered training, both at the time of joining the
Board and on other occasions where required. The Board
also undertakes a proper and thorough evaluation of its
committees on an annual basis.
● the appointment, evaluation, removal and remuneration
of the Manager;
● the consideration and approval of future developments
or changes to the investment policy, including risk and
asset allocation;
● consideration of corporate strategy and corporate
events that arise;
● application of the principles of the UK Corporate
Governance Code, corporate governance and internal
control;
● review of sub-committee recommendations, including
the
the
appointment and remuneration of the Auditor;
to shareholders
recommendation
for
● evaluation of non-audit services provided by the
external Auditor;
● approval of the appropriate dividend to be paid to
shareholders, reviewing 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 and Financial Statements that are fair, balanced and
understandable, which provides the information necessary
for shareholders to assess the position, 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 for the effective governance of
the Company. Diversity within the Board is achieved through
the appointment of directors with different sector
backgrounds and skills.
Directors’ retirement and re-election is subject to the Articles
of Association and the AIC Code. Directors are subject to re-
election every three years and Directors who have served
longer than nine years and non-independent Directors, to re-
election every year.
In light of the structured performance evaluation, David
Watkins, John Kerr and Ebbe Dinesen 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 attended by all the Directors.
The terms of reference for the Remuneration Committee can
be found on the Company’s webpage on the Manager’s
website at www.albion-ventures.co.uk/funds/AAVC 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 2016;
all members attended.
Written terms of reference have been constituted for the
Audit Committee and can be found on the Company’s
webpage on the Manager’s website at www.albion-
ventures.co.uk/funds/AAVC
Corporate
Governance section.
under
the
During the year under review, the Committee discharged its
responsibilities including:
● 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
Albion Venture Capital Trust PLC 27
Statement of corporate governance (continued)
areas requiring judgement and on critical accounting
policies;
● 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 position, 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.
28 Albion Venture Capital Trust PLC
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
position, 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 2016.
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 2016, and assessments made by
individual Directors.
In 2007 the Audit Committee undertook a tendering exercise
for the 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
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.
A new audit engagement partner was assigned to the audit
for the year ended 31 March 2016 as the previous audit
engagement partner had 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.
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.
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.
Nomination Committee
The Nomination Committee consists of all Directors, with
David Watkins as Chairman.
The main features of the internal control system with respect
to financial reporting, implemented throughout the year are:
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.
The terms of reference for the Nomination Committee can be
found on the Company’s webpage on the Manager’s website
at www.albion-ventures.co.uk/funds/AAVC 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 FRC guidance “Risk Management,
Internal Control and Related Financial and Business
Reporting”. 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.
The Board, assisted by the Audit Committee, monitors all
controls, including financial, operational and compliance
controls, and risk management. The Audit Committee
receives each year from the Manager a formal report, which
details the steps taken to monitor the areas of risk, including
those that are not directly the responsibility of the Manager,
● 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
in accordance with the FCA
by the Manager
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.
Conflicts of interest
Directors review the disclosure of conflicts of interest
annually, with changes reviewed and noted at the beginning
of each Board meeting. A Director who has conflicts of
interest has two independent Directors authorise those
Albion Venture Capital Trust PLC 29
Statement of corporate governance (continued)
conflicts. Procedures to disclose and authorise conflicts of
interest have been adhered to throughout the year.
Shareholders and financial advisers are able to obtain
information on holdings and performance using the contact
details provided on page 2.
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 21, 23 and 24 of the Directors’
report. The Company is not party to any significant
agreements that may take effect, alter or terminate upon a
change of control of the Company following a takeover bid.
Any amendments to the Company’s Articles of Association
are by way of a special resolution subject to ratification by
shareholders.
Relationships with shareholders
The Company’s Annual General Meeting on 8 August 2016
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.
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, with the exception of the
requirement for the appointment of a Chief Executive Officer,
the Company has complied throughout the year ended
31 March 2016 with all the relevant provisions set out in the
Code and with the AIC Code of Corporate Governance. The
Company continues to comply with the Code as at the date
of this report.
By order of the Board
David Watkins
Chairman
27 June 2016
30 Albion Venture Capital Trust PLC
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.
At the forthcoming Annual General Meeting David Watkins,
John Kerr and Ebbe Dinesen will retire and be proposed for
re-election.
the Company
An Ordinary resolution will be proposed at the Annual
to be held on
General Meeting of
8 August 2016 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 the current fees should be increased
to remain both competitive and reflective of the workload and
responsibilities required from the Directors. The change in
remuneration took place from 1 December 2015 and is in line
with the remuneration policy as detailed below.
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.
The maximum level of non-executive Directors’ remuneration
is £100,000 per annum which is fixed by the Company’s
Articles of Association. This policy will continue for the year
ended 31 March 2017.
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.
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, 98.6 per cent. of shareholders voted for the
resolution approving the Directors’ Remuneration Report
which shows significant Shareholder support.
Directors
The Directors who held office throughout the year and their
interests in the shares of the Company (together with those
of their immediate family) are as follows:
31 March 2016 31 March 2015
Audited (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 25,426 22,633
There have been no changes in the holdings of the Directors
between 31 March 2016 and the date of this Report.
Albion Ventures LLP, its Partners and staff hold a total of
277,316 shares in the Company as at 31 March 2016.
Partners and staff of Albion Ventures LLP were issued with a
further 694 shares under the Albion VCTs Prospectus Top Up
Offers 2015/2016 on 6 April 2016.
Annual report on remuneration
The remuneration of individual Directors’ is determined by the
Remuneration Committee within the framework set by the
Board.
It is responsible for reviewing the remuneration of the
Directors and the Company’s remuneration policy to ensure
that it reflects the duties, responsibilities and value of time
Albion Venture Capital Trust PLC 31
Directors’ remuneration report (continued)
spent by the Directors on the business of the Company and
makes recommendations to the Board accordingly.
There are no options, issued or exercisable, in the Company
which would distort the graphical representation that follows.
Directors’ remuneration
The following items have been audited.
The following table shows an analysis of the remuneration of
individual Directors, exclusive of National Insurance:
2016 2015
£’000 £’000
D J Watkins 21 20
J M B L Kerr 24 23
J Warren 21 20
E Dinesen 21 20
–––––––––––– ––––––––––––
87 83
–––––––––––– ––––––––––––
The Company does not confer any share options, long term
incentives or retirement benefits to any Director, nor does it
make a contribution to any pension scheme on behalf of the
Directors.
