Annual Financial Report
Annual Financial Report
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 2011.
This announcement was approved for release by the Board of Directors on 24 June
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 March 2011 (which have been audited) at: www.albion-
ventures.co.uk by clicking on 'Our Funds' and then 'Albion Enterprise VCT PLC'.
The Annual Report and Financial Statements for the year to 31 March 2011 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
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-backed
portfolio of lower risk, ungeared businesses, principally operating in the
leisure sector and related areas (the ''Asset-Backed 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-backed
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 21 July 2011
Record date for first dividend 5 August 2011
Payment of first dividend 31 August 2011
Announcement of Half-yearly results for the six months ending 30 November 2011
September 2011
Payment of second dividend subject to Board approval February 2012
Financial highlights
94.5p
Net asset value per share plus dividends paid from launch to 31 March
2011.
87.1p
Net asset value per share as at 31 March 2011.
3.0p
Tax-free dividends per share paid in the year to 31 March 2011.
1.5p     First tax-free dividend per share declared for the year to 31 March
2012.
Financial summary
+-----------------+-------------------+-------------------+
| Â | 31 March 2011 | 31 March 2010 |
| | (pence per share) | (pence per share) |
+-----------------+-------------------+-------------------+
| Dividends paid | 3.00 | 2.00 |
+-----------------+-------------------+-------------------+
| Revenue return | 1.23 | 1.01 |
+-----------------+-------------------+-------------------+
| Capital return | 0.67 | 0.43 |
+-----------------+-------------------+-------------------+
| Net asset value | 87.13 | 88.25 |
+-----------------+-------------------+-------------------+
Net asset value total return to shareholders since launch:
+-----------------------------------------------------------------------+
| 31 March 2011 |
| Â Â (pence per share) |
| |
| Â Â Â |
| |
| Total dividends paid during the year ended: Â Â |
| |
| 31 March 2008 Â 0.70 |
| |
| 31 March 2009 Â 1.65 |
| |
| 31 March 2010 Â 2.00 |
| |
| 31 March 2011 Â 3.00 |
| --------------------+
| Total dividends paid to 31 March 2011 Â 7.35 |
| |
| Net asset value as at 31 March 2011 Â 87.13 |
| --------------------+
| Total net asset value return to 31 March 2011 Â 94.48 |
+-----------------------------------------------------------------------+
In addition to the above dividends, the Company will pay a first dividend for
the new financial year, of 1.5 pence per share on 31 August 2011 to shareholders
on the register as at 5 August 2011.
Notes
* 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.
* All dividends paid by the Company are free of income tax. It is an H.M.
Revenue & Customs requirement that dividend vouchers indicate the tax
element should dividends have been subject to income tax. Investors should
ignore this figure on their dividend voucher and need not disclose any
income they receive from a VCT on their tax return.
* The net asset value of the Company is not its share price as quoted on the
official list of the London Stock Exchange. The share price of the Company
can be found in the Investment Companies - VCTs section of the Financial
Times on a daily basis.
* Investors are reminded that it is common for shares in VCTs to trade at a
discount to their net asset value as tax reliefs are only obtainable on
initial subscription.
Chairman's statement
Introduction
The Company's results for the year to 31 March 2011 saw a positive total return
of 1.90 pence per share, against a total return of 1.44 pence per share for the
previous year. This shows continued progress in the build of the investment
portfolio.
Board portfolio progress
A total of £10.5 million was invested or committed in the year, of which £9.8
million was in new portfolio companies. This means that the total level of
qualifying investments is now comfortably above the 70 per cent. required by HM
Revenue & Customs. New investments include £953,000 in TEG (Biogas) Perth
Limited, which is developing a new anaerobic digestion power station fed on
waste food; £1.7 million in Radnor House School Limited, a new independent
school on the Thames at Twickenham; £1.85 million in Nelson House Hospital
Limited, a freehold psychiatric unit being developed in Gosport;Â and a number
of other renewable energy projects aimed at solar or wind power. During the
year we disposed of our investment in Geronimo Inns, realising a capital profit
of £361,000 on our investment of £2.8m and achieving a total return over the
course of our investment of 24 per cent.
Strong progress was seen during the year by Dexela Limited, which develops
medical imaging products, principally  for the scanning of breast cancer.
Subsequent to the year end, the investment of £430,000 in Dexela Limited was
sold, realising initial proceeds of £867,000 with the potential, subject to
earnings over the next three years, of further proceeds of £398,000. Mirada
Medical Limited, another medical imaging business, also saw strong progress.
Against this, slower than hoped for progress at Prime Care Holdings Limited,
Dysis Medical Limited (formerly Forth Photonics Limited) and Oxsensis Limited,
led to partial provisions. These companies continue to grow their businesses as
does Mi-Pay.
Investment income for the year was 16 per cent. higher than for the previous
year, in line with the continued build up of our investment portfolio, where
most of the holdings are income producing.
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 spending cuts, while the prospects for the broader global economy
remain unclear. It remains our policy to ensure that the Company has, wherever
appropriate, a first charge over assets of companies in which we have invested.
Opportunities within our target sectors continue to arise at attractive
valuations, including the healthcare and environmental sectors, two of our core
areas of concentration.
A detailed analysis of the other risks and uncertainties facing the business is
shown in note 23 to this announcement.
