Albion Venture Capital Trust PLC
Annual Report and Financial
Statements for the year
ended 31 March 2018
A
l
b
i
o
n
V
e
n
t
u
r
e
C
a
p
i
t
a
l
T
r
u
s
t
P
L
C
2
0
1
8
250317 Albion Capital pp01-pp09.qxp 02/07/2018 20:56 Page 1
Contents
Page
2 Company information
3 Investment objective and policy
4 Background to the Company
4 Financial calendar
5 Financial highlights
7 Chairman’s statement
10 Strategic report
18 The Board of Directors
19 The Manager
21 Portfolio of investments
23 Portfolio companies
28 Directors’ report
32 Statement of Directors’ responsibilities
33 Statement of corporate governance
38 Directors’ remuneration report
41 Independent Auditor’s report
47 Income statement
48 Balance sheet
49 Statement of changes in equity
50 Statement of cash flows
51 Notes to the Financial Statements
64 Notice of Annual General Meeting
68 Dividend history for C shares and Albion Prime
VCT PLC
Albion Venture Capital Trust PLC
1
1
250317 Albion Capital pp01-pp09.qxp 02/07/2018 20:56 Page 2
Company information
Company number 03142609
Directors David Watkins MBA (Harvard), Chairman (US citizen)
John Kerr ACMA
Ann Berresford ACA
Ebbe Dinesen R (Danish) FSR
Richard Glover
Jeff Warren ACCA
Country of incorporation United Kingdom
Legal form Public Limited Company
Manager, company secretary, Albion Capital Group 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 LLP
1st Floor
4 Staple Inn
London, WC1V 7QH
Legal adviser Bird & Bird LLP
12 New 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
Tel: 0370 873 5849 (UK National Rate call, lines are open 8.30am – 5.30pm; Mon – Fri,
contact Computershare Investor Services PLC:
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.
calls may be recorded)
Financial adviser information For enquiries relating to the performance of the Company, and information for
financial advisers, please contact Albion Capital Group LLP:
Email: info@albion.capital
Tel: 020 7601 1850 (lines are open 9.00am – 5.30pm; Mon – Fri; calls may be recorded)
Website: www.albion.capital
Please note that these contacts are unable to provide financial or taxation
advice.
2
Albion Venture Capital Trust PLC
250317 Albion Capital pp01-pp09.qxp 02/07/2018 20:56 Page 3
Investment objective and policy
Albion Venture Capital Trust PLC (the “Company”) is a venture capital trust and its current general investment policy is as follows:
Investment policy
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-based businesses. The Company’s
investment portfolio will thus be structured with the objective of providing a balance between income and capital growth for the
longer term. This is achieved as follows:
• Qualifying unquoted investments are predominantly in companies which are asset-based;
• 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 Capital Group
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 Capital Group LLP, the Company’s policy remains that
its portfolio companies should not normally have external borrowings, and for the Company to have first charge over portfolio
companies’ assets.
In the November 2017 Autumn Budget, a number of changes to the legislation governing venture capital trusts were announced.
Those changes have now been enacted in the Finance Act 2017-19 and further information has been provided in Guidance Notes
issued by HM Revenue & Customs. Some of these changes took effect from the date upon which the Finance Act received Royal Assent
and others came into force on 6 April 2018. In future, VCTs may no longer offer secured loans to portfolio companies and to qualify
for VCT tax reliefs, portfolio companies must satisfy a "risk to capital condition”. This means that the portfolio company must have an
objective to grow and develop over the long term and there must be a significant risk that there could be a loss of capital to the VCT
of an amount exceeding the net return. The overall aim of HM Treasury is to encourage more high growth investment through VCTs
rather than low risk, heavily asset backed investments.
As a result of these changes, and subject to shareholder approval, the Board is now recommending a change to the
Company’s general investment policy, as set out below. The updated policy removes references to asset-based companies in
which funds managed or advised by Albion Capital Group LLP typically own 50 per cent. of the equity, to loan stock being secured by
first charges and to the Company’s policy that portfolio companies should not normally have external borrowings, and so will enable
the Company to invest in a broad range of businesses. In the future, the Company will be permitted to provide unsecured loans but
on a portfolio basis these may not represent more than 30 per cent. of investments after 5 April 2018, and the interest rate may not
exceed a normal commercial rate of return. The proposed new investment policy is as follows:
Proposed new investment policy
The Company will invest in a broad portfolio of smaller, unquoted growth businesses across a variety of sectors including
higher risk technology companies. Investments may take the form of equity or a mixture of equity and loans.
Allocation of funds will be determined by the investment opportunities which become available but efforts will be made to
ensure that the portfolio is diversified both in terms of sector and stage of maturity of company. Funds held pending
investment or for liquidity purposes will be held as cash on deposit.
Risk diversification and maximum exposures
Risk is spread by investing in a number of different businesses within venture capital trust qualifying industry sectors. The maximum amount
which the Company will invest in a single portfolio company is 15 per cent. of the Company’s assets at cost, thus ensuring a spread of
investment risk. The value of an individual investment may increase over time as a result of trading progress and it is possible that it may
grow in value to a point where it represents a significantly higher proportion of total assets prior to a realisation opportunity being available.
Gearing
The Company’s maximum exposure in relation to gearing is restricted to 10 per cent. of the adjusted share capital and reserves.
Albion Venture Capital Trust PLC
3
250317 Albion Capital pp01-pp09.qxp 02/07/2018 20:56 Page 4
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 £26.9 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, resulting in a further £14.3 million of net assets.
Financial calendar
Record date for first dividend 13 July 2018
Payment of first dividend 31 July 2018
Annual General Meeting 11:00am on 13 August 2018
Announcement of half-yearly results for the six months ending 30 September 2018 December 2018
Payment of second dividend (subject to Board approval) 31 January 2019
4
Albion Venture Capital Trust PLC
250317 Albion Capital pp01-pp09.qxp 02/07/2018 20:56 Page 5
Financial highlights
5.5p
5.0p
76.0p
Basic and diluted total return per share for
the year ended 31 March 2018
Total tax-free dividend per share paid during
the year ended 31 March 2018
Net asset value per share as at
31 March 2018
225.8p
Total shareholder return since launch to
31 March 2018
6.4%
Annualised return since launch (without tax
relief)
Total shareholder return relative to the
FTSE All-Share Index total return
(in both cases with dividends reinvested)
)
e
r
a
h
s
r
e
p
e
c
n
e
p
(
n
r
u
t
e
R
500
450
400
350
300
250
200
150
100
M
a
r
-
9
6
M
a
r
-
9
7
M
a
r
-
9
8
M
a
r
-
9
9
M
a
r
-
0
0
M
a
r
-
0
1
M
a
r
-
0
2
M
a
r
-
0
3
M
a
r
-
0
4
M
a
r
-
0
5
M
a
r
-
0
6
M
a
r
-
0
7
M
a
r
-
0
8
M
a
r
-
0
9
M
a
r
-
1
0
M
a
r
-
1
1
M
a
r
-
1
2
M
a
r
-
1
3
M
a
r
-
1
4
M
a
r
-
1
5
M
a
r
-
1
6
M
a
r
-
1
7
M
a
r
-
1
8
Total shareholder return
FTSE All-Share Index total return
Source: Albion Capital Group LLP
Methodology: Total shareholder return, including original amount invested (rebased to 100) from launch, assuming that dividends were reinvested at net asset value
of the Company at the time the shares were quoted ex-dividend. Transaction costs are not taken into account.
Albion Venture Capital Trust PLC
5
250317 Albion Capital pp01-pp09.qxp 02/07/2018 20:56 Page 6
Financial highlights continued
31 March 2018 31 March 2017
(pence per share) (pence per share)
Dividends paid 5.0 5.0
Revenue return 1.8 1.9
Capital return 3.7 6.8
Net asset value 76.0 75.4
Ordinary shares
Total shareholder return to 31 March 2018: (pence per share)
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
31 March 2017 5.00
31 March 2018 5.00
Total dividends paid to 31 March 2018 149.80
Net asset value as at 31 March 2018 76.00
Total shareholder return to 31 March 2018 225.80
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 page 68.
In addition to the dividends summarised above, the Board has declared a first dividend for the year ending 31 March 2019 of
2.5 pence per share to be paid on 31 July 2018 to shareholders on the register on 13 July 2018.
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.
• 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 accessed
via a link on the Company’s webpage at www.albion.capital/funds/AAVC under ‘Trust Information’.
• Investors are reminded that it is common for shares in VCTs to trade at a discount to their net asset value as tax reliefs are only obtainable on new subscription.
6
Albion Venture Capital Trust PLC
250317 Albion Capital pp01-pp09.qxp 02/07/2018 20:56 Page 7
Chairman’s statement
Introduction
This is my last Chairman’s statement before my
retirement and I would like to start by taking the
opportunity to thank my fellow Directors, the Manager
and our shareholders for all their support over the last
22 years. It has certainly been an enjoyable time
for me.
I am pleased to report that the results for
the year to 31 March 2018 show a total
return of 5.5 pence per share (2017: 8.7
pence per share) and net assets of 76.0
pence per share, compared to 75.4 pence
per share at 31 March 2017, after the
payment of total tax-free dividends of
5 pence per share for the year.
It is encouraging that the Company’s
total return continues for the fourth year
running to cover the dividend of 5 pence
per share. This has been partly through an
increase in the income generated by the
investment portfolio, which has risen 8.9
per cent. from the previous year. The
principal element, however, has come
from capital uplifts: in particular the uplift
in the third party valuations of our care
homes, hydro projects and schools,
together with a pleasing uplift in the
valuation of our new
fibre optic
broadband provider.
Investment performance and progress
During the year we made investments in a
start up wedding venue business, a new
business setting up a women’s health
centre on Harley Street and a company
providing fibre optic broadband to
businesses in Central London, while selling
the Crown Hotel in Harrogate and the
Weybridge health and fitness club.
Healthcare now accounts for 40 per cent.
of the portfolio, while renewable energy
accounts for 19 per cent., hotels have
reduced to 13 per cent. and education
accounts for 9 per cent..
Taking these sectors in turn, our three care
homes, Shinfield View, near Reading,
Cumnor Hill House on the outskirts of
Oxford (owned by Active Lives Care), and
Ryefield Court in Hillingdon, West London,
have been continuing to build occupancy,
further uplifts
leading
the
to
independent
third party valuations.
Meanwhile our new investment, Women’s
Health (London West One), is scheduled to
open The Evewell clinic in October 2018.
in
Our renewable energy investments are
now relatively mature, but we completed
a significant expansion of our biogas
plant, Earnside Energy. Meanwhile the
valuations of our Scottish hydro projects
have benefited from better than feared
outcomes of the business rates review.
As already mentioned, the Crown Hotel in
Harrogate was sold during the period, at a
small premium to our holding value,
realising proceeds for the Company of
approximately £3.3 million. Trading at the
Holiday Inn Express at Stansted Airport
(Kew Green) was strong for the first half of
the year, but latterly we have seen some
impact from the opening of a competitor
hotel in July. Since the year end the
business has been refinanced with £6
million bank debt, enabling £2.3 million
share premium paid by the Company and
other investors to be repaid and £3.4
million loan stock held by the Company
and other investors to be redeemed,
reducing your Company’s longstanding
investment by approximately £4.7 million.
The boutique Stanwell Heathrow Hotel has
faced increased competition in its market.
Albion Venture Capital Trust PLC
7
David Watkins
Chairman
‘
The Company’s
total return
continues for the
fourth year
running to cover
the dividend of
5 pence per
share
’
250317 Albion Capital pp01-pp09.qxp 02/07/2018 20:56 Page 8
Chairman’s statement continued
In education, Radnor House Twickenham
is close to maturity with over 400 pupils
while pupil numbers at Radnor House
Sevenoaks have been continuing to grow
and are now over 400. In addition,
MHS 1’s investment in Mount House
School, an independent secondary day
school in Barnet, North London, currently
has 160 pupils.
made
As regards other sectors, new investments
in
were
G.Network
Communications, a
rapidly growing
provider of fibre optic broadband to
businesses in Central London, and in
Beddlestead, a start up wedding venue
business which is developing its first
location in Wiltshire, expected to open in
2019.
Meanwhile our portfolio of pubs in the
North West, within Bravo Inns and Bravo
Inns II, continues to expand.
Change of investment policy
In the November 2017 Autumn Budget, a
number of changes to the legislation
governing venture capital trusts were
announced. As explained more fully in the
Strategic report, VCTs may no longer offer
secured loans and portfolio companies
must satisfy a "risk to capital condition”.
The overall aim of HM Treasury is to
encourage more high growth investment
through VCTs rather than heavily asset
backed investments. As a result of these
changes,
the Board has carefully
considered the strategic options open to
the Company and is now recommending
a change to our investment policy, which
will enable the Company to invest in a
range of businesses going
broader
forward, including in the higher risk
technology sector, and accordingly a
resolution to effect the change will be
proposed at the forthcoming Annual
General Meeting. Albion, in its other VCTs,
has had many years of experience
investing in early stage high growth
businesses. The proposed new investment
policy can be found on page 4.
8
Albion Venture Capital Trust PLC
Board composition
As you may know, I have been Chairman
of your Company since its launch in 1996
and I will be stepping down on 1 August
2018. Ebbe Dinesen intends to retire at
the Annual General Meeting in 2019. I
was very pleased to welcome Richard
Glover and Ann Berresford to the Board in
November and am happy to announce
that Richard has agreed to take over from
me as Chairman.
As stated in the interim report, Richard
has been involved with a number of
private equity backed companies over the
years, including chief executive roles at
BSM Group through its development from
a family company to a flotation on the
London Stock Exchange and subsequent
sale to the RAC, and of a professional
educational
services business, and
chairman roles at a property services
business and a retail services group.
Ann qualified as a chartered accountant
in financial
and has a background
management at Clyde Petroleum and
Bank of Ireland. She has been a non-
executive director at the Bath Building
Society and is a non-executive director at
Secure Trust Bank.
Reflections
I will be stepping down from my
Chairman role after 22 years, and it is
perhaps natural that I have a few
reflections I would like to share with the
Company’s shareholders, many of whom
have supported the Company and me for
a large part of my tenure.
small
I became Chairman of what was then
called Close Brothers Venture Capital
Trust at its initial launch in February 1996.
VCTs were an imaginative innovation to
and
encourage
entrepreneurial
through
innovative tax strategies. The total
capitalisation of all VCTs
is now
approximately £4.3 billion, so our
activities and our performance have in
the
some measure contributed
company
activities
to
‘
Our 22 year IRR
(ignoring tax
breaks) is 6.4%
per annum,
which puts us
first equal in our
“vintage” and
among the best
of all VCTs
’
250317 Albion Capital pp01-pp09.qxp 02/07/2018 20:56 Page 9
Chairman’s statement continued
establishment of the VCT as an accepted and attractive
investment class.
And the investment experience has been good. Our 22 year IRR
(ignoring tax breaks) is 6.4% per annum, which puts us first equal
in our “vintage” and among the best of all VCTs. I am proud of
our Manager and my Board for overseeing such a long term and
attractive investment performance.
Our investment management team have been successful
investors and early adopters in a number of attractive investment
themes. Over the years we have had very attractive investment
returns from hotels, nursing homes, residential property
development, movie theatres and pubs. More recently,
renewable energy and secondary schools have proven to be very
successful investment opportunities.
