Annual Financial Report
Albion Development VCT PLC
Annual Financial Report
As required by the UK Listing Authority's Disclosure and Transparency Rules 4.1
and 6.3, Albion Development VCT PLC today makes public its information relating
to the Annual Report and Financial Statements for the year ended 31 December
2010.
This announcement was approved for release by the Board of Directors on 5 April
2011.
This announcement has not been audited.
You will shortly be able to view the Annual Report and Financial Statements for
the year to 31 December 2010 (which have been audited) at www.albion-
ventures.co.uk by clicking on 'Our Funds' and then 'Albion Development VCT
PLC'. The Annual Report and Financial Statements for the year to 31 December
2010 will be available as a PDF document via a link under the 'Investor Centre'
in the 'Financial Reports and Circulars' section. The information contained in
the Annual Report and Financial Statements will include information as required
by the Disclosure and Transparency Rules, including Rule 4.1.
Investment objectives
Albion Development VCT PLC (the "Company") is a venture capital trust which
raised a total of £33.3 million through an issue of shares between 1999 and
2004. The C shares merged with the Ordinary shares in 2007.
A further £6.3 million was raised through an issue of new D shares in
2009/2010. The funds raised through the issue of the D shares will be invested
in accordance with the Company's existing investment policy.
The Company's investment policy is intended to provide investors with a regular
and predictable source of dividend income combined with the prospects of long
term capital growth. This is achieved by establishing a diversified portfolio of
holdings in smaller, unquoted companies whilst at the same time selecting and
structuring investments in such a way as to reduce the risks normally associated
with investment in such companies. It is intended that this will be achieved as
follows:
* Through investment in a number of higher risk companies with greater growth
prospects in sectors such as software and computer services, and medical
technology.
* This is balanced by  investment in lower risk, often asset-backed
investments that provide a strong income stream combined with a protection
of capital. These include freehold-based businesses in the leisure sector,
such as pubs and health clubs, as well as stable and profitable businesses
in other sectors including business services and healthcare. Such
investments will constitute the majority of investments by cost.
* In neither category do investee companies normally have any external
borrowings with a prior charge ranking ahead of the VCT.
* Up to two-thirds of qualifying investments by cost comprise loan stock
secured with a first charge on the investee company's assets.
Financial calendar
Annual General Meeting 12 noon 11 May 2011
Record date for first dividend 3 May 2011
Payment of first dividend 31 May 2011
Payment of second dividend subject to Board approval 30 September 2011
Financial summary
Ordinary shares
133.1p                  Net asset value plus dividends per Ordinary share
since launch to 31 December 2010
8.0p       Tax free dividend per Ordinary share paid in the year
to 31 December 2010
2.5p First tax free dividend per Ordinary share declared
for the year to 31 December 2011
75.4p                    Net asset value per Ordinary share as at 31 December
2010
D shares
94.0p Net asset value plus dividends per D share since
launch to 31 December 2010
1.0p       Tax free dividend per D share paid in the year to 31
December 2010
1.25p First tax free dividend per D share declared for the
year to 31 December 2011
93.0p                    Net asset value per D share as at 31 December 2010
Financial highlights
+------------------+-----------------------------+-----------------------------+
| Â | Ordinary shares | D shares |
+------------------+--------------+--------------+--------------+--------------+
| | 31 December| 31 December| 31 December| 31 December|
| | 2010| 2009| 2010| 2009|
| | pence per| pence per| pence per| pence per|
| Â | share| share| share| share|
+------------------+--------------+--------------+--------------+--------------+
|Â | Â | Â | Â | Â |
+------------------+--------------+--------------+--------------+--------------+
|Dividends paid | 8.00| 4.00| 1.0| -|
+------------------+--------------+--------------+--------------+--------------+
|Revenue return | 1.50| 2.40| 0.30| -|
+------------------+--------------+--------------+--------------+--------------+
|Capital | | | | |
|gain/(loss) | 2.40| (4.10)| (0.90)| -|
+------------------+--------------+--------------+--------------+--------------+
|Net asset value | 75.40| 79.30| 93.00| 94.60|
+------------------+--------------+--------------+--------------+--------------+
Total shareholder net asset value return to 31 December 2010:
Ordinary D shares
shares C shares 31 December
31 December 31 December 2010
2010 2010 pence per
pence per pence per share(ii)
 share (ii) share(ii)
--------------------------------------------------------------------------------
Total dividends paid during the year -
ended:Â 31 December 1999(i) 1.00 -
                                      31 -
December 2000 2.90 -
                                      31 -
December 2001 3.95 -
                                      31 -
December 2002 4.20 -
                                      31 -
December 2003(iii) 4.50 0.75
                                      -
                           31 December
2004 4.00 2.00
                                      31 -
December 2005 5.20 5.90
                                      31 -
December 2006 3.00 4.50
31 December 2007(iv) 5.00 5.36 -
31 December 2008 12.00 12.86 -
31 December 2009 4.00 4.29 -
31 December 2010 8.00 8.58 1.00
--------------------------------------
Total dividends paid to 31 December 2010 57.75 44.24 1.00
Net asset value as at 31 December 2010 75.40 80.79 93.00
--------------------------------------
Total shareholder return to 31 December 94.00
2010 133.15 125.03
--------------------------------------
Shareholders are reminded that the first Ordinary share dividend of 4.0 pence
per share for the year to 31 December 2009 was paid in advance on 30 December
2008.
In addition to the dividends paid above, the Board has declared a first dividend
for the year ending 31 December 2011, of 2.50 pence per Ordinary share and 1.25
pence per D share payable on 31 May 2011 to shareholders on the register at 3
May 2011.
Notes
(i) Assuming subscription for Ordinary shares by the First Closing on 26 January
1999.
(ii) Excludes tax benefits upon subscription.
(iii) Those subscribing for C shares after 30 June 2003 were not entitled to the
interim dividend.
(iv) The C shares were converted into Ordinary shares on 31 March 2007, with a
conversion of 1.0715 Ordinary shares for each C share. The net asset value per
share and all dividends paid subsequent to the conversion of the C shares to the
Ordinary shares are multiplied by the conversion factor of 1.0715 in respect of
the C shares return, in order to give an accurate picture of the shareholder
value since launch relating to the C shares.
Chairman's statement
Introduction
The results for Albion Development VCT for the year to 31 December 2010 show a
continued recovery from the low point of the depths of the UK recession, and an
encouraging positive return for the Ordinary share portfolio. The Ordinary
share portfolio showed a return of 3.90 pence per share while the D share
portfolio, which raised £6.3 million under the Offer for Subscription which
closed on 21 June 2010, showed a small negative return of 0.60 pence per share
during the first full year of trading.
Investment performance and progress
The Ordinary shares benefitted both from the sale of our investment in Geronimo
Inns, which realised a return of just under 25% in the 16 month holding period,
and, from the successful sale of the investment in RFI Global Services at a
level of almost twice its previous holding value. In addition, there were
further improved performances from Blackbay, Mirada Medical, CS (Greenwich) and
Lowcosttravelgroup. Against this was a reduction in value of Consolidated PR,
Oxsensis and Chichester Holdings.
During the year, some £2.1 million was invested or committed for investment by
the Ordinary share portfolio and £3.0 million by the D share portfolio. New
investments included the Orchard Portman psychiatric hospital in Somerset,
Masters Pharmaceuticals (which distributes "special" pharmaceuticals on a
worldwide basis), TEG Biogas (Perth) (a waste food-to-energy power station in
Scotland), Street-by-Street Solar (which installs solar panels on the roofs of
residential houses) and Radnor House, a new independent school by the Thames at
Twickenham.
Risks and uncertainties
The outlook for the UK economy continues to be the key risk affecting your
Company. Although there have been indications of renewed growth, there is
continuing uncertainty as to the impact on the economy of the coalition
Government's public spending cuts. Importantly, however, investment risk is
mitigated through a variety of processes, including our policy of ensuring that
the Company has a first charge over investee companies' assets wherever
possible. Meanwhile, opportunities within our target sectors continue to arise
at attractive valuations, including in the healthcare and environmental sectors,
which continue to be two core areas of activity.
A detailed analysis of the other risks and uncertainties facing the business is
shown note 24.
Discount management and share buy-backs
It remains the Board's policy to buy back shares in the market, subject to the
overall constraint that such purchases are in the VCT's interests, including the
maintenance of sufficient resources for investment in new and existing investee
companies and the continued payment of dividends to shareholders. It is the
Board's intention for such buy-backs to be in the region of a 10 to 15 per cent.
discount to net asset value, so far as market conditions and liquidity permit.
Results and dividends
As at 31 December 2010, the net asset value of the Ordinary shares was 75.40
pence per share, and the net asset value of the D shares was 93.00 pence per
share. The revenue return before taxation for the Ordinary shares was £525,000
compared to £790,000 for the previous year reflecting slower trading in some of
our previously high yielding investments such as Chichester Holdings. The D
shares' revenue return before taxation was £18,000.
As mentioned in the interim report, over the 12 years since launch, the Company
has paid or declared an annual dividend on the Ordinary shares averaging 4.80
pence per share. Since 2008, the annual dividend has averaged 8.00 pence per
share, as a result of the accumulation of substantial realised profits from the
disposal of investments. As these have now been largely paid out by way of
dividend, and bearing in mind the projected income generation of the portfolio,
combined with available reserves and cash resources, it will be your Company's
target from 2011 to return to the longer-term average and to pay out annual
dividends of around 5.00 pence per share on the Ordinary share class, so far as
it is able. Consequently, the Company will pay a first dividend for the
financial year to 31 December 2011 of 2.50 pence per Ordinary share and 1.25
pence per D share. Dividends will be paid on 31 May 2011 to shareholders on the
register on 3 May 2011.
Supporting enterprise and growth
Recent research undertaken by the Association of Investment Companies has
demonstrated that VCT investment provides substantial benefits for UK small
businesses and the economy in at least three ways: first, by creating jobs;
second, by providing additional management skill to support growing businesses;
and finally, by being cost-effective, in that the cost to the public purse is
more than offset by the increased tax returns generated by the growth of VCT-
backed companies. In common with other VCTs, your Board recommends that the
coalition Government continues to support the VCT sector as one of the best ways
to support enterprise and future economic growth.
Cancellation of share premium account
Shareholders approved the cancellation of the Company's D share premium account
by way of special resolution at a General Meeting held on 28 October 2009. The
share premium account amounting to £2.8 million was subsequently cancelled on
18 August 2010 by order of the High Court and the Notice regarding the
cancellation was registered at Companies House on 18 August 2010. The purpose of
this cancellation is to increase the distributable special reserve available for
the payment of dividends, to cover gross realised losses, or for the buy-back of
D shares.
Issue of D shares and the Albion VCTs Linked Top Up Offer
During the year, the Company issued 4,901,555 D shares under the Offer for
Subscription for D shares, bringing to £6.3m, the total raised under the Offer,
and generating net proceeds of £5.9m.
On 1 November 2010 the Company announced the launch of the Albion VCTs Linked
Top Up Offer. In aggregate, the Albion VCTs will be aiming to raise
approximately £13.3 million across seven of the VCTs managed by Albion Ventures
LLP, of which Albion Development VCT PLC's share will be approximately £2
million.
The maximum amount raised by each of the Albion VCTs will be the lower of Euros
2.5 million, and 10 per cent. of its issued share capital (over any one 12 month
period, and including any shares issued under Dividend Reinvestment Schemes),
being the amount that they may issue under the Prospectus Rules without the
publication of a full prospectus. The proceeds of the Offer will be used to
provide further resources to the Albion VCTs at a time when a number of
attractive new investment opportunities are being seen. An Investor Guide and
Offer document was sent to shareholders and can be obtained from www.albion-
ventures.co.uk.
On 7 January 2011, the Company issued 816,370 Ordinary shares at 80.10 pence per
share under the Offer. A further 811,163 Ordinary shares were allotted on 22
March 2011 at a price of 80.10 pence per Share. Further details are shown in
note 22.
Dividend reinvestment scheme for D shares
Enclosed with the Annual Report and Financial Statements sent to D shareholders
is an explanatory circular and a form allowing you to participate in the D
shares dividend reinvestment scheme whereby you may receive dividends in the
form of new D shares, which are eligible for up-front income relief. Additional
copies of this circular and form can be found on the Company's website at
www.albion-ventures.co.uk., Our funds, Albion Development VCT PLC under the
'Investor Centre' in the 'Dividend Reinvestment Scheme' section..
Outlook and prospects
The outlook for the UK economy remains uncertain. In particular, the full
impact of the public sector cuts on the wider economy has not yet been fully
felt. To mitigate this, a number of investee companies in the technology
portion of the portfolio operate in international markets and some in fast
growing developing countries. A significant number of our companies have
special assets or business capabilities, and we believe that, over the longer
term, they will provide strong returns for shareholders.
There is a view that interest rates will remain low in the short term, which
will continue to depress income from cash deposits. With this in mind, the
Company is looking to expand further its portfolio of asset-based income
producing investments where we have seen an improvement in the pipeline at
attractive prices across a range of industries, with particular emphasis on the
healthcare and environmental sectors.