Details of post balance sheet events and related party transactions are set out
in notes 21 and 22 to this announcement.
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 interest, including the
maintenance of sufficient resources for investment in new and existing portfolio
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 March 2011, the net asset value of the Ordinary shares was 87.13 pence
per share, compared to 88.25 pence as at 31 March 2010. The revenue return
after taxation was £373,000 compared to £305,000 for the previous year. The
Company will pay a first dividend for the financial year to 31 March 2012 of
1.5 pence per share. The dividend will be paid on 31 August 2011 to
shareholders on the register at 5 August 2011.
Albion VCTs Linked Top Up Offer
Your Company raised a total of £1.67 million as part of the Albion VCTs Linked
Top Up Offer which closed on 16 May 2011. The proceeds provide welcome
additional liquidity at a time when SMEs are facing a shortage of available
finance and while valuations are attractive. Details regarding the shares issued
under this Offer are shown in notes 15 and 21.
Outlook and prospects
The portfolio is being built up according to plan, with particular emphasis on
the healthcare and environmental sectors. We think that a number of investments
in the high growth sector have interesting prospects and, although there is
continued uncertainty in the UK and the global economy, we consider that the
portfolio, as a whole, has potential to generate attractive, long term returns
to shareholders.
Maxwell Packe
Chairman
24 June 2011
Manager's report
Portfolio Review
The sector analysis of Albion Enterprise VCT's investment portfolio by value as
at 31 March 2011 is shown below. This shows that healthcare now accounts for
25 per cent. of the portfolio compared to 16 per cent. at the end of the
previous financial year, while the environmental and renewables sector now
accounts for 19 per cent., compared to 2 per cent. in the previous financial
year. Following the sale of the Geronimo Inns investment, the proportion within
the pub sector has reduced from 19 per cent. to 10 per cent.
 Please see the end of this announcement for the PDF of the sector split of the
portfolio by valuation as at 31 March 2011
Source: Albion Ventures LLP
New investments
During the year some £9.8 million was invested in new investments and £700,000
in existing portfolio companies. Of this, some £2 million was invested or
committed in the healthcare sector and £5 million in the environmental sector,
which comprises renewable electricity projects for the production of power from
solar, wind and anaerobic digestion. We see the healthcare sector as being a
core area for investment, while the investment programme in the renewable
electricity sector are nearing completion.
Investment performance
Following the successful sale of Geronimo Inns, our key pub investments are in
the two Bravo Inns companies. These are strongly profitable and cash
generative. Our new investment in Radnor House School Limited has got off to a
good start, with committed pupils for its first academic year comfortably above
budget. With regard to growth investments, the sale of Dexela Limited
subsequent to the year end will produce a return of between two and three times
cost, while Mirada Medical Limited, our other medical imaging business, also saw
strong progress. Our portfolio of environmental and renewable energy
investments now amounts to £5 million and will start to produce a strong level
of income for the Company.
Albion Ventures LLP
Manager
24 June 2011
Responsibility Statement
In preparing these financial statements for the year to 31 March 2011, 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 2011 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 2011 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 March 2011 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
Maxwell Packe
Chairman
Income statement
+-----------------------------+----+---------------------+---------------------+
| Â | Â | Year ended | Year ended |
+-----------------------------+----+---------------------+---------------------+
| Â | Â | 31 March 2011 | 31 March 2010 |
+-----------------------------+----+-------+-------+-----+-------+-------+-----+
|Â | Â |Revenue|Capital|Total|Revenue|Capital|Total|
+-----------------------------+----+-------+-------+-----+-------+-------+-----+
| |Note| £'000| £'000|£'000| £'000| £'000|£'000|
+-----------------------------+----+-------+-------+-----+-------+-------+-----+
|Â | | | | | | | |
|Profits on investments |3 | -| 588| 588| -| 547| 547|
+-----------------------------+----+-------+-------+-----+-------+-------+-----+
|Investment income |4 | 852| -| 852| 733| -| 733|
+-----------------------------+----+-------+-------+-----+-------+-------+-----+
|Investment management fees |5 | (168)| (505)|(673)| (168)| (505)|(673)|
+-----------------------------+----+-------+-------+-----+-------+-------+-----+
|Other expenses |6 | (190)| -|(190)| (177)| -|(177)|
+-----------------------------+----+-------+-------+-----+-------+-------+-----+
|Â | | | | | | | |
|Return on ordinary activities| | | | | | | |
|before tax |Â | 494| 83| 577| 388| 42| 430|
+-----------------------------+----+-------+-------+-----+-------+-------+-----+
|Tax (charge)/credit on | | | | | | | |
|ordinary activities |8 | (121)| 121| -| (83)| 89| 6|
+-----------------------------+----+-------+-------+-----+-------+-------+-----+
|Return attributable to | | | | | | | |
|shareholders |Â | 373| 204| 577| 305| 131| 436|
+-----------------------------+----+-------+-------+-----+-------+-------+-----+
|Basic and diluted return per | | | | | | | |
|share (pence)* |10 | 1.23| 0.67| 1.90| 1.01| 0.43| 1.44|
+-----------------------------+----+-------+-------+-----+-------+-------+-----+
*Â 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 these Financial Statements.