Which is not to say that we have not stumbled along the way, but
then you expect that in a portfolio and there are always lessons
to be learnt. We did foresee some of the economic stress in 2008
and were in the process of selling some of our hotel assets but
those sales were overtaken by the economic crisis before we
could conclude them. As always, we might have done better, but
I am proud of what we did accomplish and I am highly confident
that Richard Glover and your Board will do even better in the
coming years.
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 year
ended 31 March 2018 was £1,019,000. 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 2018, the net asset value was £65.8 million or
76.0 pence per share, compared to £65.5 million or 75.4 pence
per share as at 31 March 2017, after the payment of total tax-
free dividends of 5 pence per share. The results comprised a total
return of 5.5 pence per share for the year (2017: 8.7 pence per
share), which is made up of a 1.8 pence per share revenue return
(2017: 1.9 pence per share) and a 3.7 pence per share capital
return (2017: 6.8 pence per share). The revenue return before
taxation was £1.9 million compared to £1.8 million for the year
to 31 March 2017. The Company will pay a first dividend of 2.5
pence per share for the year ending 31 March 2019 on 31 July
2018 to shareholders on the register on 13 July 2018, which is in
line with the Company’s current objective of paying a dividend of
5 pence per share annually. Thereafter, it is intended that
payment of the next dividend will be made at the end of January
2019.
Risks and uncertainties
The outlook for the UK economy continues to be the key risk
affecting your Company. The forthcoming withdrawal from the
European Union may have an effect on the Company and its
investments, although the extent of the effect is not quantifiable
at this time.
A detailed analysis of the other risks and uncertainties facing the
business is set out on pages 15 and 16 of the Strategic report.
Outlook and prospects
Given the changes in VCT legislation, and subject to approval of
the requisite resolution at the Annual General Meeting, the
Company’s investment policy will change in a material way, so it
seems fitting that we should have a new chairman to oversee this
important new stage in the Company’s life. The Company’s
investment portfolio will transition over time from an asset-based
one to a portfolio with a much greater focus on young growth
companies. I believe that the Manager has the expertise to effect
the transition, given its record in other VCTs it manages, and I
wish the Company a very successful future. The last 22 years
have seen good returns for shareholders and I have every
confidence that the next 22 can be at least as good. Let me finish
by just saying “thank you for your support”.
David Watkins
Chairman
29 June 2018
Albion Venture Capital Trust PLC
9
250317 Albion Capital pp10-pp20.qxp 02/07/2018 21:00 Page 10
Strategic report
Albion Venture Capital Trust PLC is a venture capital trust and its
current general investment objective and policy can be found on
page 4.
As a result of changes in The Finance Act 2018, and subject to
shareholder approval, the Board is now recommending a change
to the Company’s general investment policy. The proposed new
investment policy is as follows:
Current portfolio sector allocation
The following pie chart shows the split of the portfolio valuation
by sector as at 31 March 2018. Details of the principal
investments made by the Company are shown in the Portfolio of
investments on pages 21 and 22.
Education
9% (7%)
Cash and cash
equivalents
10% (15%)
Proposed new investment policy
The Company will invest in a broad portfolio of smaller,
unquoted growth businesses across a variety of sectors
including higher risk technology companies. Investments
may take the form of equity or a mixture of equity and
loans.
Allocation of funds will be determined by the investment
opportunities which become available but efforts will be
made to ensure that the portfolio is diversified both in
terms of sector and stage of maturity of company. Funds
held pending investment or for liquidity purposes will be
held as cash on deposit.
Risk diversification and maximum exposures
Risk is spread by investing in a number of different businesses
within venture capital trust qualifying industry sectors. The
maximum amount which the Company will invest in a single
portfolio company is 15 per cent. of the Company’s assets at
cost, thus ensuring a spread of investment risk. The value of an
individual investment may increase over time as a result of
trading progress and it is possible that it may grow in value to a
point where it represents a significantly higher proportion of total
assets prior to a realisation opportunity being available.
Gearing
The Company’s maximum exposure in relation to gearing is
restricted to 10 per cent. of the Company’s adjusted share
capital and reserves.
Renewable
energy
19% (17%)
Business
services
and other
6% (5%)
Hotels
13% (18%)
Pubs
3% (3%)
Healthcare
40% (35%)
Comparatives for 31 March 2017 are shown in brackets
Source: Albion Capital Group LLP
Direction of portfolio
The sector analysis of the Company’s investment portfolio shows
that healthcare now accounts for 40 per cent. of the portfolio,
compared to 35 per cent. at the end of the previous financial
year, mainly as a result of an uplift in valuations of £1.9 million.
Renewable energy accounts for 19 per cent. of the portfolio,
increasing from 17 per cent. as a result of uplifts in our hydro
schemes. Hotels accounted for 13 per cent. compared to 18 per
cent. at the previous year end after the sale of The Crown Hotel
in Harrogate and this has been reduced further following the year
end as a result of the refinancing of Kew Green VCT (Stansted).
Subject to shareholder approval, the change to the investment
policy will result in asset-based investments decreasing as a
proportion of the portfolio, and a greater emphasis given to
growth and technology investments. Further details on the
change in investment policy can be found in the Chairman’s
statement on page 8.
10
Albion Venture Capital Trust PLC
250317 Albion Capital pp10-pp20.qxp 02/07/2018 21:00 Page 11
Strategic report continued
Results and dividends
Ordinary shares
£’000
Net revenue return for the year
ended 31 March 2018
Net capital gain for the year
ended 31 March 2018
Total return for the year
ended 31 March 2018
Dividend of 2.5 pence
per share paid on 31 July 2017
Dividend of 2.5 pence per
share paid on 31 January 2018
Unclaimed dividends returned to the Company
Transferred to reserves
Net assets as at 31 March 2018
Net asset value as at 31 March 2018
(pence per share)
1,605
3,178
4,783
(2,179)
(2,178)
40
466
65,779
76.0
The Company paid dividends totalling 5.0 pence per share during
the year ended 31 March 2018 (2017: 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 annum.
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
2019. This dividend will be paid on 31 July 2018 to shareholders
on the register on 13 July 2018.
income has
As shown in the Income statement on page 47, the Company’s
investment
increased to £2,520,000 (2017:
£2,381,000) and the total revenue return to equity holders also
increased to £1,605,000 (2017: £1,510,000). Income continues
to more than cover on-going expenses. Although total income
has increased, revenue return per share has decreased slightly, to
1.8 pence per share (2017: 1.9 pence per share). The capital gain
on investments for the year was £3,930,000 (2017: £6,179,000),
offset by management fees charged to capital and the related
taxation impact, resulting in a capital return of 3.7 pence per
share (2017: 6.8 pence per share). The total return was 5.5 pence
per share (2017: 8.7 pence per share).
The Balance sheet on page 48 shows that the net asset value has
increased over the last year to 76.0 pence per share (2017: 75.4
pence per share), reflecting the total return exceeding the level of
dividends paid during the year.
The cash flow for the Company has been a net outflow of
£3,734,000 for the year (2017: inflow £166,000), reflecting
dividends paid, new investments in the year and the buy-back of
shares, offset by cash inflows from operations and disposal proceeds.
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 7. The healthcare sector
performed particularly well again this year with an increase in
valuations of £1.9 million. After strong increases in previous
years, the renewable energy sector saw further increases of
£1.1 million. The education sector saw an increase in valuation of
£0.5 million as Radnor House Sevenoaks boosted pupil numbers.
As reported in the Half-yearly Financial Report, recent VCT
legislation has led your Board and the Manager to conclude that
a purely asset-based investment policy will not be practicable for
the longer term. As detailed in the Chairman’s statement on
page 8, the Board is proposing a change to the investment policy
which will result in asset-based investments decreasing as a
proportion of the portfolio, and a greater emphasis given to
growth and technology investments.
Details of significant events which have occurred since the end of
the financial year are listed in note 19. 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 29.
The relevant tests to measure compliance have been carried out
and independently reviewed for the year ended 31 March 2018.
These showed that the Company has complied with all tests and
continues to do so.
The Finance Act 2018 contained a number of measures that
affects all VCTs. These include:
• a principles-based test for qualifying companies to ensure
that investment activities focuses on higher risk opportunities;
• an increase in the proportion of the portfolio invested in
qualifying unquoted companies from 70 per cent. to 80 per
cent. in respect of accounting periods starting on or after
6 April 2019 (so from 1 April 2020 for this Company); and
• VCT loan investments to be unsecured and represent no more
than normal commercial terms.
Albion Venture Capital Trust PLC
11
250317 Albion Capital pp10-pp20.qxp 02/07/2018 21:00 Page 12
Strategic report continued
Future prospects
As detailed in the Chairman’s statement on page 8, the Board is
proposing a change to the investment policy which will result in
asset-based investments decreasing as a proportion of the
portfolio, and a greater emphasis given to growth and
technology investments. This in turn is likely to result in a decline
in investment income, and thus the Company’s returns are likely
to be more geared to capital rather than revenue.
The Board believes that this model will meet the investment
objective and has the potential to deliver attractive returns to
shareholders in the future. The Manager has a strong pipeline of
investment opportunities in which the Company’s cash can be
deployed.
Key performance indicators
The Directors believe that the following key performance
indicators, which are typical for venture capital trusts and used by
2. Net asset value per share and total shareholder return
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. Total shareholder return relative to FTSE All Share Index
total return
The graph on page 5 shows the Company’s total shareholder
return against the FTSE All-Share Index total return, in both
instances with dividends reinvested.
Net asset value per share and total shareholder return*
250
205.0 204.7
190.1
191.4
195.3
197.9
199.0 201.1
220.2
225.8
211.8
206.4
191.3
183.7
171.9
159.2
148.5
136.8
127.8
118.4
110.2
e
r
a
h
s
r
e
p
e
c
n
e
P
200
150
100
99.9
95.0
50
0
1
9
1
9
9
6
9
7
9
9
0
0
0
1
0
3
4
0
5
0
6
0
8
0
9
1
0
1
2
1
3
1
9
2
0
2
0
2
2
0
2
0
2
0
2
2
0
2
0
2
0
2
2
0
2
0
0
1
1
2
2
0
1
0
1
4
5
2
0
2
0
2
1
6
1
7
0
1
8
0
0
2
2
0
0
1
9
9
8
0
0
7
Net asset value
Cumulative dividend
* Total shareholder return is net asset value plus cumulative dividends paid since launch to date.
Net asset value increased by 7.4 per cent. (after adding back the 5.0 pence per share in dividends paid) to 76.0 pence per share for
the year ended 31 March 2018.
Total shareholder return increased by 2.5 per cent. to 225.8 pence per share for the year ended 31 March 2018.
12
Albion Venture Capital Trust PLC
250317 Albion Capital pp10-pp20.qxp 02/07/2018 21:00 Page 13
Strategic report continued
3. Dividend distributions
Dividends paid
104.8
94.8
84.8
74.8
67.8
149.8
144.8
139.8
134.8
129.8
124.8
119.8
114.8
109.8
58.8
50.3
42.3
34.8
27.3
18.8
11.0
5.0
e
r
a
h
s
r
e
p
e
c
n
e
P
150
125
100
75
50
25
0
1
1
9
9
9
9
7
8
1
9
9
9
2
0
0
0
2
0
2
0
2
0
0
1
0
2
0
3
2
2
2
0
0
0
0
0
0
4
5
6
2
0
2
0
2
0
0
7
0
8
0
9
2
0
1
0
2
0
1
1
2
2
0
1
0
1
2
3
2
0
2
0
2
0
2
0
2
0
1
4
1
5
1
6
1
7
1
8
Dividends paid in the period
Cumulative dividend
Dividends paid in respect of the year ended 31 March 2018 were 5.0 pence per share (2017: 5.0 pence per share), in line with the
Board’s dividend objective. Cumulative dividends paid since inception amount to 149.8 pence per Ordinary share.
4. Ongoing charges
The ongoing charges ratio for the year ended 31 March 2018
was 2.4 per cent. (2017: 2.4 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 2.4 per cent. The cap on
total annual normal expenses, including the management fee, is
3.0 per cent. of the average net asset value.
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.
Operational arrangements
The Company has delegated the investment management of
the portfolio to Albion Capital Group LLP, which is authorised and
regulated by the Financial Conduct Authority. Albion Capital
Group 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 £50,000 (2017: £49,000) 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 new 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
Albion Venture Capital Trust PLC
13
250317 Albion Capital pp10-pp20.qxp 02/07/2018 21:00 Page 14
Strategic report continued
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 2018, no incentive fee became due to
the Manager (2017: £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 2018 the total return from 31
March 2004 amounted to 172.5 pence per share which
compared to the hurdle of 192.3 pence per share at that date.
Investment and co-investment
The Company co-invests with other venture capital trusts and
funds managed by Albion Capital Group 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.
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 Capital Group 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
Companies Act 2006 (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.
General Data Protection Regulation
The General Data Protection Regulation (“GDPR”) was effective
from 25 May 2018 with the objective of unifying data privacy
requirements across the European Union. The Manager, Albion
Capital Group LLP, has taken action to ensure that the Manager
and the Company are compliant with the regulation.
Further policies
The Company has adopted a number of further policies relating
to:
• Environment
• Global greenhouse gas emissions
• Anti-bribery
• Anti-facilitation of tax evasion
• Diversity
and these are set out in the Directors’ report on pages 29 and 30.
14
Albion Venture Capital Trust PLC
250317 Albion Capital pp10-pp20.qxp 02/07/2018 21:00 Page 15
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
Investment and
performance risk
The risk of investment in poor quality
assets, which could reduce the capital and
income returns to shareholders, and could
negatively impact on the Company’s
current and future valuations.
By nature, smaller unquoted businesses,
such as those that qualify for venture
capital trust purposes, are more fragile
than larger, long established businesses.
Valuation risk
The Company’s
investment valuation
methodology is reliant on the accuracy
and completeness of information that is
In
issued by portfolio companies.
particular, the Directors may not be aware
of or take into account certain events or
circumstances which occur after the
information issued by such companies is
reported.
VCT approval risk
The Company must comply with section
274 of the Income Tax Act 2007 which
enables its investors to take advantage of
tax relief on their investment and on
future returns. Breach of any of the rules
enabling the Company to hold VCT status
could result in the loss of that status.
To reduce this risk, the Board places reliance upon the skills and
expertise of the Manager and its track record over many years
of making successful investments in this segment of the market.
In addition, the Manager operates a formal and structured
investment appraisal and review process, which includes an
Investment Committee, comprising investment professionals
from the Manager and at least one external investment
professional. The Manager also invites and takes account of
comments from non-executive Directors of the Company on
matters discussed at the Investment Committee meetings.
Investments are actively and regularly monitored by the
Manager (investment managers normally sit on portfolio
company boards), including the level of diversification in the
portfolio, and the Board receives detailed reports on each
investment as part of the Manager’s report at quarterly board
meetings.
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 or price of recent investment
(reviewed for impairment) or supported by independent third
party professional valuations.
To reduce this risk, the Board has appointed the Manager,
which has a team with significant experience in venture
capital trust management, used to operating within the
requirements of the venture capital trust legislation. In
addition, to provide further formal reassurance, the Board has
appointed Philip Hare & Associates LLP as its taxation adviser,
who report quarterly to the Board to confirm independently
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 or our professional
advisers.
Albion Venture Capital Trust PLC
15
250317 Albion Capital pp10-pp20.qxp 02/07/2018 21:00 Page 16
Strategic report continued
Risk Possible consequence Risk management
Board members and the Manager have experience of
operating at senior
levels within or advising quoted
companies. 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 through 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 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 and its operations are subject to a series of
rigorous internal controls and review procedures exercised
throughout the year.