Each Director of the Company was remunerated personally
through the Manager’s payroll which has been recharged to
the Company.
In addition to Directors’ remuneration, the Company pays an
annual premium in respect of Directors’ & Officers’ Liability
Insurance of £7,683 (2015: £9,192).
Performance graph
The graph that follows shows the Company’s Ordinary 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 as it
contains a large range of sectors within the UK economy
similar to a generalist VCT. Investors should, however, be
reminded that shares in VCTs generally trade at a discount to
the actual net asset value of the Company.
Ordinary share price total return relative to the FTSE All-Share Index total return
(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
Mar
16
FTSE AII-Share Index total return
Ordinary share price total return
Source: Albion Ventures LLP
Methodology: The Ordinary share price total 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.
Directors’ pay compared to distribution to shareholders
2016 2015 Percentage
£’000 £’000 change
Total distribution to
shareholders including
dividends and share
buybacks 4,304 3,926 9.6
Directors’ fees 87 83 4.8
By Order of the Board
David Watkins
Director
27 June 2016
32 Albion Venture Capital Trust PLC
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 2016, 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 2016 and 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;
● Statement of Changes in Equity;
● Statement of Cash Flows; 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 Financial Reporting Council’s (FRC’s) Ethical Standards for Auditors.
A description of
www.frc.org.uk/auditscopeukprivate
the scope of an audit of Financial Statements
is provided on
the FRC’s website at
An overview of the scope of the audit including our assessment of the risk of material misstatement
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.
Investments
The outcome of our risk assessment was that the valuation of investments was considered to be the area with the greatest
effect on the overall audit strategy including the allocation of resources in the audit.
The valuation of investments is a key accounting estimate where there is an inherent risk of management override arising from
the investment valuations being prepared by the Investment Manager, who is remunerated based on the net asset value of
the Company.
Albion Venture Capital Trust PLC 33
Independent Auditor’s report to the
Members of Albion Venture Capital Trust plc (continued)
We performed initial analytical procedures to determine the extent of our work considering, inter alia, the value of individual
investments, the nature of the investment and the extent of the fair value movement. A breakdown of the investment portfolio
by nature of instrument type and valuation method is shown below.
Investment Portfolio by Type
Unquoted equity
[34%]
Unquoted loan stock
[66%]
Unquoted Investments – Valuation Method
Cost
[15%]
Value supported by
3rd party valuation
[85%]
We tested a sample of 90% of the whole unquoted investment portfolio having regard to the subjectivity of the inputs to the
valuations.
100% of the whole unquoted portfolio is based on valuations supported by a third party valuation or cost (where the
investment was recently acquired). For such investments, we verified the cost or price of recent investment to supporting
documentation and reviewed the Investment Manager’s determination of whether there were any reasons why the valuation
did not remain appropriate.
For detailed testing including the valuations supported by a third party valuation, we:
● considered whether the valuation methodology is the most appropriate in the circumstances under the International
Private Equity and Venture Capital Valuation (“IPEV”) Guidelines;
● re-performed the calculation of the investment valuations;
● agreed and benchmarked key inputs and estimates to independent information and our own research;
● challenged the assumptions inherent in the valuation of unquoted investments, and we assessed the impact of the
estimation uncertainty concerning these assumptions and the disclosure of these uncertainties in the Financial
Statements;
● considered the economic environment in which the investment operates to identify factors that could impact the
investment valuation; and
● for all investments tested, we developed our own point estimate where alternative assumptions could reasonably be
applied and considered the overall impact of such sensitisations on the portfolio of investments in determining whether
the valuations as a whole are reasonable and unbiased.
34 Albion Venture Capital Trust PLC
Independent Auditor’s report to the
Members of Albion Venture Capital Trust plc (continued)
For a risk-weighted sample of loans held at fair value, we:
● established whether the debt is being serviced;
● identified the enterprise value of the company to establish whether there is sufficient value to cover the loan stock;
● considered whether the loan stock is fully performing, past due or impaired and ensured this is correctly disclosed in the
accounts;
● considered whether returns have been spread over the life of the instrument and considered the need to perform
sensitivity;
● considered the recoverability of accrued interest and whether any provision is required;
● agreed security held to documentation;
● considered the assumption that fair value is not significantly different to cost by challenging the assumption that there is
no significant movement in the market interest rate since acquisition and considering the “unit of account” concept; and
● reviewed the treatment of accrued redemption premium/other fixed returns in line with the SORP.
The chart below depicts the coverage of our audit work across the entire portfolio:
Investments by value
Analytical
Procedures
Detailed testing
Revenue
We also considered revenue recognition to be a significant risk. Revenue consists of dividends receivable from the portfolio
companies and interest earned on loans to portfolio companies and cash balances. Revenue recognition is a significant audit
risk as it is one of the key drivers of dividend returns to investors. In particular, in unquoted companies, dividends receivable
can be difficult to predict.
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 also reviewed the recognition and classification of accrued fixed income receipts to ascertain whether it meets the
definition of realised income, 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 also agreed a sample of income receipts from bank statement
to the nominal ledger and vice versa.
In respect of dividends receivable, we compared actual income to expectations set based on independent published data on
dividends declared by the portfolio companies held. We tested the categorisation of dividends received from the portfolio
companies between revenue and capital.
The audit committee’s consideration of their key issues is set out on pages 27 and 28.
Albion Venture Capital Trust PLC 35
Independent Auditor’s report to the
Members of Albion Venture Capital Trust plc (continued)
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
Financial statement
materiality – Based
on 2% of invested
assets
Specific materiality
– classes of
transactions and
balances which
impact on revenue
profits – Based on
10% of the
revenue return
before tax
Purpose
Key considerations and
benchmarks
Assessing whether the Financial Statements
as a whole present a true and fair view
● The value of investments
● The level of judgement inherent in
Quantum
(£)
900,000
the valuation
● The range of reasonable alternative
valuation
● The level of net income return
170,000
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
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 29 and 30 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.
Statement regarding the Directors’ assessment of principal risks, going concern and longer term viability of the
Company
We have nothing material to add or to draw attention to in relation to:
● the Directors’ confirmation in the Annual Report that they have carried out a robust assessment of the principal risks
facing the entity, including those that would threaten its business model, future performance, solvency or liquidity;
● the disclosures in the Annual Report that describe those risks and explain how they are being managed or mitigated;
● the Directors’ statement in the Financial Statements about whether they considered it appropriate to adopt the going
concern basis of accounting in preparing them and their identification of any material uncertainties to the entity’s ability
to continue to do so over a period of at least twelve months from the date of approval of the Financial Statements; and
● the Directors’ explanation in the Annual Report as to how they have assessed the prospects of the entity, over what
period they have done so and why they consider that period to be appropriate, and their statement as to whether they
36 Albion Venture Capital Trust PLC
Independent Auditor’s report to the
Members of Albion Venture Capital Trust plc (continued)
have a reasonable expectation that the entity will be able to continue in operation and meet its liabilities as they fall due
over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications
or assumptions.
