Annual Financial Report

Albion Enterprise VCT PLC As required by the UK Listing Authority's Disclosure and Transparency Rules 4.1 and 6.3, Albion Enterprise VCT PLC today makes public its information relating to the Annual Report and Financial Statements for the year ended 31 March 2009. This announcement was approved by the Board of Directors on 2 July 2009. This announcement has not been audited. Please click on the following link to view the full Annual Report and Financial Statements (which have been audited) for the year to 31 March 2009. The information contained in this link includes information as required by the Disclosure and Transparency Rules, including Rule 4.1. http://hugin.info/141807/R/1326934/312492.pdf Alternatively you may view the Annual Report and Financial Statements at: www.albion-ventures.co.uk by clicking on the 'Our Funds' section. Investment Objectives The aim of Albion Enterprise VCT ("the Company") is to provide investors with a regular and predictable source of income, combined with the prospect of longer term capital growth. Once fully invested, the Company intends to achieve this by investing up to 50 per cent. of the net funds raised in an asset-based portfolio of lower risk, ungeared businesses, principally operating in the leisure sector and related areas (the ''Asset-Based Portfolio''). The balance of the net funds raised, other than funds retained for liquidity purposes, will be invested in a portfolio of higher growth businesses across a variety of sectors of the UK economy. These will range from lower risk, income producing businesses to higher risk technology companies (the ''Growth Portfolio''). Funds awaiting investment in Qualifying Investments or retained for liquidity purposes will be held in gilts, on deposit or invested in floating rate notes or similar instruments, in the latter two cases with banks with a Moody's credit rating of 'A' or above. The Company's investment portfolio will thus be structured to provide a balance between income and capital growth for the longer term. The Asset-Based Portfolio is designed to provide stability and income whilst still maintaining the potential for capital growth. The Growth Portfolio is intended to provide highly diversified exposure through its portfolio of investments in unquoted UK companies. Financial Calendar +-------------------------------------------------------------------+ | Annual General Meeting | 11 August 2009 | | | | |--------------------------------------------------+----------------| | Record date for first dividend | 10 July 2009 | | | | |--------------------------------------------------+----------------| | Payment of first dividend | 7 August 2009 | | | | |--------------------------------------------------+----------------| | Announcement of interim results for the six | November 2009 | | months ended 30 September 2009 | | | | | |--------------------------------------------------+----------------| | Payment of second dividend | January 2010 | | | | +-------------------------------------------------------------------+ Financial Highlights +-------------------------------------------------------------------+ | | 31 March 2009 | 31 March 2009 | | | (pence per share) | (pence per | | | | share) | |-------------------------------+-------------------+---------------| | Dividends paid per Ordinary | 1.65 | 0.70 | | share | | | |-------------------------------+-------------------+---------------| | Revenue return per Ordinary | 2.10 | 2.80 | | share | | | |-------------------------------+-------------------+---------------| | Capital loss per Ordinary | (5.90) | (2.50) | | share | | | |-------------------------------+-------------------+---------------| | Net asset value per Ordinary | 88.80 | 94.00 | | share | | | +-------------------------------------------------------------------+ Net asset value total return to shareholders since launch: +-------------------------------------------------------------------+ | | | 31 March 2009 | | | | (pence per share) | |-------------------------------------------+---+-------------------| | | | | |-------------------------------------------+---+-------------------| | Total dividends paid during the period | | | | ended 31 March 2008* | | 0.70 | |-------------------------------------------+---+-------------------| | Total dividends paid during the year | | | | ended 31 March 2009* | | 1.65 | |-------------------------------------------+---+-------------------| | Total dividends paid to 31 March 2009 | | 2.35 | |-------------------------------------------+---+-------------------| | Net asset value as at 31 March 2009 | | 88.80 | |-------------------------------------------+---+-------------------| | Total net asset value return to 31 March | | | | 2009 | | 91.15 | +-------------------------------------------------------------------+ * The dividend of 0.7 pence per share paid during the period ended 31 March 2008 and first dividend of 0.4 pence per share paid during the year ended 31 March 2009 were paid to shareholders who subscribed in the 2006/2007 offer only. In addition to the above dividends, the Company will pay a first dividend of 1 penny per share on 7 August 2009 to shareholders on the register as at 10 July 2009. Chairman's statement Introduction The results for the Company's second period of operation, being the year to 31 March 2009, reflect the worsening economic environment. Nevertheless, the Company's total negative return of 3.8 pence per share (or 4.3 per cent. of net asset value) compares favourably to the decline in the FTSE All Share Index (including dividends paid) of 29.3 per cent. over the same period. This is principally due to the fact that the Company still has high levels of cash available for investment. Under the Further Offer for subscription launched in December 2007, a total of 10,567,738 shares were issued on 4 April 2008 at a price of 100 pence each. The net proceeds of the Offer were £9,986,512. These shares were admitted to the Official List and to the London Stock Exchange on 7 April 2008. Investment progress and prospects A total of £4.3 million was invested in three existing and eight new investee companies during the year, taking the total portfolio to sixteen qualifying investments. While trading in many of our asset-backed, leisure-oriented businesses remains resilient, valuations have fallen in line with the decline generally in the commercial property market, particularly for those investments made during 2007. In addition, there has been slower progress than expected in some of our growth investments, which has also resulted in partial write downs. Nevertheless, your Company's policy of ensuring that it has a first charge, wherever possible, over investee companies' assets is helping to mitigate the adverse effect of the economic down-turn. In addition, your Company has considerable cash resources which will enable it to take advantage of the lower valuations now becoming apparent. The current very low interest rates available in the market, however, lead us to take a cautious view over the income prospects of the Company in the current year, though we would currently expect a dividend of not less than 2 pence per share to be paid during the year. Recovery of historic VAT Following a period of lobbying by the Association of Investment Companies, the welcome review of the position regarding the exemption of management fees from VAT by H.M. Revenue & Customs in July 2008 has meant that the Manager is able to reclaim historic VAT that it had previously charged to the Company. A reclaim of historic VAT of £38,000 (before the deduction of tax) has been credited to the accounts in respect of the repayment. Further details regarding this claim, and its disclosure, are shown in note 5 of this announcement. With effect from 1 October 2008, all management and administration fees are considered exempt from VAT. Risks and uncertainties The strongly negative outlook of the UK economy continues to be the key risk affecting the Company and, as mentioned above, we are seeing the effects of this in certain sectors of our portfolio. Nevertheless, despite pressures on individual investee companies, the portfolio as a whole remains cash generative and it remains our policy to ensure that investee companies have no external bank borrowings. Meanwhile, investment opportunities continue to arise at attractive valuations in a variety of sectors. Among these is the healthcare sector, which is one of our core areas of concentration. Detailed analysis of the other risks and uncertainties facing the business is shown in note 12 of this announcement. Results and dividends The revenue return after tax was £640,000 enabling total dividends to be paid of 1.65 pence per share. Net asset value per share at 31 March 2009 was 88.8 pence (31 March 2008: 94.0 pence). Your Board announces a first dividend for the year of 1 penny per share (2008: 0.4 pence per share) which will be paid on 7 August 2009 to those shareholders on the register as at 10 July 2009. 