The Audit Committee reviews the Internal Audit Reports
prepared by the Manager’s internal auditors, PKF Littlejohn
LLP. On an annual basis, the Audit Committee Chairman
meets with the internal audit partner to provide an
opportunity to ask specific detailed questions in order to
satisfy itself that the Manager has strong systems and
controls in place including those in relation to business
continuity.
In addition, the Board regularly reviews the performance of
its key service providers, particularly the Manager, to ensure
they continue to have the necessary expertise and resources
to deliver the Company’s investment objective and policies.
The Manager and other service providers have also
demonstrated to the Board that there is no undue reliance
placed upon any one individual.
The Company invests in a diversified portfolio of companies
across a number of industry sectors and in addition often
invests a mixture of instruments in portfolio companies.
At any given time, the Company has sufficient cash resources
to meet its operating requirements, including share buy-backs
and follow on investments.
The Company operates a share buyback policy, which is
designed to limit the discount at which the Ordinary shares
trade to around 5 per cent. to net asset value, by providing a
purchaser through the Company in absence of market
purchasers. From time to time buy-backs cannot be applied,
for example when the Company is subject to a close period, or
if it were to exhaust any buyback authorities.
New Ordinary shares are issued at sufficient premium to net
asset value to cover the costs of issue and to avoid asset value
dilution to existing investors.
Regulatory and
compliance risk
Operational and
internal control risk
The Company is listed on The London
Stock Exchange and is required to comply
with the rules of the UK Listing Authority,
as well as with the Companies Act,
other
Standards
Accounting
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.
and
The Company relies on a number of third
parties, in particular the Manager, for the
provision of investment management and
administrative functions. Failures in key
systems and
the
Manager’s business could put assets of
the Company at risk or result in reduced or
inaccurate information being passed to
the Board or to shareholders.
controls within
Economic and
political risk
Market value of
Ordinary shares
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.
The market value of Ordinary shares can
fluctuate. The market value of an Ordinary
share, as well as being affected by its net
asset value and prospective net asset
value, also takes into account its dividend
yield and prevailing interest rates. As such,
the market value of an Ordinary share
may vary considerably from its underlying
net asset value. The market prices of
shares in quoted investment companies
can, therefore, be at a discount or
premium to the net asset value at
different times, depending on supply and
demand, market conditions, general
investor sentiment and other factors.
Accordingly the market price of the
Ordinary shares may not fully reflect their
underlying net asset value.
16
Albion Venture Capital Trust PLC
250317 Albion Capital pp10-pp20.qxp 02/07/2018 21:00 Page 17
Strategic report continued
Viability statement
In accordance with the FRC UK Corporate Governance Code
published in 2016 and principle 21 of the AIC Code of Corporate
Governance, the Directors have assessed the prospects of the
Company over three years to 31 March 2021. 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 three year
period is considered the most appropriate given the forecasts
that the Board require from the Manager and the estimated
timelines for finding, assessing and completing investments.
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 considered the role 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
and deploy capital. 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.
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 2021.
This Strategic report of the Company for the year ended 31
March 2018 has been prepared in accordance with the
requirements of section 414A of 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.
For and on behalf of the Board,
David Watkins
Chairman
29 June 2018
Albion Venture Capital Trust PLC
17
250317 Albion Capital pp10-pp20.qxp 02/07/2018 21:00 Page 18
The Board of Directors
The following are the Directors of the Company, all of whom operate in a non-executive capacity:
David Watkins MBA (Harvard), Chairman (appointed 9 February 1996)
David Watkins worked for Goldman Sachs from 1972 until 1991 where he was head of Euromarkets Syndication and Head of European
Real Estate. He subsequently joined Mountleigh Group PLC where he worked as a director on the restructuring of the business prior to
the Group being placed into administration. After a period operating his own corporate finance business, he joined Baring Securities
in 1994 as Head of Equity Capital Markets – London, before leaving in mid-1995 when the company went into administration to
become Chief Financial Officer and one of the principal shareholders 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.
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.
Ann Berresford BSc (Hons), ACA (appointed 8 November 2017)
Ann Berresford is a Chartered Accountant with a background in the financial services and energy sectors. She holds a degree in Organic
Chemistry and trained as an accountant with Grant Thornton, qualifying with the ICAEW in 1984. She moved into industry in 1985
and worked in financial management and treasury for the British independent oil exploration and production company, Clyde
Petroleum plc in both the UK and in The Netherlands. In 1998, following the takeover of Clyde Petroleum plc, she moved into financial
services and joined Bristol & West plc which had just become part of the Bank of Ireland Group. She progressed from financial
controller of Bristol & West plc to finance director of the Bank of Ireland’s UK network and left in 2006. Since then, she has had a
number of non-executive roles, including positions at Bath Building Society, the Pensions Protection Fund, Triodos Renewables plc,
Hyperion Insurance Group and the Pensions Regulator. She is currently a non-executive director of Secure Trust Bank plc.
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.
Richard Glover (appointed 8 November 2017)
Richard Glover spent 15 years in industrial relations and HR management roles in the 1970s and 1980s first with ICI and then with
Grand Metropolitan. Since 1990 he has been involved in two private equity backed businesses in the service sector: first in 1990 the
British School of Motoring (BSM), where, as MD and later CEO, he took the Company through flotation and then sale to RAC and in
2000, the accountancy training company ATC International, where he became the majority shareholder in 2003, running the business
in Eastern Europe until selling it in 2011. He has also held a number of non-executive director positions in the service sector and
remains extensively involved with the Worshipful Company of Haberdashers and its education activities.
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.
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 (to be replaced by Richard Glover from
1 August 2018).
All Directors are members of the Remuneration Committee and Jeff Warren is Chairman.
18
Albion Venture Capital Trust PLC
250317 Albion Capital pp10-pp20.qxp 02/07/2018 21:00 Page 19
The Manager
Albion Capital Group 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 and provides administration services
to Albion Community Power PLC and Albion Care Communities Limited. Albion Capital, together with its subsidiary, OLIM Investment
Managers, currently has total assets under management or administration of approximately £1 billion.
The following are specifically responsible for the management and administration of the venture capital trusts managed by Albion
Capital Group 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 Capital (formerly Albion Ventures) in 1996. He is the managing partner of Albion Capital
and is a director of Albion Technology & General VCT PLC, Albion Enterprise VCT PLC and Albion Development VCT PLC, all managed
by Albion Capital. He is also chief executive of Albion Community Power PLC, chairman of OLIM Investment Managers, 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 Capital in 2001
since when he has focused on leisure and healthcare investing. Will became deputy managing partner of Albion Capital in 2009. Will
has a BA in History from Southampton University.
Adam Chirkowski MA (Hons), having graduated in Industrial Economics followed by a Masters in Corporate Strategy, spent five years
at N M Rothschild & Sons specialising in mergers and acquisitions, principally in the natural resources and then healthcare sectors,
before joining Albion Capital in 2013. He is currently responsible for a number of investments including renewable energy projects, care
homes, health clinics, fibre broadband and wedding venues.
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 Capital 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 Capital 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 Capital in 2009. He is also a director of Albion Care Communities Limited.
David Gudgin BSc (Hons), ACMA, qualified as a management accountant with ICL before spending 3 years at the BBC. In 1999 he
joined 3i plc as an investor in European technology based in London and Amsterdam. In 2002 he moved to Foursome Investments
(now Frog Capital) as the lead investor of an environmental technology and a later stage development capital fund. David joined
Albion Capital in 2005 and became a partner in 2009. He is also managing director of Albion Community Power PLC and a director of
Albion Care Communities Limited. 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 Capital in 2010, where he is currently operations partner for the group. He is also finance director of OLIM
Investment Managers, was finance director of Albion Community Power PLC, and is also on the AIC’s VCT Technical Committee. 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 Capital in 2015, he qualified as a chartered accountant with KPMG, spending four years working in transactions and
restructuring, primarily in turnaround and M&A situations.
Albion Venture Capital Trust PLC
19
250317 Albion Capital pp10-pp20.qxp 02/07/2018 21:00 Page 20
The Manager continued
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 Capital 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.
Catriona McDonald BA (Hons), graduated from Harvard University, majoring in economics. She joined Albion Capital’s technology
investment team in 2018 having previously worked for Goldman Sachs in both New York and London. At Goldman Sachs, Cat executed
several high profile transactions across the product space including leveraged buyouts, IPOs and M&A.
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.
Following this he worked for General Electric UK, where he was responsible for mergers and acquisitions in the medical technology and
healthcare IT sectors. He joined Albion Capital 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 Capital in 1998, where he has been
responsible for much of the asset based portfolio. Henry became a partner in Albion Capital in 2009. He holds an MA degree in Classics
from Oxford University.
Nadine Torbey MSc, BEng, graduated from the American University of Beirut with a Bachelor in Electrical and Computer Engineering
and followed this with a MSc. in Innovation Management and Entrepreneurship from Brown University. She joined Albion Capital’s
technology investment team in 2018 from Berytech Fund Management, Lebanon. Her career to date has involved many aspects of
tech investing including experience in a wide variety of digital platforms, big data management, virtual reality and digital networks.
Robert Whitby-Smith BA (Hons), FCA, MSI, began his career at KPMG and moved on to Credit Suisse First Boston and ING Barings
where he advised a number of businesses on capital raising and M&A activity. After moving to Albion Capital in 2005, Robert started
investing in the software and tech enabled services, and became a partner in 2009. Robert holds an honours degree in History from
the University of Reading and is a Chartered Accountant and a member of the Chartered Institute for Securities and Investment.
Marco Yu PhD, MA, MRICS, qualified as a chartered surveyor at Bouygues (UK), before moving to EC Harris in 2005 where he advised
senior lenders on large capital projects. Marco joined Albion Capital in 2007, since when he has specialised in two key investment areas,
renewable energy, particularly wind and solar, and asset based businesses ranging from retail, hotels, cinemas and pubs to residential
property. Marco graduated from Cambridge University with a first class degree in economics and has a PhD in construction economics
from University College London.
20
Albion Venture Capital Trust PLC
250317 Albion Capital pp21-pp27.qxp 02/07/2018 21:04 Page 21
Portfolio of investments
As at 31 March 2018 As at 31 March 2017
% voting Change
rights held Cumulative Cumulative in value
by all Albion* movement 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
Shinfield Lodge Care Limited 35.3 50.0 6,425 5,026 11,451 6,425 4,088 10,513 938
Active Lives Care Limited 22.2 50.0 4,810 2,648 7,458 4,530 2,227 6,757 421
Kew Green VCT (Stansted) Limited 45.2 50.0 5,910 1,063 6,973 5,910 767 6,677 296
Ryefield Court Care Limited 23.6 50.0 3,880 2,662 6,542 3,540 2,124 5,664 538
Radnor House School (Holdings) Limited 7.1 50.0 2,345 2,441 4,786 2,381 1,935 4,316 506
Chonais River Hydro Limited 9.2 50.0 3,074 1,316 4,390 3,074 767 3,841 549
The Stanwell Hotel Limited 39.2 50.0 5,069 (3,189) 1,880 5,069 (2,783) 2,286 (406)
Gharagain River Hydro Limited 11.5 50.0 1,363 428 1,791 1,363 162 1,525 266
Earnside Energy Limited 9.5 50.0 1,531 88 1,619 1,531 112 1,643 (24)
Bravo Inns II Limited 6.4 50.0 1,085 262 1,347 1,085 132 1,217 130
The Street by Street Solar
Programme Limited 6.5 50.0 675 463 1,138 675 372 1,047 91
G. Network Communications Limited 7.6 49.9 710 426 1,136 – – – 426
Alto Prodotto Wind Limited 7.4 50.0 660 454 1,114 662 364 1,026 91
MHS 1 Limited 14.8 50.0 1,026 (5) 1,021 1,026 (2) 1,024 (3)
Beddlestead Limited 9.3 50.0 956 – 956 8 – 8 –
TWCL Limited 14.3 50.0 801 (2) 799 1,083 (326) 757 42
Women’s Health (London West One)
Limited 6.0 40.0 750 – 750 – – – –
Infinite Ventures (Goathill) Limited 11.5 31.0 480 232 712 480 152 632 80
Regenerco Renewable Energy Limited 4.5 50.0 451 232 683 451 177 628 55
Bravo Inns Limited 7.6 50.0 751 (173) 578 751 (170) 581 (3)
Dragon Hydro Limited 7.3 30.0 311 187 498 311 162 473 25
Erin Solar Limited 18.6 50.0 520 (23) 497 520 (11) 509 (12)
AVESI Limited 7.4 50.0 242 99 341 242 80 322 19
Harvest AD Limited – – 307 4 311 307 – 307 4
G&K Smart Developments VCT Limited 50.0 100.0 276 (11) 265 276 (20) 256 9
Greenenerco Limited 3.9 50.0 129 86 215 135 66 201 22
Premier Leisure (Suffolk) Limited 9.9 47.4 175 25 200 175 (6) 169 31
Total fixed asset investments 44,712 14,739 59,451 42,010 10,369 52,379 4,091
* Albion Capital Group LLP
** Amounts shown as 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 additions and disposals during the year.
The comparative cost and valuations for 31 March 2017 do not agree to the Annual Report and Financial Statements for the year ended
31 March 2017 as the above list does not include brought forward investments that were fully disposed of in the year.
Albion Venture Capital Trust PLC
21
250317 Albion Capital pp21-pp27.qxp 02/07/2018 21:04 Page 22
Portfolio of investments continued
Total change in value of investments for the year 4,091
Movement in loan stock accrued interest (355)
Unrealised gains sub total 3,736
Realised gain in current year 194
Total gains on income investments as per Income statement 3,930
Opening Total Gain on
carrying Disposal realised opening
Fixed asset investment realisations during the year ended Cost* value proceeds (loss)/gain value
31 March 2018 £’000 £’000 £’000 £’000 £’000
Disposals:
The Crown Hotel Harrogate Limited 4,245 3,094 3,262 (983) 168
Loan stock repayments:
Radnor House School (Holdings) Limited 36 36 36 – –
Greenenerco Limited 5 7 7 2 –
Alto Prodotto Wind Limited 2 3 3 1 –
Escrow adjustments and other:
Escrow adjustments** – – 26 26 26
TWCL Limited*** 282 – – (282) –
Total realisations 4,570 3,140 3,334 (1,236) 194
*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.
**Fair value movements on deferred consideration from previously disposed investments.
***The cost as shown above is after deducting realised losses of £282,000 for TWCL Limited which is still held at the Balance sheet date.
22
Albion Venture Capital Trust PLC
250317 Albion Capital pp21-pp27.qxp 02/07/2018 21:04 Page 23
Portfolio companies
Geographical locations
6
88
Portfolio of 27
unquoted companies
employing over 500
people across the
United Kingdom.
9
10
4
7
5
5
2
3
1
Albion Venture Capital Trust PLC
23
Renewable energy
sector generating
approximately 30GWh
per annum, capable of
powering over 9,000
typical households.
Healthcare
Renewable energy
Business services and other
Education
Pubs
Hotels
Numbers indicate top 10
investments by value
250317 Albion Capital pp21-pp27.qxp 02/07/2018 21:04 Page 24
Portfolio companies continued
The top ten fixed asset investments by value are shown below.
1. Shinfield Lodge Care Limited
The company operates a 66 bed, purpose built
residential care home in Shinfield near Reading,
Berkshire. The home provides residential and
dementia care to elderly residents and attracts
fees in line with the high end, private pay market
it targets. Promoting social interaction and
offering a wide range of activities are at the core
of the care philosophy. The home was recently
voted one of the Top 20 care homes in the South
East of England. Occupancy continues to grow as
the home nears maturity.