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’ statements, set out on page 21, in relation to going concern and on page 14 in relation to longer-term
viability; 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.
Vanessa-Jayne Bradley (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
London
United Kingdom
27 June 2016
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Albion Venture Capital Trust PLC 37
Income statement
Year ended 31 March 2016 Year ended 31 March 2015
Revenue Capital Total Revenue Capital Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Gains on investments 3 – 3,203 3,203 – 2,569 2,569
Investment income 4 2,236 – 2,236 1,989 – 1,989
Investment management fees 5 (246) (739) (985) (212) (636) (848)
Other expenses 6 (287) – (287) (273) – (273)
–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––
Return on ordinary activities before tax 1,703 2,464 4,167 1,504 1,933 3,437
Tax (charge)/credit on ordinary activities 8 (300) 148 (152) (190) 135 (55)
–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––
Return and total comprehensive
income attributable to shareholders 1,403 2,612 4,015 1,314 2,068 3,382
–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––
Basic and diluted return
per share (pence)* 10 2.0 3.6 5.6 2.1 3.2 5.3
–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––
* excluding treasury shares
The accompanying notes on pages 42 to 54 form an integral part of these Financial Statements.
The total column of this Income statement represents the profit and loss account of the Company. The supplementary revenue
and capital columns have been prepared in accordance with the Association of Investment Companies’ Statement of
Recommended Practice.
There are no recognised gains or losses other than the results for the year disclosed above. Accordingly a statement of total
comprehensive income is not required.
The difference between the reported profit on ordinary activities before tax and the historical profit is due to the fair value
movements on investments.
38 Albion Venture Capital Trust PLC
Balance sheet
31 March 2016 31 March 2015
Note £’000 £’000
Fixed asset investments 11 45,015 38,229
Current assets
Trade and other receivables less than one year 13 2,139 166
Cash and cash equivalents 10,330 9,002
–––––––––––– ––––––––––––
12,469 9,168
–––––––––––– ––––––––––––
Total assets 57,484 47,397
Creditors: amounts falling due within one year
Trade and other payables less than one year 14 (529) (469)
–––––––––––– ––––––––––––
Total assets less current liabilities 56,955 46,928
–––––––––––– ––––––––––––
Equity attributable to equityholders
Called up share capital 15 861 714
Share premium 18,374 8,228
Capital redemption reserve 7 7
Unrealised capital reserve 1,128 (2,269)
Realised capital reserve 10,737 11,522
Other distributable reserve 25,848 28,726
–––––––––––– ––––––––––––
Total equity shareholders’ funds 56,955 46,928
–––––––––––– ––––––––––––
Basic and diluted net asset value per share (pence)* 16 72.0 71.6
–––––––––––– ––––––––––––
* excluding treasury shares
The accompanying notes on pages 42 to 54 form an integral part of these Financial Statements.
These Financial Statements were approved by the Board of Directors and authorised for issue on 27 June 2016, and were
signed on its behalf by
David Watkins
Chairman
Company number: 03142609
Albion Venture Capital Trust PLC 39
Statement of changes in equity
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 2015 714 8,228 7 (2,269) 11,522 28,726 46,928
Return and total comprehensive
income for the year – – – 2,343 269 1,403 4,015
Transfer of previously unrealised
gains/(losses) on realisations
of investments – – – 1,054 (1,054) – –
Purchase of treasury shares – – – – – (733) (733)
Issue of equity 147 10,423 – – – – 10,570
Cost of issue of equity – (277) – – – – (277)
Net dividends paid (note 9) – – – – – (3,549) (3,549)
–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––
As at 31 March 2016 861 18,374 7 1,128 10,737 25,848 56,955
–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––
As at 1 April 2014 645 3,525 7 (3,343) 10,527 31,297 42,658
Return and total comprehensive
income 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
–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––
* Included within the aggregate of these reserves is an amount of £36,585,000 (2015: £37,979,000) which is considered
distributable.
40 Albion Venture Capital Trust PLC
Statement of cash flows
Year ended Year ended
31 March 2016 31 March 2015
£’000 £’000
Operating activities
Loan stock income received 2,028 1,764
Deposit interest received 115 76
Dividend income received 81 57
Investment management fees paid (938) (828)
Other cash payments (273) (271)
Corporation tax (paid)/refund (99) 64
–––––––––––– ––––––––––––
Net cash flow from operating activities 915 862
Cash flow from investing activities
Purchase of fixed asset investments (6,430) (9,042)
Disposal of fixed asset investments 2,786 8,833
–––––––––––– ––––––––––––
Net cash flow from investing activities (3,644) (209)
Cash flow from financing activities
Issue of share capital* 7,886 4,478
Cost of issue of equity (2) (1)
Dividends paid (3,094) (2,873)
Purchase of own shares (including costs) (733) (760)
–––––––––––– ––––––––––––
Net cash flow from financing activities 4,057 844
Increase in cash and cash equivalents 1,328 1,497
Cash and cash equivalents at start of period 9,002 7,505
–––––––––––– ––––––––––––
Cash and cash equivalents at end of period 10,330 9,002
Cash and cash equivalents comprise
Cash at bank and in hand 10,330 9,002
Cash equivalents – –
–––––––––––– ––––––––––––
Total cash and cash equivalents 10,330 9,002
–––––––––––– ––––––––––––
*An additional £1,988,000 relating to shares subscribed and allotted on 31 March 2016 was received after the year end, bringing total
proceeds for the year ended 31 March 2016 to £9,874,000 as shown in note 15.
Albion Venture Capital Trust PLC 41
Notes to the Financial Statements
methodologies including earnings multiples, the level of
third party offers received, prices of recent investment
rounds, net assets and industry valuation benchmarks.
Where the Company has an investment in an early
stage enterprise, the price of a recent investment round
is often the most appropriate approach to determining
fair value. In situations where a period of time has
elapsed since the date of the most recent transaction,
consideration is given to the circumstances of the
portfolio company since that date in determining fair
value. This includes consideration of whether there is
any evidence of deterioration or strong definable
evidence of an increase in value. In the absence of
these indicators, the investment in question is valued at
the amount reported at the previous reporting date.