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 Company's interest, including the maintenance of sufficient resources for the investment in existing and new portfolio companies and the continued payment of dividends to shareholders. Given the high level of volatility and the adverse movements apparent in all markets, the discount to net asset value per share at which shares are bought back will widen from that which has applied historically. Change of the Manager and name change The business of Close Ventures Limited was acquired by Albion Ventures LLP ("Albion Ventures") from Close Brothers Group plc ("Close") on 23 January 2009. Albion Ventures has been formed by the executive directors of Close Ventures Limited; meanwhile Close will continue to have an investment in the business. The Company's management contract has been novated from Close Ventures to Albion Ventures under exactly the same terms as the existing agreement. The investment approach of Albion Ventures and the investment policy of the Company are also unchanged, with a continued emphasis on building up a broad portfolio of investee companies normally with no external bank borrowings and the maintenance of a regular dividend yield. As a result of this change, the Company Secretary has changed to Albion Ventures LLP, and the Company changed its name from Close Enterprise VCT PLC to Albion Enterprise VCT PLC at a General Meeting on 20 March 2009. Patrick Reeve Director 2 July 2009 Manager's report An analysis of Albion Enterprise VCT PLC's investment portfolio as at 31 March 2009 is shown below. Split of portfolio valuation by sector as at 31 March 2009 http://hugin.info/141807/R/1326934/312484.pdf Source: Albion Ventures LLP Care has been taken to create a spread across a broad number of sectors, with those that are asset-backed and consumer based such as pubs and cinemas, being balanced by higher growth businesses in areas such as healthcare and environmental sectors. New investments New investments made during the year include the following: £430,000 in Dexela Limited, which designs and develops scanners for diagnosing breast cancer; £457,000 in Prime Care Holdings Limited, which provides domiciliary care for the elderly in the south of England; £167,000 in Mirada Medical Limited, which provides software to integrate medical diagnostics; £555,000 in Forth Photonics Limited, which provides equipment for detection of cervical cancer; £950,000 in Bravo Inns II Limited, which is purchasing pubs in the north west of England; £1 million in Droxford Hospital Limited,which is in the process of acquiring a site for the development of a mental hospital; and £560,000 in Vibrant Energy Surveys Limited, a provider of environmental efficiency certificates within the property sector. As the above chart shows, emphasis is being placed on investments involved in the healthcare sector as we believe this is one of the sectors (along with the environmental sector) that is likely to show a level of resilience in growth in the current difficult economic climate. Portfolio review A number of companies in the portfolio are performing strongly, with particular growth being shown by Opta Sports Data Limited (which provides sports analysis for the media sector) and Bravo Inns II Limited (where a number of public houses were bought recently at attractive prices). In addition Prime Care Holdings Limited is showing promising organic growth since we first invested. Against this, Resorthoppa Limited, which provides transfer services from airports to hotels within the travel sector, was hit both by pressures on the travel sector in general and also by the strength of the euro. This led to the company being merged with Lowcosttravelgroup Limited, a company in which a number of the other VCTs managed by Albion Ventures LLP have an investment. In addition, a partial provision has been made against the investment in Vibrant Energy Surveys Limited. The company was affected last year by the severe slow down in residential housing sales and this in turn led to the restructuring of the company's management. New investment opportunities We are already building up a strong and diversified portfolio of healthcare related businesses. In addition, we aim to ensure that the environmental sector also forms a sizeable portion of the Company's investment portfolio. The Company currently has considerable cash balances, and we continue to review a number of opportunities at attractive valuations in both these and other areas such as the leisure sector, where a lack of bank financing has led to some interesting opportunities for cautious purchasers. Details of related party transactions are shown in note 15 of this announcement. Albion Ventures LLP Investment Manager 2 July 2009 Responsibility Statement In preparing these financial statements for the year to 31 March 2009, the Directors of the Company, being Maxwell Packe, Lady Balfour of Burleigh, Lord St. John of Bletso and Patrick Reeve, 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 March 2009 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 March 2009 as required by DTR 4.2.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 March 2009 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 which is attached to this announcement. By order of the Board Patrick Reeve Chairman 2 July 2009 Income Statement +----------------------------------------------------------------------------------+ | | | Year ended |From 7 November 2006 to| |-----------------------------+----+-----------------------+-----------------------| | | | 31 March 2009 | 31 March 2008 | |-----------------------------+----+-----------------------+-----------------------| | | |Revenue|Capital| Total| Revenue| Capital|Total| |-----------------------------+----+-------+-------+-------+--------+--------+-----| | |Note| £'000| £'000| £'000| £'000| £'000|£'000| |-----------------------------+----+-------+-------+-------+--------+--------+-----| | | | | | | | | | |Losses on investments |3 | -|(1,434)|(1,434)| -| (262)|(262)| |-----------------------------+----+-------+-------+-------+--------+--------+-----| |Investment income |4 | 1,248| -| 1,248| 1,065| -|1,065| |-----------------------------+----+-------+-------+-------+--------+--------+-----| |Investment management fees | | (181)| (542)| (723)| (117)| (352)|(469)| |-----------------------------+----+-------+-------+-------+--------+--------+-----| |Recovery of VAT |5 | 10| 28| 38| -| -| -| |-----------------------------+----+-------+-------+-------+--------+--------+-----| |Other expenses | | (203)| -| (203)| (175)| -|(175)| |-----------------------------+----+-------+-------+-------+--------+--------+-----| | | | | | | | | | |Return/(loss) on ordinary | | | | | | | | |activities before tax | | 874|(1,948)|(1,074)| 773| (614)| 159| |-----------------------------+----+-------+-------+-------+--------+--------+-----| |Tax (charge)/credit on | | | | | | | | |ordinary activities |6 | (234)| 153| (81)| (214)| 114|(100)| |-----------------------------+----+-------+-------+-------+--------+--------+-----| |Return/(loss) attributable to| | | | | | | | |shareholders | | 640|(1,795)|(1,155)| 559| (500)| 59| |-----------------------------+----+-------+-------+-------+--------+--------+-----| |Basic and diluted | | | | | | | | |return/(loss) per share | | | | | | | | |(pence)* |8 | 2.1| (5.9)| (3.8)| 2.8| (2.5)| 0.3| +----------------------------------------------------------------------------------+ *(excluding treasury shares) 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. The accompanying notes form an integral part of this announcement. 