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 return on ordinary activities before tax and
the historical return 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
+---------------------------------------------+----+-------------+-------------+
| Â | Â | Â | Â |
+---------------------------------------------+----+-------------+-------------+
| Â | Â |31 March 2011|31 March 2010|
+---------------------------------------------+----+-------------+-------------+
|  |Note| £'000| £'000|
+---------------------------------------------+----+-------------+-------------+
|Fixed asset investments | 11| 18,164| 11,908|
+---------------------------------------------+----+-------------+-------------+
|Â | Â | Â | Â |
+---------------------------------------------+----+-------------+-------------+
|Current assets | Â | Â | Â |
+---------------------------------------------+----+-------------+-------------+
|Trade and other debtors | 13| 144| 111|
+---------------------------------------------+----+-------------+-------------+
|Current asset investments | 13| 2,507| 2,536|
+---------------------------------------------+----+-------------+-------------+
|Cash at bank | 17| 7,002| 12,281|
+---------------------------------------------+----+-------------+-------------+
|Â | Â | 9,653| 14,928|
+---------------------------------------------+----+-------------+-------------+
|Â | Â | Â | Â |
+---------------------------------------------+----+-------------+-------------+
|Creditors: amounts falling due within one | | | |
|year | 14| (284)| (78)|
+---------------------------------------------+----+-------------+-------------+
|Â | Â | Â | Â |
+---------------------------------------------+----+-------------+-------------+
|Net current assets | Â | 9,369| 14,850|
+---------------------------------------------+----+-------------+-------------+
|Â | Â | Â | Â |
+---------------------------------------------+----+-------------+-------------+
|Net assets | Â | 27,533| 26,758|
+---------------------------------------------+----+-------------+-------------+
|Â | Â | Â | Â |
+---------------------------------------------+----+-------------+-------------+
|Capital and reserves | Â | Â | Â |
+---------------------------------------------+----+-------------+-------------+
|Called up share capital | 15| 15,937| 15,189|
+---------------------------------------------+----+-------------+-------------+
|Share premium | Â | 535| -|
+---------------------------------------------+----+-------------+-------------+
|Unrealised capital reserve | Â | (518)| (797)|
+---------------------------------------------+----+-------------+-------------+
|Special reserve | Â | 11,987| 13,473|
+---------------------------------------------+----+-------------+-------------+
|Treasury shares reserve | Â | (207)| (39)|
+---------------------------------------------+----+-------------+-------------+
|Realised capital reserve | Â | (874)| (1,368)|
+---------------------------------------------+----+-------------+-------------+
|Revenue reserve | Â | 673| 300|
+---------------------------------------------+----+-------------+-------------+
|Total equity shareholders' funds | Â | 27,533| 26,758|
+---------------------------------------------+----+-------------+-------------+
|Â | Â | Â | Â |
+---------------------------------------------+----+-------------+-------------+
|Basic and diluted net asset value per share | | | |
|(pence)* | 16| 87.13| 88.25|
+---------------------------------------------+----+-------------+-------------+
*Â excluding treasury shares
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 24 June 2011 and were signed on its behalf by
Maxwell Packe
Chairman
Company number: 05990732
Reconciliation of movements in shareholders' funds
+------------+-------+-------+----------+--------+--------+--------+--------+------+
| |Called-| Share|Unrealised| Special|Treasury|Realised| Revenue| Total|
| | up|premium| capital|reserve*| shares| capital|reserve*| |
| | share| | reserve*| |reserve*|reserve*| | |
| Â |capital| | | | | | | |
+------------+-------+-------+----------+--------+--------+--------+--------+------+
|  | £'000| £'000| £'000| £'000| £'000| £'000| £'000| £'000|
+------------+-------+-------+----------+--------+--------+--------+--------+------+
|As at 1 | | | | | | | | |
|April 2010 | 15,189| -| (797)| 13,473| (39)| (1,368)| 300|26,758|
+------------+-------+-------+----------+--------+--------+--------+--------+------+
|Issue of | | | | | | | | |
|share | | | | | | | | |
|capital | 748| 535| -| -| -| -| -| 1,283|
+------------+-------+-------+----------+--------+--------+--------+--------+------+
|Capitalised | | | | | | | | |
|investment | | | | | | | | |
|management | | | | | | | | |
|fees | -| -| -| -| -| (505)| -| (505)|
+------------+-------+-------+----------+--------+--------+--------+--------+------+
|Tax relief | | | | | | | | |
|on costs | | | | | | | | |
|charged to | | | | | | | | |
|capital | -| -| -| -| -| 121| -| 121|
+------------+-------+-------+----------+--------+--------+--------+--------+------+
|Purchase of | | | | | | | | |