Examples of events or changes that could indicate a
diminution include:
o
o
o
the performance and/or prospects of the
underlying business are significantly below the
expectations on which the investment was
based;
a significant adverse change either in the
the
portfolio company’s business or
technological, market, economic,
legal or
regulatory environment in which the business
operates; or
in
market conditions have deteriorated, which may
be indicated by a fall in the share prices of
quoted businesses operating in the same or
related sectors.
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 other distributable reserve
when a share becomes ex-dividend.
Debtors and creditors and cash are carried at amortised cost,
in accordance with FRS 102. There are no financial liabilities
other than creditors.
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 when the Company’s right to receive payment and
expect settlement is established. Where interest is rolled up
and/or payable at redemption then it is recognised as income
unless there is reasonable doubt as to its receipt.
Bank interest income
Interest income is recognised on an accrual basis using the
rate of interest agreed with the bank.
1. Basis of preparation
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, including
Financial Reporting Standard 102 (“FRS 102”), and with the
2014 Statement of Recommended Practice “Financial
Statements of Investment Trust Companies and Venture
Capital Trusts” (“SORP”) issued by The Association of
Investment Companies (“AIC”). This is the first period in which
the Financial Statements have been prepared under FRS 102
which became mandatory for companies with a financial year
beginning from 1 January 2015. On adoption of, and in
accordance with FRS 102, loans and receivables previously
measured at amortised cost using the effective interest rate
method less impairment have been classified at fair value
through profit and loss (“FVTPL”). This has not led to a
material change in value and so has not led to a restatement
of comparatives. Further details can be found in note 17.
The preparation of the Financial Statements requires
management to make judgements and estimates that affect
the application of policies and reported amounts of assets,
liabilities, income and expenses. The most critical estimates
and judgements relate to the determination of carrying value
of investments at FVTPL. The Company values investments
by following the International Private Equity and Venture
Capital Valuation (“IPEVCV”) Guidelines and further detail on
the valuation techniques used are outlined in note 2.
2. Accounting policies
Fixed asset investments
The Company’s business is investing in financial assets with a
view to profiting from their total return in the form of income
and capital growth. This portfolio of financial assets is
managed and its performance evaluated on a fair value basis,
in accordance with a documented investment policy, and
information about the portfolio is provided internally on that
basis to the Board.
In accordance with the requirements of FRS 102, those
undertakings in which the Company holds more than 20 per
cent. of the equity as part of an investment portfolio are not
accounted
these
In
circumstances the investment is measured at FVTPL.
the equity method.
for using
Upon initial recognition (using trade date accounting)
investments, including loan stock, are classified by the
Company as FVTPL and are included at their initial fair value,
which is cost (excluding expenses incidental to the acquisition
which are written off to the income statement).
Subsequently, the investments are valued at ‘fair value’, which
is measured as follows:
● Investments listed on recognised exchanges are valued
at their bid prices at the end of the accounting period
or otherwise at fair value based on published price
quotations;
● Unquoted investments, where there is not an active
market, are valued using an appropriate valuation
technique in accordance with the IPEVCV Guidelines.
Indicators of fair value are derived using established
42 Albion Venture Capital Trust PLC
Notes to the Financial Statements (continued)
2. Accounting policies (continued)
Investment management fees and other expenses
Reserves
Share premium account
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.
This reserve accounts for the difference between the price
paid for shares and the nominal value of the shares, less issue
costs and transfers to the other distributable reserve.
Capital redemption reserve
This reserve accounts for amounts by which the issued share
capital is diminished through the repurchase and cancellation
of the Company’s own shares.
Unrealised capital reserve
Increases and decreases in the valuation of investments held
at the year end against cost are included in this reserve.
Realised capital reserve
The following are disclosed in this reserve:
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
102. Current tax is tax payable (refundable) in respect of the
taxable profit (tax loss) for the current period or past reporting
periods using the tax rates and laws that have been enacted
or substantively enacted at the financial reporting date.
Taxation associated with capital expenses is applied in
accordance with the SORP.
Deferred tax is provided in full on all timing differences at the
reporting date. Timing differences are differences between
taxable profits and total comprehensive income as stated in
the financial statements that arise from the inclusion of income
and expenses in tax assessments in periods different from
those in which they are recognised in the financial statements.
As a VCT the Company has an exemption from tax on capital
gains. The Company intends to continue meeting the
conditions required to obtain approval as a VCT in the
foreseeable future. The Company therefore, should have no
material deferred tax timing differences arising in respect of
the revaluation or disposal of investments and the Company
has not provided for any deferred tax.
● 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
The Special reserve, Treasury share reserve and the Revenue
reserve were combined in 2012 to form a single reserve
named Other distributable reserve.
This reserve accounts for movements from the revenue
column of the Income statement, the payment of dividends,
the buy-back of shares and other non-capital realised
movements.
Dividends
Dividends by the Company are accounted for in the period in
which the dividend is paid or approved at the Annual General
Meeting.
Albion Venture Capital Trust PLC 43
Notes to the Financial Statements (continued)
3. Gains on investments
Year ended Year ended
31 March 2016 31 March 2015
£’000 £’000
Unrealised gains on fixed asset investments 2,343 1,442
Realised gains on fixed asset investments 860 1,127
–––––––––––––– ––––––––––––––
Gains on investments 3,203 2,569
–––––––––––––– ––––––––––––––
4. Investment income
Year ended Year ended
31 March 2016 31 March 2015
£’000 £’000
Income recognised on investments
Loan stock interest and other fixed returns 2,039 1,860
Dividend income 81 51
Bank deposit interest 116 78
–––––––––––––– ––––––––––––––
2,236 1,989
–––––––––––––– ––––––––––––––
Interest income earned on impaired investments at 31 March 2016 amounted to £208,000 (2015: £306,000).
All of the Company’s income is derived from operations in the United Kingdom.
5. Investment management fees
Year ended Year ended
31 March 2016 31 March 2015
£’000 £’000
Investment management fee charged to revenue 246 212
Investment management fee charged to capital 739 636
–––––––––––––– ––––––––––––––
985 848
–––––––––––––– ––––––––––––––
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 £1,033,000 (2015: £896,000), were purchased by the Company from Albion Ventures LLP;
this includes £985,000 (2015: £848,000) of investment management fee and £48,000 (2015: £48,000) 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 £282,000 (2015: £235,000).
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 2016, fees of £116,000 attributable to the investments of the Company were received by Albion Ventures LLP
pursuant to these arrangements (2015: £360,000).