Geoffrey Vero
Chairman
5 April 2011
Manager's report
The sector analysis of Albion Development VCT PLC's investment portfolio as at
31 December 2010 is shown below. By valuation, the asset-backed element of the
portfolio now accounts for 49 per cent. of the Ordinary shares' net asset value
and 23 per cent. of the D shares' net asset value, while the growth portfolio
accounts for 32 per cent. of the Ordinary shares and 7 per cent. of the D
shares, with cash and liquid resources and other net current assets providing
the balance.
In the Ordinary share portfolio, the healthcare element now accounts for 17 per
cent. (2009: 20 per cent. including Mears Group plc, most of which had been sold
during 2010), while the environmental and renewable portion is now 3 per cent.,
up from 2 per cent. For the D shares, the proportions are 7 per cent. for each
of the healthcare and environmental sectors.
Ordinary share portfolio
The sector split of the Ordinary share portfolio by valuation as at 31 December
2010 is shown at the end of this announcement.
D share portfolio
The sector split of the D share portfolio by valuation as at 31 December 2010 is
shown at the end of this announcement.
Portfolio review
As mentioned in the Chairman's statement, a number of companies within the
growth portfolio have begun to perform strongly. In addition to those detailed
in the Chairman's statement, it is worth mentioning improved prospects for
Dexela, memsstar (formerly Point 35 Microstructures), and Helveta. Against
this, continued difficult markets led to the restructuring of Rostima. The
effects of the Government cut-backs, meanwhile, have so far only been seen in
Consolidated PR, where a marked reduction in the State's spending on public
relations has led to a fall in revenue, though the company remains profitable.
In our asset-backed portfolio, cinemas have performed particularly well, while
profitability continued to climb at our health and fitness clubs leading to a
write-up in value of the Kensington Health Club. The Charnwood Pub Company,
which operates food-led pubs in central England, saw a reduction in value as its
core customer base struggled in a difficult economic climate, while Chichester
Holdings' markets have also suffered.
Realisations
The successful sale of RFI Global Services realised proceeds of £927,000 against
cost of £561,000 and a value as at 31 December 2009 of £479,000. The sale of
Geronimo Inns generated proceeds of £1.1 million, in addition to annual income
of 8%, against a cost of £960,000.
In addition, the Company sold the majority of its holding in Mears Group plc for
proceeds of £1.1 million. The balance of this holding was sold after the year
end.
New investments
Two new healthcare investments were made during the year in Orchard Portman
Hospital, a freehold psychiatric hospital based in Somerset, and Masters
Pharmaceuticals. The broader healthcare sector remains a core area for
concentration going forwards as we believe that the sector, at all stages of
technology and service, offers growth opportunities over the years to come,
despite the undoubted adverse effect of the impending spending cuts. In
addition, your Company has made its first renewable energy investments. TEG
Biogas (Perth) is constructing a waste-food-to-energy plant in Scotland, which
will become operational in 2011. We have also made an investment in the solar
energy sector through Street-by-Street Solar, which installs and owns PV panels
on residential buildings in the Thames Valley. In general, the environmental
sector is also set to be an important area for concentration, with a portfolio
weighting of up to 15 per cent., as, like healthcare, we see that it has strong,
longer term growth prospects.
The pipeline of potential new investments is strong; subsequent to the year end,
the Company has invested in a second psychiatric treatment centre. In addition,
terms have been agreed with a number of renewable energy projects in the
anaerobic digestion, hydroelectricity and wind sectors.
Albion Ventures LLP
Manager
5 April 2011
Responsibility Statement
In preparing these financial statements for the year to 31 December 2010, the
Directors of the Company, being Mr Geoffrey Vero, Mr David Pinckney, Mr Jonathan
Thornton and Mr Andrew Phillipps, confirm that to the best of their knowledge:
- summary financial information contained in this announcement and the full
Annual Report and Financial Statements for the year ended 31 December 2010 for
the Company has been prepared in accordance with United Kingdom Generally
Accepted Accounting Practice (UK Accounting Standards and applicable law) and
give a true and fair view of the assets, liabilities, financial position and
profit and loss of the Company for the year ended 31 December 2010 as required
by DTR 4.1.12.R;
-the Chairman's statement and Manager's report include a fair review of the
information required by DTR 4.2.7R (indication of important events during the
year ended 31 December 2010 and description of principal risks and uncertainties
that the Company faces); and
-the Chairman's statement and Manager's report include a fair review of the
information required by DTR 4.2.8R (disclosure of related parties transactions
and changes therein).
A detailed "Statement of Directors' responsibilities for the preparation of the
Company's financial statements" is contained within the full audited Annual
Report and Financial Statements.
By order of the Board
Geoffrey Vero
Chairman
Income statement
+-------------------------+----+-----------------------+-----------------------+
| | | Combined | Combined |
| | |Year ended 31 December |Year ended 31 December |
| Â | Â | 2010 | 2009 |
+-------------------------+----+-------+-------+-------+-------+-------+-------+
| |Note| | | | | | |
|Â | Â |Revenue|Capital| Total|Revenue|Capital| Total|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
| |  | £'000| £'000| £'000| £'000| £'000| £'000|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Gains/(losses) on | | | | | | | |
|investments |3 | -| 1,005| 1,005| -| (986)| (986)|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Investment income |4 | 924| -| 924| 1,078| -| 1,078|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Investment management | | | | | | | |
|fees |5 | (152)| (457)| (609)| (135)| (407)| (542)|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Recovery of VAT |Â | -| -| -| 26| 82| 108|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Other expenses |6 | (229)| -| (229)| (178)| -| (178)|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Return/(loss) on ordinary| | | | | | | |
|activities before tax |Â | 543| 548| 1,091| 791|(1,311)| (520)|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Tax (charge)/credit on | | | | | | | |
|ordinary activities |8 | (82)| 114| 32| (88)| 94| 6|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Return/(loss) | | | | | | | |
|attributable to | | | | | | | |
|shareholders |Â | 461| 662| 1,123| 703|(1,217)| (514)|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Â |Â | Â | Â | Â | Â | Â | Â |
+-------------------------+----+-------+-------+-------+-------+-------+-------+
The accompanying notes form an integral part of these Financial Statements.
The total column of this Income statement represents the profit and loss account
of the Company. The supplementary revenue and capital columns have been prepared
in accordance with the Association of Investment Companies' Statement of
Recommended Practice.
All revenue and capital items in the above statement derive from continuing
operations.
There are no recognised gains or losses other than the results for the year
disclosed above. Accordingly a Statement of total recognised gains and losses is
not required.
The difference between the reported loss on ordinary activities before tax and
the historical profit is due to the fair value movements on investments. As a
result a note on historical cost profit and losses has not been prepared.
Disclosure of basic and diluted earnings per share is given in the underlying
Ordinary and D share fund Income statements on the following pages.
Income statement (non-statutory analysis)
+-------------------------+----+-----------------------+------------------------
| | | Ordinary shares | Ordinary shares
| | |Year ended 31 December |Year ended 31 December
| Â | Â | 2010 | 2009
+-------------------------+----+-------+-------+-------+-------+-------+--------
| |Note| | | | | |
|Â | Â |Revenue|Capital| Total|Revenue|Capital| Total
+-------------------------+----+-------+-------+-------+-------+-------+--------
| |  | £'000| £'000| £'000| £'000| £'000| £'000
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Gains/(losses) on | | | | | | | |
|investments |3 | -| 985| 985| -| (986)| (986)|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Investment income |4 | 835| -| 835| 1,077| -| 1,077|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Investment management | | | | | | | |
|fees |5 | (125)| (376)| (501)| (135)| (406)| (541)|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Recovery of VAT |Â | -| -| -| 26| 82| 108|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Other expenses |6 | (185)| -| (185)| (178)| -| (178)|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Return/(loss) on ordinary| | | | | | | |
|activities before tax |Â | 525| 609| 1,134| 790|(1,310)| (520)|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Tax (charge)/credit on | | | | | | | |
|ordinary activities |8 | (78)| 97| 19| (88)| 94| 6|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Return/(loss) | | | | | | | |
|attributable to | | | | | | | |
|shareholders |Â | 447| 706| 1,153| 702|(1,216)| (514)|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
|Basic and diluted | | | | | | | |
|return/(loss) per share | | | | | | | |
|(pence)* |10 | 1.50| 2.40| 3.90| 2.40| (4.10)| (1.70)|
+-------------------------+----+-------+-------+-------+-------+-------+-------+
+-------------------------+----+-----------------------+------------------------
| | | D shares | D shares
| | |Year ended 31 December |Year ended 31 December
| Â | Â | 2010 | 2009
+-------------------------+----+-------+-------+-------+-----+-------+----------
| |Note| | | | | |
|Â | Â |Revenue|Capital| Total|Total|Capital| Total
+-------------------------+----+-------+-------+-------+-----+-------+----------
| |  | £'000| £'000| £'000|£'000| £'000| £'000
+-------------------------+----+-------+-------+-------+-----+-------+---------+
|Â |Â | Â | Â | Â | Â | Â | Â |
+-------------------------+----+-------+-------+-------+-----+-------+---------+
|Gains on investments |3 | -| 20| 20| Â | Â | Â |
+-------------------------+----+-------+-------+-------+-----+-------+---------+
|Investment income |4 | 89| -| 89| 1| -| 1|
+-------------------------+----+-------+-------+-------+-----+-------+---------+
|Investment management | | | | | | | |
|fees |5 | (27)| (81)| (108)| -| (1)| (1)|
+-------------------------+----+-------+-------+-------+-----+-------+---------+
|Other expenses |6 | (44)| -| (44)| -| -| -|
+-------------------------+----+-------+-------+-------+-----+-------+---------+
|Return/(loss) on ordinary| | | | | | | |
|activities before tax |Â | 18| (61)| (43)| 1| (1)| -|
+-------------------------+----+-------+-------+-------+-----+-------+---------+
|Tax (charge)/credit on | | | | | | | |
|ordinary activities |8 | (4)| 17| 13| -| -| -|
+-------------------------+----+-------+-------+-------+-----+-------+---------+
|Return attributable to | | | | | | | |
|shareholders |Â | 14| (44)| (30)| 1| (1)| -|
+-------------------------+----+-------+-------+-------+-----+-------+---------+
|Basic and diluted | | | | | | | |
|return/(loss) per share | | | | | | | |
|(pence)* |10 | 0.30| (0.90)| (0.60)| -| -| -|
+-------------------------+----+-------+-------+-------+-----+-------+---------+
* excluding treasury shares
The accompanying notes form an integral part of these Financial Statements.
Balance sheet
+---------------------------------------+----+----------------+----------------+
| | | Combined| Combined|
| Â |Note|31 December 2010|31 December 2009|
+---------------------------------------+----+----------------+----------------+
|  |  | £'000| £'000|
+---------------------------------------+----+----------------+----------------+
|Â | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
|Fixed asset investments | 11| 19,639| 18,875|
+---------------------------------------+----+----------------+----------------+
|Â | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
|Current assets | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
|Trade and other debtors | 13| 237| 406|
+---------------------------------------+----+----------------+----------------+
|Cash at bank and in hand | 18| 8,512| 5,908|
+---------------------------------------+----+----------------+----------------+
|Â | Â | 8,749| 6,314|
+---------------------------------------+----+----------------+----------------+
|Â | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
|Creditors: amounts falling due within | | | |
|one year | 14 | (470)| (306)|
+---------------------------------------+----+----------------+----------------+
|Â | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
|Net current assets | Â | 8,279| 6,008|
+---------------------------------------+----+----------------+----------------+
|Â | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
|Net assets | Â | 27,918| 24,883|
+---------------------------------------+----+----------------+----------------+
|Â | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
|Capital and reserves | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
|Called up share capital | 15| 19,388| 17,074|
+---------------------------------------+----+----------------+----------------+
|Share premium | Â | 37| 640|
+---------------------------------------+----+----------------+----------------+
|Capital redemption reserve | Â | 1,426| 1,183|
+---------------------------------------+----+----------------+----------------+
|Unrealised capital reserve | Â | (5,063)| (6,365)|
+---------------------------------------+----+----------------+----------------+
|Special reserve | Â | 10,497| 12,507|
+---------------------------------------+----+----------------+----------------+
|Treasury shares reserve | Â | (2,633)| (2,540)|
+---------------------------------------+----+----------------+----------------+
|Realised capital reserve | Â | 2,860| 1,389|
+---------------------------------------+----+----------------+----------------+
|Revenue reserve | Â | 1,406| 995|
+---------------------------------------+----+----------------+----------------+
|Total equity shareholders' funds | Â | 27,918| 24,883|
+---------------------------------------+----+----------------+----------------+
|Â | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
|Â | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
The accompanying notes form an integral part of these Financial Statements.