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. Balance Sheet +-------------------------------------------------------------------+ | | | | | |---------------------------------+------+---------------+----------| | | | | 31 March | | | | 31 March 2009 | 2008 | |---------------------------------+------+---------------+----------| | | Note | £'000 | £'000 | |---------------------------------+------+---------------+----------| | | | | | |---------------------------------+------+---------------+----------| | Fixed asset investments | | 5,804 | 2,847 | |---------------------------------+------+---------------+----------| | | | | | |---------------------------------+------+---------------+----------| | Current Assets | | | | |---------------------------------+------+---------------+----------| | Trade and other debtors | | 30 | 141 | |---------------------------------+------+---------------+----------| | Current asset investments | | 12,123 | 1,474 | |---------------------------------+------+---------------+----------| | Cash at bank | | 9,319 | 14,363 | |---------------------------------+------+---------------+----------| | Total current assets | | 21,472 | 15,978 | |---------------------------------+------+---------------+----------| | | | | | |---------------------------------+------+---------------+----------| | Creditors: amounts falling due | | | | | within one year | | (348) | (221) | |---------------------------------+------+---------------+----------| | | | | | |---------------------------------+------+---------------+----------| | Net current assets | | 21,124 | 15,757 | |---------------------------------+------+---------------+----------| | | | | | |---------------------------------+------+---------------+----------| | Net assets | | 26,928 | 18,604 | |---------------------------------+------+---------------+----------| | | | | | |---------------------------------+------+---------------+----------| | Capital and reserves | | | | |---------------------------------+------+---------------+----------| | Called up share capital | 9 | 15,180 | 9,897 | |---------------------------------+------+---------------+----------| | Special reserve | | 13,473 | 8,787 | |---------------------------------+------+---------------+----------| | Treasury shares reserve | | (31) | - | |---------------------------------+------+---------------+----------| | Realised capital reserve | | (614) | (238) | |---------------------------------+------+---------------+----------| | Unrealised capital reserve | | (1,681) | (262) | |---------------------------------+------+---------------+----------| | Revenue reserve | | 601 | 420 | |---------------------------------+------+---------------+----------| | Total equity shareholders' | | | | | funds | | 26,928 | 18,604 | |---------------------------------+------+---------------+----------| | | | | | |---------------------------------+------+---------------+----------| | Basic and diluted net asset | | | | | value per share (pence)* | 10 | 88.8 | 94.0 | +-------------------------------------------------------------------+ *(excluding treasury shares) The accompanying notes form an integral part of this announcement. Reconciliation of Movement in Shareholders' Funds +-------------------------------------------------------------------------------------------------------+ | |Called-up| | |Treasury|Realised|Unrealised| | | | | share| Share| Special| shares| capital| capital| Revenue| | | | capital|premium|reserve*|reserve*|reserve*| reserve*|reserve*| Total| |------------------------------+---------+-------+--------+--------+--------+----------+--------+-------| | | £'000| £'000| £'000| £'000| £'000| £'000| £'000| £'000| |------------------------------+---------+-------+--------+--------+--------+----------+--------+-------| |As at 1 April 2008 | 9,897| -| 8,787| -| (238)| (262)| 420| 18,604| |------------------------------+---------+-------+--------+--------+--------+----------+--------+-------| |Issue of share capital | 5,283| 5,283| -| -| -| -| -| 10,566| |------------------------------+---------+-------+--------+--------+--------+----------+--------+-------| |Issue costs | -| (580)| -| -| -| -| -| (580)| |------------------------------+---------+-------+--------+--------+--------+----------+--------+-------| |Cost of cancellation of share | | | | | | | | | |premium account | -| -| (17)| -| -| -| -| (17)| |------------------------------+---------+-------+--------+--------+--------+----------+--------+-------| |Cancellation of share premium | | | | | | | | | |account | -|(4,703)| 4,703| -| -| -| -| -| |------------------------------+---------+-------+--------+--------+--------+----------+--------+-------| |Capitalised investment | | | | | | | | | |management fees | -| -| -| -| (542)| -| -| (542)| |------------------------------+---------+-------+--------+--------+--------+----------+--------+-------| |Recovery of VAT capitalised | -| -| -| -| 28| -| -| 28| |------------------------------+---------+-------+--------+--------+--------+----------+--------+-------| |Tax relief on costs charged to| | | | | | | | | |capital | -| -| -| -| 153| -| -| 153| |------------------------------+---------+-------+--------+--------+--------+----------+--------+-------| |Purchase of own treasury | | | | | | | | | |shares | -| -| -| (31)| -| -| -| (31)| |------------------------------+---------+-------+--------+--------+--------+----------+--------+-------| |Net realised losses on | | | | | | | | | |investments in the year | -| -| -| -| (15)| -| -| (15)| |------------------------------+---------+-------+--------+--------+--------+----------+--------+-------| |Unrealised losses on | | | | | | | | | |investments | -| -| -| -| -| (1,419)| -|(1,419)| |------------------------------+---------+-------+--------+--------+--------+----------+--------+-------| |Revenue return attributable to| | | | | | | | | |shareholders | -| -| -| -| -| -| 640| 640| |------------------------------+---------+-------+--------+--------+--------+----------+--------+-------| |Dividends paid | -| -| -| -| -| -| (459)| (459)| |------------------------------+---------+-------+--------+--------+--------+----------+--------+-------| |As at 31 March 2009 | 15,180| -| 13,473| (31)| (614)| (1,681)| 601| 26,928| +-------------------------------------------------------------------------------------------------------+ +-------------------------------------------------------------------------------------------------------+ | |Called-up| | |Treasury|Realised|Unrealised| | | | | share| Share| Special| shares| capital| capital| Revenue| | | | capital|premium|reserve*|reserve*|reserve*| reserve*|reserve*| Total| |------------------------------+---------+-------+--------+--------+--------+----------+--------+-------| | | £'000| £'000| £'000| £'000| £'000| £'000| £'000| £'000| |------------------------------+---------+-------+--------+--------+--------+----------+--------+-------| |As at 7 November 2006 | -| -| -| -| -| -| -| -| |------------------------------+---------+-------+--------+--------+--------+----------+--------+-------| |Issue of share capital | 9,897| 9,897| -| -| -| -| -| 19,794| |------------------------------+---------+-------+--------+--------+--------+----------+--------+-------| |Issue costs | -|(1,089)| -| -| -| -| -|(1,089)| |------------------------------+---------+-------+--------+--------+--------+----------+--------+-------| |Cost of cancellation of share | | | | | | | | | |premium account | -| -| (21)| -| -| -| -| (21)| |------------------------------+---------+-------+--------+--------+--------+----------+--------+-------| |Cancellation of share premium | | | | | | | | | |account | -|(8,808)| 8,808| -| -| -| -| -| |------------------------------+---------+-------+--------+--------+--------+----------+--------+-------| |Capitalised investment | | | | | | | | | |management fees | -| -| -| -| (352)| -| -| (352)| |------------------------------+---------+-------+--------+--------+--------+----------+--------+-------| |Tax relief on costs charged to| | | | | | | | | |capital | -| -| -| -| 114| -| -| 114| |------------------------------+---------+-------+--------+--------+--------+----------+--------+-------| |Unrealised losses on | | | | | | | | | |investments | -| -| -| -| -| (262)| -| (262)| |------------------------------+---------+-------+--------+--------+--------+----------+--------+-------| |Revenue