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 20,860
Ordinary shares in the Company.
6. Other expenses
Year ended Year ended
31 March 2016 31 March 2015
£’000 £’000
Directors’ fees (inc. NIC) 93 90
Secretarial and administration fee 48 48
Other administrative expenses 119 110
Auditor’s remuneration for statutory audit services (exc. VAT) 27 25
–––––––––––––– ––––––––––––––
287 273
–––––––––––––– ––––––––––––––
44 Albion Venture Capital Trust PLC
Notes to the Financial Statements (continued)
7. Directors’ fees
The amounts paid to and on behalf of Directors during the year are as follows:
Year ended Year ended
31 March 2016 31 March 2015
£’000 £’000
Directors’ fees 87 83
National insurance 6 7
–––––––––––––– ––––––––––––––
93 90
–––––––––––––– ––––––––––––––
The Company’s key management personnel are the Directors. Further information regarding Directors’ remuneration can be found in
the Directors’ remuneration report on page 32.
8. Tax (charge)/credit on ordinary activities
Year ended 31 March 2016 Year ended 31 March 2015
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
UK corporation tax in respect of
current year (324) 148 (176) (305) 135 (170)
UK corporation tax in respect of
prior year 24 – 24 115 – 115
––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––
Total (300) 148 (152) (190) 135 (55)
––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––
Factors affecting the tax charge:
Year ended Year ended
31 March 2016 31 March 2015
£’000 £’000
Return on ordinary activities before taxation 4,167 3,437
–––––––––––––– ––––––––––––––
Tax on profit at the standard rate of 20% (2015: 21%) (833) (722)
Factors affecting the charge:
Non-taxable gains 640 539
Income not taxable 17 11
Consortium relief in respect of prior years 24 115
Marginal relief – 2
–––––––––––––– ––––––––––––––
(152) (55)
–––––––––––––– ––––––––––––––
The tax charge for the year shown in the Income statement is lower than the standard rate of corporation tax in the UK of 20 per cent.
(2015: 21 per cent.). The differences are explained above.
Consortium relief is recognised in the accounts in the period in which the claim is submitted to HMRC and is shown as tax in respect
of prior year.
Notes
(i) Venture Capital Trusts are not subject to corporation tax on capital gains.
(ii) Tax relief on expenses charged to capital has been determined by allocating tax relief to expenses by reference to the applicable corporation tax rate
and allocating the relief between revenue and capital in accordance with the SORP.
(iii) No deferred tax asset or liability has arisen in the year.
Albion Venture Capital Trust PLC 45
Notes to the Financial Statements (continued)
9. Dividends
Year ended Year ended
31 March 2016 31 March 2015
£’000 £’000
First dividend paid on 31 July 2014 – 2.5 pence per share – 1,576
Second dividend paid on 31 December 2014 – 2.5 pence per share – 1,590
First dividend paid on 31 July 2015 – 2.5 pence per share 1,789 –
Second dividend paid on 31 December 2015 – 2.5 pence per share 1,782 –
Unclaimed dividends (22) (41)
–––––––––––––– ––––––––––––––
3,549 3,125
–––––––––––––– ––––––––––––––
In addition to the dividends summarised above, the Board has declared a first dividend for the year ending 31 March 2017 of 2.5 pence
per share. This dividend will be paid on 29 July 2016 to shareholders on the register as at 8 July 2016. The total dividend will be
approximately £1,987,000.
During the year, unclaimed dividends older than twelve years of £22,000 (2015: £41,000) 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 2016 Year ended 31 March 2015
Revenue Capital Total Revenue Capital Total
The return per share has been based
on the following figures:
Return attributable to
equity shares (£’000) 1,403 2,612 4,015 1,314 2,068 3,382
Weighted average shares
in issue (excluding treasury shares) 72,020,718 63,464,790
Return attributable per equity
share (pence) 2.0 3.6 5.6 2.1 3.2 5.3
––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––
The weighted average number of shares is calculated excluding treasury shares of 6,954,440 (2015: 5,841,440).
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 2016 31 March 2015
£’000 £’000
Investments held at fair value through profit or loss
Unquoted equity 15,163 10,442
Unquoted loan stock 29,852 27,787
–––––––––––––– ––––––––––––––
45,015 38,229
–––––––––––––– ––––––––––––––
46 Albion Venture Capital Trust PLC
Notes to the Financial Statements (continued)
11. Fixed asset investments (continued)
31 March 2016 31 March 2015
£’000 £’000
Opening valuation 38,229 35,580
Purchases at cost 6,430 9,010
Disposal proceeds (2,852) (9,026)
Realised gains 860 1,127
Movement in loan stock accrued income 4 96
Unrealised gains 2,343 1,442
–––––––––––––– ––––––––––––––
Closing valuation 45,015 38,229
–––––––––––––– ––––––––––––––
Movement in loan stock accrued income
Opening accumulated movement in loan stock accrued income 261 165
Movement in loan stock accrued income 4 96
–––––––––––––– ––––––––––––––
Closing accumulated movement in loan stock accrued income 265 261
–––––––––––––– ––––––––––––––
Movement in unrealised (losses)/gains
Opening accumulated unrealised losses (2,269) (3,343)
Transfer of previously unrealised losses/(gains) to realised reserve on realisations of investments 1,054 (368)
Unrealised gains 2,343 1,442
–––––––––––––– ––––––––––––––
Closing accumulated unrealised gains/(losses) 1,128 (2,269)
–––––––––––––– ––––––––––––––
Historic cost basis
Opening book cost 40,239 38,759
Purchases at cost 6,430 9,010
Sales at cost* (3,047) (7,530)
–––––––––––––– ––––––––––––––
Closing book cost* 43,622 40,239
–––––––––––––– ––––––––––––––
*Included in the sales at cost is the cost after deducting realised losses of £506,000 for The Charnwood Pub Company Limited which are still held at the
Balance sheet date.
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 fixed asset investments are valued at fair value in accordance with the IPEVCV guidelines as follows:
31 March 2016 31 March 2015
£’000 £’000
Valuation methodology
Cost (reviewed for impairment) 6,743 7,219
Valuation supported by third party or desktop valuation 38,272 31,010
–––––––––––––– ––––––––––––––
45,015 38,229
–––––––––––––– ––––––––––––––
Full valuations are prepared by independent RICS qualified surveyors in full compliance with the RICS Red Book. Desk-top reviews are
carried out by similarly RICS qualified surveyors by updating previously prepared full valuations for current trading and market indices.