These Financial Statements were approved by the Board of Directors, and
authorised for issue on 5 April 2011 and were signed on its behalf by
Geoffrey Vero
Chairman
Company number: 3654040
Balance sheet (non-statutory analysis)
+---------------------------------------+----+----------------+----------------+
| | | Ordinary shares| Ordinary shares|
| Â |Note|31 December 2010|31 December 2009|
+---------------------------------------+----+----------------+----------------+
|  |  | £'000| £'000|
+---------------------------------------+----+----------------+----------------+
|Â | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
|Fixed asset investments | 11| 17,853| 18,875|
+---------------------------------------+----+----------------+----------------+
|Â | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
|Current assets | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
|Trade and other debtors | 13| 219| 170|
+---------------------------------------+----+----------------+----------------+
|Cash at bank and in hand | 18| 4,227| 4,709|
+---------------------------------------+----+----------------+----------------+
|Â | Â | 4,446| 4,879|
+---------------------------------------+----+----------------+----------------+
|Â | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
|Creditors: amounts falling due within | | | |
|one year | 14| (279)| (228)|
+---------------------------------------+----+----------------+----------------+
|Â | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
|Net current assets | Â | 4,167| 4,651|
+---------------------------------------+----+----------------+----------------+
|Â | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
|Net assets | Â | 22,020| 23,526|
+---------------------------------------+----+----------------+----------------+
|Â | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
|Capital and reserves | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
|Called up share capital | 15| 16,220| 16,357|
+---------------------------------------+----+----------------+----------------+
|Share premium | Â | 37| -|
+---------------------------------------+----+----------------+----------------+
|Capital redemption reserve | Â | 1,426| 1,183|
+---------------------------------------+----+----------------+----------------+
|Unrealised capital reserve | Â | (5,083)| (6,365)|
+---------------------------------------+----+----------------+----------------+
|Special reserve | Â | 7,752| 12,507|
+---------------------------------------+----+----------------+----------------+
|Treasury shares reserve | Â | (2,633)| (2,540)|
+---------------------------------------+----+----------------+----------------+
|Realised capital reserve | Â | 2,924| 1,390|
+---------------------------------------+----+----------------+----------------+
|Revenue reserve | Â | 1,377| 994|
+---------------------------------------+----+----------------+----------------+
|Â | | | |
|Total equity shareholders' funds | Â | 22,020| 23,526|
+---------------------------------------+----+----------------+----------------+
|Â | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
|Basic and diluted net asset value per | | | |
|share (pence)* | 17| 75.40| 79.30|
+---------------------------------------+----+----------------+----------------+
|Â | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
* excluding treasury shares
The accompanying notes form an integral part of these Financial Statements.
Balance sheet (non-statutory analysis)
+---------------------------------------+----+----------------+----------------+
| | | D shares| D shares|
| Â |Note|31 December 2010|31 December 2009|
+---------------------------------------+----+----------------+----------------+
|  |  | £'000| £'000|
+---------------------------------------+----+----------------+----------------+
|Â | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
|Fixed asset investments | 11| 1,786| -|
+---------------------------------------+----+----------------+----------------+
|Â | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
|Current assets | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
|Trade and other debtors | 13| 18| 236|
+---------------------------------------+----+----------------+----------------+
|Cash at bank and in hand | 18| 4,285| 1,199|
+---------------------------------------+----+----------------+----------------+
|Â | Â | 4,303| 1,435|
+---------------------------------------+----+----------------+----------------+
|Â | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
|Creditors: amounts falling due within | | | |
|one year | 14| (191)| (78)|
+---------------------------------------+----+----------------+----------------+
|Â | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
|Net current assets | Â | 4,112| 1,357|
+---------------------------------------+----+----------------+----------------+
|Â | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
|Net assets | Â | 5,898| 1,357|
+---------------------------------------+----+----------------+----------------+
|Â | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
|Capital and reserves | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
|Called up share capital | 15| 3,168| 717|
+---------------------------------------+----+----------------+----------------+
|Share premium | Â | -| 640|
+---------------------------------------+----+----------------+----------------+
|Capital redemption reserve | Â | -| -|
+---------------------------------------+----+----------------+----------------+
|Unrealised capital reserve | Â | 20| -|
+---------------------------------------+----+----------------+----------------+
|Special reserve | Â | 2,745| -|
+---------------------------------------+----+----------------+----------------+
|Treasury shares reserve | Â | -| -|
+---------------------------------------+----+----------------+----------------+
|Realised capital reserve | Â | (64)| (1)|
+---------------------------------------+----+----------------+----------------+
|Revenue reserve | Â | 29| 1|
+---------------------------------------+----+----------------+----------------+
|Â | | | |
|Total equity shareholders' funds | Â | 5,898| 1,357|
+---------------------------------------+----+----------------+----------------+
|Â | Â | Â | Â |
+---------------------------------------+----+----------------+----------------+
|Basic and diluted net asset value per | | | |
|share (pence)* | 17| 93.00| 94.60|
+---------------------------------------+----+----------------+----------------+
* excluding treasury shares
The accompanying notes form an integral part of these Financial Statements.
Reconciliation of movements in shareholders' funds
Combined
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
| |Called-| | | | | | | | |
| | up| | Capital|Unrealised| |Treasury|Realised| | |
| | share| Share|redemption| capital| Special| shares| capital| Revenue| |
| Â |capital|premium| reserve| reserve*|reserve*|reserve*|reserve*|reserve*| Total|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|  | £'000| £'000| £'000| £'000| £'000| £'000| £'000| £'000| £'000|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|As at 1 | | | | | | | | | |
|January 2010| 17,074| 640| 1,183| (6,365)| 12,507| (2,540)| 1,389| 995| 24,883|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Net realised| | | | | | | | | |
|gains on | | | | | | | | | |
|investments | -| -| -| -| -| -| 386| -| 386|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Unrealised | | | | | | | | | |
|gains on | | | | | | | | | |
|investments | -| -| -| 619| -| -| -| -| 619|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Transfer of | | | | | | | | | |
|unrealised | | | | | | | | | |
|losses to | | | | | | | | | |
|realised | | | | | | | | | |
|losses | -| -| -| 682| -| -| (682)| -| -|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Capitalised | | | | | | | | | |
|investment | | | | | | | | | |
|management | | | | | | | | | |
|fee | -| -| -| -| -| -| (457)| -| (457)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Tax relief | | | | | | | | | |
|on costs | | | | | | | | | |
|charged to | | | | | | | | | |
|capital | -| -| -| -| -| -| 114| -| 114|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Purchase of | | | | | | | | | |
|own treasury| | | | | | | | | |
|shares | -| -| -| -| -| (289)| -| -| (289)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Cancellation| | | | | | | | | |
|of treasury | | | | | | | | | |
|shares | (121)| -| 121| -| (196)| 196| -| -| -|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Purchase of | | | | | | | | | |
|own shares | | | | | | | | | |
|for | | | | | | | | | |
|cancellation| (120)| -| 120| -| (158)| -| -| -| (158)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Issue of | | | | | | | | | |
|equity (net | | | | | | | | | |
|of costs) | 2,555| 2,221| -| -| -| -| -| -| 4,776|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Cancellation| | | | | | | | | |
|of Share | | | | | | | | | |
|premium | | | | | | | | | |
|account | -|(2,824)| -| -| 2,810| -| -| 14| -|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Transfer | | | | | | | | | |
|from Special| | | | | | | | | |
|reserve to | | | | | | | | | |
|Realised | | | | | | | | | |
|reserve | -| -| -| -| (3,301)| -| 3,301| -| -|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Revenue | | | | | | | | | |
|return | | | | | | | | | |
|attributable| | | | | | | | | |
|to | | | | | | | | | |
|shareholders| -| -| -| -| -| -| -| 461| 461|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Dividends | | | | | | | | | |
|paid | -| -| -| -| (1,165)| Â | (1,191)| (64)|(2,420)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|As at 31 | | | | | | | | | |
|December | | | | | | | | | |
|2010 | 19,388| 37| 1,426| (5,063)| 10,497| (2,633)| 2,860| 1,406| 27,918|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
| |Called-| | | | | | | | |
| | up| | Capital|Unrealised| |Treasury|Realised| | |
| | share| Share|redemption| capital| Special| shares| capital| Revenue| |
| Â |capital|premium| reserve| reserve*|reserve*|reserve*|reserve*|reserve*| Total|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|  | £'000| £'000| £'000| £'000| £'000| £'000| £'000| £'000| £'000|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|As at 1 | | | | | | | | | |
|January 2009| 16,307| 3,266| 1,183| (5,622)| 9,223| (2,272)| 2,459| 889| 25,433|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Net realised| | | | | | | | | |
|losses on | | | | | | | | | |
|investments | -| -| -| -| -| -| (3)| -| (3)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Unrealised | | | | | | | | | |
|losses on | | | | | | | | | |
|investments | -| -| -| (983)| -| -| -| -| (983)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Transfer of | | | | | | | | | |
|unrealised | | | | | | | | | |
|losses to | | | | | | | | | |
|realised | | | | | | | | | |
|losses | -| -| -| 240| -| -| (240)| -| -|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Capitalised | | | | | | | | | |
|investment | | | | | | | | | |
|management | | | | | | | | | |
|fee | -| -| -| -| -| -| (407)| -| (407)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Capitalised | | | | | | | | | |
|recoverable | | | | | | | | | |
|VAT | -| -| -| -| -| -| 82| -| 82|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Tax relief | | | | | | | | | |
|on costs | | | | | | | | | |
|charged to | | | | | | | | | |
|capital | -| -| -| -| -| -| 94| -| 94|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Purchase of | | | | | | | | | |
|own treasury| | | | | | | | | |
|shares | -| -| -| -| -| (268)| -| -| (268)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Issue of | | | | | | | | | |
|equity (net | | | | | | | | | |
|of costs) | 767| 658| -| -| -| -| -| -| 1,425|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Cancellation| | | | | | | | | |
|of Share | | | | | | | | | |
|premium | | | | | | | | | |
|account | -|(3,284)| -| -| 3,284| -| -| -| -|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Revenue | | | | | | | | | |
|return | | | | | | | | | |
|attributable| | | | | | | | | |
|to | | | | | | | | | |
|shareholders| -| -| -| -| -| -| -| 703| 703|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Dividends | | | | | | | | | |
|paid | -| -| -| -| -| -| (596)| (596)|(1,192)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|As at 31 | | | | | | | | | |
|December | | | | | | | | | |
|2009 | 17,074| 640| 1,183| (6,365)| 12,507| (2,540)| 1,389| 995| 24,883|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
* The Special reserve allows the Company, amongst other things, to facilitate
the payment of dividends earlier than would otherwise have been possible as
transfers can be made from this reserve to the Realised capital reserve to
offset gross losses on disposal of investments. Accordingly, a transfer of
£3,301,000 in respect of the Ordinary shares, representing gross realised losses
on disposal of investments from launch to 31 December 2010, has been made from
the Special reserve to the Realised capital reserve.
Included within these reserves is an amount of £7,067,000 (2009: £5,986,000)
which is considered distributable. The Special reserve has been treated as
distributable in determining the amounts available for distribution.