Website: www.shinfieldview.com
Filleted audited results:
year to 31 December 2016
Net assets
Basis of valuation:
£’000
Investment information
730
Third party valuation – earnings multiple
Income recognised in the year
Total cost
Total valuation
Voting rights
Voting rights for all Albion managed companies
£’000
430
6,425
11,451
35.3 per cent.
50.0 per cent.
2. Active Lives Care Limited
The company operates a 75 bed, purpose built
residential care home in Cumnor Hill, Oxford. The
home provides nursing, residential and dementia
care to elderly residents and attracts fees in line
with the high end, private pay market it targets.
Promoting social interaction and offering a wide
range of activities are at the core of the care
philosophy. Occupancy continues to grow as the
home nears maturity.
Filleted audited results:
year to 31 December 2016
Net liabilities
Basis of valuation:
£’000
Investment information
(178)
Third party valuation – earnings multiple
Income recognised in the year
Total cost
Total valuation
Voting rights
Voting rights for all Albion managed companies
£’000
553
4,810
7,458
22.2 per cent.
50.0 per cent.
Website: www.cumnorhillhouse.com
24
Albion Venture Capital Trust PLC
250317 Albion Capital pp21-pp27.qxp 02/07/2018 21:04 Page 25
Portfolio companies continued
3. Kew Green VCT (Stansted) Limited
The company developed and operates the
Holiday Inn Express hotel at London Stansted
Airport under a 125 year lease and a new 25 year
franchise agreement. The hotel opened with 183
bedrooms in January 2005 and expanded to 254
bedrooms in July 2007. In June 2018 the
company was refinanced with bank debt,
enabling the remaining loan stock and the share
premium originally paid by investors to be repaid
(see note 19). A substantial refurbishment of the
public areas took place in early 2018 and the
bedrooms are currently being upgraded to the
latest brand standards.
Audited results:
year to 31 August 2017
Turnover
EBITDA
Profit before tax
Net assets
Basis of valuation:
£’000
Investment information
5,716
1,202
573
5,340
Third party valuation – earnings multiple
Income recognised in the year
Total cost
Total valuation
Voting rights
Voting rights for all Albion
managed or advised companies
£’000
317
5,910
6,973
45.2 per cent.
50.0 per cent.
Website: www.expressstanstedairport.co.uk
4. Ryefield Court Care Limited
The company operates a 60 bed, purpose built
residential care home in Hillingdon, London. The
home provides residential and dementia care to
elderly residents and attracts fees in line with the
high end, private pay market it targets.
Promoting social interaction and offering a wide
range of activities are at the core of the care
philosophy. In 2017 the home was rated
“Outstanding” by CQC, the regulatory body,
which places it among the top 1% of care
homes in London and the South East. Separately,
the home was recently voted one of the Top 20
care homes in London. Occupancy continues to
grow as the home nears maturity.
£’000
Investment information
(447)
Third party valuation – earnings multiple
Income recognised in the year
Total cost
Total valuation
Voting rights
Voting rights for all Albion managed companies
£’000
405
3,880
6,542
23.6 per cent.
50.0 per cent.
Website: www.ryefieldcourt.com
Filleted audited results:
year to 30 April 2017
Net liabilities
Basis of valuation:
Albion Venture Capital Trust PLC
25
250317 Albion Capital pp21-pp27.qxp 02/07/2018 21:04 Page 26
Portfolio companies continued
5. Radnor House School (Holdings) Limited
Radnor House operates two independent schools in Twickenham and Sevenoaks. The Twickenham school trades at
near mature levels with more than 400 children on the roll. The school in Sevenoaks, which was acquired in 2015 as
a turnaround opportunity, is now growing strongly with over 400 children on the roll and further capacity to expand.
Both schools aim to deliver a personalised education experience to each student with a focus on learning. The
curriculum and co-curricular activities are designed to give each child a wide range of academic and other skills and
prepare him or her for a dynamic and rapidly changing world.
Audited results: year to 31 August 2017
£’000
Investment information
Turnover
EBITDA
Loss before tax
Net assets
Basis of valuation:
11,487
1,489
(552)
30,951
Third party valuation – earnings multiple
Income recognised in the year
Total cost
Total valuation
Voting rights
Voting rights for all Albion managed companies
£’000
230
2,345
4,786
7.1 per cent.
50.0 per cent.
Website: www.radnorhouse.org
Website: www.thestanwell.com
6. Chonais River Hydro Limited
Chonais River Hydro is a 2MW hydropower scheme
near Loch Carron in the Scottish Highlands. It is a
run-of-river scheme, taking water from a small river
via an intake on the mountainside. The scheme is
low visual impact with the only visible components
being a small intake and a powerhouse, both of
which are built using local material. It generates
enough electricity to power about 2,000 homes.
It benefits from inflation-protected renewable
subsidies for a period of 20 years. The scheme was
commissioned in 2014 and has been generating
successfully since.
Filleted audited results: year to
30 September 2017 £’000
Investment information
£’000
Net liabilities
Basis of valuation:Third party Total cost
(57)
Income recognised in the year
valuation – discounted Total valuation
cash flow Voting rights
276
3,074
4,390
9.2 per cent.
Voting rights for all Albion
managed companies
50.0 per cent.
26
Albion Venture Capital Trust PLC
7. The Stanwell Hotel Limited
The company owns and operates The Stanwell
Heathrow Hotel, a four star boutique hotel in the
village of Stanwell, just south of Heathrow Airport.
The company acquired the freehold property
when it had 19 bedrooms and undertook an
extensive redevelopment, enlarging the hotel to
52 bedrooms. Recent additions have been an
extension to the restaurant area which doubles as
a popular meeting room, a new entrance and the
introduction of a fitness suite.
Filleted audited results:
year to
31 August 2017
£’000
Net liabilities
Basis of valuation:
(7,914)
Investment information
£’000
Income recognised in the year
Total cost
–
5,069
1,880
39.2 per cent.
50.0 per cent.
Third party valuation – Total valuation
earnings multiple
Voting rights
Voting rights for all Albion
managed companies
250317 Albion Capital pp21-pp27.qxp 02/07/2018 21:04 Page 27
Portfolio companies continued
8. Gharagain River Hydro Limited
Gharagain River Hydro is a 1MW hydropower
scheme near Loch Carron in the Scottish Highlands,
about 3 miles from Chonais River Hydro. It is a
run-of-river scheme with the same design as
Chonais River Hydro. It generates enough electricity
to power about 1,000 homes. It benefits from
inflation-protected renewable subsidies for a period
of 20 years. The scheme was commissioned in
2014 and has been generating successfully since.
Filleted audited results:
year to
30 September 2017 £’000
Net assets
Basis of valuation:
194
Investment information
£’000
Income recognised in the year
Total cost
119
1,363
1,791
11.5 per cent.
Third party valuation – Total valuation
discounted cash flow Voting rights
Voting rights for all
Albion managed
companies
50.0 per cent
9. Earnside Energy Limited
Earnside Energy owns and operates an anaerobic digestion (“AD”) plant and composting facility in Perthshire in
Scotland. The AD plant, which has recently undergone a significant expansion programme, turns waste food
into electricity and produces digestate for use as an agricultural fertiliser, while the composting facility produces
compost from co-mingled food and garden waste. The combined facility is capable of processing c. 75,000
tonnes of waste per annum.
Website: www.earnsideenergy.com
Audited results:
year to 31 December 2016
Turnover
EBITDA
Loss before tax
Net assets
Basis of valuation:
£’000
Investment information
2,608
372
(722)
803
Third party valuation – discounted cash flow
Income recognised in the year
Total cost
Total valuation
Voting rights
Voting rights of all Albion managed companies
£’000
–
1,531
1,619
9.5 per cent.
50.0 per cent.
10. Bravo Inns II Limited
Bravo Inns II was formed in September 2007 to
acquire freehold pubs in the North of England.
The Bravo strategy is to acquire closed and
underinvested sites, undertaking high quality
refurbishments before trading as wet-led
community pubs. The estate currently consists of
31 sites and the Bravo team are looking to add
2-3 sites a year to grow the estate.
Filleted audited results:
year to
31 March 2017
£’000
Investment information
£’000
Net assets
Basis of valuation:
Income recognised in the year
Total cost
Third party valuation – Valuation
4,467
3
1,085
1,347
6.4 per cent.
earnings multiple
Voting rights
Voting rights for all
Albion managed
companies
50.0 per cent.
Website: www.bravoinns.com
Albion Venture Capital Trust PLC
27
250317 Albion Capital pp28-pp40.qxp 02/07/2018 21:07 Page 28
Directors’ report
The Directors submit their Annual Report and the audited
Financial Statements on the affairs of Albion Venture Capital
Trust PLC (the “Company”) for the year ended 31 March 2018.
The Statement of corporate governance on pages 33 to 37 forms
a part of the Directors’ report.
BUSINESS REVIEW
Principal activity and status
The principal activity of the Company is that of a venture capital
trust. It has been approved by H.M. Revenue & Customs
(‘HMRC’) as a venture capital trust in accordance with the
Income Tax Act 2007 and, in the opinion of the Directors, the
Company has conducted its affairs so as to enable it to continue
to obtain such approval. In order to maintain its status under
Venture Capital Trust legislation, a VCT must comply on a
continuing basis with the provisions of Section 274 of the
Income Tax Act 2007 and further details of this can be found on
page 29 of this Directors’ report.
The Company is not a close company for taxation purposes and
its shares are premium 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 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 or voting rights) rank pari passu for voting rights
and each Ordinary share is entitled to one vote. There are no
restrictions on the transfer of shares or on voting rights.
Shareholders are entitled to receive dividends and the return of
capital on winding up or other return of 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 1,186,774
Ordinary shares (2017: 8,974,488), of which 365,978 Ordinary
shares (2017: 8,221,867) were issued under the Albion VCTs Top
Up Offers; and 820,796 Ordinary shares (2017: 752,621) were
issued under the Company’s Dividend Reinvestment Scheme.
28
Albion Venture Capital Trust PLC
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 9 of the
Chairman’s statement.
Substantial interests and shareholder profile
As at 31 March 2018 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 Guidance and
Transparency Rule 5 made to the Company during the year
ended 31 March 2018, 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 9 of the Chairman’s statement and on page 12 of the
Strategic report.
Results and dividends
Detailed information on the results and dividends for the year
ended 31 March 2018 can be found in the Strategic report on
page 11.
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 2016, the Board has assessed
the Company’s operation as a going concern. The Company has
significant cash and liquid resources, its portfolio of investments
is well diversified in terms of sector and the major cash outflows
of the Company (namely investments, buy-backs and dividends)
are within the Company’s control. Accordingly, after making
diligent enquiries the Directors have a reasonable expectation
that the Company has adequate resources to continue in
operational existence over a period of at least twelve months
from the date of approval of the Financial Statements. For this
reason, the Directors have considered it appropriate to adopt the
going concern basis of accounting.
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 17. The Company’s business activities,
together with details of its performance are shown in the
Strategic report and this Directors’ report.
Post balance sheet events
Details of events that have occurred since 31 March 2018 are
shown in note 19.
Principal risks and uncertainties
A summary of the principal risks faced by the Company is set out
on pages 15 and 16 of the Strategic report.
250317 Albion Capital pp28-pp40.qxp 02/07/2018 21:07 Page 29
Directors’ report continued
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’ (80 per cent. from 1 April 2020 for the
Company);
(3) Until 5 April 2018 for funds raised to 5 April 2011, 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 and for investments made after 5 April 2018 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;
(9) The Company’s investment in another company must not
be used to acquire another business, or shares in another
company; and
(10) The Company may only make qualifying investments or
certain non-qualifying investments permitted by Section
274 of the Income Tax Act 2007.
These tests drive a spread of investment risk through prohibiting
holdings of more than 15 per cent. by HMRC value in any
portfolio company. The tests have been carried out and
independently reviewed for the year ended 31 March 2018. The
Company has complied with all tests and continues to do so.
‘Qualifying holdings’ include shares or securities (including
unsecured 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 10.
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.
The Finance Act 2018 contained a number of measures that
affect all VCTs which will be phased in over the coming years.
Further details of some of the changes introduced can be found
in the Strategic report on page 11.
recognises
Environment
The management and administration of the Company is
undertaken by the Manager, Albion Capital Group LLP. Albion
its
Capital Group LLP
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
impact on the
designed to minimise the Company’s
environment
reducing energy
consumption.
importance of
recycling and
include
the
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 Venture Capital Trust PLC
29
250317 Albion Capital pp28-pp40.qxp 02/07/2018 21:07 Page 30
Directors’ report continued
Albion Capital Group LLP reviews the anti-bribery policies and
procedures of all portfolio companies.
Meeting, they will both resign and be subject to election at the
forthcoming Annual General Meeting.
Anti-facilitation of tax evasion policy
The Company has adopted a zero tolerance approach with
regards to the facilitation of criminal tax evasion and has put in
place a robust risk assessment procedure to ensure compliance.
The Board reviews this policy and the prevention procedures in
place for all associates on a regular basis.
Diversity
The Board currently consists of five male and one female
Director. 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 18.
The Manager has an equal opportunities policy and currently
employees 12 men and 16 women.
Employees
The Company is managed by Albion Capital Group LLP and
hence has no employees other than its Directors.
Directors
The Directors who held office throughout the year, and their
interests in the shares of the Company (together with those of
their immediate family) are shown in the Directors’ remuneration
report on page 39.
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 or her in relation to the performance of his or her
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, John Kerr and Jeff Warren
will retire and offer themselves for re-election as they 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. As Richard Glover and Ann
Berresford have been appointed since the last Annual General
Advising ordinary retail investors
The Company currently conducts its affairs so that its shares can
be recommended by financial intermediaries to ordinary retail
investors in accordance with the FCA’s rules in relation to non-
mainstream investment products and intends to continue to do
so for the foreseeable future. The FCA’s restrictions which apply
to non-mainstream investment products do not apply to the
Company’s shares because they are shares in a VCT which, for
the purposes of the new rules relating to non-mainstream
investment products, are excluded securities and may be
promoted to ordinary retail investors without restriction.
Packaged Retail and Insurance-based Investment Products
(“PRIIPs”)
Investors should be aware that the PRIIPs Regulation requires
the Manager, as PRIIP manufacturer, to prepare a Key
Information Document (“KID”) in respect of the Company. This
KID must be made available by the Manager to retail investors
prior to them making any investment decision and is available on
the Company’s webpage on the Manager’s website. The
Company is not responsible for the information contained in the
KID and investors should note that the procedures for calculating
the risks, costs and potential returns are prescribed by the law.
The figures in the KID may not reflect the expected returns for
the Company and anticipated performance returns cannot be
guaranteed.
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
13 August 2018. The notice of the Annual General Meeting is at
the end of this document.
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.capital/funds/AAVC
under the “Financial Reports and Circulars section”.
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
30
Albion Venture Capital Trust PLC
250317 Albion Capital pp28-pp40.qxp 02/07/2018 21:07 Page 31
Directors’ report continued
with the Companies Act or the Listing Rules of the Financial
Conduct Authority.
Change of investment policy
Ordinary resolution number 9 proposes that the Company’s
investment policy be amended to enable the Company to
comply with new VCT qualifying requirements.
Authority to allot shares
Ordinary resolution number 10 will request the authority to allot
up to an aggregate nominal amount of £192,486 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 9,730,188 Ordinary shares
in treasury which represents 10.1 per cent. of the total Ordinary
share capital in issue as at 31 March 2018.