return attributable to| | | | | | | | | |shareholders | -| -| -| -| -| -| 559| 559| |------------------------------+---------+-------+--------+--------+--------+----------+--------+-------| |Dividends paid | -| -| -| -| -| -| (139)| (139)| |------------------------------+---------+-------+--------+--------+--------+----------+--------+-------| |As at 31 March 2008 | 9,897| -| 8,787| -| (238)| (262)| 420| 18,604| +-------------------------------------------------------------------------------------------------------+ Included within these reserves is an amount of £11,748,000 (2008: £8,707,000) which is considered distributable. The Special reserve has been treated as distributable in determining the amounts available for distribution. Cash Flow Statement +-------------------------------------------------------------------+ | | | | From | | | | | 7 November | | | | Year ended | 2006 | | | | 31 March | To 31 March | | | | 2009 | 2008 | | | Note | £'000 | £'000 | |--------------------------------+------+-------------+-------------| | Operating activities | | | | |--------------------------------+------+-------------+-------------| | Investment income received | | 776 | 138 | |--------------------------------+------+-------------+-------------| | Deposit interest received | | 311 | 903 | |--------------------------------+------+-------------+-------------| | Investment management fees | | | | | paid | | (527) | (408) | |--------------------------------+------+-------------+-------------| | Other cash payments | | (188) | (239) | |--------------------------------+------+-------------+-------------| | Net cash inflow from operating | | | | | activities | 11 | 372 | 394 | |--------------------------------+------+-------------+-------------| | | | | | |--------------------------------+------+-------------+-------------| | Taxation | | | | |--------------------------------+------+-------------+-------------| | UK corporation tax paid | | (126) | - | |--------------------------------+------+-------------+-------------| | | | | | |--------------------------------+------+-------------+-------------| | Capital expenditure and | | | | | financial investments | | | | |--------------------------------+------+-------------+-------------| | Purchase of investments | | (4,286) | (3,078) | |--------------------------------+------+-------------+-------------| | Net cash outflow from | | | | | investing activities | | (4,286) | (3,078) | |--------------------------------+------+-------------+-------------| | | | | | |--------------------------------+------+-------------+-------------| | Management of liquid resources | | | | |--------------------------------+------+-------------+-------------| | Purchase of current asset | | | | | investments | | (22,544) | (1,497) | |--------------------------------+------+-------------+-------------| | Disposal of current asset | | | | | investments | | 11,933 | - | |--------------------------------+------+-------------+-------------| | Net cash outflow from liquid | | | | | resources | | (10,611) | (1,497) | |--------------------------------+------+-------------+-------------| | | | | | |--------------------------------+------+-------------+-------------| | Equity dividends paid | | | | |--------------------------------+------+-------------+-------------| | Dividends paid | 7 | (459) | (139) | |--------------------------------+------+-------------+-------------| | Net cash outflow before | | | | | financing | | (15,110) | (4,320) | |--------------------------------+------+-------------+-------------| | | | | | |--------------------------------+------+-------------+-------------| | Financing | | | | |--------------------------------+------+-------------+-------------| | Issue of ordinary share | | | | | capital | | 10,568 | 19,794 | |--------------------------------+------+-------------+-------------| | Purchase of own shares | | (24) | - | |--------------------------------+------+-------------+-------------| | Expenses of issue of ordinary | | | | | share capital | | (478) | (1,111) | |--------------------------------+------+-------------+-------------| | Net cash inflow from financing | | 10,066 | 18,683 | |--------------------------------+------+-------------+-------------| | | | | | |--------------------------------+------+-------------+-------------| | Cash (outflow)/inflow in the | | | | | year | | (5,044) | 14,363 | +-------------------------------------------------------------------+ Notes to the announcement 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 Companies" ("SORP") issued by the Association of Investment Companies ("AIC") in January 2009. Albion Enterprise VCT PLC has decided to adopt the principles of the January 2009 SORP earlier than the mandatory date. Accounting policies have been applied consistently in current and prior periods except for the classification of floating rate notes as explained below. 2. Accounting policies Fixed and current asset investments Unquoted equity investments In accordance with FRS 26 "Financial Instruments Measurement", unquoted equity investments are designated as fair value through profit or loss ("FVTPL"). Unquoted investments' fair value is determined by the Directors in accordance with the International Private Equity and Venture Capital Valuation Guidelines (IPEVCV guidelines). Fair value movements on equity investments 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, convertibles and unquoted equity derived instruments Warrants, convertibles and unquoted equity derived instruments are only valued if their exercise or contractual conversion terms would allow them to be exercised or converted 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 and Euro commercial paper Unquoted loan stock and Euro commercial paper are classified as loans and receivables in accordance with FRS 26 and carried at amortised cost using the Effective Interest Rate method ("EIR") less impairment. Movements in the amortised cost relating to interest income are reflected in the revenue column of the Income Statement, and hence are reflected in the Revenue reserve, and movements in respect of capital provisions are reflected in the capital column of the Income Statement and are reflected in the Realised capital reserve following sale, or in the Unrealised capital reserve on revaluation. Loan stocks which are not impaired or past due are considered fully performing in terms of contractual interest and capital repayments and the Board does not consider that there is a current likelihood of a shortfall on security cover for 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. Unquoted loan stocks are classified as fixed asset investments in the balance sheet. Floating rate notes In accordance with FRS 26, floating rate notes are designated as FVTPL. Floating rate notes are valued at market bid price at the balance sheet date. Floating rate notes and Euro commercial paper are classified as current asset investments as they are investments held for the short term and comparative classification in the Balance Sheet has been restated accordingly. 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. 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 Unquoted equity income 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. Unquoted loan stock, Euro commercial paper income and other preferred income The returns on non-equity shares and debt securities are recognised on a time apportionment basis using an 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. Floating rate note income Floating rate note income is recognised on an accruals basis using the interest rate applicable to the floating rate note at that time. Treasury gilt edged stock income Treasury gilt income is recognised on an accruals basis using the interest rate applicable to the treasury gilt. Investment management fees and 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. This is 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 per annum. 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 specific nature of taxation of venture capital trusts means that it is unlikely that any deferred tax will arise. The Directors have considered the requirements of FRS 19 and do not believe that any provision should be made. 