Reconciliation of movements in shareholders' funds (non-statutory analysis)
Ordinary shares
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
| |Called-| | | | | | | | |
| | up| | Capital|Unrealised| |Treasury|Realised| | |
| | share| Share|redemption| capital| Special| shares| capital| Revenue| |
| Â |capital|premium| reserve| reserve*|reserve*|reserve*|reserve*|reserve*| Total|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|  | £'000| £'000| £'000| £'000| £'000| £'000| £'000| £'000| £'000|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|As at 1 | | | | | | | | | |
|January 2010| 16,357| -| 1,183| (6,365)| 12,507| (2,540)| 1,390| 994| 23,526|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Net realised| | | | | | | | | |
|gains on | | | | | | | | | |
|investments | -| -| -| -| -| -| 386| -| 386|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Unrealised | | | | | | | | | |
|gains on | | | | | | | | | |
|investments | -| -| -| 599| -| -| -| -| 599|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Transfer of | | | | | | | | | |
|unrealised | | | | | | | | | |
|losses to | | | | | | | | | |
|realised | | | | | | | | | |
|losses | -| -| -| 682| -| -| (682)| -| -|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Capitalised | | | | | | | | | |
|investment | | | | | | | | | |
|management | | | | | | | | | |
|fee | -| -| -| -| -| -| (376)| -| (376)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Tax relief | | | | | | | | | |
|on costs | | | | | | | | | |
|charged to | | | | | | | | | |
|capital | -| -| Â | -| -| -| 97| -| 97|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Purchase of | | | | | | | | | |
|own treasury| | | | | | | | | |
|shares | -| -| -| -| -| (289)| -| -| (289)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Cancellation| | | | | | | | | |
|of shares | | | | | | | | | |
|out of | | | | | | | | | |
|treasury | (121)| -| 121| -| (196)| 196| -| -| -|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Purchase of | | | | | | | | | |
|own shares | | | | | | | | | |
|for | | | | | | | | | |
|cancellation| (120)| -| 120| -| (158)| -| -| -| (158)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Issue of | | | | | | | | | |
|equity (net | | | | | | | | | |
|of costs) | 104| 37| -| -| -| -| -| -| 141|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Transfer | | | | | | | | | |
|from Special| | | | | | | | | |
|reserve to | | | | | | | | | |
|realised | | | | | | | | | |
|reserve | -| -| -| -| (3,301)| -| 3,301| -| -|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Revenue | | | | | | | | | |
|return | | | | | | | | | |
|attributable| | | | | | | | | |
|to | | | | | | | | | |
|shareholders| -| -| -| -| -| -| -| 447| 447|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Dividends | | | | | | | | | |
|paid | -| -| -| -| (1,100)| -| (1,191)| (64)|(2,355)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|As at 31 | | | | | | | | | |
|December | | | | | | | | | |
|2010 | 16,220| 37| 1,426| (5,083)| 7,752| (2,633)| 2,924| 1,377| 22,020|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
| |Called-| | | | | | | | |
| | up| | Capital|Unrealised| |Treasury|Realised| | |
| | share| Share|redemption| capital| Special| shares| capital| Revenue| |
| Â |capital|premium| reserve| reserve*|reserve*|reserve*|reserve*|reserve*| Total|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|  | £'000| £'000| £'000| £'000| £'000| £'000| £'000| £'000| £'000|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|As at 1 | | | | | | | | | |
|January 2009| 16,307| 3,266| 1,183| (5,622)| 9,223| (2,272)| 2,459| 889| 25,433|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Net realised| | | | | | | | | |
|losses on | | | | | | | | | |
|investments | -| -| -| -| -| -| (3)| -| (3)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Unrealised | | | | | | | | | |
|losses on | | | | | | | | | |
|investments | -| -| -| (983)| -| -| -| -| (983)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Transfer of | | | | | | | | | |
|unrealised | | | | | | | | | |
|losses to | | | | | | | | | |
|realised | | | | | | | | | |
|losses | -| -| -| 240| -| -| (240)| -| -|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Capitalised | | | | | | | | | |
|investment | | | | | | | | | |
|management | | | | | | | | | |
|fee | -| -| -| -| -| -| (406)| -| (406)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Capitalised | | | | | | | | | |
|recoverable | | | | | | | | | |
|VAT | -| -| -| -| -| -| 82| -| 82|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Tax relief | | | | | | | | | |
|on costs | | | | | | | | | |
|charged to | | | | | | | | | |
|capital | -| -| -| -| -| -| 94| -| 94|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Purchase of | | | | | | | | | |
|own treasury| | | | | | | | | |
|shares | -| -| -| -| -| (268)| -| -| (268)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Issue of | | | | | | | | | |
|equity (net | | | | | | | | | |
|of costs) | 50| 18| -| -| -| -| -| -| 68|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Cancellation| | | | | | | | | |
|of Share | | | | | | | | | |
|Premium | | | | | | | | | |
|account | -|(3,284)| -| -| 3,284| -| -| -| -|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Revenue | | | | | | | | | |
|return | | | | | | | | | |
|attributable| | | | | | | | | |
|to | | | | | | | | | |
|shareholders| -| -| -| -| -| -| -| 702| 702|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|Dividends | | | | | | | | | |
|paid | -| -| -| -| -| -| (596)| (596)|(1,192)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
|As at 31 | | | | | | | | | |
|December | | | | | | | | | |
|2009 | 16,357| -| 1,183| (6,365)| 12,507| (2,540)| 1,390| 994| 23,526|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-------+
Included within these reserves is an amount of £4,337,000 (2009: £5,986,000)
which is considered distributable. The Special reserve has been treated as
distributable in determining the amounts available for distribution.
Reconciliation of movements in shareholders' funds (non-statutory analysis)
D shares
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-----+
| |Called-| | | | | | | | |
| | up| | Capital|Unrealised| |Treasury|Realised| | |
| | share| Share|redemption| capital| Special| shares| capital| Revenue| |
| Â |capital|premium| reserve| reserve|reserve*|reserve*|reserve*|reserve*|Total|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-----+
|  | £'000| £'000| £'000| £'000| £'000| £'000| £'000| £'000|£'000|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-----+
|As at 1 | | | | | | | | | |
|January 2010| 717| 640| -| -| -| -| (1)| 1|1,357|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-----+
|Unrealised | | | | | | | | | |
|gains on | | | | | | | | | |
|investments | -| -| -| 20| -| -| -| -| 20|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-----+
|Capitalised | | | | | | | | | |
|investment | | | | | | | | | |
|management | | | | | | | | | |
|fee | -| -| -| -| -| -| (81)| -| (81)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-----+
|Tax relief | | | | | | | | | |
|on costs | | | | | | | | | |
|charged to | | | | | | | | | |
|capital | -| -| -| -| -| -| 17| -| 17|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-----+
|Issue of | | | | | | | | | |
|equity (net | | | | | | | | | |
|of costs) | 2,451| 2,184| -| -| -| -| -| -|4,635|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-----+
|Cancellation| | | | | | | | | |
|of share | | | | | | | | | |
|premium | | | | | | | | | |
|account | -|(2,824)| -| -| 2,810| -| -| 14| -|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-----+
|Revenue | | | | | | | | | |
|return | | | | | | | | | |
|attributable| | | | | | | | | |
|to | | | | | | | | | |
|shareholders| -| -| -| -| -| -| -| 14| 14|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-----+
|Dividends | | | | | | | | | |
|paid | -| -| -| -| (65)| Â | Â | -| (65)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-----+
|As at 31 | | | | | | | | | |
|December | | | | | | | | | |
|2010 | 3,168| -| -| 20| 2,745| -| (64)| 29|5,898|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-----+
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-----+
| |Called-| | | | | | | | |
| | up| | Capital|Unrealised| |Treasury|Realised| | |
| | share| Share|redemption| capital| Special| shares| capital| Revenue| |
| Â |capital|premium| reserve| reserve|reserve*|reserve*|reserve*|reserve*|Total|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-----+
|  | £'000| £'000| £'000| £'000| £'000| £'000| £'000| £'000|£'000|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-----+
|As at 1 | | | | | | | | | |
|January 2009| -| -| -| -| -| -| -| -| -|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-----+
|Capitalised | | | | | | | | | |
|investment | | | | | | | | | |
|management | | | | | | | | | |
|fee | -| -| -| -| -| -| (1)| -| (1)|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-----+
|Issue of | | | | | | | | | |
|equity (net | | | | | | | | | |
|of costs) | 717| 640| -| -| -| -| -| -|1,357|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-----+
|Revenue | | | | | | | | | |
|return | | | | | | | | | |
|attributable| | | | | | | | | |
|to | | | | | | | | | |
|shareholders| -| -| -| -| -| -| -| 1| 1|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-----+
|As at 31 | | | | | | | | | |
|December | | | | | | | | | |
|2009 | 717| 640| -| -| -| -| (1)| 1|1,357|
+------------+-------+-------+----------+----------+--------+--------+--------+--------+-----+
Included within these reserves is an amount of £2,710,000 (2009: nil) which is
considered distributable. The Special reserve has been treated as distributable
in determining the amounts available for distribution
Cash flow statement
+--------------------------------------+-----+----------------+----------------+
| | Â | Combined| Combined|
| |Notes| Year ended| Year ended|
| | |31 December 2010|31 December 2009|
| | | £'000| £'000|
+--------------------------------------+-----+----------------+----------------+
|Operating activities | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Investment income received | Â | 706| 949|
+--------------------------------------+-----+----------------+----------------+
|Deposit interest received | Â | 136| 66|
+--------------------------------------+-----+----------------+----------------+
|Dividend income received | Â | 50| 47|
+--------------------------------------+-----+----------------+----------------+
|Other income received | Â | -| 22|
+--------------------------------------+-----+----------------+----------------+
|Investment management fees paid | Â | (600)| (375)|
+--------------------------------------+-----+----------------+----------------+
|VAT recovery | Â | -| 522|
+--------------------------------------+-----+----------------+----------------+
|Other cash payments | Â | (211)| (180)|
+--------------------------------------+-----+----------------+----------------+
|Net cash flow from operating | Â | | |
|activities | 19| 81| 1,051|
+--------------------------------------+-----+----------------+----------------+
|Â | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Taxation | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|UK corporation tax recovered/(paid) | Â | 44| (384)|
+--------------------------------------+-----+----------------+----------------+
|Â | Â | | |
|Capital expenditure and financial | | | |
|investments | | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Purchase of fixed asset investments |  | (3,188)| (1,819)|
+--------------------------------------+-----+----------------+----------------+
|Disposal of fixed asset investments |  | 3,590| 422|
+--------------------------------------+-----+----------------+----------------+
|Net cash flow from investing | Â | | |
|activities | | 402| (1,397)|
+--------------------------------------+-----+----------------+----------------+
|Â | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Management of liquid resources | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Disposal of current asset investments | Â | -| 3,050|
+--------------------------------------+-----+----------------+----------------+
|Â | Â | | |
|Net cash flow from liquid resources | | -| 3,050|
+--------------------------------------+-----+----------------+----------------+
|Â | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Â | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Equity dividends paid | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Dividends paid  (net of cost of |  | | |
|issuing shares under Dividend | | | |
|Reinvestment Scheme) | | (2,265)| (1,133)|
+--------------------------------------+-----+----------------+----------------+
|Net cash flow before financing | Â | (1,738)| 1,187|
+--------------------------------------+-----+----------------+----------------+
|Â | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Financing | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Issue of share capital (net of costs) | Â | 4,792| 1,199|
+--------------------------------------+-----+----------------+----------------+
|Purchase of own shares | 15| (446)| (268)|
+--------------------------------------+-----+----------------+----------------+
|Costs of cancelling share premium | Â | | |
|account | | (6)| -|
+--------------------------------------+-----+----------------+----------------+
|Interclass payments | Â | 2| -|
+--------------------------------------+-----+----------------+----------------+
|Net cash flow from financing | Â | 4,342| 931|
+--------------------------------------+-----+----------------+----------------+
|Â | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Cash flow in the year | 18| 2,604| 2,118|
+--------------------------------------+-----+----------------+----------------+
Cash flow statement (non-statutory analysis)
+--------------------------------------+-----+----------------+----------------+
| | Â | Ordinary shares| Ordinary shares|
| |Notes| Year ended| Year ended|
| | |31 December 2010|31 December 2009|
|  | | £'000| £'000|
+--------------------------------------+-----+----------------+----------------+
|Operating activities | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Investment income received | Â | 692| 949|
+--------------------------------------+-----+----------------+----------------+
|Deposit interest received | Â | 65| 66|
+--------------------------------------+-----+----------------+----------------+
|Dividend income received | Â | 50| 47|
+--------------------------------------+-----+----------------+----------------+
|Other income received | Â | -| 22|
+--------------------------------------+-----+----------------+----------------+
|Investment management fees paid | Â | (525)| (375)|
+--------------------------------------+-----+----------------+----------------+
|VAT recovery | Â | -| 522|
+--------------------------------------+-----+----------------+----------------+
|Other cash payments | Â | (181)| (180)|
+--------------------------------------+-----+----------------+----------------+
|Net cash flow from operating | 19| | |
|activities | | 101| 1,051|
+--------------------------------------+-----+----------------+----------------+
|Â | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Taxation | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|UK corporation tax recovered/(paid) | Â | 44| (384)|
+--------------------------------------+-----+----------------+----------------+
|Â | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Capital expenditure and financial | Â | | |
|investments | | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Purchase of fixed asset investments |  | (1,567)| (1,819)|
+--------------------------------------+-----+----------------+----------------+
|Disposal of fixed asset investments |  | 3,590| 422|
+--------------------------------------+-----+----------------+----------------+
|Net cash flow from investing | Â | | |
|activities | | 2,023| (1,397)|
+--------------------------------------+-----+----------------+----------------+
|Â | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Management of liquid resources | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Disposal of current asset investments | Â | -| 3,050|
+--------------------------------------+-----+----------------+----------------+
|Net cash flow from liquid resources | Â | -| 3,050|
+--------------------------------------+-----+----------------+----------------+
|Â | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Â | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Equity dividends paid | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Dividends paid (net of cost of issuing| Â | | |
|shares issued under Dividend | | | |
|Reinvestment Scheme) | | (2,200)| (1,133)|
+--------------------------------------+-----+----------------+----------------+
|Net cash flow before financing | Â | (32)| 1,187|
+--------------------------------------+-----+----------------+----------------+
|Â | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Financing | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Purchase of own shares | Â | (446)| (251)|
+--------------------------------------+-----+----------------+----------------+
|Costs of issue of share capital | Â | (6)| (17)|
+--------------------------------------+-----+----------------+----------------+
|Interclass payments | Â | 2| -|
+--------------------------------------+-----+----------------+----------------+
|Net cash flow from financing | Â | (450)| (268)|
+--------------------------------------+-----+----------------+----------------+
|Â | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Cash flow in the year | 18| (482)| 919|
+--------------------------------------+-----+----------------+----------------+
Cash flow statement (non-statutory analysis)
+--------------------------------------+-----+----------------+----------------+
| | Â | D Â shares| D shares|
| |Notes| Year ended| Year ended|
| | |31 December 2010|31 December 2009|
|  | | £'000| £'000|
+--------------------------------------+-----+----------------+----------------+
|Operating activities | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Investment income received | Â | 14| -|
+--------------------------------------+-----+----------------+----------------+
|Deposit interest received | Â | 71| -|
+--------------------------------------+-----+----------------+----------------+
|Investment management fees paid | Â | (75)| -|
+--------------------------------------+-----+----------------+----------------+
|Other cash payments | Â | (30)| -|
+--------------------------------------+-----+----------------+----------------+
|Net cash flow from operating | 19| | |
|activities | | (20)| -|
+--------------------------------------+-----+----------------+----------------+
|Â | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Capital expenditure and financial | Â | | |
|investments | | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Purchase of fixed asset investments |  | (1,621)| -|
+--------------------------------------+-----+----------------+----------------+
|Disposal of fixed asset investments |  | -| -|
+--------------------------------------+-----+----------------+----------------+
|Net cash flow from investing | Â | | |
|activities | | (1,621)| -|
+--------------------------------------+-----+----------------+----------------+
|Â | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Equity dividends paid | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Dividends paid | Â | (65)| -|
+--------------------------------------+-----+----------------+----------------+
|Net cash flow before financing | Â | (1,706)| -|
+--------------------------------------+-----+----------------+----------------+
|Â | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Financing | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Issue of share capital  (net of costs)|  | 4,792| 1,199|
+--------------------------------------+-----+----------------+----------------+
|Net cash flow from financing | Â | 4,792| 1,199|
+--------------------------------------+-----+----------------+----------------+
|Â | Â | Â | Â |
+--------------------------------------+-----+----------------+----------------+
|Cash flow in the year | 18| 3,086| 1,199|
+--------------------------------------+-----+----------------+----------------+
Notes to the Financial Statements
1. Accounting convention
The financial statements have been prepared in accordance with the historical
cost convention, modified to include the revaluation of investments, in
accordance with applicable United Kingdom law and accounting standards and with
the Statement of Recommended Practice "Financial Statements of Investment Trust
Companies and Venture Capital Trusts" ("SORP") issued by the Association of
Investment Companies ("AIC") in January 2009. Accounting policies have been
applied consistently in current and prior periods.