This resolution replaces the authority given to the Directors at
the Annual General Meeting in 2017. The authority sought at the
forthcoming Annual General Meeting will expire 15 months from
the date this resolution is passed or at the conclusion of the next
Annual General Meeting of the Company, whichever is earlier.
Disapplication of pre-emption rights
Special resolution number 11 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 £192,486 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 2017. The authority sought at the
forthcoming Annual General Meeting will expire 15 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 12 will request the authority to
purchase a maximum of 14,426,856 shares representing 14.99
per cent. of the Company’s issued Ordinary share capital at, or
between, the minimum and maximum prices specified in
resolution 12. Shares bought back under this authority may be
cancelled.
The Board believes that it is helpful for the Company to continue
to have the flexibility to buy its own shares and this resolution
seeks authority from shareholders to do so.
This resolution would renew the 2017 authority, which was on
similar terms. During the financial year under review, the
Company purchased 1,467,000 Ordinary shares for treasury of
nominal value of £15,000 at an aggregate consideration of
£1,019,000, including stamp duty, representing 1.5 per cent. of
the issued share capital of the Company as at 31 March 2018.
The maximum nominal value of treasury shares held during the
year was £97,000.
The authority sought at the Annual General Meeting will expire 15
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.
Special resolution number 13 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 or she
ought to have taken as a Director to make himself or herself
aware of any relevant audit information and to establish that
the Company’s Auditor is aware of that information.
This disclosure is given and should be interpreted in accordance
with the provisions of s418 of the Companies Act 2006.
By Order of the Board
Albion Capital Group LLP
Company Secretary
1 King’s Arms Yard
London, EC2R 7AF
29 June 2018
Albion Venture Capital Trust PLC
31
250317 Albion Capital pp28-pp40.qxp 02/07/2018 21:07 Page 32
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Annual Report
and Financial Statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare Financial
Statements for each financial year. Under that law the Directors
have elected to prepare the Company’s Financial Statements in
accordance with United Kingdom Generally Accepted
Accounting Practice (“UK GAAP”) (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 UK
GAAP subject to any material departures disclosed and
explained in the Financial Statements; and
• prepare a Directors’ report, a Strategic report and Directors’
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 provide the information necessary for
shareholders to assess the Company’s position, performance,
business model and strategy.
Website publication
The Directors are responsible for ensuring the Annual Report and
Financial Statements are made available on a website. Financial
Statements are published on the Company’s webpage on the
in
Manager’s website
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. The Directors’ responsibility also extends to the
ongoing integrity of the Financial Statements contained therein.
(www.albion.capital/funds/AAVC)
Directors’ responsibilities pursuant to Disclosure Guidance
and Transparency Rule 4 of the UK Listing Authority
The Directors confirm to the best of their knowledge:
• The Financial Statements have been prepared in accordance
with UK GAAP and give a true and fair view of the assets,
liabilities, financial position and profit 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 it faces.
For and on behalf of the Board
David Watkins
Chairman
29 June 2018
32
Albion Venture Capital Trust PLC
250317 Albion Capital pp28-pp40.qxp 02/07/2018 21:07 Page 33
Statement of corporate governance
Background
The Financial Conduct Authority requires all companies listed on
a regulated market 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 2016.
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 as setting out
additional principles and recommendations on issues that are of
specific relevance to the Company.
The Board considers that reporting against the principles and
recommendations of the AIC Code, and by reference to the AIC
Guide (which incorporates the UK Corporate Governance Code),
will provide better information to shareholders than reporting
under the Code alone.
The Company has complied with the recommendations of the
AIC Code and the relevant provisions of the 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. From 1 August 2018, Richard Glover will
be appointed as the Chairman.
John Kerr is an external member of the Investment Committee of
Albion Capital Group LLP. The Board has reviewed and approved
this role and concluded it does not affect his independence.
John Kerr and Jeff Warren have both been Directors of the
Company for more than nine years and, in accordance with the
recommendations of the AIC code, are subject to annual re-
election. The Board does not have a policy of limiting the tenure
of any Director as the Board does not consider that a Director’s
length of service reduces his or her ability to act independently of
the Manager.
The Directors have a range of business and financial skills which
are relevant to the Company; these are described in the Board of
Directors section of this Annual Report, on page 18. 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.
As Richard Glover and Ann Berresford have been appointed since
the last Annual General Meeting, they will both resign and be
subject to election at the forthcoming Annual General Meeting.
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 36.
The Board met four times during the year as part of its regular
programme of Board meetings. All of the Directors attended all
meetings, except for Richard Glover and Ann Berresford who
joined the Board on 8 November 2017. 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.
The Chairman ensures that all Directors receive, in a timely
manner, all relevant management, regulatory and financial
information. The Board receives and considers reports regularly
from the Manager and other key advisers, and ad hoc reports and
information are supplied to the Board as required. The Board has
a formal schedule of matters reserved for it and the agreement
between the Company and its Manager sets out the matters over
which the Manager has authority and limits beyond which Board
approval must be sought.
The Manager has authority over the management of the
investment portfolio, the organisation of custodial services,
accounting, secretarial and administrative services. The main
issues reserved for the Board include:
• the appointment, evaluation, removal and remuneration of
the Manager;
Albion Venture Capital Trust PLC
33
250317 Albion Capital pp28-pp40.qxp 02/07/2018 21:07 Page 34
Statement of corporate governance
continued
• 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
recommendation to shareholders for the appointment and
remuneration of the Auditor;
• 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
undertakes a proper and thorough evaluation of its committees
on an annual basis.
Directors’ retirement and re-election is subject to the Articles of
Association and the AIC Code. Directors are subject to re-election
every three years and Directors who have served longer than nine
years and non-independent Directors, to re-election every year.
In light of the structured performance evaluation, John Kerr and
Jeff Warren who are subject to re-election, and Richard Glover
and Ann Berresford who are subject to 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 appoint 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 except Richard Glover
and Ann Berresford who joined on 8 November 2017.
The terms of reference for the Remuneration Committee can be
found on the Company’s webpage on the Manager’s website at
Corporate
www.albion.capital/funds/AAVC
Governance section.
under
the
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 2018; all members attended all
meetings, except Richard Glover and Ann Berresford who joined
on 8 November 2017.
• 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.
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.capital/funds/AAVC under the
Corporate Governance section.
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 are offered training, both at the time of joining the
Board and on other occasions where required. The Board also
34
Albion Venture Capital Trust PLC
During the year under review, the Committee discharged its
responsibilities including:
• formally reviewing the Annual Report and Financial
Statements, the Half-yearly Financial Report, the Interim
Management
associated
announcements, with particular focus on the main areas
requiring judgement and on critical accounting policies;
Statements
and
the
250317 Albion Capital pp28-pp40.qxp 02/07/2018 21:07 Page 35
Statement of corporate governance
continued
• reviewing the effectiveness of the internal controls system and
examination of the Internal Controls Report produced by the
Manager;
• meeting with the external Auditor and reviewing their
findings;
• 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 Manager. The
Audit Committee reviewed the estimates and judgements made
in relation to these investments and were satisfied that they were
appropriate. The Audit Committee also discussed the controls in
place over the valuation of investments. The Committee
recommended investment valuations to the Board for approval.
Revenue recognition
The revenue generated from loan stock interest and dividend
income has been considered by the Audit Committee as part of
its review of the Annual Report as well as a quarterly review of the
management accounts prepared by the Manager. The Audit
Committee has considered the controls in place over revenue
recognition to ensure that amounts received are in line with
expectation and budget.
Following rigorous reviews of the Annual Report and Financial
Statements and consideration of the key areas of risk identified,
the Audit Committee and Board has concluded that, as a whole,
the Financial Statements are fair, balanced and understandable
and that they provide the information necessary for shareholders
to assess the Company’s 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 2018.
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
2018, and assessments made by individual Directors.
During the year, the Audit Committee undertook a competitive
tender process for appointment of the external auditor for the
financial year ending 31 March 2018, so as to ensure auditor
independence and continued quality of judgement. The core
legislation mandates that the maximum period for which a firm
can be appointed auditor of a public interest entity is 10 years.
Member states can choose to make this period shorter, or they
can choose to allow extensions: to 20 years if a competitive
Albion Venture Capital Trust PLC
35
250317 Albion Capital pp28-pp40.qxp 02/07/2018 21:07 Page 36
Statement of corporate governance
continued
tender is held at the 10 year point. BDO first acted as Auditor for
the year ended 31 March 2008. The Company can confirm that
there are no contractual obligations that restrict the Company’s
choice of external auditor. As a result of this selection process,
and evaluation of objective and subjective criteria, it was decided
to retain BDO LLP as the external auditor of the Company. The
Audit Committee will continue to review and evaluate the
standard and quality of service provided by the Auditor, as well as
value for money in the provision of these services on an annual
basis.
The Audit Committee also has an annual meeting with the
external Auditor, without the Manager present, at which
pertinent questions are asked to help the Audit Committee
determine if the Auditor’s skills match all the relevant and
appropriate criteria.
Based on the assurance obtained, the Audit Committee
recommended to the Board a resolution to re-appoint BDO LLP
as Auditor at the forthcoming Annual General Meeting.
Nomination Committee
The Nomination Committee consists of all Directors, with David
Watkins as Chairman. From 1 August 2018 Richard Glover will be
appointed as Chairman.
The Board’s policy on the recruitment of new directors is to
attract a range of backgrounds, skills and experience and to
ensure that appointments are made on the grounds of merit
against clear and objective criteria and bear in mind gender and
other diversity within the Board.
The Nomination Committee met during the year, and following a
detailed interview and referencing process, the Nomination
Committee recommended the appointment of Richard Glover
and Ann Berresford as Directors.
The terms of reference for the Nomination Committee can be
found on the Company’s webpage on the Manager’s website at
www.albion.capital/funds/AAVC
Corporate
Governance section.
under
the
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
36
Albion Venture Capital Trust PLC
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, 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
its review
Committee assists the Board
responsibilities.
in discharging
The main features of the internal control system with respect to
financial reporting are:
• segregation of duties between the preparation of valuations
and recording in accounting records;
• independent third party valuations of the majority of the
asset-backed investments within the portfolio are undertaken
annually;
• reviews of valuations are carried out by the managing partner
and reviews of financial reports are carried out by the
operations partner of Albion Capital Group LLP;
• bank reconciliations are carried out monthly, and stock
reconciliations are carried out six-monthly, by the Manager in
accordance with the FCA requirements;
• all published financial reports are reviewed by Albion Capital
Group 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 Capital Group 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 Capital Group LLP undertakes periodic examination of the
business processes and controls environment at Albion Capital
250317 Albion Capital pp28-pp40.qxp 02/07/2018 21:07 Page 37
Statement of corporate governance
continued
Group 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 conflicts, and is excluded
from discussions or decisions regarding those conflicts.
Procedures to disclose and authorise conflicts of interest have
been adhered to throughout the year.
Capital structure and Articles of Association
Details regarding the Company’s capital structure, substantial
interests and Directors’ powers to buy and issue shares are
detailed in full on pages 28 and 31 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 13 August 2018 will
be used as an opportunity to communicate with investors. The
Board, including the Chairman of the Audit Committee, will be
available to answer questions at the Annual General Meeting.
At the Annual General Meeting, the level of proxies lodged on
each resolution, the balance for and against the resolution, and
the number of votes withheld, are announced after the resolution
has been voted on by a show of hands.
The Annual General Meeting will also include a presentation from
the Manager on the portfolio and on the Company, and a
presentation from a portfolio company.
Shareholders and financial advisers are able to obtain
information on holdings and performance using the contact
details provided on page 2.
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
2018 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.
For and on behalf of the Board
David Watkins
Chairman
29 June 2018
Albion Venture Capital Trust PLC
37
250317 Albion Capital pp28-pp40.qxp 02/07/2018 21:07 Page 38
Directors’ remuneration report
Introduction
This report is submitted in accordance with Section 420 of the
Companies Act 2006 and describes how the Board has applied
the principles relating to the Directors’ remuneration.
An ordinary resolution will be proposed at the Annual General
Meeting of the Company to be held on 13 August 2018 for the
approval of the annual remuneration report as set out below. The
current remuneration policy was approved by shareholders (95.3
per cent. of shareholders voted for the resolution) at the Annual
General Meeting held on 14 August 2017, and it will remain in
place for a three year period.
The Company’s independent Auditor, BDO LLP, is required to
give its opinion on certain information included in this report as
indicated. The Auditor’s opinion is included in the Independent
Auditor’s Report.
Annual statement from the Chairman of the Remuneration
Committee
The Remuneration Committee comprises all of the Directors with
Jeff Warren as Chairman.
The Remuneration Committee met once during the year to
review Directors’ responsibilities and salaries against the market
and concluded that the current level of remuneration, which was
increased in 2015, remained appropriate and so proposed no
increase for the forthcoming year.
Directors’ remuneration policy
The Company’s policy is that fees payable to non-executive
Directors should reflect their expertise, responsibilities and time
spent on Company matters. In determining the level of non-
executive remuneration, market equivalents are considered in
comparison to the overall activities and size of the Company.
There is no performance related pay criteria applicable to non-
executive Directors.
This policy was last voted on at the 2017 Annual General
Meeting where 95.3 per cent. of shareholders voted for the
resolution approving the Directors’ remuneration policy which
shows significant shareholder support.
The current maximum
level of non-executive Directors’
remuneration is £150,000 per annum in aggregate which is fixed
by the Company’s Articles of Association, changes to which are
made by ordinary resolution.
The Company’s Articles of Association provide for the
resignation and, if approved, re-election of the Directors every
three years at the Annual General Meeting. In accordance with
the recommendations of the AIC Code, Directors who have
served the Company for longer than nine years are subject to
annual re-election, and any non-independent Directors are also
subject to annual re-election. At the forthcoming Annual General
Meeting John Kerr and Jeff Warren will retire and be proposed for
re-election. As Richard Glover and Ann Berresford have been
appointed since the last Annual General Meeting, they will both
resign and be subject to election at the forthcoming Annual
General Meeting. David Watkins is to retire as a Director on
1 August 2018.
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,
94.3 per cent. of shareholders voted for the resolution approving
the Directors’ remuneration report which shows significant
shareholder support.
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 spent by the
Directors on the business of the Company and makes
recommendations to the Board accordingly.
38
Albion Venture Capital Trust PLC
250317 Albion Capital pp28-pp40.qxp 02/07/2018 21:07 Page 39
Directors’ remuneration report continued
Directors’ remuneration
The following items have been audited.
The following table shows an analysis of the remuneration of
individual Directors, exclusive of National Insurance:
David Watkins
John Kerr
Ann Berresford
(appointed 8 November 2017)
Ebbe Dinesen
Richard Glover
(appointed 8 November 2017)
Jeff Warren
2018
£’000
2017
£’000
24
24
9
22
9
22
110
24
24
–
22
–
22
92
The Directors’ remuneration for the year ending 31 March 2019
is expected to be approximately £121,000.
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 £8,578 (2017: £7,052).
Directors’ interests
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:
David Watkins
John Kerr
Ann Berresford
(appointed 8 November 2017)
Ebbe Dinesen
Richard Glover
(appointed 8 November 2017)
Jeff Warren
31 March
2018
(Number of
shares)
31 March
2017
(Number of
shares)
10,000
13,109
–
36,552
–
20,000
79,661
10,000
13,109
n/a
36,552
n/a
20,000
79,661
There have been no changes in the holdings of the Directors
between 31 March 2018 and the date of this Report.
The following items have not been audited.