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. Reserves Realised capital reserves The following are disclosed in this reserve: * gains and losses compared to cost on the realisation of investments; and * expenses, together with the related taxation effect, charged in accordance with the above policies. Unrealised capital reserves Increases and decreases in the valuation of investments held at the year end, against cost are disclosed in this reserve. Special reserve This reserve was created on the cancellation of the Company's share premium account, is distributable and amongst other purposes can be used for making market purchases and effecting tender offers of Ordinary shares, offsetting of losses to enable the Company to pay dividends, or can be used for the same purposes that the Company could use a Share premium account. 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. 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. 3. Losses on investments +-------------------------------------------------------------------+ | | | | | From | | | | | | 7 November | | | | | Year ended | 2006 | | | | | 31 March | to 31 March | | | | | 2009 | 2008 | |------------------+-----------------+---+------------+-------------| | | | | £'000 | £'000 | |------------------------------------+---+------------+-------------| | Unrealised losses on fixed | | | | | | asset investments held at fair | | | | | | value through profit or loss | | | | | | account | | | (1,251) | (240) | |--------------------------------+---+---+------------+-------------| | | | | | | |--------------------------------+---+---+------------+-------------| | Unrealised losses on | | | | | | investments held at amortised | | | | | | cost | | | (108) | - | |--------------------------------+---+---+------------+-------------| | Unrealised losses on fixed | | | | | | asset investments | | | (1,359) | (240) | |--------------------------------+---+---+------------+-------------| | | | | | | |--------------------------------+---+---+------------+-------------| | Unrealised losses on current | | | | | | asset investments held at fair | | | | | | value through profit or loss | | | | | | account | | | (60) | (22) | |--------------------------------+---+---+------------+-------------| | Unrealised losses sub total | | | (1,419) | (262) | |--------------------------------+---+---+------------+-------------| | Realised losses on current | | | | | | asset investments held at fair | | | | | | value through profit or loss | | | | | | account | | | (15) | - | |--------------------------------+---+---+------------+-------------| | Realised losses sub total | | | (15) | - | |--------------------------------+---+---+------------+-------------| | | | | | | |--------------------------------+---+---+------------+-------------| | Total | | | (1,434) | (262) | +-------------------------------------------------------------------+ Investments valued on amortised cost basis are unquoted loan stock investments as described in note 2. 4. Investment income +-------------------------------------------------------------------+ | | | From | | | Year ended | 7 November 2006 | | | 31 March | to 31 March | | | 2009 | 2008 | |------------------------------------+------------+-----------------| | | £'000 | £'000 | |------------------------------------+------------+-----------------| | Income recognised on investments | | | | held at fair value through profit | | | | or loss | | | |------------------------------------+------------+-----------------| | Floating rate note interest | 317 | 61 | |------------------------------------+------------+-----------------| | Bank deposit interest | 312 | 913 | |------------------------------------+------------+-----------------| | Treasury gilt edged stock interest | 348 | - | |------------------------------------+------------+-----------------| | | 977 | 974 | |------------------------------------+------------+-----------------| | Income recognised on investments | | | | held at amortised cost | | | |------------------------------------+------------+-----------------| | Return on loan stock investments | 159 | 91 | |------------------------------------+------------+-----------------| | Euro commercial paper interest | 112 | - | |------------------------------------+------------+-----------------| | | 1,248 | 1,065 | +-------------------------------------------------------------------+ Interest income earned on impaired investments at 31 March 2009 amounted to £41,000 (2008: nil). These investments are held at amortised cost. 5. Recovery of VAT HMRC issued a business briefing on 24 July 2008 which permitted the recovery of historic VAT that had been charged on management fees, and which made these fees exempt from VAT with effect from 1 October 2008. The Manager, Albion Ventures LLP has made a claim for the historic VAT that Albion Enterprise VCT PLC has paid on management fees. During the year, the Company received a historic VAT payment of £94,000 (before the deduction of tax) prior to off-setting an increase in management fees of £56,000 due as a result of the increase in the net asset value for the respective periods and resultant recovery of fees subject to an expense cap. A net sum of £38,000 has been recognised as a separate item in the Income Statement, allocated between revenue and capital return in the same proportion as that which the original VAT has been charged. An additional tax charge of £11,000 is payable on this recovery of historic VAT and this is reflected in the tax charge shown in the Income Statement. It is possible that further amounts may be recoverable in due course; however, the Directors are at this stage unable to quantify the amounts involved. 6. Tax charge/(credit) on ordinary activities +---------------------------------------------------------------------+ | | |From 7 November 2006 to| | |Year ended 31 March 2009| 31 March 2008 | |--------------------+------------------------+-----------------------| | | Revenue| Capital| Total| Revenue| Capital|Total| | | £'000| £'000| £'000| £'000| £'000|£'000| |--------------------+--------+--------+------+--------+--------+-----| |UK corporation tax | | | | | | | |in respect of the | | | | | | | |current year | 234| (153)| 81| 214| (114)| 100| |--------------------+--------+--------+------+--------+--------+-----| | | | | | | | | +---------------------------------------------------------------------+ The UK government changed the rate of UK corporation tax rate from 30 per cent. to 28 per cent. with effect from 1 April 2008. The tax charge for the year is lower than the standard rate of corporation tax of 28 per cent. (2008: 30 per cent.). The differences are explained below. +-------------------------------------------------------------------+ | | | From | | | Year ended | 7 November 2006 to | | | 31 March | 31 March | | | 2009 | 2008 | | | £'000 | £'000 | |---------------------------------+------------+--------------------| | (Loss)/return on ordinary | (1,074) | 159 | | activities before tax | | | |---------------------------------+------------+--------------------| | Tax on (loss)/profit at the | (300) | 48 | | standard rate | | | |---------------------------------+------------+--------------------| | Factors affecting the charge: | | | |---------------------------------+------------+--------------------| | Capital losses not subject to | | | | taxation | 401 | 79 | |---------------------------------+------------+--------------------| | Marginal relief | (20) | (27) | |---------------------------------+------------+--------------------| | | 81 | 100 | +-------------------------------------------------------------------+ Notes (i) Venture Capital Trusts are not subject to corporation tax on capital gains. (ii) Tax relief on expenses charged to capital has been determined by allocating tax relief to expenses by reference to the applicable corporation tax rate of 28 per cent. and allocating the relief between revenue and capital in accordance with the SORP. (iii) No deferred tax asset or liability has arisen in the year. 7. Dividends +-------------------------------------------------------------------+ | | | From 7 November 2006 to | | | Year ended 31 March 2009 | 31 March 2008 | |-----------+---------------------------+---------------------------| | | Revenue | Capital | Total | Revenue | Capital | Total | | | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |-----------+---------+---------+-------+---------+---------+-------| | Dividend | | | | | | | | of 0.7p | | | | | | | | per share | | | | | | | | paid on | | | | | | | | 28 | | | | | | | | December | | | | | | | | 2007 | - | - | - | 139 | - | 139 | |-----------+---------+---------+-------+---------+---------+-------| | Dividend | | | | | | | | of 0.4p | | | | | | | | per share | | | | | | | | paid on | | | | | | | | 15 August | | | | | | | | 2008 | 79 | - | 79 | - | - | - | |-----------+---------+---------+-------+---------+---------+-------| | Dividend | | | | | | | | of 1.25p | | | | | | | | per share | | | | | | | | paid on 9 | | | | | | | | January | | | | | | | | 2009 | 380 | - | 380 | - | - | - | |-----------+---------+---------+-------+---------+---------+-------| | | 459 | - | 459 | 139 | - | 139 | +-------------------------------------------------------------------+ In addition to the dividends summarised above, the Directors have declared a first revenue dividend for the year ending 31 March 2010 of 1 penny per share to be paid on 7 August 2009 to shareholders on the register as at 10 July 2009. 