2. Accounting policies
Investments
Quoted and unquoted equity investments, debt issued at a discount, and
convertible bonds
In accordance with FRS 26 "Financial Instruments Recognition and Measurement",
quoted and unquoted equity, debt issued at a discount and convertible bonds are
designated as fair value through profit or loss. Investments listed on
recognised exchanges are valued at the closing bid prices at the end of the
accounting period. Unquoted investments' fair value is determined by the
Directors in accordance with the September 2009 International Private Equity and
Venture Capital Valuation Guidelines (IPEVCV guidelines).
Desk top reviews are carried out by independent RICS qualified surveyors by
updating previously prepared full valuations for current trading and market
indices. Full valuations are prepared by similarly qualified surveyors but in
full compliance with the RICS Red Book.
Fair value movements and gains and losses arising on the disposal of investments
are reflected in the capital column of the Income statement in accordance with
the AIC SORP. Realised gains or losses on the sale of investments will be
reflected in the Realised capital reserve, and unrealised gains or losses
arising from the revaluation of investments will be reflected in the Unrealised
capital reserve.
Warrants and unquoted equity derived instruments
Warrants and unquoted equity derived instruments are only valued if their
exercise or contractual terms would allow them to be exercised as at the balance
sheet date, and if there is additional value to the Company in exercising or
converting as at the balance sheet date. Otherwise these instruments are held at
nil value. The valuation techniques used are those used for the underlying
equity investment.
Unquoted loan stock
Unquoted loan stock (excluding convertible bonds and debt issued at a discount)
is classified as loans and receivables in accordance with FRS 26 and carried at
amortised cost using the Effective Interest Rate method less impairment.
Movements in respect of capital provisions are reflected in the capital column
of the Income statement and are reflected in the Realised capital reserve
following sale, or in the Unrealised capital reserve on revaluation.
For all unquoted loan stock, fully performing, renegotiated, past due and
impaired, the Board considers that the fair value is equal to or greater than
the security value of these assets.
For unquoted loan stock, the amount of the impairment is the difference between
the asset's cost and the present value of estimated future cash flows,
discounted at the effective interest rate. The future cash flows are estimated
based on the fair value of the security less estimated selling costs.
Investments are recognised as financial assets on legal completion of the
investment contract and are de-recognised on legal completion of the sale of an
investment.
Dividend income is not recognised as part of the fair value movement of an
investment, but is recognised separately as investment income through the
Revenue reserve when a share becomes ex-dividend.
Loan stock accrued interest is recognised in the Balance sheet as part of the
carrying value of the loans and receivables at the end of each reporting period.
It is not the Company's policy to exercise control or significant influence over
investee companies. Therefore, in accordance with the exemptions under FRS 9
"Associates and joint ventures", those undertakings in which the Company holds
more than 20 per cent. of the equity are not regarded as associated
undertakings.
Investment income
Quoted and unquoted equity income
Dividend income is included in revenue when the investment is quoted ex-
dividend.
Unquoted loan stock and other preferred income
Fixed returns on non-equity shares and debt securities are recognised on a time
apportionment basis using the effective interest rate over the life of the
financial instrument. Income which is not capable of being received within a
reasonable period of time is reflected in the capital value of the investment.
Bank interest income
Interest income is recognised on an accrual basis using the rate of interest
agreed with the bank.
Investment management fees and other expenses
All expenses have been accounted for on an accruals basis. Expenses are charged
through the revenue account except the following which are charged through the
Realised capital reserve:
* 75 per cent. of management fees are allocated to the capital account to the
extent that these relate to an enhancement in the value of the investments
and in line with the Board's expectation that over the long term 75 per
cent. of the Company's investment returns will be in the form of capital
gains; and
* expenses which are incidental to the purchase or disposal of an investment
are charged through the Realised capital reserve.
Under the terms of the Management agreement, total expenses including management
fees and excluding performance fees will not exceed 3.5 per cent. of net asset
value of the Company at the year end.
Performance incentive fee
In the event that a performance incentive fee crystallises, the fee will be
allocated between Revenue and Realised capital reserves based upon the
proportion to which the calculation of the fee is attributable to revenue and
capital returns.
Taxation
Taxation is applied on a current basis in accordance with FRS 16 "Current tax".
Taxation associated with capital expenses is applied in accordance with the
SORP. In accordance with FRS 19 "Deferred tax", deferred taxation is provided in
full on timing differences that result in an obligation at the balance sheet
date to pay more tax or a right to pay less tax, at a future date, at rates
expected to apply when they crystallise based on current tax rates and law.
Timing differences arise from the inclusion of items of income and expenditure
in taxation computations in periods different from those in which they are
included in the financial statements. Deferred tax assets are recognised to the
extent that it is regarded as more likely than not that they will be recovered.
The Directors have considered the requirements of FRS 19 and do not believe that
any provision should be made for deferred tax.
Reserves
Share premium account
This reserve accounts for the difference between the price paid for shares and
the nominal value of the shares, less issue costs and transfers to the special
reserve.
Capital redemption reserve
This reserve accounts for amounts by which the issued share capital is
diminished through the repurchase and cancellation of the Company's own shares.
Unrealised capital reserves
Increases and decreases in the valuation of investments held at the year end
against cost, are included in this reserve.
Special reserve
The cancellation of the share premium account has created a special reserve that
can be used to fund market purchases and subsequent cancellation of own shares,
the payment of dividends, to cover gross realised losses, and for other
distributable purposes.
Treasury shares reserve
This reserve accounts for amounts by which the distributable reserves of the
Company are diminished through the repurchase of the Company's own shares for
treasury.
Realised capital reserve
The following are disclosed in this reserve:
* gains and losses compared to cost on the realisation of investments;
* expenses, together with the related taxation effect, charged in accordance
with the above policies; and
* dividends paid to equity holders.
Dividends
In accordance with FRS 21 "Events after the balance sheet date", dividends
declared by the Company are accounted for in the period in which the dividend
has been paid or approved by shareholders in an Annual General Meeting.
D shares
Until such time that D shares are converted into Ordinary shares, all
investments and returns attributable to this class of share will be separately
identifiable from the existing Ordinary shares. All residual expenses will be
allocated in the ratio of the respective Net Asset Values of each class of
share.
3. Gains/(losses) on investments
 Year ended 31 December Year ended 31 December
2010 2009
--------------------------------------------------------------------------------
Ordinary Ordinary D
 shares D shares Total shares shares Total
 £'000 £'000 £'000 £'000 £'000 £'000
--------------------------------------------------------------------------------
Unrealised gains on fixed
asset investments held at
fair value through profit
or loss account 338 - 338 574 - 574
Unrealised reversals of
impairments/(impairments)
on fixed asset investments
held at amortised cost 261 20 281 (1,557) - (1,557)
-----------------------------------------------------
Unrealised gains/(losses)
sub-total 599 20 619 (983) - (983)
-----------------------------------------------------
Realised gains/(losses) on
investments held at fair
value through profit or
loss account 426 - 426 (2) - (2)
Realised (losses) on
investments held at
amortised cost (40) - (40) (37) - (37)
Realised gains on current
asset investments held at
fair value through profit
or loss account - - - 36 - 36
-----------------------------------------------------
Realised gains/(losses)
sub-total 386 - 386 (3) - (3)
-----------------------------------------------------
-----------------------------------------------------
 985 20 1,005 (986) - (986)
-----------------------------------------------------
Investments measured on an amortised cost basis are unquoted loan stock
investments as described in note 2.
4. Investment income
 Year ended 31 December 2010 Year ended 31 December 2009
Ordinary Ordinary
shares D shares Total shares D shares Total
 £'000 £'000 £'000 £'000 £'000  £'000
--------------------------------------------------------------------------------
Income
recognised on
investments held
at fair value
through profit
or loss
Dividend income 27 - 27 70 - 70
Floating rate
note interest - - - 20 - 20
Bank deposit
interest 66 73 139 67 1 68
Income from
convertible
bonds and
discounted debt 15 - 15 - - -
----------------------------------------------------------------
 108 73 181 157 1 158
Income
recognised on
investments held
at amortised
cost
Return on loan
stock
investments 727 16 743 920 - 920
----------------------------------------------------------------
 835 89 924 1,077 1 1,078
----------------------------------------------------------------
Interest income earned on impaired investments at 31 December 2010 amounted to
£74,000 (2009: £368,000). These investments are all held at amortised cost.
5. Investment management fees
 Year ended 31 December 2010 Year ended 31 December 2009
Ordinary D shares Total Ordinary D shares Total
 shares £'000 £'000 £'000 shares £'000 £'000  £'000
--------------------------------------------------------------------------------
Investment
management fee
charged to
revenue 125 27 152 135 - 135
Investment
management fee
charged to
capital 376 81 457 406 1 407
-----------------------------------------------------------------
 501 108 609 541 1 542
-----------------------------------------------------------------
Further details of the Management agreement under which the investment
management fee is paid are given in page 22 of the Directors' report and
enhanced business review in the Annual Report and Financial Statements.
6. Other expenses
 Year ended 31 December 2010 Year ended 31 December  2009
Ordinary Ordinary
 shares D shares Total shares D shares Total
 £'000 £'000 £'000 £'000 £'000 £'000
--------------------------------------------------------------------------------
Directors' fees
(including VAT and
NIC) 76 12 88 87 - 87
Other administrative
expenses 87 29 116 67 - 67
Auditor's
remuneration for
statutory audit
services 22 3 25 24 - 24
------------------------------------------------------------
 185 44 229 178 - 178
------------------------------------------------------------
7. Directors' fees
The amounts paid to Directors during the year are as follows:
 Year ended 31 December 2010 Year ended 31 December 2009
 Ordinary shares D shares Total Ordinary shares D shares Total
 £'000 £'000 £'000 £'000 £'000 £'000
--------------------------------------------------------------------------------
Directors' fees 71 11 82 82 - 82
National insurance
and/or VAT 5 1 6 5 - 5
--------------------------------------------------------------
 76 12 88 87 - 87
--------------------------------------------------------------
Further information can be found in the Directors' remuneration report in the
Annual Report and Financial Statements.
8. Tax (charge)/credit on ordinary activities
The Company's combined tax credit of £32,000 (2009: credit of £6,000) is
analysed between the two share classes as follows:
 Year ended 31 December Year ended 31 December
2010 2009
Revenue Capital Total Revenue Capital Total
Ordinary shares £'000 £'000 £'000 £'000 £'000 £'000
--------------------------------------------------------------------------------
UK corporation tax in respect of
current year (123) 97 (26) (193) 94 (99)
UK corporation tax in respect of
prior years 45 - 45 105 - 105
------------------------------------------------
 (78) 97 19 (88) 94 6
------------------------------------------------
Factors affecting the tax charge:
Year ended Year ended
31 December 2010 31 December 2009
Ordinary shares £'000 £'000
--------------------------------------------------------------------------------
Profit/(loss) on ordinary activities before
taxation 1,134 (520)
----------------------------------
Tax on profit/(loss) at the standard rate for
small companies (238) 146
Factors affecting the charge:
Non-taxable profits/(losses) 206 (276)
Marginal relief - 12
Non-taxable income 6 19
Consortium relief in respect of prior years 45 105
----------------------------------
 19 6
----------------------------------
 Year ended 31 December Year ended 31 December
2010 2009
Revenue Capital Total Revenue Capital Total
D shares £'000 £'000 £'000 £'000 £'000 £'000
--------------------------------------------------------------------------------
UK corporation tax in respect of
current year (4) 17 13 - -
UK corporation tax in respect of
prior year - - - - - -
------------------------------------------------
 (4) 17 13 - - -
------------------------------------------------
Factors affecting the tax charge:
Year ended Year ended
31 December 2010 31 December 2009
D shares £'000 £'000
--------------------------------------------------------------------------------
Loss on ordinary activities before taxation (43) -
----------------------------------
Tax on loss at the standard rate for small
companies 9 -
Factors affecting the charge:
Non-taxable profits 4 -
----------------------------------
 13 -
----------------------------------
The tax charge for the year shown in the Income statement is lower than the
standard rate of corporation tax for small companies in the UK of 21 per cent.