Albion Capital Group LLP, its partners and staff hold a total of
366,227 shares in the Company as at 31 March 2018.
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 1 April 2008. 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.
There are no options, issued or exercisable, in the Company
which would distort the graphical representation that follows.
Albion Venture Capital Trust PLC
39
250317 Albion Capital pp28-pp40.qxp 02/07/2018 21:07 Page 40
Directors’ remuneration report continued
Ordinary share price total return relative to the
FTSE All-Share Index total return
(in both cases with dividends reinvested)
)
e
r
a
h
s
r
e
p
e
c
n
e
p
(
n
r
u
t
e
R
250
200
150
100
50
0
Mar
2008
Mar
2009
Mar
2010
Mar
2011
Mar
2012
Mar
2013
Mar
2014
Mar
2015
Mar
2016
Mar
2017
Mar
2018
Ordinary share price total return
FTSE All-Share Index total return
Source: Albion Capital Group LLP
Methodology: The Ordinary share price total return to the shareholder, including original amount invested (rebased to 100), assuming
that dividends were reinvested at the share price of the Company at the time the shares were quoted ex-dividend. Transaction costs
are not taken into account.
Directors’ pay compared to distribution to shareholders
2018
£’000
4,317
1,019
110
2017 Percentage
£’000 change
3,964 8.9%
873 16.7%
92 19.6%
Total dividend distribution to shareholders
Share buybacks
Total Directors fees
For and on behalf of the Board
David Watkins
Director
29 June 2018
40
Albion Venture Capital Trust PLC
250317 Albion Capital pp41-pp46.qxp 02/07/2018 21:09 Page 41
Independent Auditor’s report to the Members of
Albion Venture Capital Trust PLC
Opinion
We have audited the financial statements of Albion Venture
Capital Trust plc (the “company”) for the year ended 31 March
2018 which comprise the income statement, the balance sheet,
the statement of changes in equity and the statement of cash
flows and notes to the financial statements, including a summary
of significant accounting policies. The financial reporting
framework that has been applied in their preparation is
applicable law and United Kingdom Accounting Standards,
including Financial Reporting Standard 102 The Financial
Reporting Standard applicable in the UK and Republic of Ireland
(United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
• give a true and fair view of the state of the company’s affairs
as at 31 March 2018 and of its profit for the year then ended;
• have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice;
• have been prepared in accordance with the requirements of
the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor’s responsibilities for the audit of the financial statements
section of our report. We are independent of the company in
accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC’s
Ethical Standard as applied to listed public interest entities, and
we have fulfilled our other ethical responsibilities in accordance
with these requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for
our opinion.
Conclusions relating to principal risks, going concern and
viability statement
We have nothing to report in respect of the following information
in the annual report, in relation to which the ISAs (UK) require us
to report to you whether we have anything material to add or
draw attention to:
• the disclosures in the annual report that describe the principal
risks and explain how they are being managed or mitigated;
• the directors’ confirmation in the annual report that they
have carried out a robust assessment of the principal risks
facing the company, including those that would threaten its
business model, future performance, solvency or liquidity;
• the directors’ statement in the financial statements about
whether the directors considered it appropriate to adopt the
going concern basis of accounting in preparing the financial
statements and the directors’ identification of any material
uncertainties to the company’s ability to continue to do so
over a period of at least twelve months from the date of
approval of the financial statements;
• whether the directors’ statement relating to going concern
required under the Listing Rules in accordance with Listing
Rule 9.8.6R(3) is materially inconsistent with our knowledge
obtained in the audit; or
• the directors’ explanation in the annual report as to how they
have assessed the prospects of the company, over what
period they have done so and why they consider that period
to be appropriate, and their statement as to whether they
have a reasonable expectation that the company 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.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which
had the greatest effect on: the overall audit strategy; the
allocation of resources in the audit; and directing the efforts of
the engagement team. These matters were addressed in the
context of our audit of the financial statements as a whole, and
in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Albion Venture Capital Trust PLC
41
250317 Albion Capital pp41-pp46.qxp 02/07/2018 21:09 Page 42
Independent Auditor’s report to the Members of
Albion Venture Capital Trust PLC continued
Key Audit Matter
Audit response
Valuation of investments (Note
2 and 11 to the financial
statements)
There is a high level of estimation
uncertainty involved in determining
the
investment
valuations.
unquoted
The Investment Manager’s fee is
based on the value of the net
assets of the fund, as shown in
note 5.
As the Investment Manager is
responsible for valuing investments
for the financial statements, there
is a potential risk of overstatement
of
investment valuations. The
existence of an expense cap in the
management
agreement
enhances this risk.
We tested a sample of 90% of the unquoted investment portfolio by value of investment
holdings.
We performed preliminary analytical procedures to determine our investment sample and
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.
10% of the unquoted portfolio is based on valuations using net assets (i.e. cash held) or cost
(where the investment was recently acquired). For such investments, we checked the net
assets or cost to supporting documentation and considered the Investment Manager’s
determination of whether there were any reasons why the valuation and the valuation
methodology was not appropriate at 31 March 2018.
The remaining 90% of the investment portfolio is valued with reference to more subjective
techniques with 21% based on discounted cash flows and 69% using earnings multiples, as
described in note 11.
Our detailed testing for such investments, performed on all investments within our sample
comprised:
• Forming a determination of whether the valuation methodology is the most appropriate
in the circumstances under the International Private Equity and Venture Capital
Valuation (“IPEV”) Guidelines obtaining management explanations
• Re-performed the calculation of the multiples-based investment valuations
• Where a valuation has been performed by a third party management’s expert, we
assessed the competence and capabilities of that expert, the quality of their work and
their qualifications, as well as challenging the basis of inputs and assumptions used by
the expert (i.e. discount rates and earnings multiples). We also considered any updates
for subsequent information to the valuation made by the investment manager and
obtained appropriate evidence for those changes
• Benchmarked key inputs and estimates to independent information and our own
research
• Challenged the assumptions inherent in the valuation of unquoted investments and
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
• Developed our own point estimates 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
42
Albion Venture Capital Trust PLC
250317 Albion Capital pp41-pp46.qxp 02/07/2018 21:09 Page 43
Independent Auditor’s report to the Members of
Albion Venture Capital Trust PLC continued
Key Audit Matter
Audit response
For investments not included in our detailed testing, we performed the following procedures
For investments not included in our detailed testing, we performed the following procedures
where relevant:
where relevant:
• Considered whether the valuation had been prepared by a suitably qualified individual
• Considered whether the valuation had been prepared by a suitably qualified individual
• Considered whether a valid IPEV methodology had been adopted
• Considered whether a valid IPEV methodology had been adopted
• Considered whether the valuation used up to date trading information
• Considered whether the valuation used up to date trading information
For a sample of loans held at fair value, we:
For a sample of loans held at fair value, we:
• Vouched security held to documentation
• Vouched 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
• Considered the assumption that fair value is not significantly different to cost by
rate since acquisition and considering the “unit of account” concept (i.e. the investment
challenging the assumption that there is no significant movement in the market interest
as a whole)
rate since acquisition and considering the “unit of account” concept (i.e. the investment
• Reviewed the treatment of accrued redemption premium/other fixed returns in line with
as a whole)
the SORP
• Reviewed the treatment of accrued redemption premium/other fixed returns in line with
the SORP
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.
In respect of dividends receivable, we compared actual income to expectations set based on
independent published data or management information from the investee company on
dividends declared by the portfolio companies held.
Revenue recognition
(Note 2 and 4 to the financial
statements)
Revenue consists primarily of
interest earned on loans to investee
companies, as well as dividends
receivable
investee
companies.
from
of
assessment
Revenue recognition is considered
to be a significant risk, particularly
the
the
interest
recoverability of
income, and the completeness of
dividends, as it is one of the key
drivers of dividend returns to
investors.
loan
Income arises from unquoted
investments and can be difficult to
predict. It is often a key factor in
demonstrating the performance of
the portfolio.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. For planning,
we consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of
reasonable users that are taken on the basis of the financial statements. In order to reduce to an appropriately low level the probability that
any misstatements exceed materiality we use a lower materiality level, performance materiality, to determine the extent of testing needed.
Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of
identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the Financial Statements.
The application of these key considerations gives rise to two levels of materiality, the quantum and purpose of which are tabulated below.
Albion Venture Capital Trust PLC
43
250317 Albion Capital pp41-pp46.qxp 02/07/2018 21:09 Page 44
Independent Auditor’s report to the Members of
Albion Venture Capital Trust PLC continued
Materiality measure
Purpose
Key considerations and benchmarks
Quantum (£)
Financial statement
materiality.
(2% of gross
investments)
Performance
materiality.
Specific materiality –
classes of transactions
and balances which
impact on net realised
returns.
(10% of the revenue
return before tax)
the financial
Assessing whether
statements as a whole present a true
and fair view.
• The value of gross investments
• The level of judgement inherent in the
valuation
£1,190,000
(31 March 2017:
£1,110,000)
• The range of reasonable alternative
valuations
Lower level of materiality applied in
performance of the audit when
determining the nature and extent of
testing applied to individual balances
and classes of transactions.
• Financial statement materiality
• Risk and control environment
• History of prior errors (if any)
• Level of gross expenditure
those
classes
Assessing
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
financial
on
statements.
the basis of
the
£890,000
(31 March 2017:
£830,000)
£190,000
(31 March 2017:
£180,000)
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £11,000, as well as
differences below that threshold that, in our view, warranted reporting on qualitative grounds.
An overview of the scope of our audit
Our audit approach was developed by obtaining an understanding of the company’s activities, the key functions undertaken by the
Board 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.
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report
other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion
thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit
or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we
are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact.
We have nothing to report in this regard.
44
Albion Venture Capital Trust PLC
250317 Albion Capital pp41-pp46.qxp 02/07/2018 21:09 Page 45
Independent Auditor’s report to the Members of
Albion Venture Capital Trust PLC continued
In this context, we also have nothing to report in regard to our
responsibility to specifically address the following items in the
other information and to report as uncorrected material
misstatements of the other information where we conclude that
those items meet the following conditions:
• Fair, balanced and understandable – the statement given
by the directors that they consider the annual report and
financial statements taken as a whole is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the company’s performance, business
model and strategy, is materially inconsistent with our
knowledge obtained in the audit; or
• Audit Committee reporting – the section describing the
work of the audit committee does not appropriately address
matters communicated by us to the audit committee; or
• Directors’ statement of compliance with the UK
Corporate Governance Code – the parts of the directors’
statement required under the Listing Rules relating to the
company’s compliance with the UK Corporate Governance
Code containing provisions specified for review by the auditor
in accordance with Listing Rule 9.8.10R(2) do not properly
disclose a departure from a relevant provision of the UK
Corporate Governance Code.
Opinions 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.
In our opinion, based on the work undertaken in the course of the
audit:
• 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 strategic report and directors’ report have been prepared
in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the company
and its environment obtained in the course of the audit, we have
not identified material misstatements in the strategic report or
the directors’ report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us 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.
Responsibilities of directors
As explained more fully in the directors’ responsibilities
statement, the directors are responsible for the preparation of
the financial statements and for being satisfied that they give a
true and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless
the directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these
financial statements.
As part of an audit in accordance with ISAs, we exercise
professional judgement and maintain professional scepticism
throughout the audit. We also:
Albion Venture Capital Trust PLC
45
250317 Albion Capital pp41-pp46.qxp 02/07/2018 21:09 Page 46
Independent Auditor’s report to the Members of
Albion Venture Capital Trust PLC continued
A further description of our responsibilities for the audit of the
financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor’s report.
Other matters which we are required to address
Following the recommendation of the audit committee, we were
appointed by the Board of Directors to audit the financial
statements for the year ended 31 March 2008 and subsequent
financial periods. We were reappointed as auditors in respect of
the year ended 31 March 2018 by the Board. The period of total
uninterrupted engagement is 11 years, covering the years ending
31 March 2008 to 31 March 2018.
The non-audit services prohibited by the FRC’s Ethical Standard
were not provided to the company and we remain independent
of the company in conducting our audit.
Our audit opinion is consistent with the additional report to the
audit committee.
Use of our report
This report is made solely to the company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might
state to the company’s members those matters we are required
to state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company and
the company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Vanessa-Jayne Bradley (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London
United Kingdom
29 June 2018
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
• Identify and assess the risks of material misstatement of the
financial statements, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the
override of internal control.
• Obtain an understanding of internal control relevant to the
audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company’s internal
control.
• Evaluate the appropriateness of accounting policies used and
the reasonableness of accounting estimates and related
disclosures made by management.
• Conclude on the appropriateness of management’s use of
the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant
doubt on the company’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we
are required to draw attention in our auditor’s report to the
related disclosures in the financial statements or, if such
disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or
conditions may cause the company to cease to continue as a
going concern.
• Evaluate the overall presentation, structure and content of the
financial statements, including the disclosures, and whether
the
the underlying
transactions and events in a manner that achieves fair
presentation.
statements
represent
financial
We communicate with those charged with governance
regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during
our audit.
We also provide those charged with governance with a
statement that we have complied with relevant ethical
requirements regarding independence, and to communicate
with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where
applicable, related safeguards.
46
Albion Venture Capital Trust PLC
250317 Albion Capital pp47-pp50.qxp 02/07/2018 21:10 Page 47
Income statement
Revenue Capital Total Revenue Capital Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Year ended 31 March 2018
Year ended 31 March 2017
Gains on investments 3 – 3,930 3,930 – 6,179 6,179
Investment income 4 2,520 – 2,520 2,381 – 2,381
Investment management fees 5 (310) (928) (1,238) (283) (848) (1,131)
Other expenses 6 (332) – (332) (296) – (296)
Profit on ordinary activities
before tax 1,878 3,002 4,880 1,802 5,331 7,133
Tax (charge)/credit on ordinary
activities 8 (273) 176 (97) (292) 170 (122)
Profit and total comprehensive
income attributable to shareholders 1,605 3,178 4,783 1,510 5,501 7,011
Basic and diluted return per share
(pence)* 10 1.8 3.7 5.5 1.9 6.8 8.7
* excluding treasury shares
The accompanying notes on pages 51 to 63 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.
Albion Venture Capital Trust PLC
47
250317 Albion Capital pp47-pp50.qxp 02/07/2018 21:10 Page 48
Balance sheet
31 March 2018 31 March 2017
Note £’000 £’000
Fixed asset investments 11 59,451 55,473
Current assets
Trade and other receivables less than one year 13 136 140
Cash and cash equivalents 6,762 10,496
6,898 10,636
Total assets 66,349 66,109
Payables: amounts falling due within one year
Trade and other payables less than one year 14 (570) (634)
Total assets less current liabilities 65,779 65,475
Equity attributable to equity holders
Called up share capital 15 962 951
Share premium 25,475 24,630
Capital redemption reserve 7 7
Unrealised capital reserve 13,789 8,623
Realised capital reserve 6,755 8,743
Other distributable reserve 18,791 22,521
Total equity shareholders’ funds 65,779 65,475
Basic and diluted net asset value per share (pence)* 16 76.0 75.4
* excluding treasury shares
The accompanying notes on pages 51 to 63 form an integral part of these Financial Statements.