Fair value investments had the following movements between valuation methodologies between 31 March 2015 and 31 March 2016:
Value as at
31 March 2016
Change in valuation methodology (2015 to 2016) £’000 Explanatory note
Cost (reviewed for impairment) to Valuation supported 4,390 Third party valuation has recently taken place
by third party or desktop valuation
The valuation will be the most appropriate valuation methodology for an investment within its market, with regard to the financial health
of the investment and the IPEVCV Guidelines. The Directors believe that, within these parameters, there are no other possible methods
of valuation which would be reasonable as at 31 March 2016.
Albion Venture Capital Trust PLC 47
Notes to the Financial Statements (continued)
11. Fixed asset investments (continued)
FRS 102 and the SORP requires the Company to disclose the inputs to 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
Level A Quoted prices in an active market
Level B Price of a recent transaction for identical instruments
Level C (i) Inputs to valuations are from observable sources and are directly or indirectly derived from prices
Level C (ii) Inputs to valuations not based on observable market data
Unquoted equity, preference shares and loan stock are all valued according to Level C (ii) valuation methods.
Investments held at fair value through profit or loss (Level C (ii)) had the following movements in the year to 31 March 2016:
31 March 2016 31 March 2015
Unquoted Unquoted
Equity loan stock Total Equity loan stock Total
£’000 £’000 £’000 £’000 £’000 £’000
Opening balance 10,442 27,787 38,229 11,093 5,790 16,883
Re-classification to
fair value* – – – – 20,718 20,718
–––––––––––––– –––––––––––––– –––––––––––––– –––––––––––––– –––––––––––––– ––––––––––––––
Opening balance (revised) 10,442 27,787 38,229 11,093 26,508 37,601
Additions 1,684 4,746 6,430 1,340 3,107 4,447
Disposal proceeds (721) (2,131) (2,852) (4,875) (200) (5,075)
Loan stock conversion – – – – (1,210) (1,210)
Debt/equity swap – – – 590 (590) –
Accrued loan stock interest – 4 4 – 135 135
Realised gains 722 138 860 1,121 – 1,121
Unrealised gains 3,036 (693) 2,343 1,173 37 1,210
–––––––––––––– –––––––––––––– –––––––––––––– –––––––––––––– –––––––––––––– ––––––––––––––
Closing balance 15,163 29,852 45,015 10,442 27,787 38,229
–––––––––––––– –––––––––––––– –––––––––––––– –––––––––––––– –––––––––––––– ––––––––––––––
*As per FRS 102 adoption the unquoted loan stock balance for 2015 has been re-classified to include £20,718,000 of investments at fair value that were
previously held under amortised cost.
FRS 102 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 C(ii) 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.
48 Albion Venture Capital Trust PLC
Notes to the Financial Statements (continued)
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 2016 as described below:
Company
Country of
incorporation
Profit/(loss)
before tax
£’000
Net assets/
(liabilities)
£’000
% class and
share type
% total voting
rights
Kew Green VCT (Stansted) Limited
Great Britain
G&K Smart Development VCT Limited Great Britain
243
n/a*
4,502
319
The Stanwell Hotel Limited
Great Britain
(753)
(6,112)
Shinfield Lodge Care Limited
Great Britain
n/a**
n/a**
The Crown Hotel Harrogate
Limited
Active Lives Care Limited
Great Britain
(798)
(7,439)
Great Britain
n/a*
1,182
45.2% Ordinary
shares
42.9% Ordinary
shares
39.2% Ordinary
shares
33.4% Ordinary
shares
24.1% Ordinary
shares
21.1% Ordinary
shares
45.2%
42.9%
39.2%
33.4%
24.1%
21.1%
*The company files abbreviated accounts which do not disclose this information.
** The company has only filed dormant company accounts until it starts trading.
13. Current assets
31 March 2016 31 March 2015
Trade and other debtors £’000 £’000
Prospectus Top Up Offers proceeds* 1,988 –
Other debtors 112 83
UK corporation tax receivable 24 70
Prepayments and accrued income 15 13
–––––––––––––– ––––––––––––––
2,139 166
–––––––––––––– ––––––––––––––
*This relates to shares subscribed and allotted on 31 March 2016 with monies received after the year end.
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 2016 31 March 2015
£’000 £’000
Trade creditors 18 12
UK Corporation tax payable 176 170
Accruals and deferred income 335 287
–––––––––––––– ––––––––––––––
529 469
–––––––––––––– ––––––––––––––
The Directors consider that the carrying amount of creditors is not materially different to their fair value.
Albion Venture Capital Trust PLC 49
Notes to the Financial Statements (continued)
15. Called up share capital
31 March 2016 31 March 2015
£’000 £’000
Allotted, called up and fully paid
86,081,939 Ordinary shares of 1p each (2015: 71,365,088) 861 714
–––––––––––––– ––––––––––––––
Voting rights
79,127,499 Ordinary shares of 1p each (net of treasury shares) (2015: 65,523,648)
The Company purchased 1,113,000 Ordinary shares (2015: 1,146,000) to be held in treasury at a nominal value of £11,000 and a cost
of £733,000 (2015: £760,000) representing 1.3 per cent. of its issued share capital as at 31 March 2016. The shares purchased for
treasury were funded from other distributable reserve.
The Company holds a total of 6,954,440 shares (2015: 5,841,440) in treasury at a nominal value of £69,500, representing 8.1 per cent.
of the issued Ordinary share capital as at 31 March 2016.
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 2015 302,983 3 206 69.12 66.5
31 December 2015 305,966 3 213 70.15 66.5
–––––––––––––– –––––––––––––– ––––––––––––––
608,949 6 419
–––––––––––––– –––––––––––––– ––––––––––––––
During the year the following Ordinary shares were allotted under the Albion VCTs Prospectus Top Up Offers 2014/2015 and the Albion
VCTs Prospectus Top Up Offers 2015/2016:
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)
2 April 2015 5,158,657 52 3,568 71.3 65.5
30 June 2015 57,128 1 41 73.1 65.5
30 June 2015 11,337 – 8 73.5 65.5
30 June 2015 805,008 8 577 73.9 65.5
30 September 2015 115,352 1 81 72.0 66.0
29 January 2016 3,531,675 35 2,478 71.6 66.5
29 January 2016 1,614,056 16 1,133 72.0 66.5
31 March 2016 2,814,689 28 1,988 72.8 66.5
–––––––––––––– –––––––––––––– ––––––––––––––
14,107,902 141 9,874
–––––––––––––– –––––––––––––– ––––––––––––––
16. Basic and diluted net asset value per share
31 March 2016 31 March 2015
Basic and diluted net asset value per share (pence) 72.0 71.6
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 79,127,499 Ordinary shares (2015: 65,523,648).