(2009: 28 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 years.
Notes
(i) Â Â Â Â Â Â Â Â Â Â Â Venture Capital Trusts are not subject to corporation tax on
capital gains.
(ii) Â Â Â Â Â Â Â Â Â Â 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) Â Â Â Â Â Â Â Â Â No deferred tax asset or liability has arisen in the year.
9. Dividends
 Year ended 31 December 2010 Year ended 31 December 2009
 Special  Special
Ordinary Revenue Capital reserve Revenue Capital reserve
shares £'000 £'000 £'000 £'000 £'000 £'000
--------------------------------------------------------------------------------
Dividend of
4.0p per - - 596
Ordinary share
paid on 25
September 2009 - 596 -
Dividend of
4.0p per
Ordinary 1,191 - -
share paid on
4 May 2010 - - -
Dividend of
4.0p per - 1,100 -
Ordinary share
paid on 30
September 2010 64 - -
------------------------------------------------------------------
 64 1,191 1,100 596 596 -
------------------------------------------------------------------
Shareholders are reminded that the first Ordinary share dividend of 4.0 pence
per share for the year to 31 December 2009 was paid in advance on 30 December
2008.
 Year ended 31 December 2010 Year ended 31 December 2009
 Special  Special
Revenue Capital reserve Revenue Capital reserve
D shares £'000 £'000 £'000 £'000 £'000 £'000
--------------------------------------------------------------------------------
Dividend of
1.0p per D - 65 -
share paid on
30 September
2010 - - -
------------------------------------------------------------------
In addition to the dividends summarised above, the Board has declared a first
dividend of 2.50 pence per Ordinary share and 1.25 pence per D share for the
year ending 31 December 2011. This dividend will be paid on 31 May 2011 to
shareholders on the register as at 3 May 2011. This dividend totals
approximately £730,000 for Ordinary shares and £80,000 for D shares.
10. Basic and diluted return/(loss) per share
Ordinary shares Year ended 31 December Year ended 31 December
2010 2009
 Revenue Capital Total Revenue Capital Total
--------------------------------------------------------------------------------
The return per share has been
based
on the following figures:
Return/(loss) attributable to
equity 447 706 1,153
shares (£'000) 702 (1,216) (514)
Weighted average shares in issue
(excluding treasury 29,450,610 29,842,149
shares)
Return/(loss) attributable per
equity 1.50 2.40 3.90 2.40 (4.10) (1.70)
share (pence)
The weighted average number of Ordinary shares is calculated excluding the
treasury shares of 3,243,696 (2009: 3,043,726).
D shares Year ended 31 December Year ended 31 December
2010 2009
 Revenue Capital Total Revenue Capital Total
--------------------------------------------------------------------------------
The return per share has been
based
on the following figures:
Return/(loss) attributable to 14 (44) (30)
equity - - -
shares (£'000)
Weighted average shares in issue
(excluding treasury 5,193,933 -
shares)
Return/(loss) attributable per 0.30 (0.90) (0.60) - - -
equity
share (pence)
There are no D shares held in treasury.
There are no convertible instruments, derivatives or contingent share agreements
in issue so basic and diluted return/(loss) per share are the same.
11. Fixed asset investments
The classification of investments by nature of instruments is as follows:
 Ordinary shares D shares
 31 December 31 December 31 December
2010 31 December 2009 2010 2009
£'000 £'000 £'000 £'000
--------------------------------------------------------------------------------
Unquoted equity   5,199 4,733  530 -
Quoted equity  241 1,270  - -
Unquoted loan stock  11,476 12,852  1,212 -
Convertible and
discounted bonds  937 -  44 -
Warrants  - 20  - -
-------------------------------------------------------
  17,853 18,875  1,786 -
-------------------------------------------------------
Ordinary shares D shares Combined
  £'000 £'000 £'000
--------------------------------------------------------------------------------
Opening valuation as at 1 January 2010 Â 18,875 - 18,875
Purchases at cost  1,514 1,765 3,279
Disposal proceeds  (3,564) - (3,564)
Realised gains  386 - 386
Movement in loan stock accrued income  43 1 44
Unrealised gains  599 20 619
-------------------------------------
Closing valuation as at 31 December 2010 Â 17,853 1,786 19,639
-------------------------------------
Movement in loan stock accrued income
Opening accumulated movement in loan stock
accrued income  376 - 376
Movement in loan stock accrued income  43 1 44
------------------------------------
Closing accumulated movement in loan stock
accrued income as at 31 December 2010 Â 419 1 420
------------------------------------
Movement in unrealised losses
Opening accumulated unrealised losses  (6,500) - (6,500)
Transfer of previously unrealised losses
on disposal  682 - 682
Movement in unrealised losses  599 20 619
------------------------------------
Closing accumulated unrealised losses as at
31 December 2010 Â (5,218) 20 (5,198)
------------------------------------
Historic cost basis
Opening book cost  24,999 - 24,999
Purchases at cost  1,514 1,765 3,279
Sales at cost  (3,861) - (3,861)
------------------------------------
Closing book cost as at 31 December 2010 Â 22,652 1,765 24,417
------------------------------------
Ordinary shares' fixed asset investments held at fair value through the profit
or loss account total £6,377,000 (2009: £6,023,000) and include convertible
bonds and debt with a carrying value of £740,000 as at 31 December 2010 which
have been re-presented from the amortised cost to fair value category in the
accounts having previously been designated fair value through profit and loss on
initial recognition. Investments measured at amortised cost total £11,476,000
(2009: £12,852,000).
Ordinary shares' loan stocks (including those carried at fair value through
profit or loss) using a fixed interest rate total £12,302,000 (2009:
£12,566,000) and loan stock using a floating rate total £111,000 (2009:
£286,000).
D shares' fixed asset investments held at fair value through the profit or loss
account total £574,000 (2009: nil). Investments held at amortised cost total
£1,212,000 (2009: nil).
All D shares' loan stock uses a fixed interest rate.
The amounts shown for the purchase and disposal of fixed assets included in the
cash flow statement differ from the amounts shown above, due to deferred
consideration shown as a debtor, and investment settlement debtors and
creditors.
For both Ordinary and D shares, the Directors believe that the carrying value of
loan stock measured at amortised cost is not materially different to fair value.
The Company does not hold any assets as the result of the enforcement of
security during the period, and believes that the carrying values for both
impaired and past due assets are covered by the value of security held for these
loan stock investments.
Unquoted equity investments and convertible and discounted bonds are valued in
accordance with the IPEVCV guidelines as follows:
 31 December 2010 31 December 2009
--------------------------------------------------------------------------------
Valuation Ordinary shares D shares Total Ordinary shares D shares Total
methodology £'000 £'000 £'000 £'000 £'000 £'000
--------------------------------------------------------------------------------
Cost (reviewed for
impairment) 603 521 1,124 431 - 431
Net asset value
supported by third
party valuation 905 53 958 992 - 992
Net asset value
supported by
independent
desktop review 38 - 38 - - -
Recent investment
price 672 - 672 1,384 - 1,384
Earning multiple 2,133 - 2,133 1,946 - 1,946
Revenue multiple 1,785 - 1,785 - - -
--------------------------------------------------------------
 6,136 574 6,710 4,753 - 4,753
--------------------------------------------------------------
The Ordinary shares portfolio had the following movements between valuation
methodologies between 31 December 2009 and 31 December 2010:
Value as at
Change in valuation methodology 31 December 2010
(2009 to 2010) £'000 Explanatory note
--------------------------------------------------------------------------------
Cost (reviewed for impairment) 109 More recent pricing information
to recent investment price available
Cost (reviewed for impairment) 310 Company performance can be
to revenue multiple measured against industry
comparables
Cost (reviewed for impairment) 2,602 Improvement in asset valuation
to net asset value supported by
third party valuation
Recent investment price to 1,137 Company performance can be
revenue multiple measured against industry
comparables
Earnings multiple to revenue 115 Temporary trading losses
multiple
Recent investment price to 69 Earnings are now being
earnings multiple generated
There has been no change in D shares' valuation methodologies as there were no
investments as at 31 December 2009.
The valuation method used will be the most appropriate valuation methodology for
an investment within its market, with regard to the financial health of the
investment and the IPEVCV Guidelines. The Directors believe that, within these
parameters, there are no other possible methods of valuation which would be
reasonable as at 31 December 2010.
The amended FRS 29 'Financial Instruments: Disclosures' requires the Company to
disclose the valuation methods applied to its investments measured at fair value
through profit or loss in a fair value hierarchy according to the following
definitions;
+--------------------+---------------------------------------------------------+
|Fair value hierarchy|Definition of valuation method |
+--------------------+---------------------------------------------------------+
|Level 1 |Unadjusted quoted (bid) prices applied |
|Â | |
+--------------------+---------------------------------------------------------+
|Level 2 |Inputs to valuation are from observable sources and are|
|Â |directly or indirectly derived from prices |
| |Â |
+--------------------+---------------------------------------------------------+
|Level 3 |Inputs to valuations not based on observable market data.|
|Â | |
+--------------------+---------------------------------------------------------+
The Ordinary shares' investments valued at fair value through profit or loss
account can be categorised in accordance with FRS 29 as follows:
  31 December 2010
  Level 1 Level 2 Level 3 Total
  £'000 £'000 £'000 £'000
----------------------------------------------------------------------------
Quoted equity  241 - - 241
Unquoted equity  - - 5,199 5,199
Convertible and discounted bonds  - - 937 937
--------------------------------------
  241 - 6,136 6,377
--------------------------------------
  31 December 2009
  Level 1 Level 2 Level 3 Total
  £'000 £'000 £'000 £'000
-----------------------------------------------------------
Quoted equity  1,270 - - 1,270
Unquoted equity  - - 4,753 4,753
--------------------------------------
  1,270 - 4,753 6,023
--------------------------------------
The D shares' investments valued at fair value through profit or loss account
can be categorised in accordance with FRS 29 as follows:
  31 December 2010
  Level 1 Level 2 Level 3 Total
  £'000 £'000 £'000 £'000
----------------------------------------------------------------------------
Unquoted equity  -  530 530
Convertible and discounted bonds   - 44 44
--------------------------------------
  -  574 574
--------------------------------------
The Ordinary and D shares' unquoted equity investments and convertible and
discounted bonds valued at fair value through profit or loss (level 3) had the
following movements in the year to 31 December 2010:
 Ordinary shares D shares Total
 £'000 £'000 £'000
--------------------------------------------------------------------------------
Opening balance as at 1 January 2010 4,753 - 4,753
Additions 1,025 554 1,579
Disposals (961) - (961)
Re-presentation of convertible bond 740 - 740
Unrealised gains on equity investments and
convertible and discounted  bonds 579 20 599
-------------------------------
Closing balance as at 31 December 2010 6,136 574 6,710
-------------------------------
The Ordinary and D shares' unquoted equity investments and convertible and
discounted bonds valued at fair value through profit or loss (level 3) had the
following movements in the year to 31 December 2009:
 Ordinary shares D shares Total
 £'000 £'000 £'000
-----------------------------------------------------------------------------
Opening balance as at 1 January 2009 3,599 - 3,599
Additions 1,081 - 1,081
Disposals (410) - (410)
Re-presentation of convertible bond 483 - 483
-------------------------------------
Closing balance as at 31 December 2009 4,753 - 4,753
-------------------------------------
FRS 29 requires the Directors to consider the impact of changing one or more of
the inputs used as part of the valuation process to reasonable possible
alternative assumptions. The valuation methodology applied to 36% of the
Ordinary shares' and 100% of the D shares' unquoted equity investments and
convertible and discounted bonds (by valuation) as at 31 December 2010 is based
on third party independent evidence and recent investment price. The Directors
believe that changes to reasonable possible alternative assumptions for the
valuation of the portfolio could result in an increase in the valuation of
investments of £243,000 or a decrease in investments of £483,000 for the
Ordinary share portfolio.
12. Significant interests
The principal activity of the Company is to select and hold a portfolio of
investments in unquoted securities. Although the Company, through the Manager,
will, in some cases, be represented on the board of the investee company, it
will not take a controlling interest or become involved in the day-to-day
management of an investee company.