|own treasury| | | | | | | | |
|shares | -| -| -| -| (168)| -| -| (168)|
+------------+-------+-------+----------+--------+--------+--------+--------+------+
|Net realised| | | | | | | | |
|gains on | | | | | | | | |
|investments | -| -| -| -| -| 91| -| 91|
+------------+-------+-------+----------+--------+--------+--------+--------+------+
|Unrealised | | | | | | | | |
|gains on | | | | | | | | |
|fixed and | | | | | | | | |
|current | | | | | | | | |
|asset | | | | | | | | |
|investments | -| -| 497| -| -| -| -| 497|
+------------+-------+-------+----------+--------+--------+--------+--------+------+
|Transfer of | | | | | | | | |
|previously | | | | | | | | |
|unrealised | | | | | | | | |
|losses on | | | | | | | | |
|sale of | | | | | | | | |
|investments | -| -| (218)| -| -| 218| -| -|
+------------+-------+-------+----------+--------+--------+--------+--------+------+
|Revenue | | | | | | | | |
|return | | | | | | | | |
|attributable| | | | | | | | |
|to | | | | | | | | |
|shareholders| -| -| -| -| -| -| 373| 373|
+------------+-------+-------+----------+--------+--------+--------+--------+------+
|Dividends | | | | | | | | |
|paid | -| -| -| -| -| -| (917)| (917)|
+------------+-------+-------+----------+--------+--------+--------+--------+------+
|Transfer | | | | | | | | |
|from special| | | | | | | | |
|reserve to | | | | | | | | |
|realised | | | | | | | | |
|capital | | | | | | | | |
|reserve | -| -| -| (569)| -| 569| -| -|
+------------+-------+-------+----------+--------+--------+--------+--------+------+
|Transfer | | | | | | | | |
|from special| | | | | | | | |
|reserve to | | | | | | | | |
|revenue | | | | | | | | |
|reserve | -| -| -| (917)| -| -| 917| -|
+------------+-------+-------+----------+--------+--------+--------+--------+------+
|As at 31 | | 535| | | | | | |
|March 2011 | 15,937| | (518)| 11,987| (207)| (874)| 673|27,533|
+------------+-------+-------+----------+--------+--------+--------+--------+------+
+-------------+--------+-----------+---------+--------+--------+--------+------+
| | Called-| Unrealised| Special|Treasury|Realised| Revenue| Total|
| |up share| capital| reserve*| shares| capital|reserve*| |
| Â | capital| reserve*| |reserve*|reserve*| | |
+-------------+--------+-----------+---------+--------+--------+--------+------+
|  | £'000| £'000| £'000| £'000| £'000| £'000| £'000|
+-------------+--------+-----------+---------+--------+--------+--------+------+
|As at 1 April| | | | | | | |
|2009 | 15,180| (1,681)| 13,473| (31)| (614)| 601|26,928|
+-------------+--------+-----------+---------+--------+--------+--------+------+
|Issue of | | | | | | | |
|share capital| 9| -| -| -| -| -| 9|
+-------------+--------+-----------+---------+--------+--------+--------+------+
|Capitalised | | | | | | | |
|investment | | | | | | | |
|management | | | | | | | |
|fees | -| -| -| -| (505)| -| (505)|
+-------------+--------+-----------+---------+--------+--------+--------+------+
|Tax relief on| | | | | | | |
|costs charged| | | | | | | |
|to capital | -| -| -| -| 89| -| 89|
+-------------+--------+-----------+---------+--------+--------+--------+------+
|Purchase of | | | | | | | |
|own treasury | | | | | | | |
|shares | -| -| -| (8)| -| -| (8)|
+-------------+--------+-----------+---------+--------+--------+--------+------+
|Net realised | | | | | | | |
|gains on | | | | | | | |
|investments | -| -| -| -| 198| -| 198|
+-------------+--------+-----------+---------+--------+--------+--------+------+
|Unrealised | | | | | | | |
|gains on | | | | | | | |
|investments | -| 349| -| -| -| -| 349|
+-------------+--------+-----------+---------+--------+--------+--------+------+
|Transfer of | | | | | | | |
|previously | | | | | | | |
|unrealised | | | | | | | |
|losses on | | | | | | | |
|sale of | | | | | | | |
|investments | -| 536| -| -| (536)| -| -|
+-------------+--------+-----------+---------+--------+--------+--------+------+
|Revenue | | | | | | | |
|return | | | | | | | |
|attributable | | | | | | | |
|to | | | | | | | |
|shareholders | -| -| -| -| -| 305| 305|
+-------------+--------+-----------+---------+--------+--------+--------+------+
|Dividends | | | | | | | |
|paid | -| -| -| -| -| (606)| (606)|
+-------------+--------+-----------+---------+--------+--------+--------+------+
|As at 31 | | | | | | | |
|March 2010 | 15,189| (797)| 13,473| (39)| (1,368)| 300|26,758|
+-------------+--------+-----------+---------+--------+--------+--------+------+
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
£569,000 representing gross realised losses on disposal of investments from
launch to 31 March 2011, has been made from the special reserve to the realised
capital reserve.
In addition, a transfer of £917,000 representing the dividend payment made from
revenue reserve has been made from the special reserve to the revenue reserve.
* Included within the aggregate of these reserves is an amount of £11,061,000
(2010: £11,569,000) which is considered distributable. The special reserve has
been treated as distributable in determining the amounts available for
distribution.