8. Basic and diluted return/(loss) per share +-------------------------------------------------------------------------+ | | |From 7 November 2006 to| | |Year ended 31 March 2009| 31 March 2008 | |------------------------+------------------------+-----------------------| | | Revenue|Capital| Total| Revenue| Capital|Total| |------------------------+--------+-------+-------+--------+--------+-----| |Return/(loss) | | | | | | | |attributable to equity | | | | | | | |shares (£'000) | 640|(1,795)|(1,155)| 559| (500)| 59| |------------------------+--------+-------+-------+--------+--------+-----| |Return/(loss) | | | | | | | |attributable per | | | | | | | |Ordinary share (pence) | | | | | | | |(basic and diluted) | 2.1| (5.9)| (3.8)| 2.8| (2.5)| 0.3| +-------------------------------------------------------------------------+ Return per share has been calculated on 30,266,779 shares (2008: 19,793,147), being the weighted average number of shares in issue for the year, excluding treasury shares of 43,300 (2008: nil). There are no convertible instruments, derivatives or contingent share agreements in issue for Albion Enterprise VCT PLC hence there are no dilution affects to the return per share. The basic return per share is therefore the same as the diluted return per share. 9. Called up share capital +-------------------------------------------------------------------+ | | 31 March | 31 March | | | 2009 | 2008 | | | £'000 | £'000 | |---------------------------------------------+----------+----------| | Authorised | | | |---------------------------------------------+----------+----------| | 50,000,000 shares of 50p each (2008: | | | | 50,000,000) | 25,000 | 25,000 | |---------------------------------------------+----------+----------| | | | | | Allotted, called up and fully paid | | | |---------------------------------------------+----------+----------| | 30,360,885 shares of 50p each (2008: | | | | 19,793,147) | 15,180 | 9,897 | |---------------------------------------------+----------+----------| | | | | | Allotted, called up and fully paid | | | | excluding treasury shares | | | |---------------------------------------------+----------+----------| | 30,317,585 shares of 50p each (2008: | | | | 19,793,147) | 15,159 | 9,897 | +-------------------------------------------------------------------+ The Company purchased 43,300 shares (2008: nil) to be held in treasury at a cost of £31,000 (2008: £nil) representing 0.1 per cent. of the shares in issue (excluding treasury shares) as at 1 April 2008. The shares purchased for treasury were funded from the Treasury shares reserve. The Company holds a total of 43,300 shares representing 0.1 per cent. of the shares in issue (excluding treasury shares) as at 31 March 2009. At the Extraordinary General Meeting on 19 December 2007, an Ordinary resolution was approved to increase the Company's authorised share capital from £20,000,000 to £25,000,000 by the creation of 10,000,000 Ordinary shares of 50p each. These shares were used for the Further Offer for Subscription which closed on 4 April 2008. On 4 April 2008, 10,567,738 shares with a nominal value of 50 pence each, (total nominal value of £5,283,869) were allotted in accordance with the terms of the Offer for Subscription dated 23 November 2007. These were issued at a total value of 100 pence each. These shares were admitted to the Official List of the UK Listing Authority on 7 April 2008. +-------------------------------------------------------------------+ | Date of | Number of | Aggregate | Consideration | Opening | | allotment | shares | nominal | received | market price | | | allotted | value of | £'000 | per share on | | | | shares | | allotment | | | | £'000 | | date | | | | | | pence per | | | | | | share | |-----------+------------+-----------+---------------+--------------| | 4 April | 10,567,738 | 5,284 | 10,568 | 100.0 | | 2008 | | | | | +-------------------------------------------------------------------+ 10. Basic and diluted net asset value per share +-------------------------------------------------------------------+ | | | | 31 March | 31 March | | | | | 2009 | 2008 | |-----------------------------------------+---+----------+----------| | Basic and diluted net asset value | | | | | | per share attributable (pence) | | | 88.8 | 94.0 | +-------------------------------------------------------------------+ The net asset value per share at the year end is calculated in accordance with the Articles of Association and is based upon total shares in issue less treasury shares of 30,317,585 shares (2008: 19,793,147) at 31 March 2009. The Company's policy is to sell treasury shares at a price greater than the purchase price hence the net asset value per share on a diluted basis would be equal to or greater than the basic net asset value per share, depending on the actual price achieved for selling the treasury shares. 11. Reconciliation of net return on ordinary activities before taxation to net cash inflow from operating activities +-------------------------------------------------------------------+ | | | | | From | | | | | Year ended | 7 November 2006 | | | | | 31 March | to 31 March | | | | | 2008 | 2008 | | | | | £'000 | £'000 | |----------------------------+---+---+------------+-----------------| | Revenue return on ordinary | | | | | | activities before taxation | | | 874 | 773 | |----------------------------+---+---+------------+-----------------| | Investment management fee | | | | | | charged to capital | | | (542) | (352) | |----------------------------+---+---+------------+-----------------| | Recovery of VAT charged to | | | | | | capital | | | 28 | - | |----------------------------+---+---+------------+-----------------| | Movement in accrued | | | | | | amortised loan stock | | | | | | interest | | | (30) | (8) | |----------------------------+---+---+------------+-----------------| | Increase in debtors | | | (128) | (141) | |----------------------------+---+---+------------+-----------------| | Decrease in creditors | | | 170 | 122 | |----------------------------+---+---+------------+-----------------| | Net cash inflow from | | | | | | operating activities | | | 372 | 394 | +-------------------------------------------------------------------+ 12. 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: 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 their 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 external investment professionals. 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 detailed reports on each investment as part of the Manager's report at quarterly board meetings. 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, and is 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 advisors. 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. 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 considerable 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. 