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 investee companies as at 31 December
2010, as described below:
% total
Country of % class and voting
Company incorporation Principal activity share type rights
--------------------------------------------------------------------------------
Evolutions Television and post 27.0% A
Television Limited Great Britain production Ordinary 23.7%
33.2% A
Ordinary
The Q Garden Garden centre 10.8%
Company Limited Great Britain operator Ordinary 16.6%
Consolidated PR Public relations 50.0% A
Limited Great Britain agency Ordinary 11.8%
Owner of
Albion Investment residential 48.4% A
Properties Limited Great Britain property Ordinary 48.4%
Mobile data 21.1% A
Blackbay Limited Great Britain solutions Ordinary 7.4%
International
Masters specialist
Pharmaceuticals distributor of 21.1% A
Limited Great Britain pharmaceuticals Ordinary 3.6%
As permitted by FRS 9, the investments listed above are held as part of an
investment portfolio, and their value to the Company is as part of a portfolio
of investments. Therefore these investments are not considered to be associated
undertakings.
13. Trade and other debtors
 31 December 2010 31 December 2009
D Â D
Ordinary shares shares Total Ordinary shares shares Total
 £'000 £'000 £'000 £'000 £'000 £'000
--------------------------------------------------------------------------------
Prepayments and
accrued income 9 5 14 24 1 25
UK corporation
taxable receivable 113 13 126 136 - 136
Other debtors 97 - 97 10 235 245
------------------------------------------------------------
 219 18 237 170 236 406
------------------------------------------------------------
The Directors consider that the carrying amount of debtors is not materially
different from their fair value.
14. Creditors: amounts falling due within one year
 31 December 2010 31 December 2009
D Â D
Ordinary shares shares Total Ordinary shares shares Total
 £'000 £'000 £'000 £'000 £'000 £'000
--------------------------------------------------------------------------------
Trade creditors 142 35 177 - - -
Accruals and
deferred income 52 11 63 200 78 278
Other creditors 85 145 230 28 - 28
--------------------------------------------------------------
 279 191 470 228 78 306
--------------------------------------------------------------
The Directors consider that the carrying amount of creditors is not materially
different from their fair value.
15. Called up share capital
 31 December 2010 31 December 2009
Ordinary D shares Total Ordinary D shares Total
 shares   shares
--------------------------------------------------------------------------------
Authorised
share capital
of 50 pence
each
Number of
authorised
shares 50,000,000 40,000,000 90,000,000 50,000,000 40,000,000 90,000,000
------------------------------------------------------------------
Nominal value
of authorised
shares (£'000) 25,000 20,000 45,000 25,000 20,000 45,000
------------------------------------------------------------------
Allotted,
called up and
fully paid
shares of 50
pence each
Number of
shares 32,439,999 6,335,155 38,775,154 32,713,157 1,433,600 34,146,757
------------------------------------------------------------------
Nominal value
of
shares(£'000) 16,220 3,168 19,388 16,357 717 17,074
------------------------------------------------------------------
Number of
shares in
issue (net of
treasury
shares) 29,196,303 6,335,155 35,531,458 29,669,431 1,433,600 31,103,031
------------------------------------------------------------------
The Company purchased 441,970 Ordinary shares (2009: 424,011) to be held in
treasury at a cost of £289,000 (2009: £268,000). The Company cancelled 242,000
Ordinary shares from treasury, and purchased 241,615 Ordinary shares for
cancellation at a cost of £157,000.
The Company holds a total of 3,243,696 Ordinary shares in treasury, representing
9.5 per cent. of the issued share capital as at 31 March 2011. Â There are no D
shares held in treasury.
Under the terms of the Ordinary shares' Dividend Reinvestment Scheme Circular
dated 27 August 2008, the following Ordinary shares of 50 pence nominal value
were allotted during the year:
Date of Number of Issue Aggregate Consideration Opening
allotment shares price nominal received market price
allotted pence per value of  £'000 per share on
share shares allotment
£'000 date
pence per
share
--------------------------------------------------------------------------------
4 May 2010 Â 101,296 75.30 Â 50 Â 69 Â 67.00
30 September
2010 Â 109,161 73.00 Â 54 Â 79 Â 65.00
------------- ------------ ----------------
  210,457   104  148
------------- ------------ ----------------
Under the Offer for Subscription for D shares launched on 1 October 2009, the
following D shares of 50 pence nominal value were allotted at an issue price of
100.00 pence per share;
Date of Number of shares Aggregate Net consideration Opening market
allotment allotted nominal value received price per
of shares £'000 share on
£'000 allotment date
pence per
share
--------------------------------------------------------------------------------
28 January 95.00
2010 Â 561,425 Â 281 Â 531
25 February 95.00
2010 Â 112,150 Â 56 Â 107
15 March 2010 Â 408,425 Â 204 Â 387 95.00
23 March 2010 Â 652,295 Â 326 Â 618 95.00
5 April 2010 Â 2,792,235 Â 1,396 Â 2,641 95.00
30 April 2010 Â 323,525 Â 162 Â 301 95.00
21 June 2010 Â 51,500 Â 26 Â 50 95.00
---------------- -------------- ------------------
  4,901,555  2,451  4,635
---------------- -------------- ------------------
16. Cancellation of the D share premium account
Shareholders approved the cancellation of the Company's D share premium account
by way of special resolution at a General Meeting held on 28 October 2009. The
share premium account amounting to £2.8 million was subsequently cancelled on
18 August 2010 by order of the High Court and the Notice regarding the
cancellation was registered at Companies House on 18 August 2010. The purpose of
this cancellation is to increase the special reserve available for distribution
as dividends, and which, amongst other purposes, can be used for making market
purchases of D shares.
17. Basic and diluted net asset values per share
 31 December 2010 31 December 2009
Ordinary shares D shares Ordinary shares D shares
 pence per share pence per share pence per share pence per share
--------------------------------------------------------------------------------
Basic and
diluted net
asset values per
share 75.40 93.00 79.30 94.60
----------------------------------------------------------------
The basic and diluted net asset values per share at the year end are calculated
in accordance with the Articles of Association and are based upon total shares
in issue (less treasury shares) of 29,196,303 Ordinary shares (2009:
29,669,431) and 6,335,155 D shares (2009: 1,433,600) as at 31 December 2010.
18. Analysis of changes in cash during the year
 Year ended 31 December 2010 Year ended 31 December 2009
Ordinary shares D shares Total Ordinary shares D shares Total
 £'000 £'000  £'000 £'000 £'000 £'000
--------------------------------------------------------------------------------
Opening cash 5,908 3,790
balances 4,709 1,199 3,790 -
Net cash flow (482) 3,086 2,604 919 1,199 2,118
---------------------------------------------------------------
Closing cash 8,512 5,908
balances 4,227 4,285 4,709 1,199
---------------------------------------------------------------
19. Reconciliation of net return on ordinary activities before taxation to net
cash flow from operating activities
Year ended 31 December
 Year ended 31 December 2010 2009
Ordinary Ordinary Total
shares D shares Total shares D shares £'000
 £'000 £'000 £'000 £'000 £'000
--------------------------------------------------------------------------------
Revenue return on
ordinary activities 791
before taxation 525 18 543 790 1
Investment management fee
charged to capital (376) (81) (457) (406) (1) (407)
Recoverable VAT 82
capitalised - - Â 82 -
Movement in accrued
amortised loan stock 22
interest (43) (1) (44) 22 -
Decrease/(increase) in
debtors 26 (4) 22 463 - 463
 (Decrease)/increase in
creditors (31) 48 17 100 - 100
-------------------------------------------------------
Net cash flow from
operating activities 101 (20) 81 1,051 - 1,051
-------------------------------------------------------
20. Capital and financial instruments risk management
The Company's capital comprises Ordinary shares and D 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 23 of the
Directors' report and enhanced business review within the Annual Report and
Financial Statements. Details regarding the issue of new shares under the Albion
VCTs Linked Top Up Offer are shown in note 22.
The Company's financial instruments comprise equity and loan stock investments
in unquoted companies, equity in main market quoted companies, cash balances and
short term debtors and creditors which arise from its operations. The main
purpose of these financial instruments is to generate cashflow and revenue and
capital appreciation for the Company's operations. The Company has no gearing or
other financial liabilities apart from short term creditors. The Company does
not use any derivatives for the management of its balance sheet.
The principal risks arising from the Company's operations are:
* Investment (or market) risk (which comprises investment price and cash flow
interest rate risk);
* credit risk; and
* liquidity risk.
The Board regularly reviews and agrees policies for managing each of these
risks. There have been no changes in the nature of the risks that the Company
has faced during the past year, and apart from where noted below, there have
been no changes in the objectives, policies or processes for managing risks
during the past year. The key risks are summarised below.
Investment risk
As a venture capital trust, it is the Company's specific nature to evaluate and
control the investment risk of its portfolio in quoted and unquoted investments,
details of which are shown on pages 11 to 14 of the Annual Report and Financial
Statements. 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 investee company and the dynamics
of market quoted comparators. The Manager receives management accounts from
investee companies, and members of the investment management team often sit on
the boards of unquoted investee companies; this enables the close
identification, monitoring and management of investment risk.
The Manager and the Board formally reviews 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 asset investment portfolio which, for Ordinary shares is £17,853,000
(2009: £18,875,000) and for D shares £1,786,000 (2009: nil). Fixed asset
investments form 81 per cent. of the Ordinary shares' and 30 per cent. of the D
shares' net asset value as at 31 December 2010 (2009: 80 per cent. Ordinary
shares; nil D shares).
More details regarding the classification of fixed asset investments are shown
in note 11.
Investment price risk
Investment price risk is the risk that the fair value of future investment cash
flows will fluctuate due to factors specific to an investment instrument or to
a market in similar instruments. To mitigate the investment price risk for the
Company as a whole, the strategy of the Company is to invest in a broad spread
of industries with approximately two-thirds of the unquoted investments
comprising debt securities, which, owing to the structure of their yield and the
fact that they are usually secured, have a lower level of price volatility than
equity. Details of the industries in which investments have been made are shown
in the pie charts on page 8 of the Manager's report in the Annual Report and
Financial Statements.
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 September 2009 IPEVCV Guidelines. The Directors believe that,
within these parameters, there are no reasonable possible alternative methods of
valuation of the investments as at 31 December 2010.
As required under FRS 29 "Financial Instruments: Disclosures", the Board is
required to illustrate by way of a sensitivity analysis the degree of exposure
to market risk. The Board considers that the value of the fixed 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 investment portfolio (keeping all other variables constant) would
increase or decrease the net asset value and return for the year of Ordinary
shares by £1,785,000 and £179,000 for the D shares.
Cash flow interest rate risk
It is the Company's policy to accept a degree of interest rate risk on its
financial assets through the effect of interest rate changes. On the basis of
the Company's analysis, it is estimated that a rise or fall of 0.5 per cent. in
all LIBOR and base rates would have reduced total return before tax for the year
by approximately £22,000 for the Ordinary shares (2009: £35,000) and £24,000 for
the D shares (2009: nil).
The weighted average interest rate applied to the Company's fixed rate assets
during the year was approximately 4.5 per cent. for the Ordinary shares (2009:
6.1 per cent.) and 2.9 per cent. for the D shares (2009: nil).
The weighted average period to maturity for the fixed rate assets is
approximately 1.8 years (2009:Â 2.8 years) for Ordinary shares and 4.7 years for
D shares (2009: nil).
The Company's financial assets and liabilities, all denominated in pounds
sterling, consist of the following:
Ordinary shares
 31 December 2010 31 December 2009
 Non-  Non-
Fixed Floating interest Fixed Floating interest
rate rate bearing Total rate rate bearing Total
 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
--------------------------------------------------------------------------------
Unquoted
equity - - 5,199 5,199 - - 4,753 4,753
Quoted
equity - - 241 241 - - 1,270 1,270
Convertible
and
discounted
bonds 936 - - 936 - - - -
Unquoted
loan stock 11,366 111 - 11,477 12,566 286 - 12,852
Debtors - - 219 219 - - 170 170
Current
liabilities - - (279) (279) - - (228) (228)
Cash 3,703 524 - 4,227 4,420 289 - 4,709
--------------------------------------------------------------------
 16,005 635 5,380 22,020 16,986 575 5,965 23,526
--------------------------------------------------------------------
D shares
 31 December 2010 31 December 2009
 Non-  Non-
Fixed Floating interest Fixed Floating interest
rate rate bearing Total rate rate bearing Total
 £'000 £'000- £'000 £'000 £'000 £'000- £'000 £'000
--------------------------------------------------------------------------------
Unquoted
equity - - 530 530 - - - -
Convertible
and
discounted
bonds 44 - - 44 - - - -
Unquoted loan
stock 1,212 - - 1,212 - - - -
Debtors  - 18 18 - - 236 236
Current
liabilities - - (191) (191) - - (78) (78)
Cash 4,050 235 - 4,285 - 1,199 - 1,199
-------------------------------------------------------------------
 5,306 235 357 5,898 - 1,199 158 1,357
-------------------------------------------------------------------
Credit risk
Credit risk is the risk that the counterparty to a financial instrument will
fail to discharge an obligation or commitment that it has entered into with the
Company. The Company is exposed to credit risk through its debtors, investment
in unquoted loan stock, and through the holding of cash on deposit with banks.
The Manager evaluates credit risk on loan stock instruments 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 investee company in order to mitigate the gross credit risk. The
Manager receives management accounts from investee companies, and members of the
investment management team often sit on the boards of unquoted investee
companies; this enables the close identification, monitoring and management of
investment specific credit risk.