Cash flow statement
+--------------------------------------------------+----+-----------+----------+
| | |Â Year ended|Year ended|
| | | 31 March| 31 March|
| | | 2011| 2010|
|  |Note| £'000| £'000|
+--------------------------------------------------+----+-----------+----------+
|Operating activities | Â | Â | Â |
+--------------------------------------------------+----+-----------+----------+
|Investment income received | Â | 767| 626|
+--------------------------------------------------+----+-----------+----------+
|Deposit interest received | Â | 150| 136|
+--------------------------------------------------+----+-----------+----------+
|Investment management fees paid | Â | (670)| (890)|
+--------------------------------------------------+----+-----------+----------+
|Other cash payments | Â | (170)| (229)|
+--------------------------------------------------+----+-----------+----------+
|Net cash flow from operating activities | 18| 77| (357)|
+--------------------------------------------------+----+-----------+----------+
|Â | Â | Â | Â |
+--------------------------------------------------+----+-----------+----------+
|Taxation | Â | Â | Â |
+--------------------------------------------------+----+-----------+----------+
|UK corporation tax | Â | 6| (134)|
+--------------------------------------------------+----+-----------+----------+
|Â | Â | Â | Â |
+--------------------------------------------------+----+-----------+----------+
|Capital expenditure and financial investments | Â | Â | Â |
+--------------------------------------------------+----+-----------+----------+
|Purchase of fixed asset investments | Â | (8,737)| (5,644)|
+--------------------------------------------------+----+-----------+----------+
|Disposal of fixed asset investments | Â | 3,161| -|
+--------------------------------------------------+----+-----------+----------+
|Net cash flow from investing activities | Â | (5,576)| (5,644)|
+--------------------------------------------------+----+-----------+----------+
|Â | Â | Â | Â |
+--------------------------------------------------+----+-----------+----------+
|Management of liquid resources | Â | Â | Â |
+--------------------------------------------------+----+-----------+----------+
|Purchase of current asset investments | Â | (3,009)| (4,399)|
+--------------------------------------------------+----+-----------+----------+
|Disposal of current asset investments | Â | 3,054| 14,108|
+--------------------------------------------------+----+-----------+----------+
|Net cash flow from liquid resources | Â | 45| 9,709|
+--------------------------------------------------+----+-----------+----------+
|Â | Â | Â | Â |
+--------------------------------------------------+----+-----------+----------+
|Equity dividends paid (net of cost of shares | | | |
|issued under the Dividend Reinvestment Scheme) | Â | (861)| (597)|
+--------------------------------------------------+----+-----------+----------+
|Net cash flow before financing | Â | (6,309)| 2,977|
+--------------------------------------------------+----+-----------+----------+
|Â | Â | Â | Â |
+--------------------------------------------------+----+-----------+----------+
|Financing | Â | Â | Â |
+--------------------------------------------------+----+-----------+----------+
|Issue of ordinary share capital | Â | 1,210| -|
+--------------------------------------------------+----+-----------+----------+
|Purchase of own shares | 15| (164)| (15)|
+--------------------------------------------------+----+-----------+----------+
|Expenses of issue of ordinary share capital | Â | (16)| -|
+--------------------------------------------------+----+-----------+----------+
|Net cash flow from financing | Â | 1,030| (15)|
+--------------------------------------------------+----+-----------+----------+
|Â | Â | Â | Â |
+--------------------------------------------------+----+-----------+----------+
|Cash flow in the year | 17| (5,279)| 2,962|
+--------------------------------------------------+----+-----------+----------+
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
Fixed and current asset 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 ("FVTPL"). 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 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 and 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 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
Unquoted loan stock (excluding convertible bonds and debt issued at a discount)
are classified as loans and receivables as permitted by FRS 26 and carried at
amortised cost using the Effective Interest Rate method less impairment.
Movements in 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.
For all unquoted loan stock, whether fully performing, re-negotiated, past due
or impaired, the Board considers that the fair value is equal to or greater than
the security value of these assets. For unquoted loan stock, the amount of the
impairment is the difference between the asset's cost and the present value of
estimated future cash flows, discounted at the original effective interest rate.
The future cash flows are estimated based on the fair value of the security less
the estimated selling costs.
Floating rate notes
In accordance with FRS 26, floating rate notes are designated as fair value
through profit or loss. Floating rate notes are valued at market bid price at
the balance sheet date. Floating rate notes are classified as current asset
investments as they are investments held for the short term.
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
portfolio 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 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 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 accruals 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.
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.
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 for deferred tax  should be made.
Reserves
Unrealised capital reserve
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,
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.
3. Profits on investments
Year ended Year ended
31 March  31 March
 2011 2010
 £'000 £'000
--------------------------------------------------------------------------------
Unrealised gains on fixed asset investments held at fair
value
through profit or loss account 405 425
Unrealised reversals of impairments/(impairments) Â on
investments held
at amortised cost 121 (112)
----------------------
Unrealised gains on fixed asset investments 526 313
Unrealised (losses)/gains on current asset investments
held at fair
value through profit or loss account (29) 36
----------------------
Unrealised gains sub-total 497 349
----------------------
Realised gains on fixed asset investments held at fair
value
through profit or loss account 43 -
Realised gains on current asset investments held at fair
value
through profit or loss account 48 198
----------------------
Realised gains sub-total 91 198
----------------------
 588 547
----------------------
Investments measured at amortised cost are unquoted loan stock investments as
described in note 2.
4. Investment income
 Year ended Year ended
31 March 31 March
2011 2010
 £'000 £'000
--------------------------------------------------------------------------------
Income recognised on investments held at fair value
through profit or loss
Floating rate note interest 70 145
----------------------
Income recognised on investments held at amortised cost
Return on loan stock investments 618 402
Bank deposit interest 164 135
Euro commercial paper interest - 51
----------------------
 782 588
----------------------
 852 733
----------------------
Interest income earned on impaired investments at 31 March 2011 amounted to
£6,000 (2010: £39,000). These investments are measured at amortised cost.