These Financial Statements were approved by the Board of Directors and authorised for issue on 29 June 2018, and were signed on
its behalf by
David Watkins
Chairman
Company number: 03142609
48
Albion Venture Capital Trust PLC
250317 Albion Capital pp47-pp50.qxp 02/07/2018 21:10 Page 49
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 2017 951 24,630 7 8,623 8,743 22,521 65,475
Return/(loss) and total comprehensive
income for the year – – – 3,736 (558) 1,605 4,783
Transfer of previously unrealised
losses on realisations of investments – – – 1,430 (1,430) – –
Purchase of treasury shares – – – – – (1,019) (1,019)
Issue of equity 12 856 – – – – 868
Cost of issue of equity – (11) – – – – (11)
Net dividends paid (note 9) – – – – – (4,317) (4,317)
As at 31 March 2018 962 25,475 7 13,789 6,755 18,791 65,779
As at 1 April 2016 861 18,374 7 1,128 10,737 25,848 56,955
Return/(loss) and total comprehensive
income for the year – – – 6,165 (664) 1,510 7,011
Transfer of previously unrealised
losses on realisations of investments – – – 1,330 (1,330) – –
Purchase of treasury shares – – – – – (873) (873)
Issue of equity 90 6,422 – – – – 6,512
Cost of issue of equity – (166) – – – – (166)
Net dividends paid (note 9) – – – – – (3,964) (3,964)
As at 31 March 2017 951 24,630 7 8,623 8,743 22,521 65,475
* These reserves amount to £25,546,000 (2017: £31,264,000) which is considered distributable.
Albion Venture Capital Trust PLC
49
250317 Albion Capital pp47-pp50.qxp 02/07/2018 21:10 Page 50
Statement of cash flows
Year ended Year ended
31 March 2018 31 March 2017
£’000 £’000
Cash flow from operating activities
Loan stock income received 2,124 1,941
Deposit interest received 7 69
Dividend income received 34 45
Investment management fees paid (1,236) (1,091)
Other cash payments (321) (302)
Corporation tax paid (147) (127)
Net cash flow from operating activities 461 535
Cash flow from investing activities
Purchase of fixed asset investments (3,027) (4,521)
Disposal of fixed asset investments 3,410 572
Net cash flow from investing activities 383 (3,949)
Cash flow from financing activities
Issue of share capital 268 7,809
Cost of issue of equity (2) (2)
Dividends paid (3,755) (3,424)
Purchase of own shares (including costs) (1,089) (803)
Net cash flow from financing activities (4,578) 3,580
(Decrease)/increase in cash and cash equivalents (3,734) 166
Cash and cash equivalents at start of period 10,496 10,330
Cash and cash equivalents at end of period 6,762 10,496
Cash and cash equivalents comprise
Cash at bank 6,762 10,496
Cash equivalents – –
Total cash and cash equivalents 6,762 10,496
50
Albion Venture Capital Trust PLC
250317 Albion Capital pp51-pp63.qxp 02/07/2018 21:14 Page 51
Notes to the Financial Statements
• 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 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:
• 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 portfolio
company’s business or in the technological, market,
economic, legal or regulatory environment in which the
business operates; or
• 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.
Receivables and payables and cash are carried at amortised cost,
in accordance with FRS 102. There are no financial liabilities
other than payables.
Basis of preparation
1.
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”).
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 fair value through profit and loss (“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 below.
Information about the Company can be found on page 2.
Accounting policies
2.
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 for using the equity method. In these circumstances
the investment is measured at FVTPL.
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;
Albion Venture Capital Trust PLC
51
250317 Albion Capital pp51-pp63.qxp 02/07/2018 21:14 Page 52
Notes to the Financial Statements continued
Accounting policies (continued)
2.
Investment income
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 accruals basis using the rate
of interest agreed with the bank.
Investment management fees and other expenses
All expenses have been accounted for on an accruals basis.
Expenses are charged through the other distributable reserve
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.
Performance incentive fee
In the event that a performance incentive fee crystallises, the fee
will be allocated between other distributable 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
52
Albion Venture Capital Trust PLC
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.
Reserves
Share premium
This reserve accounts for the difference between the price paid
for shares and the nominal value of the shares, less issue costs.
Capital redemption reserve
This reserve accounts for amounts by which the issued share
capital is diminished through the repurchase and cancellation of
the Company’s own shares.
Unrealised capital reserve
Increases and decreases in the valuation of investments held at
the year end against cost are included in this reserve.
Realised capital reserve
The following are disclosed in this reserve:
• gains and losses compared to cost on the realisation of
investments;
• expenses, together with the related taxation effect, charged
in accordance with the above policies; and
• dividends paid to equity holders where paid out by capital.
Other distributable reserve
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.
Segmental reporting
The Directors are of the opinion that the Company is engaged in
a single operating segment of business, being investment in
equity and debt. The Company invests in smaller companies
principally based in the UK.
250317 Albion Capital pp51-pp63.qxp 02/07/2018 21:14 Page 53
Notes to the Financial Statements continued
Gains on investments
3.
Year ended Year ended
31 March 2018 31 March 2017
£’000 £’000
Unrealised gains on fixed asset investments 3,736 6,165
Realised gains on fixed asset investments 194 14
Gains on investments 3,930 6,179
Investment income
4.
Year ended Year ended
31 March 2018 31 March 2017
£’000 £’000
Income recognised on investments
Loan stock interest and other fixed returns 2,479 2,277
Dividend income 34 45
Bank deposit interest 7 59
2,520 2,381
Interest income earned on impaired investments at 31 March 2018 amounted to £1,000 (2017: £120,000).
All of the Company’s income is derived from operations in the United Kingdom.
Investment management fees
5.
Year ended Year ended
31 March 2018 31 March 2017
£’000 £’000
Investment management fee charged to revenue 310 283
Investment management fee charged to capital 928 848
1,238 1,131
Further details of the Management agreement under which the investment management fee is paid are given in the Strategic report
on page 13.
During the year, services of a total value of £1,288,000 (2017: £1,180,000), were purchased by the Company from Albion Capital
Group LLP; this includes £1,238,000 (2017: £1,131,000) of investment management fee and £50,000 (2017: £49,000) secretarial and
administration fee. At the financial year end, the amount due to Albion Capital Group LLP in respect of these services disclosed within
accruals and deferred income was £325,000 (2017: £323,000).
Albion Capital Group LLP is, from time to time, eligible to receive arrangement fees and monitoring fees from portfolio companies.
During the year ended 31 March 2018, fees of £169,000 attributable to the investments of the Company were received by Albion
Capital Group LLP pursuant to these arrangements (2017: £100,000).
Albion Capital Group LLP, its partners and staff hold a total of 366,227 shares in the Company as at 31 March 2018.
Albion Venture Capital Trust PLC
53
250317 Albion Capital pp51-pp63.qxp 02/07/2018 21:14 Page 54
Notes to the Financial Statements continued
Other expenses
6.
Year ended Year ended
31 March 2018 31 March 2017
£’000 £’000
Directors’ fees (inc. NIC) 119 100
Auditor’s remuneration for statutory audit services (exc. VAT) 28 26
Secretarial and administration fee 50 49
Other administrative expenses 135 121
332 296
Directors’ fees
7.
The amounts paid to and on behalf of Directors during the year are as follows:
Year ended Year ended
31 March 2018 31 March 2017
£’000 £’000
Directors’ fees 110 92
National insurance 9 8
119 100
The Company’s key management personnel are the Directors. Further information regarding Directors’ remuneration can be found in
the Directors’ remuneration report on page 39.
Tax charge/(credit) on ordinary activities
8.
Year ended 31 March 2018 Year ended 31 March 2017
Revenue Capital Total Revenue Capital
£’000 £’000 £’000 £’000 £’000
UK corporation tax in respect of current year 350 (176) 174 351 (170)
UK corporation tax in respect of prior year (77) – (77) (59) –
Total 273 (176) 97 292 (170)
Total
£’000
181
(59)
122
Factors affecting the tax charge:
Year ended Year ended
31 March 2018 31 March 2017
£’000 £’000
Return on ordinary activities before taxation 4,880 7,133
Tax on profit at the standard rate of 19% (2017: 20%) 927 1,426
Factors affecting the charge:
Non-taxable gains (747) (1,236)
Income not taxable (6) (9)
Consortium relief in respect of prior years (77) (59)
97 122
54
Albion Venture Capital Trust PLC
250317 Albion Capital pp51-pp63.qxp 02/07/2018 21:14 Page 55
Notes to the Financial Statements continued
Tax charge/(credit) on ordinary activities (continued)
8.
The tax charge for the year shown in the Income statement is lower than the standard rate of corporation tax in the UK of 19 per cent.
(2017: 20 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.
Dividends
9.
Year ended Year ended
31 March 2018 31 March 2017
£’000 £’000
Dividend of 2.5p per share paid on 29 July 2016 – 1,987
Dividend of 2.5p per share paid on 30 December 2016 – 1,986
Dividend of 2.5p per share paid on 31 July 2017 2,179 –
Dividend of 2.5p per share paid on 31 January 2018 2,178 –
Unclaimed dividends (40) (9)
4,317 3,964
In addition to the dividends summarised above, the Board has declared a first dividend for the year ending 31 March 2019 of
2.5 pence per share to be paid on 31 July 2018 to shareholders on the register on 13 July 2018. The total dividend will be
approximately £2,163,000. All dividends are paid from the other distributable reserve.
During the year, unclaimed dividends older than twelve years of £40,000 (2017: £9,000) 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 2018 Year ended 31 March 2017
Revenue Capital Total Revenue Capital
Total
The return per share has been based
on the following figures:
Return/(loss) attributable to
equity shares (£’000) 1,605 3,178 4,783 1,510 5,501
Weighted average shares in issue
(excluding treasury shares) 87,117,574 80,525,974
Return/(loss) attributable per
equity share (pence) 1.8 3.7 5.5 1.9 6.8
7,011
8.7
The weighted average number of shares is calculated excluding treasury shares of 9,730,188 (2017: 8,263,188).
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.
Albion Venture Capital Trust PLC
55
250317 Albion Capital pp51-pp63.qxp 02/07/2018 21:14 Page 56
Notes to the Financial Statements continued
Fixed asset investments
11.
31 March 2018 31 March 2017
£’000 £’000
Investments held at fair value through profit or loss
Unquoted equity 25,717 21,900
Unquoted loan stock 33,734 33,573
59,451 55,473
31 March 2018 31 March 2017
£’000 £’000
Opening valuation 55,473 45,015
Purchases at cost 3,027 4,521
Disposal proceeds (3,334) (572)
Realised gains 194 14
Movement in loan stock accrued income 355 331
Unrealised gains 3,736 6,165
Closing valuation 59,451 55,473
Movement in loan stock accrued income
Opening accumulated movement in loan stock accrued income 596 265
Movement in loan stock accrued income 355 331
Closing accumulated movement in loan stock accrued income 951 596
Movement in unrealised gains/(losses)
Opening accumulated unrealised gains 8,623 1,128
Transfer of previously unrealised losses to realised reserve on realisations of investments 1,430 1,330
Unrealised gains 3,736 6,165
Closing accumulated unrealised gains 13,789 8,623
Historic cost basis
Opening book cost 46,255 43,622
Purchases at cost 3,027 4,521
Sales at cost* (4,570) (1,888)
Closing book cost* 44,712 46,255
*Included in the sales at cost is the cost after deducting realised losses of £282,000 for TWCL Limited which is 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.
56
Albion Venture Capital Trust PLC
250317 Albion Capital pp51-pp63.qxp 02/07/2018 21:14 Page 57
Notes to the Financial Statements continued
Fixed asset investments (continued)
11.
Unquoted fixed asset investments are valued at fair value in accordance with the IPEVCV guidelines as follows:
31 March 2018 31 March 2017
Valuation methodology £’000 £’000
Third party valuation – earnings multiple 41,015 41,105
Third party valuation – discounted cash flow 12,500 11,338
Net assets 3,094 2,207
Cost (reviewed for impairment) or price of recent investment 2,842 823
59,451 55,473
Fair value investments had the following movements between valuation methodologies between 31 March 2017 and 31 March 2018:
Value as at
31 March 2018
Change in valuation methodology (2017 to 2018) £’000 Explanatory note
Cost (reviewed for impairment) to net assets 809 More appropriate valuation methodology
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 2018.
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. The table below sets out fair value hierarchy definitions using FRS102 s.11.27.
Fair value hierarchy Definition
Level 1 Unadjusted quoted prices in an active market
Level 2 Inputs to valuations are from observable sources and are directly or indirectly derived from prices
Level 3 Inputs to valuations not based on observable market data
Unquoted equity, preference shares and loan stock are all valued according to Level 3 valuation methods.
Investments held at fair value through profit or loss (Level 3) had the following movements:
31 March 2018 31 March 2017
£’000 £’000
Opening balance 55,473 45,015
Additions 3,027 4,521
Disposal proceeds (3,334) (572)
Accrued loan stock interest 355 331
Realised gains 194 14
Unrealised gains 3,736 6,165
Closing balance 59,451 55,473
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. 59 per cent. of the portfolio of investments is based on cost, recent price of investment,
net assets or is loan stock, and as such the Board considers that the assumptions used for their valuations are the most reasonable.
The Directors believe that changes to reasonable possible alternative assumptions for the valuations of the remainder of the portfolio
companies could result in an increase in the valuation of investments by £707,000 or a decrease in the valuation of investments by
£602,000. For valuations based on third party valuations, the Board considers that the most significant inputs are earnings multiples
and market value per room for care homes; which have been adjusted to drive the above sensitivities.
Albion Venture Capital Trust PLC
57
250317 Albion Capital pp51-pp63.qxp 02/07/2018 21:14 Page 58
Notes to the Financial Statements continued
Significant interests
12.
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 2018 as described below:
Net
Profit/(loss)
(liabilities)/ Result % class
Registered before tax
assets for year and
Company postcode £’000
£’000 ended share type
Active Lives Care Limited EC2R 7AF n/a*
(178) 31 December 2016 22.2% Ordinary
G&K Smart Development VCT Limited EC2R 7AF n/a*
282 31 December 2016 50.0% Ordinary
Kew Green VCT (Stansted) Limited EC2R 7AF 573
5,340 31 August 2017 45.2% Ordinary
Ryefield Court Care Limited EC2R 7AF n/a*
(447) 30 April 2017 23.6% Ordinary
Shinfield Lodge Care Limited EC2R 7AF n/a*
The Stanwell Hotel Limited EC2R 7AF n/a*
730 31 December 2016 35.3% Ordinary
(7,914) 31 August 2017 39.2% Ordinary
% total
voting
rights
22.2%
50.0%
45.2%
23.6%
35.3%
39.2%
*The company files filleted accounts which do not disclose this information.
13. Current assets
31 March 2018 31 March 2017
Trade and other receivables £’000 £’000
Other receivables 51 96
UK corporation tax receivable 77 35
Prepayments and accrued income 8 9
136 140
The Directors consider that the carrying amount of receivables is not materially different to their fair value.
Payables: amounts falling due within one year
14.
31 March 2018 31 March 2017
£’000 £’000
Trade payables 12 78
UK Corporation tax payable 174 181
Accruals and deferred income 384 375
570 634
The Directors consider that the carrying amount of payables is not materially different to their fair value.
58
Albion Venture Capital Trust PLC
250317 Albion Capital pp51-pp63.qxp 02/07/2018 21:14 Page 59
Notes to the Financial Statements continued
15. Called up share capital
Allotted, called up and fully paid £’000
95,056,427 Ordinary shares of 1 penny each at 31 March 2017 951
1,186,774 Ordinary shares of 1 penny each issued during the year 12
96,243,201 Ordinary shares of 1 penny each at 31 March 2018 962
8,263,188 Ordinary shares of 1 penny each held in treasury at 31 March 2017 (83)
1,467,000 Ordinary shares purchased during the year to be held in treasury (15)
9,730,188 Ordinary shares of 1 penny each held in treasury at 31 March 2018 (97)
86,513,013 Ordinary shares of 1 penny each in circulation* at 31 March 2018 865
* Carrying one vote each
The Company purchased 1,467,000 Ordinary shares (2017: 1,308,748) to be held in treasury at a cost of £1,019,000 (2017:
£873,000) representing 1.5 per cent. (2017: 1.4 per cent.) of its issued share capital as at 31 March 2018. The shares purchased for
treasury were funded from the other distributable reserve.