There are no convertible instruments, derivatives or contingent share agreements in issue.
17. First time adoption of FRS 102
In the prior year Financial Statements unquoted loan stock (excluding convertible bonds and debt issued at a discount) were classified
as loans and receivables as permitted by FRS 26 and measured at amortised cost using the Effective Interest Rate method less
impairment. This is the first year of application of FRS 102, if FRS 102 had been applied in the prior year and unquoted loan stock had
been valued at “fair value” this would have seen an increase in value of loan stock by £108,000 which would have been a 0.39%
difference as a percentage of total loan stock valuation. The first time adoption of FRS 102 had no material impact, therefore no
restatement of comparatives is necessary.
50 Albion Venture Capital Trust PLC
Notes to the Financial Statements (continued)
18. 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 7 of the Chairman’s statement.
The Company’s financial instruments comprise equity and loan stock investments in unquoted companies, 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.
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.
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern, so that it
can continue to provide returns for shareholders and to provide an adequate return to shareholders by allocating its capital to assets
commensurate with the level of risk.
By its nature, the Company has an amount of capital, at least 70 per cent. (as measured under the tax legislation) of which is and must
be, and remain, invested in the relatively high risk asset class of small UK companies within three years of that capital being subscribed.
The Company accordingly has limited scope to manage its capital structure in the light of changes in economic conditions and the risk
characteristics of the underlying assets. Subject to this overall constraint upon changing the capital structure, the group may adjust the
amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets if so required to maintain a
level of liquidity to remain a going concern.
Although, as the Investment Policy implies, the Board would consider levels of gearing, there are no current plans to do so. It regards
the net assets of the Company as the Company’s capital, as the levels of liabilities are small and the management of them is not directly
related to managing the return to shareholders. There has been no change in this approach from the previous year.
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 17. Investment risk is the exposure of the Company to the revaluation and devaluation
of investments. The main driver of investment risk is the operational and financial performance of the portfolio company and the
dynamics of market quoted comparators. The Manager receives management accounts from portfolio companies, and members of
the investment management team often sit on the boards of 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 £45,015,000 (2015:
£38,229,000). Fixed asset investments form 79 per cent. of the net asset value as at 31 March 2016 (2015: 81 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 17
and in the Strategic report.
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.
Albion Venture Capital Trust PLC 51
Notes to the Financial Statements (continued)
18. Capital and financial instruments risk management (continued)
As required under FRS 102 section 34.29, 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 £4,502,000 (2015: £3,830,000).
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 £122,000 (2015: £62,000). 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 6.70 per
cent. (2015: 6.30 per cent.). The weighted average period to maturity for the fixed rate assets is approximately 4.7 years (2015: 4.8
years).
The Company’s financial assets and liabilities, all denominated in pounds sterling, consist of the following:
31 March 2016 31 March 2015
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 – – 15,163 15,163 – – 10,442 10,442
Unquoted loan stock* 29,116 279 457 29,852 27,201 279 307 27,787
Debtors ** – – 2,110 2,110 – – 91 91
Current liabilities** – – (353) (353) – – (299) (299)
Cash – 10,330 – 10,330 – 9,002 – 9,002
––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––
29,116 10,609 17,377 57,102 27,201 9,281 10,541 47,023
––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––
*Including convertible loan stock and debt issued at a discount
** 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 2016 was limited to £29,852,000 (2015: £27,787,000) of unquoted loan stock
instruments (all of which is secured on the assets of the portfolio company), £10,330,000 cash deposits with banks (2015: £9,002,000)
and £2,100,000 of other debtors (2015: £83,000).
The credit profile of the unquoted loan stock is described under liquidity risk below.
52 Albion Venture Capital Trust PLC
Notes to the Financial Statements (continued)
18. Capital and financial instruments risk management (continued)
The cost, impairment and carrying value of impaired loan stocks held at fair value at 31 March 2016 and 31 March 2015 are as follows:
31 March 2016 31 March 2015
Cost Impairment Carrying value Cost Impairment Carrying value
£’000 £’000 £’000 £’000 £’000 £’000
Impaired loan stock 11,065 (3,041) 8,024 13,603 (3,494) 10,109
––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––
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 or deposit 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 £5,497,000 as
at 31 March 2016 (2015: £4,516,000).
The Company has no committed borrowing facilities as at 31 March 2016 (2015: £nil) and had cash balances of £10,330,000 (2015:
£9,002,000). 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 £529,000 for the year to 31 March 2016 (2015: £469,000).
The carrying value of loan stock investments at 31 March 2016 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 4,875 7,732 383 12,990
1-2 years 101 – – 101
2-3 years 407 – – 407
3-5 years 7,693 292 105 8,090
Greater than 5 years 5,437 – 2,827 8,264
–––––––––––––– –––––––––––––– –––––––––––––– ––––––––––––––
Total 18,513 8,024 3,315 29,852
–––––––––––––– –––––––––––––– –––––––––––––– ––––––––––––––
Loan stock categorised as past due includes:
● Loan stock with a carrying value of £2,730,000 yielding an average of 12.5 per cent. which has loan stock interest past due less
than 12 months.
● Loan stock with a carrying value of £585,000 yielding an average of 10 per cent. which has loan stock interest past due between
1 and 2 years.
Albion Venture Capital Trust PLC 53
Notes to the Financial Statements (continued)
18. Capital and financial instruments risk management (continued)
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
–––––––––––––– –––––––––––––– –––––––––––––– ––––––––––––––
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 2016 are stated at fair value as determined by the Directors, with the
exception of debtors and creditors and cash which are carried at amortised cost, in accordance with FRS 102. 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.
19. Commitments and contingencies
The company had the following financial commitment in respect of the following investments:
● Ryefield Court Care Limited, £1,063,000
● Active Lives Care Limited, £680,000
● Shinfield Lodge Care Limited, £600,000
There are no contingent liabilities or guarantees given by the Company as at 31 March 2016 (31 March 2015: nil).