5. Investment management fees
 Year ended Year ended
31 March  31 March
2011 2010
 £'000 £'000
------------------------------------------------------------------------
Investment management fee charged to revenue 168 168
Investment management fee charged to capital 505 505
--------------------------
 673 673
--------------------------
Further details of the Management agreement under which the investment
management fee is paid are shown on page 19 in the Directors' report and
enhanced business review in the full Annual Report and Financial Statements.
6. Other expenses
 Year ended Year ended
31 March  31 March
2011 2010
 £'000 £'000
--------------------------------------------------------------------------------
Directors' fees and associated costs (inclusive of NI/VAT) 82 84
Auditor's remuneration for statutory audit services
(inclusive of VAT) 26 24
Other administrative expenses 82 69
----------------------
 190 177
----------------------
7. Directors' fees and associated costs
The amounts paid to Directors during the year are as follows:
 Year ended Year ended
31 March 31 March
2011 2010
 £'000 £'000
---------------------------------------------------------
Directors' fees 74 74
National Insurance and/or VAT 7 8
Expenses 1 2
--------------------------
 82 84
--------------------------
Expenses charged relate to travel expenses in furtherance of their duties as
Directors. Further information regarding Directors' remuneration can be found on
page 27 of the Directors' remuneration report in the full Annual Report and
Financial Statements.
8. Tax (charge)/credit on ordinary activities
 Year ended 31 March Year ended 31 March
2011 2010
Revenue Capital Total Revenue Capital Total
 £'000 £'000 £'000 £'000 £'000 £'000
UK corporation tax in respect of the
current year (123) 121 (2) (89) 89 -
UK corporation tax in respect of
prior year 2 - 2 6 - 6
--------------------------------------------
 (121) 121 - (83) 89 6
--------------------------------------------
 Year ended Year ended
31 March 31 March
2011 2010
£'000 £'000
--------------------------------------------------------------------
Return on ordinary activities before tax 577 430
--------------------------
Tax on profit at the standard rate (121) (120)
Factors affecting the charge:
Capital profits not subject to taxation 123 153
Consortium relief - 6
Losses (2) (33)
--------------------------
Current tax charge - 6
--------------------------
The tax charge for the year shown in the Income statement is lower than the
standard rate of corporation tax in the UK of 21 per cent. (2010: 28 per cent.).
The differences are explained above.
Consortium relief is recognised in the account in the period in which the claim
is submitted to HMRC and is shown as tax in respect of prior year.
Notes
(i) Venture Capital Trusts are not subject to corporation tax on capital
gains.
(ii) Tax relief on expenses charged to capital has been determined by
allocating tax relief to expenses by reference to the applicable
corporation tax rate 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.
9. Dividends
Year ended 31 March Year ended 31 March
2011 2010
     £'000 £'000
--------------------------------------------------------------------------------
Dividend of 1.00p per
share paid on 7 August
2009 Â Â Â Â - 303
Dividend of 1.00p per
share paid on 6 January
2010 Â Â Â Â - 303
Dividend of 1.50p per
share paid on 7 August
2010 Â Â Â Â 481 -
Dividend of 1.50p per
share paid on 28 February
2011 Â Â Â Â 436 -
----------------------------------------------
     917 606
----------------------------------------------
In addition to the dividends summarised above, the Directors have declared a
first dividend for the year ending 31 March 2012 of 1.5 pence per share to be
paid on 31 August 2011 to shareholders on the register as at 5 August 2011. The
total dividend will be approximately £486,000.
10. Basic and diluted return per share
 Year ended 31 March Year ended 31 March
2011 2010
 Revenue Capital Total Revenue Capital Total
--------------------------------------------------------------------------------
The return per share has been based
on the following figures:
Return attributable to equity shares
(£'000) 373 204 577 305 131 436
Weighted average shares in issue
(excluding treasury shares) 30,462,927 30,314,795
Return attributable per Ordinary
share (pence) (basic and diluted) 1.23 0.67 1.90 1.01 0.43 1.44
The weighted average number of shares is calculated excluding treasury shares of
274,010 (2010: 54,967).
There are no convertible instruments, derivatives or contingent share agreements
in issue for Albion Enterprise VCT PLC hence there is no dilution effect to the
return per share. The basic return per share is therefore the same as the
diluted return per share.