The Company holds a total of 9,730,188 shares (2017: 8,263,188) in treasury at a nominal value of £97,000, representing 10.1 per
cent. of the issued Ordinary share capital as at 31 March 2018.
Under the terms of the Dividend Reinvestment Scheme Circular dated 10 July 2008, the following new Ordinary shares of nominal
value 1 penny per share were allotted during the year:
Aggregate Opening
nominal market price
value Issue price Net on allotment
Number of of shares (pence invested date (pence
Date of allotment shares allotted (£’000) per share) (£’000) per share)
31 July 2017 402,670 4 72.9 292 71.0
31 January 2018 418,126 4 71.6 298 68.5
820,796 8 590
During the year the following new Ordinary shares of nominal value 1 penny per share were allotted under the Albion VCTs Prospectus
Top Up Offers 2016/2017:
Aggregate Opening
nominal Net market price
value Issue price consideration on allotment
Number of of shares (pence received date (pence
Date of allotment shares allotted (£’000) per share) (£’000) per share)
7 April 2017 52,543 1 74.5 38 68.0
7 April 2017 29,427 – 74.9 22 68.0
7 April 2017 284,008 3 75.3 207 68.0
365,978 4 267
Albion Venture Capital Trust PLC
59
250317 Albion Capital pp51-pp63.qxp 02/07/2018 21:14 Page 60
Notes to the Financial Statements continued
16. Basic and diluted net asset value per share
31 March 2018 31 March 2017
Basic and diluted net asset value per share (pence) 76.0 75.4
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 86,513,013 Ordinary shares (2017: 86,793,239).
There are no convertible instruments, derivatives or contingent share agreements in issue.
17. 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 9 of the Chairman’s statement.
The Company’s financial instruments comprise equity and loan stock investments in unquoted companies, cash balances and short
term receivables and payables 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 payables. The Company does not use any derivatives for the management of its Balance sheet.
The principal risks arising from the Company’s operations are:
• Investment (or market) risk (which comprises investment price and cash flow interest rate risk);
• credit risk; and
• liquidity risk.
The Board regularly reviews and agrees policies for managing each of these risks. There have been no changes in the nature of the
risks that the Company has faced during the past year and, apart from where noted below, there have been no changes in the
objectives, policies or processes for managing risks during the past year. The key risks are summarised below.
Investment risk
As a venture capital trust, it is the Company’s specific nature to evaluate and control the investment risk of its portfolio in unquoted
investments, details of which are shown on page 21. 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 £59,451,000 (2017:
£55,473,000). Fixed asset investments form 90 per cent. of the net asset value as at 31 March 2018 (2017: 85 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, have a lower level of price volatility than equity. Details of the industries in which
investments have been made are contained in the Strategic report.
60
Albion Venture Capital Trust PLC
250317 Albion Capital pp51-pp63.qxp 02/07/2018 21:14 Page 61
Notes to the Financial Statements continued
17. Capital and financial instruments risk management (continued)
Valuations are based on the most appropriate valuation methodology for an investment within its market, with regard to the financial
health of the investment and the IPEVCV Guidelines.
As required under FRS 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 asset investments (keeping all other variables
constant) would increase or decrease the net asset value and return for the year by £5,945,000 (2017: £5,547,000).
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 1 per cent. in all interest rates would have increased total return before
tax for the year by approximately £70,000 (2017: £74,000). 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 7.6 per
cent. (2017: 7.0 per cent.). The weighted average period to maturity for the fixed rate assets is approximately 4.9 years (2017: 4.6
years).
The Company’s financial assets and liabilities, all denominated in pounds sterling, consist of the following:
31 March 2018 31 March 2017
Non- Non-
Fixed Floating interest Floating interest
rate rate bearing Total Fixed rate rate bearing Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Unquoted equity – – 25,717 25,717 – – 21,900 21,900
Unquoted loan stock 32,279 281 1,174 33,734 32,987 279 307 33,573
Receivables* – – 51 51 – – 96 96
Current liabilities* – – (396) (396) – – (452) (452)
Cash – 6,762 – 6,762 – 10,496 – 10,496
32,279 7,043 26,546 65,868 32,987 10,775 21,851 65,613
* The receivables 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 receivables, 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 receivables) and other risks, both at the time of initial investment
and at quarterly Board meetings.
Albion Venture Capital Trust PLC
61
250317 Albion Capital pp51-pp63.qxp 02/07/2018 21:14 Page 62
Notes to the Financial Statements continued
17. Capital and financial instruments risk management (continued)
The Company’s total gross credit risk as at 31 March 2018 was limited to £33,734,000 of unquoted loan stock instruments (2017:
£33,573,000), £6,762,000 cash deposits with banks (2017: £10,496,000) and £51,000 of other receivables (2017: £96,000).
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.
The credit profile of the unquoted loan stock is described under liquidity risk.
Liquidity risk
Liquid assets are held as cash on current short term 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
£6,362,000 as at 31 March 2018 (2017: £6,330,000).
The Company has no committed borrowing facilities as at 31 March 2018 (2017: £nil) and had cash balances of £6,762,000 (2017:
£10,496,000). 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 £570,000 for the year to 31 March 2018 (2017: £634,000).
The carrying value of loan stock investments as analysed by expected maturity dates is as follows:
31 March 2018 31 March 2017
Fully Fully
performing Past due Impaired Total performing Past due Impaired Total
Redemption date £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Less than one year 4,480 981 4,093 9,554 4,498 426 7,326 12,250
1-2 years 4,785 – – 4,785 417 – – 417
2-3 years 4,332 124 184 4,640 4,541 – – 4,541
3-5 years 2,726 961 – 3,687 5,334 978 416 6,728
5+ years 7,649 3,419 – 11,068 6,719 2,918 – 9,637
Total 23,972 5,485 4,277 33,734 21,509 4,322 7,742 33,573
Loan stock can be past due as a result of interest or capital not being paid in accordance with contractual terms.
Impaired loan stock has a cost of £6,443,000 (2017: £10,145,000).
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 2018 are stated at fair value as determined by the Directors, with the
exception of receivables and payables and cash which are carried at amortised cost, in accordance with FRS 102. There are no financial
liabilities other than payables. The Company’s financial liabilities are all non-interest bearing. It is the Directors’ opinion that the book
value of the financial liabilities is not materially different to the fair value and all are payable within one year.
62
Albion Venture Capital Trust PLC
250317 Albion Capital pp51-pp63.qxp 02/07/2018 21:14 Page 63
Notes to the Financial Statements continued
18. Commitments and contingencies
The Company had no financial commitments in respect of investments at 31 March 2018.
There are no contingent liabilities or guarantees given by the Company as at 31 March 2018 (31 March 2017: nil).
Post balance sheet events
19.
Since 31 March 2018 the Company has had the following post balance sheet events:
• Repayment of £4,676,000 in relation to loan stock and share premium from Kew Green VCT (Stansted) Limited;
• Investment of £120,000 in uMotif Limited; and
• Investment of £65,000 in Healios Limited.
20. Related party transactions
Other than transactions with the Manager as disclosed in note 5, there are no related party transactions or balances requiring
disclosure.
Albion Venture Capital Trust PLC
63
250317 Albion Capital pp64-pp68.qxp 02/07/2018 21:16 Page 64
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 13 August 2018 at 11:00 am for the following purpose:
To consider and, if thought fit, to pass the following resolutions, of which numbers 1 to 10 will be proposed as ordinary resolutions and
numbers 11 to 13 as special resolutions.
Ordinary Business
1. To receive and adopt the Company’s accounts for the year ended 31 March 2018 together with the report of the Directors and
Auditor.
2. To approve the Directors’ remuneration report for the year ended 31 March 2018.
3. To elect Richard Glover as a Director of the Company.
4. To elect Ann Berresford as a Director of the Company.
5. To re-elect John Kerr as a Director of the Company.
6. To re-elect Jeff Warren as a Director of the Company.
7. To re-appoint BDO LLP as Auditor of the Company to hold office from conclusion of the meeting to the conclusion of the next
meeting at which the accounts are to be laid.
8. To authorise the Directors to agree the Auditor’s remuneration.
Special Business
9.
Change of investment policy
That the Company’s current investment policy be replaced by the following:
The Company will invest in a broad portfolio of smaller, unquoted growth businesses across a variety of sectors including higher
risk technology companies. Investments may take the form of equity or a mixture of equity and loans.
Allocation of funds will be determined by the investment opportunities which become available but efforts will be made to
ensure that the portfolio is diversified both in terms of sector and stage of maturity of company. Funds held pending investment
or for liquidity purposes will be held as cash on deposit.
Risk diversification and maximum exposures
Risk is spread by investing in a number of different businesses within venture capital trust qualifying industry sectors. The
maximum amount which the Company will invest in a single portfolio company is 15 per cent. of the Company’s assets at cost,
thus ensuring a spread of investment risk. The value of an individual investment may increase over time as a result of trading
progress and it is possible that it may grow in value to a point where it represents a significantly higher proportion of total assets
prior to a realisation opportunity being available.
Gearing
The Company’s maximum exposure in relation to gearing is restricted to 10 per cent. of the adjusted share capital and reserves.
10. 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 £192,486
representing approximately 20 per cent. of the total Ordinary share capital as at the date of the Notice, provided that this
authority shall expire 15 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.
64
Albion Venture Capital Trust PLC
250317 Albion Capital pp64-pp68.qxp 02/07/2018 21:16 Page 65
Notice of Annual General Meeting continued
11. Authority for the disapplication of pre-emption rights
That, subject to the authority and conditional on the passing of resolution number 10, 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 10 and/or to sell ordinary shares held by the Company as treasury shares for cash as
if section 561(1) of the Act did not apply to any such allotment or sale.
Under this power the Directors may impose any limits or restrictions and make any arrangements which they deem necessary
or expedient to deal with any treasury shares, fractional entitlements, record dates, legal, regulatory or practical problems in, or
laws of, any territory or other matter, arising under the laws of, or the requirements of any recognised regulatory body or any
stock exchange in, any territory or any other matter.
This power shall expire 15 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.
12. Authority to purchase own shares
That, subject to and in accordance with the Company’s Articles of Association, the Company be generally and unconditionally
authorised, pursuant to and in accordance with section 701 of the Act, 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 provided that:
(a) the maximum aggregate number of shares hereby authorised to be purchased is 14,426,856 shares representing 14.99
per cent. of the issued Ordinary share capital of the Company as at the date of this Notice;
(b) the minimum price, exclusive of any expenses, which may be paid for an ordinary share is 1 penny;
(c) the maximum price, exclusive of any expenses, which may be paid for a share shall be an amount equal to the higher of
(a) 105% of the average of the middle market quotations for the share, as derived from the London Stock Exchange Daily
Official List, for the five business days immediately preceding the date on which the share is purchased; and (b) the
amount stipulated by Article 5(1) of the Buy-back and Stabilisation Regulation 2003;
(d) the authority hereby conferred shall, unless previously revoked, varied or renewed, expire 15 months from the date that
this resolution is passed or, if earlier, at the conclusion of the next Annual General Meeting; and
(e) the Company may enter into a contract or contracts to purchase shares under this authority before the expiry of the
authority which will or may be executed wholly or partly after the expiry of the authority, and may make a purchase of
shares in pursuance of any such contract or contracts as if the authority conferred hereby had not expired.
13. 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 Capital Group LLP
Company Secretary
Registered office
1 King’s Arms Yard
London, EC2R 7AF
29 June 2018
Albion Venture Capital Trust PLC is registered in England and Wales with number 03142609
Albion Venture Capital Trust PLC
65
250317 Albion Capital pp64-pp68.qxp 02/07/2018 21:16 Page 66
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/eproxy 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 9 August 2018.
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 9 August 2018 (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 9 August 2018. 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 or her 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
66
Albion Venture Capital Trust PLC
250317 Albion Capital pp64-pp68.qxp 02/07/2018 21:16 Page 67
Notice of Annual General Meeting continued
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.capital/funds/AAVC under the “Fund Reports” section.
7. Any member attending the meeting has the right to ask questions. The Company must cause to be answered any such question
relating to the business being dealt with at the meeting but no such answer need be given if (a) to do so would interfere unduly
with the preparation for the meeting or involve the disclosure of confidential information, (b) the answer has already been given
on a website in the form of an answer to a question, or (c) it is undesirable in the interests of the Company or the good order of
the meeting that the question be answered.
8. Copies of contracts of service and letters of appointment between the Directors and the Company, together with the Register
of Directors’ Interests in the Ordinary shares of 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 27 June 2018 being the latest practicable date prior to the publication of this Notice, the Company’s issued share capital
consists of 96,243,201 Ordinary shares with a nominal value of 1 penny each. The Company also holds 9,730,188 Ordinary
shares in treasury. Therefore, the total voting rights in the Company as at 27 June 2018 are 86,513,013.
Albion Venture Capital Trust PLC
67
250317 Albion Capital pp64-pp68.qxp 02/07/2018 21:16 Page 68
Dividend history for Albion Venture Capital Trust PLC
‘C Shares’ and Albion Prime VCT PLC (unaudited)
Proforma
Albion Prime
C shares VCT PLC
Total shareholder return to 31 March 2018: (pence per share) (pence per share)
Total dividends paid during the year ended : 31 March 1998 2.00 1.10
31 March 1999 8.75 6.40
31 March 2000 2.70 1.50
31 March 2001 4.80 4.25
31 March 2002 7.60 2.75
31 March 2003 7.70 2.00
31 March 2004 8.20 1.25
31 March 2005 9.75 2.20
31 March 2006 11.75 4.50
31 March 2007 10.00 4.00
31 March 2008 10.00 5.00
31 March 2009 10.00 4.50
31 March 2010 5.00 2.00
31 March 2011 5.00 3.00
31 March 2012 5.00 3.00
31 March 2013 5.00 3.70
31 March 2014 5.00 4.40
31 March 2015 5.00 4.40
31 March 2016 5.00 4.40
31 March 2017 5.00 4.40
31 March 2018 5.00 4.40
Total dividends paid to 31 March 2018 138.25 73.15
Net asset value as at 31 March 2018 76.00 66.89
Total shareholder return to 31 March 2018 214.25 140.04
Notes
• The Ordinary shares and the C shares merged on an equal basis.
• The proforma shareholder returns presented above for Albion Prime VCT PLC 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 2018. This proforma is based upon 0.8801 Albion Venture Capital Trust PLC shares for every
Albion Prime VCT PLC share which merged with Albion Venture Capital Trust PLC on 25 September 2012.
• 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.
68
Albion Venture Capital Trust PLC
Perivan Financial Print 250317
Albion Venture Capital Trust PLC
16 This report is printed on Amadeus offset a totally recycled paper
A member of the Association
of Investment Companies
produced using 100% recycled waste at a mill that has been
awarded the ISO 14001 certificate for environmental management.
The pulp is bleached using a totally chlorine free (TCF) process.
A
l
b
i
o
n
V
e
n
t
u
r
e
C
a
p
i
t
a
l
T
r
u
s
t
P
L
C
2
0
1
8