20. Post balance sheet events
Since 31 March 2016 the Company has had the following post balance sheet events:
Investments in the following companies:
● Earnside Energy Limited, £1,022,000
● Shinfield Lodge Care Limited, £885,000
● Active Lives Care Limited, £680,000
● Ryefield Court Care Limited, £635,000
● The Weybridge Club Limited, £3,000
Shares issued under the Albion VCTs Prospectus Top Up Offers 2015/2016:
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)
6 April 2016 245,265 2 173 72.0
6 April 2016 9,897 – 7 72.4
6 April 2016 107,001 1 76 72.8
–––––––––––––– ––––––––––––––
362,163 256
–––––––––––––– ––––––––––––––
21. Related party transactions
66.5
66.5
66.5
Other than transactions with the Manager as disclosed in note 5, there are no related party transactions or balances requiring
disclosure.
54 Albion Venture Capital Trust PLC
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 8 August 2016 at 11:00 am for the following
purpose:
To consider and, if thought fit, to pass the following resolutions, of which numbers 1 to 8 will be proposed as ordinary
resolutions and numbers 9 to 11 as special resolutions.
Ordinary Business
1. To receive and adopt the Company’s accounts for the year ended 31 March 2016 together with the report of the
Directors and Auditor.
2. To approve the Directors’ remuneration report for the year ended 31 March 2016.
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-elect Ebbe Dinesen as a Director of the Company.
6. 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.
7. To authorise the Directors to agree the Auditor’s remuneration.
Special Business
8. 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
£172,888 representing approximately 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.
9. Authority for the disapplication of pre-emption rights
That, subject to and conditional on the passing of resolution number 8, 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 8 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 £172,888 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 8” were omitted in relation to such a sale.
Albion Venture Capital Trust PLC 55
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.
10. 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) 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
(d) 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 the Companies (Acquisition of Own Shares) (Treasury Shares) Regulations 2003 (the “Regulations”), Ordinary
shares purchased by the Company out of distributable profits can be held as treasury shares, which may then be
cancelled or sold for cash. The authority sought by this special resolution is intended to apply equally to shares to be
held by the Company as treasury shares in accordance with the Regulations.
11. 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
27 June 2016
Albion Venture Capital Trust PLC is registered in England and Wales with number 03142609
56 Albion Venture Capital Trust PLC
Notice of Annual General Meeting (continued)
Notes
1. Members entitled to attend, speak and vote at the Annual General Meeting (“AGM”) may appoint a proxy or proxies (who need
not be a member of the Company) to exercise these rights in their place at the meeting. A member may appoint more than
one proxy, provided that each proxy is appointed to exercise the rights attached to different shares. Proxies may only be
appointed by:
● completing and returning the Form of Proxy enclosed with this Notice to Computershare Investor Services PLC,
The Pavilion, Bridgwater Road, Bristol, BS99 6ZZ;
● going to www.investorcentre.co.uk and following the instructions provided there; or
● by having an appropriate CREST message transmitted, if you are a user of the CREST system (including CREST personal
members).
Return of the Form of Proxy will not preclude a member from attending the meeting and voting in person. A member may not
use any electronic address provided in the Notice of this meeting to communicate with the Company for any purposes other
than those expressly stated.
To be effective the Form of Proxy must be completed in accordance with the instructions and received by the Registrars of the
Company by 11.00 am on 4 August 2016.
2. Any person to whom this Notice is sent who is a person nominated under section 146 of the Companies Act 2006 (‘the Act’)
to enjoy information rights (a “Nominated Person”) may, under an agreement between him or her and the member by whom
he or she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the AGM. If a
Nominated Person has no such proxy appointment right or does not wish to exercise it, he or she may, under any such
agreement, have a right to give instructions to the member as to the exercise of voting rights.
The statement of rights of members in relation to the appointment of proxies in note 1 above does not apply to Nominated
Persons. The rights described in that note can only be exercised by members of the Company.
3. To be entitled to attend and vote at the AGM (and for the purpose of the determination by the Company of the votes they may
cast), members must be registered in the register of members of the Company at 11.00 am on 4 August 2016 (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 11.00am on 4 August 2016. 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 “Investor Centre” 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.
Albion Venture Capital Trust PLC 57
Notice of Annual General Meeting (continued)
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.
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 24 June 2016 being the latest practicable date prior to the publication of this Notice, the Company’s issued share capital
consists of 86,444,102 Ordinary shares with a nominal value of 1 penny each. The Company also holds 6,954,440 Ordinary
shares in treasury. Therefore, the total voting rights in the Company as at 24 June 2016 are 79,489,662.
58 Albion Venture Capital Trust PLC
Dividend history for Albion Venture Capital
Trust PLC ‘C Shares’ (unaudited)
Total shareholder return to 31 March 2016 C shares
(pence per share)
Total dividends paid during the year ended: 31 March 1998 2.00
31 March 1999 8.75
31 March 2000 2.70
31 March 2001 4.80
31 March 2002 7.60
31 March 2003 7.70
31 March 2004 8.20
31 March 2005 9.75
31 March 2006 11.75
31 March 2007 10.00
31 March 2008 10.00
31 March 2009 10.00
31 March 2010 5.00
31 March 2011 5.00
31 March 2012 5.00
31 March 2013 5.00
31 March 2014 5.00
31 March 2015 5.00
31 March 2016 5.00
––––––––––––
Total dividends paid to 31 March 2016 128.25
Net asset value as at 31 March 2016 72.00
––––––––––––
Total shareholder return to 31 March 2016 200.25
––––––––––––
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 free of income tax. It is an H.M. Revenue & Customs requirement that dividend vouchers indicate
the tax element should dividends have been subject to income tax. Investors should ignore this figure on their dividend voucher and
need not disclose any income they receive from a VCT on their tax return.
● The Ordinary Shares and the C Shares merged on an equal basis.
Albion Venture Capital Trust PLC 59
Dividend history for Albion Prime VCT PLC now merged
with Albion Venture Capital Trust PLC (unaudited)
Proforma
Albion Prime VCT PLC
Total proforma shareholder return to 31 March 2016 (pence per share)
Total dividends paid during the year ended: 31 March 1998 1.10
31 March 1999 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
31 March 2016 4.40
––––––––––––
Total dividends paid to 31 March 2016 64.35
Proforma net asset value as at 31 March 2016 63.37
––––––––––––
Total proforma shareholder return to 31 March 2016 127.72
––––––––––––
Notes
● The pro-forma 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 2016. 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.
● 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.
60 Albion Venture Capital Trust PLC
Perivan Financial Print 241176
Albion Venture Capital Trust PLC
Albion Venture Capital Trust PLC
Annual Report and Financial
Statements for the year
ended 31 March 2016
Albion Venture Capital Trust PLC
A member of the Association of Investment Companies
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