11. Fixed asset investments
31 March 31 March
2011 Â 2010
 £'000 £'000
------------------------------------------------------------------------
Qualifying unquoted equity investments 6,349 5,526
Qualifying unquoted convertible discounted bonds 5,700 -
Qualifying unquoted loan stock investments 6,075 5,544
Non-qualifying loan stock investments 40 838
----------------------
 18,164 11,908
----------------------
   Total
 £'000
Opening valuation as at 1 April 2010 Â Â Â 11,908
Purchases at cost    8,927
Disposal proceeds    (3,161)
Realised gains    43
Movement in loan stock revenue accrued income    (79)
Unrealised gains    526
--------
Closing valuation as at 31 March 2011 Â Â Â 18,164
--------
Movement in loan stock revenue accrued income
Opening accumulated movement in loan stock revenue accrued income    136
Movement in loan stock revenue accrued income    (79)
--------
Closing accumulated movement in loan stock revenue accrued income    57
--------
Movement in unrealised losses
Opening accumulated unrealised losses    (833)
Movement in unrealised gains    526
Transfer of previously unrealised gains on disposal    (218)
--------
Closing accumulated unrealised losses    (525)
--------
Historic cost basis
Opening book cost    12,605
Purchases at cost    8,927
Sales at cost    (2,900)
--------
Closing book cost    18,632
--------
Fixed asset investments held at fair value through the profit or loss account
total £12,049,000 (2010: £5,526,000) and include convertible bonds and debt with
a value of £554,000 which has been represented from the amortised cost to fair
value category in the accounts having previously been designated at fair value
through profit or loss on initial recognition. Investments measured at amortised
cost total £6,115,000 (2010: £6,382,000).
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.
Fixed asset investment class valuation methodologies
Unquoted loan stock investments (including those carried at fair value through
profit and loss) using a fixed interest rate total £11,587,000 (2010:
£5,001,000), and loan stock using a floating interest rate total £228,000 (2010:
£1,381,000).
The Directors believe that the carrying value of loan stock, valued using
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 year, and believes that the carrying values for impaired and
past due assets are covered by the value of security held for these loan stock
investments.
Investments held at fair value are valued in accordance with the IPEVCV
guidelines as follows:
 31 March 2011 31 March 2010
Valuation methodology £'000 £'000
------------------------------------------------------------------------------
Cost (reviewed for impairment) 5,499 1,566
Net asset value supported by third party valuation 547 1,667
Offered acquisition price 883 -
Recent investment price 1,808 1,739
Revenue multiple 2,995 -
Earnings multiple 317 554
----------------------------
 12,049 5,526
----------------------------
The portfolio had the following movements between valuation methodologies
between 31 March 2010 and 31 March 2011:
Value as at
Change in valuation methodology 31 March 2011
(2010 to 2011) £'000 Explanatory note
--------------------------------------------------------------------------------
Revenue multiple to acquisition Most recent price information
price 883 available
Cost reviewed for impairment to Improvement in investment
earnings multiple 240 performance
Earnings multiple to revenue
multiple 206 Temporary trading losses
Recent investment price to Improvement in investment
revenue multiple 1,897 performance
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 September 2009 IPEVCV Guidelines. The Directors believe that,
within these parameters, there are no other reasonable methods of valuation
which would be reasonable as at 31 March 2011.
The amended FRS 29 'Financial Instruments: Disclosures' requires the Company to
disclose the valuation methods applied to its investments measured at fair value
through profit or loss in a fair value hierarchy according to the following
definitions:
Fair value hierarchy Definition of valuation method
--------------------------------------------------------------------------------
Level 1 Unadjusted quoted (bid) prices applied
Level 2 Inputs to valuation are from observable sources and are
directly or indirectly derived from prices
Level 3 Inputs to valuations are not based on observable market
data
The fixed asset investments valued at fair value through profit or loss are
categorised in accordance with FRS 29 as follows:
 31 March 2011
 Level 1 Level 2 Level 3 Total
 £'000 £'000 £'000 £'000
------------------------------------------------------------------------------
Unquoted equity - - 6,349 6,349
Convertible and discounted bonds - - 5,700 5,700
---------------------------------------
 - - 12,049 12,049
---------------------------------------
31 March 2010
 Level 1 Level 2 Level 3 Total
 £'000 £'000 £'000 £'000
------------------------------------------------------------------------------
Unquoted equity and preference shares - - 5,526 5,526
---------------------------------------
The unquoted equity investments and preference shares held at fair value through
profit or loss (level 3) had the following movements in the year to 31 March
2011:
 31 March 2011 31 March 2010
 £'000 £'000
------------------------------------------------------------------------
Opening balance 5,526 2,624
Additions 6,805 2,084
Debt/equity swap - 426
Disposals (1,285) -
Realised gain 44 -
Re-presentation of convertible bonds 554 -
Unrealised gains on equity investments 405 392
--------------------------------
Closing balance 12,049 5,526
--------------------------------
FRS29 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 62 per cent. of
the equity and convertible bond investments (by valuation) are based on third
party independent evidence and recent investment price or new investments
supported by cash. The Directors believe that changes to reasonable possible
alternative input assumptions for the valuation of the remainder of the
portfolio could result in an increase in the valuation of investments by
£968,000 or a decrease in the valuation of investments by £1,020,000.
12. Significant interests
The principal activity of the Company is to select and hold a portfolio of
investments in unquoted securities. Although the Company, through the Manager,
will, in some cases, be represented on the board of the portfolio company, it
will not take a controlling interest or become involved in the management of a
portfolio 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 March 2011,
as described below:
Country of Principal % class and % total
Company incorporation activities share type voting
--------------------------------------------------------------------------------
Greenenerco 50.0% A
Limited Great Britain Environmental Ordinary 50.0%
Regenerco
Renewable Energy 39.7% A
Limited Great Britain Environmental Ordinary 39.7%
TEG Biogas 32.9% A
(Perth) Limited Great Britain Environmental Ordinary 32.9%
Alto Prodotto 50.0% A
Limited Great Britain Environmental Ordinary 50.0%
The Street by
Street Solar
Programme 21.5% A
Limited Great Britain Environmental Ordinary 21.5%
21.5% A
AVESI Limited Great Britain Environmental Ordinary 21.5%
13. Current assets
Current assets include the following:
31 March 2011 31 March 2010
Trade and other debtors  £'000 £'000
----------------------------------------------------------------
Prepayments and accrued income 42 25
UK corporation tax receivable 80 86
Other debtors 22 -
--------------------------------
 144 111
--------------------------------
The Directors consider that the carrying amount of debtors is not materially
different to their fair value.