Bank deposits are held with banks which have a Moody's credit rating of at least
'A'. The Company has an informal policy of limiting counterparty banking
exposure to a maximum of 20 per cent. of net asset value for any one
counterparty.
The Manager and the Board formally review credit risk (including debtors) and
other risks, both at the time of initial investment and at quarterly Board
meetings.
The Company's total gross credit risk for Ordinary shares at 31 December 2010
was limited to £12,413,000 (2009: £12,852,000) of unquoted loan stock
instruments, £219,000 debtors (2009: £170,000) and £4,227,000 (2009: £4,709,000)
cash deposits with banks.
The Company's total gross credit risk for D shares at 31 December 2010 was
limited to £1,256,000 unquoted loan stock instruments, £18,000 debtors and
£4,285,000 of cash on deposit with banks.
The Ordinary shares' cost, impairment and carrying value of impaired loan stocks
measured at amortised cost as at 31 December 2010 and 31 December 2009 are as
follows:
 31 December 2010 31 December 2009
Cost Impairment Carrying value Cost Impairment Carrying value
 £'000 £'000 £'000 £'000 £'000 £'000
--------------------------------------------------------------------------------
Impaired loan
stock 7,133 (2,262) 4,871 8,143 (2,621) 5,522
----------------------------------------------------------------
There are no impaired loan stock instruments for D shares.
Impaired loan stock instruments have a first fixed charge or a fixed and
floating charge over the assets of the investee company and the Board deem the
security value to be the carrying value.
As at the balance sheet date, the cash held by the Company is held with the
Royal Bank of Scotland plc, Lloyds TSB Bank plc, Scottish Widows Bank plc and
Standard Life Cash Savings (part of Barclays Bank plc). Credit risk on cash
transactions is mitigated by transacting with counterparties that are regulated
entities subject to regulatory supervision, with Moody's credit ratings of at
least 'A' or equivalent as assigned by international credit-rating agencies.
Liquidity risk
Liquid assets are held as cash on current account, cash on deposit or short term
money market account. 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 £2,791,000 (2009:
£2,488,000) as at 31 December 2010.
The Company had no committed borrowing facilities as at 31 December 2010 (2009:
nil) and the Company had cash balances of £8,512,000 (2009: £5,908,000). 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 of the Company's financial liabilities are short term in nature
and total £470,000 (2009: £305,000).
The carrying value of Ordinary shares' loan stock investments at 31 December
2010 as analysed by expected maturity dates is as follows:
Fully performing Renegotiated Impaired Past due Total
Redemption date £'000 £'000 £'000 £'000 £'000
---------------------------------------------------------------------------
Less than one year - - 2,603 205 2,808
1-2 years 1,279 894 498 2,259 4,930
2-3 years 1,078 - 514 122 1,714
3-5 years 1,340 111 1,256 226 2,933
Greater than 5 years 28 - - - 28
-------------------------------------------------------
 3,725 1,005 4,871 2,812 12,413
-------------------------------------------------------
The carrying value of Ordinary shares' loan stock investments at 31 December
2009 as analysed by expected maturity dates is as follows:
Fully performing Renegotiated Impaired Total
Redemption date £'000 £'000 £'000 £'000
--------------------------------------------------------------------------
Less than one year 114 34 97 245
1-2 years 1,583 905 134 2,622
2-3 years 429 48 3,995 4,472
3-5 years 2,820 1,397 1,296 5,513
------------------------------------------------------
 4,946 2,384 5,522 12,852
------------------------------------------------------
All of the D shares' loan stock investments at 31 December 2010 are fully
performing and are expected to mature over periods longer than 4 years.
Loan stock categorised as past due includes;
* loan stock valued at £309,000 yielding 14.3 per cent. which has capital past
due by 2 months;
* loan stock valued at £1,213,000 which has interest past due which is
yielding 4.0 per cent.;
* loan stock valued at £737,000 which has interest past due which is yielding
7 per cent.;
* loan stock valued at £278,000 which has interest overdue by 10 months, the
payment of which has been deferred to December 2011;
* loan stock valued at £205,000 which has capital repayments overdue by six
months, which is yielding 9.9 per cent.;
* loan stock valued at £70,000 which has interest overdue for in excess of 15
months.
Loan stock disclosed as renegotiated would otherwise be disclosed as past due.
In view of the factors identified above, the Board considers that the Company is
subject to low liquidity risk.
Fair values of financial assets and financial liabilities
All of the Company's financial assets and liabilities as at 31 December 2010 are
stated at fair value as determined by the Directors, with the exception of loans
and receivables included within investments, which are measured at amortised
cost, in accordance with FRS 26. The Directors believe that the current carrying
value of loan stock is not materially different to the fair value. There are no
financial liabilities other than creditors. The Company's financial liabilities
are all non-interest bearing. It is the Directors' opinion that the book value
of the financial liabilities is not materially different from the fair value and
all are payable within one year.
21. Contingencies and Comittments
The Company had the following financial commitments in respect of investments:
* Rostima Holdings Limited, £60,000;
* TEG Biogas (Perth) Limited, £208,000;
* The Street by Street Solar Programme Limited, £418,000; and
* Nelson House Hospital Limited, £1,131,000.
22. Post balance sheet events
Since the year end, the Company has made the following investments;
* Regenerco Renewable Energy Limited, £130,000:
* AVESI Limited, £104,000;
* Xceleron Limited, £25,000
* Masters Pharmaceuticals Limited, £148,000
* Nelson House Hospital Limited, £23,000;
* Prime Care Holdings Limited, £43,000.
On 1 November 2010 the Company announced the launch of the Albion VCTs Linked
Top Up Offer. In aggregate, the Albion VCTs will be aiming to raise
approximately  £13.3 million across seven of the VCTs managed by Albion Ventures
LLP, of which Albion Development VCT PLC's share will be approximately £2
million. The maximum amount raised by each of the Albion VCTs will be the lower
of € 2.5 million, and 10 per cent. of its issued share capital (over any one 12
month period, and including any shares issued under Dividend Reinvestment
Schemes), being the amount that they may issue under the Prospectus Rules
without the publication of a full prospectus. The number of new shares available
may change depending on the £: € exchange rate at the date of allotment.
The proceeds of the Offer will be used to provide further resources to the
Albion VCTs at a time when a number of attractive new investment opportunities
are being seen. An Investor Guide and Offer document have been sent to
shareholders.
The following Ordinary shares of nominal value 50 pence per share were allotted
under the Offer after the year end:
Opening
market price
Aggregate per share on
Issue nominal Net allotment
price value of consideration date
Number of shares received
Date of pence per shares pence per
allotment share allotted £'000 £'000 share
--------------------------------------------------------------------------------
7 January 80.1 Â 816,370 Â 408 Â 604 Â 64.00
2011
22 March 2011 80.1 Â 811,163 Â 406 Â 614 Â 60.50
23. Related party transactions
The Manager, Albion Ventures LLP, is considered to be a related party by virtue
of the fact that the Manager is party to a Management Agreement from the Company
(details disclosed on page 22 of the Annual Report and Financial Statements).
During the year, services of a total value of £609,000 (2009: £542,000) were
purchased by the Company from Albion Ventures LLP in respect of management fees.
At the financial year end, the amount due to Albion Ventures LLP disclosed as
trade creditors was £160,000 (2009: £143,000).
Albion Ventures LLP acts as receiving agent and a promoter for the Offer for
Subscription of D shares. Under the terms of the Offer, Albion Ventures was
entitled to receive 5.5 per cent. of funds raised under the Offer in exchange
for underwriting the costs of the Offer. During the year, Albion Ventures LLP
charged £193,000 in respect of its services as receiving agent. These sums have
been offset against amounts credited to the share premium account.
Albion Ventures LLP holds 331 fractional entitlement shares of the Company as a
result of the conversion of C shares to Ordinary shares in March 2007. These
shares will be sold for the benefit of the Company at a future date.
Albion Ventures LLP also holds 14,000 Ordinary shares as a result of the failure
of an original subscriber to pay cleared funds on
initial subscription.
24. Principal risks and uncertainties
In addition to the current economic risks outlined in the Chairman's statement,
the Board considers that the Company faces the following major risks and
uncertainties:
1. Investment risk
This is the risk of investment in poor quality assets which reduces the capital
and income returns to shareholders, and negatively impacts on the Company's
reputation. By nature, smaller unquoted businesses, such as those that qualify
for venture capital trust purposes, are more fragile than larger, long
established businesses.
To reduce this risk, the Board places reliance upon the skills and expertise of
the Manager and its strong track record for investing in this segment of the
market. In addition, the Manager operates a formal and structured investment
process, which includes an Investment Committee, comprising investment
professionals from the Manager and at least one external investment
professional. The Manager also invites comments from all non-executive Directors
on investments discussed at the Investment Committee meetings. Investments are
actively and regularly monitored by the Manager (investment managers normally
sit on investee company boards) and the Board receives reports on each
investment as part of the Manager's report at quarterly board meetings.
2. Venture Capital Trust approval risk
The Company's current approval as a venture capital trust allows investors to
take advantage of tax reliefs on initial investment and ongoing tax free capital
gains and dividend income. Failure to meet the qualifying requirements could
result in investors losing the tax relief on initial investment and loss of tax
relief on any tax-free income or capital gains received. In addition, failure to
meet the qualifying requirements could result in a loss of listing of the
shares.
To reduce this risk, the Board has appointed the Manager, who has a team with
significant experience in venture capital trust management, used to operating
within the requirements of the venture capital trust legislation. In addition,
to provide further formal reassurance, the Board has appointed
PricewaterhouseCoopers LLP as its taxation advisers. PricewaterhouseCoopers LLP
report quarterly to the Board to independently confirm compliance with the
venture capital trust legislation, to highlight areas of risk and to inform on
changes in legislation.
3. Compliance risk
The Company is listed on The London Stock Exchange and is required to comply
with the rules of the UK Listing Authority, as well as with the Companies Act,
Accounting Standards and other legislation. Failure to comply with these
regulations could result in a delisting of the Company's shares, or other
penalties under the Companies Act or from financial reporting oversight bodies.
Board members and the Manager have experience of operating at senior levels
within quoted businesses. In addition, the Board and the Manager receive regular
updates on new regulation from its auditors, lawyers and other professional
bodies.
4. Internal control risk
Failures in key controls, within the Board or within the Manager's business,
could put assets of the Company at risk or result in reduced or inaccurate
information being passed to the Board or to shareholders.
The Audit Committee meets with the Manager's internal auditors, Littlejohn, at
least once a year, receiving a report regarding the last formal internal audit
performed on the Manager, and providing the opportunity for the Audit Committee
to ask specific and detailed questions. During the year the Board met with the
Partner of Littlejohn LLP responsible for the Albion Ventures LLP internal audit
to discuss the most recent Internal Audit Report completed on the Manager. The
Manager has a comprehensive business continuity plan in place in the event that
operational continuity is threatened. Further details regarding the Board's
management and review of the Company's internal controls through the
implementation of the Turnbull guidance are detailed on page 27 of the Annual
Report and Financial Statements.
Measures are in place to mitigate information risk in order to ensure the
integrity, availability and confidentiality of information used within the
business.
5. Reliance upon third parties risk
The Company is reliant upon the services of Albion Ventures LLP for the
provision of investment management and administrative functions. There are
provisions within the Management Agreement for the change of Manager under
certain circumstances (for more detail, see the Management agreement paragraph
within the Directors report and enhanced business review of the Annual Report
and Financial Statements). In addition, the Manager has demonstrated to the
Board that there is no undue reliance placed upon any one individual within
Albion Ventures LLP.
6. Financial risks
By its nature, as a venture capital trust, the Company is exposed to investment
risk (which comprises investment price risk and cash flow interest rate risk),
credit risk and liquidity risk. The Company's policies for managing these risks
and its financial instruments are outlined in full in note 20.
All of the Company's income and expenditure is denominated in sterling and hence
the Company has no foreign currency risk. The Company is financed through equity
and does not have any borrowings. The Company does not use derivative financial
instruments.
25. Other information
The information set out in this announcement does not constitute the Company's
statutory accounts within the terms of section 434 of the Companies Act 2006 for
the periods ended 31 December 2010 and 31 December 2009, and is derived from
the statutory accounts for those financial years, which have been, or in the
case of the accounts for the year ended 31Â December 2010, which will be,
delivered to the Registrar of Companies. The Auditors reported on those
accounts; their reports were unqualified and did not contain a statement under
s498 (2) or (3) of the Companies Act 2006.
The Company's Annual General Meeting will be held at The City of London Club,
19 Old Broad Street, London, EC2N 1DS on 11 May 2011 at 12 noon.
26. Publication
The full audited Annual Report and Financial Statements are being sent to
shareholders and copies will be made available to the public at the registered
office of the Company, Companies House, the National Storage Mechanism  and also
electronically at www.albion-ventures.co.uk under the 'Our Funds' section, by
clicking on 'Albion Development VCT PLC', where the Report can be accessed as a
PDF document via a link under the 'Investor Centre' in the 'Financial Reports
and Circulars' section.
Sector split of the Ordinary and D share portfolio :
http://hugin.info/141803/R/1504152/439052.pdf
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Albion Development VCT PLC - Ordinary Shares via Thomson Reuters ONE
[HUG#1504152]
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