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 will meet 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. In the past year the Board has met with the Head of Internal Audit of Close Brothers Group on a similar basis. The Manager has a comprehensive business continuity plan in place in the event that operational continuity is threatened. Further details regarding the Board's management and review of the Company's internal controls through the implementation of the Turnbull guidance are detailed on page 28 of the audited Annual Report and Financial Statement which is attached to this announcement. Measures are in place to mitigate information risk in order to ensure the integrity, availability and confidentiality of information used within the business. Reliance upon third parties risk The Company is reliant upon the services of Albion Ventures LLP for the provision of investment management and administrative functions. There are provisions within the Management Agreement for the change of Manager under certain circumstances. In addition, the Manager has demonstrated to the Board that there is no undue reliance placed upon any one individual within Albion Ventures LLP. Financial 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 13 below. 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. 13. Capital and financial instruments risk management The Company's capital comprises Ordinary shares as described in note 9. 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 full Annual Report and Financial Statements which is attached to this announcement. The Company's financial instruments comprise equity and loan stock investments in unquoted companies, floating rate notes, Euro Commercial Paper, cash balances, short term debtors and creditors which arise from its operations. The main purpose of these financial instruments is to generate cashflow, revenue and capital appreciation for the Company's operations. The Company has no gearing or other financial liabilities apart from short term creditors. The Company does not use any derivatives for the management of its balance sheet. The principal risks arising from the Company's operations are: * Investment (or market) risk (which comprises investment price and cash flow interest rate risk); * credit risk; and * liquidity risk. The Board regularly reviews and agrees policies for managing each of these risks. There have been no changes in the nature of the risks that the Company has faced during the past year, and apart from where noted below, there have been no changes in the objectives, policies or processes for managing risks during the past year. The key risks are summarised below: Investment risk As a venture capital trust, it is the Company's specific nature to evaluate and control the investment risk of its portfolio in unquoted investments. 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 companies 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 review investment risk (which includes market price risk), both at the time of initial investment and at quarterly Board meetings. The Board monitors the prices at which sales of investments are made to ensure that profits to the Company are maximised, and that valuations of investments retained within the portfolio appear sufficiently prudent and realistic compared to prices being achieved in the market for sales of unquoted investments. The maximum investment risk as at the balance sheet date is the value of the fixed and current asset investment portfolio which is £17,927,000 (2008: £4,321,000). Fixed and current asset investments form 67 per cent. of the Ordinary share net asset value as at 31 March 2009 (2008: 23 per cent.). More details regarding the classification of fixed and current asset investments are shown in notes 12 and 14 of the Annual Report and Financial Statements attached to this announcement. 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 sectors in which investments have been made are contained in the Portfolio of Investments section of the Annual Report and Financial Statements and in the Manager's Report above. In accordance with the IPEVCV Guidelines, in the absence of a more appropriate methodology, investments held for less than 12 months are valued at cost. Thereafter, the valuation will move to 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 reasonable possible alternative methods of valuation of the investments as at 31 March 2009. As required under FRS 29, the Board is required to illustrate by way of a sensitivity analysis, the degree of exposure to market risk. The Board considers that the value of the fixed and current asset investment portfolio is sensitive to a 10 per cent. change based on the current economic climate. The impact of a 10 per cent. change has been selected as this is considered reasonable given the current level of volatility observed both on a historical basis and future expectations. The sensitivity of a 10 per cent. increase or decrease in the valuation of the fixed and current asset investments (keeping all other variables constant) would increase or decrease the net asset value by £1,793,000 (2008: £432,000). Cash flow interest rate risk It is the Company's policy to accept a degree of interest rate risk on its financial assets through the effect of interest rate changes. On the basis of the Company's analysis, it is estimated that a fall of one percentage point in all interest rates would have reduced total return before tax for the year by approximately £191,000 (2008: £177,000). The weighted average interest rate applied to the Company's fixed rate assets during the year was approximately 6.6 per cent. (2008: 10.1 per cent.). The weighted average period to maturity for the fixed rate assets is approximately 2.74 years (2008: 4.3 years). 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, floating rate notes, Euro Commercial Paper and through the holding of cash on deposit with banks. The Manager evaluates credit risk on loan stock, floating rate note instruments and other similar 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. Floating rate note investments, Euro Commercial Paper and 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 and floating rate note 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 at 31 March 2009 was limited to £3,180,000 (2008: £1,268,000) of unquoted loan stock instruments, £9,319,000 (2008: £14,363,000) cash deposits with banks and £12,123,000 (2008: £1,474,000) held in floating rate notes and Euro Commercial Paper. An analysis of the performance of unquoted loan stock by redemption date if given under liquidity risk below. As at the balance sheet date, the cash held by the Company is held with the Royal Bank of Scotland plc, Bank of Scotland plc, Lloyds TSB Bank plc and HSBC plc. Credit risk on cash transactions is mitigated by transacting with counterparties that are regulated entities subject to prudential 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, as Euro Commercial Paper and as floating rate notes. Under the terms of its Articles, the Company has the ability to borrow up to 10 per cent. of its net assets, which amounts to £2,693,000 (2008: £1,860,000) as at 31 March 2009. The Company has no committed borrowing facilities as at 31 March 2009 (2008: nil) and had cash balances of £9,319,000 (2008: £14,363,000), together with £8,174,000 (2008: £1,474,000) invested in floating rate notes and £3,949,000 (2008: nil) invested in Euro Commercial Paper, which are considered to be readily realisable within the timescales required to make cash available for investment. The main cash outflows are for new investments, buy-back of shares and dividend payments, which are within the control of the Company. The Manager formally reviews the cash requirements of the Company on a monthly basis, and the Board on a quarterly basis as part of its review of management accounts and forecasts. All the Company's financial liabilities are short term in nature and total £348,000 (2008: £221,000) at 31 March 2009. In view of this, the Board considers that the Company is subject to low liquidity risk. The carrying value of loan stock investments held at amortised cost at 31 March 2009 is analysed by the expected maturity dates as follows: +-------------------------------------------------------------------+ | | | | Impaired | | | | Fully performing | Renegotiated | loan | | | Redemption | loan stock | loan stock | stock | Total | | date | £'000 | £'000 | £'000 | £'000 | |------------+--------------------+--------------+----------+-------| | 3-5 years | 2,592 | - | 588 | 3,180 | |------------+--------------------+--------------+----------+-------| | | | | | | +-------------------------------------------------------------------+ The carrying value of loan stock investments held at amortised cost as at 31 March 2008 is analysed by the expected maturity dates as follows: +-------------------------------------------------------------------+ | | | | Impaired | | | | Fully performing | Renegotiated | loan | | | Redemption | loan stock | loan stock | stock | Total | | date | £'000 | £'000 | £'000 | £'000 | |------------+--------------------+--------------+----------+-------| | 3-5 years | 1,084 | 184 | - | 1,268 | |------------+--------------------+--------------+----------+-------| | | | | | | +-------------------------------------------------------------------+ The cost, impairment and carrying value of impaired loan stocks held at amortised cost at 31 March 2009 and 31 March 2008 are as follows: +--------------------------------------------------------------------------+ | | 31 March 2009 | 31 March 2008 | |----------+-------------------------------+-------------------------------| | | Cost| Impairment| Carrying| Cost| Impairment| Carrying| | | | | value| | | value| |----------+-------+------------+----------+-------+------------+----------| | | £'000| £'000| £'000| £'000| £'000| £'000| |----------+-------+------------+----------+-------+------------+----------| |Impaired | | | | | | | |loan stock| 706| (118)| 588| -| -| -| +--------------------------------------------------------------------------+ 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 estimate that the security value approximates to the carrying value. Loan stock investments disclosed above as renegotiated would otherwise have been disclosed as past due. Fair values of financial assets and financial liabilities All the Company's financial assets and liabilities as at 31 March 2009 are stated at fair value as determined by the Directors, with the exception of loans and receivables included within investments, which are carried at amortised cost, in accordance with FRS 26. In the opinion of the Directors the current carrying value of loan stock is not materially different to the fair value. There are no financial liabilities other than creditors. The Company's financial liabilities are all non-interest bearing. It is the Directors' opinion that the book value of the financial liabilities is not materially different to the fair value and all are payable within one year and that the Company is subject to low liquidity risk as a result of nil gearing and strong cash balances. The Company's financial assets and liabilities as at 31 March 2009, all denominated in pounds sterling, consist of the following: +----------------------------------------------------------------------------------------------------+ | | 31 March 2009 | 31 March 2008 | |-------------+-------------------------------------------+------------------------------------------| | | | | | | | | | | | | Fixed| Floating| | | Fixed| Floating| | | | | rate| rate| Non-interest| Total| rate| rate| Non-interest| Total| | | £'000| £'000| £'000| £'000| £'000| £'000| £'000| £'000| |-------------+--------+----------+--------------+--------+-------+----------+--------------+--------| | | | | | | | | | | |Floating rate| | | | | | | | | |notes | -| 8,174| -| 8,174| -| 1,474| -| 1,474| |-------------+--------+----------+--------------+--------+-------+----------+--------------+--------| |Euro | | | | | | | | | |Commercial | | | | | | | | | |Paper | 3,949| -| -| 3,949| -| -| -| -| |-------------+--------+----------+--------------+--------+-------+----------+--------------+--------| |Unquoted loan| | | | | | | | | |stock | 2,299| 881| -| 3,180| 1,268| -| -| 1,268| |-------------+--------+----------+--------------+--------+-------+----------+--------------+--------| |Unquoted | | | | | | | | | |equity | -| -| 2,624| 2,624| -| -| 1,579| 1,579| |-------------+--------+----------+--------------+--------+-------+----------+--------------+--------| |Debtors | -| -| 30| 30| -| -| 141| 141| |-------------+--------+----------+--------------+--------+-------+----------+--------------+--------| |Current | | | | | | | | | |liabilities | -| -| (348)| (348)| -| -| (221)| (221)| |-------------+--------+----------+--------------+--------+-------+----------+--------------+--------| |Cash | 4,500| 4,819| -| 9,319| 5,000| 9,363| -| 14,363| |-------------+--------+----------+--------------+--------+-------+----------+--------------+--------| |Total net | | | | | | | | | |assets | 10,748| 13,874| 2,306| 26,928| 6,268| 10,837| 1,499| 18,604| +----------------------------------------------------------------------------------------------------+ 14. Post balance sheet events Since 31 March 2009 the Company has completed the following investments and disposals: * Investment in Welland Inns VCT Limited of £12,000 * Investment in Bravo Inns II Limited of £125,000 * Investment in Mi-Pay Limited of £94,000 * Investment in 1Kingsarmsyard Income & Growth VCT Limited of £56,000 15. Related party transactions The Manager, Albion Ventures LLP, is considered to be a related party by virtue of the fact that Patrick Reeve, a Director of the Company, is also a Partner of the Manager. The Manager is party to a Management Agreement from the Company. During the year, services of a total value of £723,000 (2008: £469,000) were purchased by the Company from Albion Ventures LLP. At the financial year end, the amount due to Albion Ventures LLP disclosed as accruals and deferred income was £219,000 (2008: £62,000). Albion Ventures LLP has reclaimed VAT from HMRC as described in note 5. A sum of £38,000 has been recognised in the Income Statement for the year reflecting a gross receipt of £94,000, less a creditor for £56,000 in respect of related historic management fees to be paid to Albion Ventures LLP. Patrick Reeve, is a Director of the Company, and is also the Managing Partner of Albion Ventures LLP, which is the Manager of the Fund. During the year, the Company was charged £20,000 (including VAT) by Albion Ventures LLP in respect of Patrick Reeve's services as a Director (2008: £19,000). At the year end, the amount due to Albion Ventures LLP in respect of these services disclosed as accruals and deferred income was £5,000 (2008: £5,000). Buybacks of Ordinary shares during the year were transacted through Winterflood Securities Limited, a subsidiary of Close Brothers Group plc, which, up to 23 January 2009, was the ultimate parent company of the Manager. Details of buy-backs during the year can be found in note 9. During the year, fundraising fees of £581,000 were paid to Close Investments Limited, a subsidiary of Close Brothers Group plc, in association with the Further Offer for Subscription in April 2008. Maxwell Packe is the chairman of the Board and a shareholder in Vibrant Energy Surveys Limited, a company in which Albion Enterprise VCT PLC is invested. During the year, Vibrant Energy Surveys Limited paid Albion Enterprise VCT PLC loan stock interest of £3,000. During the year, the Company invested £560,000 in Vibrant Energy Surveys Limited. At the year end, the Company held equity with a value of nil, and loan stock with a value of £107,000. 16. Other information The information set out in this announcement does not constitute the Company's statutory accounts within the terms of section 240 of the Companies Act 1985 for the periods ended 31 March 2009 and 31 March 2008, and is derived from the statutory accounts for these periods, which have been, or in the case of the accounts for the year ended 31 March 2009, 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 s237 (2) or (3) of the companies Act 1985. The Company's Annual General Meeting will be held at The City of London Club, 19 Old Broad Street, London, EC2N 1DS on 11 August 2009 at 12 noon. 17. Publication The full audited Annual Report and Financial Statements is being sent to shareholders and copies will be made available to the public at the registered office of the Company, Companies House, the FSA viewing facility and also electronically at www.albion-ventures.co.uk. 2 July 2009 For further information, please contact: Patrick Reeve of Albion Ventures LLP Tel: 020 7601 1850 ---END OF MESSAGE--- This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
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