31 March 2011 31 March 2010
Current asset investment £'000 £'000
-----------------------------------------------------------------------
UBS AG floating rate note 20 May 2011 2,507 2,536
--------------------------------
 2,507 2,536
--------------------------------
The investments in the floating rate notes represent money held for investment.
The floating rate notes can be converted to cash within three working days. This
sum is regarded as money held pending investment and is treated as liquid
resources in the Cash flow statement.
In accordance with FRS 29, the UBS AG floating rate note has been categorised as
Level 1 within the fair value hierarchy, as described in note 11 above.
14. Creditors: amounts falling due within one year
31 March
31 March 2011 2010
 £'000 £'000
---------------------------------------------------------
Trade creditors 7 -
Accruals and deferred income 44 29
Other creditors 233 49
---------------------------
 284 78
---------------------------
The Directors consider that the carrying amount of creditors is not materially
different to their fair value.
15. Called up share capital
 31 March 31 March
2011 2010
£'000 £'000
------------------------------------------------------------------------------
Authorised
50,000,000 shares of 50p each (2010: 50,000,000) 25,000 25,000
------------------
Allotted, called up and fully paid
31,873,247 shares of 50p each (2010: 30,377,492) 15,937 15,189
------------------
Allotted, called up and fully paid excluding treasury shares
31,599,237 shares of 50p each (2010: 30,322,525)
The Company purchased 219,043 shares (2010: 11,667) to be held in treasury at a
cost of £168,000 (2010: £8,000) representing 0.7 per cent. of the shares in
issue (excluding treasury shares) as at 24 June 2011. The shares purchased for
treasury were funded from the Treasury shares reserve.
The Company holds a total of 274,010 shares in treasury representing 0.9 per
cent. of the shares in issue as at 31 March 2011.
Under the terms of the Dividend Reinvestment Scheme Circular dated 26 November
2009, the following Ordinary shares, with nominal value of 50 pence, were
allotted in the year to 31 March 2011:
Opening
market price
Aggregate Issue price per share on
nominal including Net allotment
Number of value of issue cost consideration date
Date of shares shares (pence per received (pence per
allotment allotted £'000 share) £'000 share)
--------------------------------------------------------------------------------
6 August
2010 31,470 16 86.75p 22 75.0
28 February
2011 34,119 17 85.70p 29 76.0
During the year the following Ordinary shares of nominal value 50 pence were
allotted under the Albion VCT's Linked Top Up Offer:
Opening
market price
Aggregate Issue price per share on
nominal including Net allotment
Number of value of issue cost consideration date
Date of shares shares (pence per received (pence per
allotment allotted £'000 share) £'000 share)
--------------------------------------------------------------------------------
7 January
2011 713,617 357 91.60p 618 77.5
22 March 77.5
2011 716,549 358 90.70p 614
16. Basic and diluted net asset value per share
31 March 31 March
   2011 2010
-----------------------------------------------------------------------------
Basic and diluted net asset value per share
attributable
(pence per share) Â Â 87.13 88.25
------------------
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 31,599,237 shares (2010: 30,322,525) at 31 March 2011.
17. Analysis of changes in cash during the year
31 March 31 March
2011 2010
   £'000 £'000
-----------------------------------------------------
Opening cash balances   12,281 9,319
Net cash flow   (5,279) 2,962
----------------------
Closing cash balances   7,002 12,281
----------------------
18. Reconciliation of net return on ordinary activities before taxation to net
cash flow from operating activities
Year ended Year ended
31 March 2011 31 March 2010
   £'000 £'000
--------------------------------------------------------------------------------
Revenue return on ordinary activities before
taxation   494 388
Investment management fee charged to capital   (505) (505)
Movement in accrued amortised loan stock
interest   79 14
(Increase)/decrease in debtors   (16) 5
Increase/(decrease) in creditors   25 (259)
----------------------------
Net cash flow from operating
activities   77 (357)
----------------------------
19. Capital and financial instruments risk management
The Company's capital comprises Ordinary shares as described in note 15. The
Company is permitted to buy back its own shares for cancellation or treasury
purposes, and this is described in more detail on page 17 of the Directors'
report and enhanced business review within the full Annual Report and Financial
Statements.
The Company's financial instruments comprise equity and loan stock investments
in unquoted companies, floating rate notes, cash balances, 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 unquoted investments, details of
which are shown on page 11 and 12 of the full Annual Report and Financial
Statement. Investment risk is the exposure of the Company to the revaluation and
devaluation of investments. The main driver of investment risk is the
operational and financial performance of the portfolio companies and the
dynamics of market quoted comparators. The Manager receives management accounts
from portfolio companies, and members of the investment management team often
sit on the boards of unquoted portfolio companies; this enables the close
identification, monitoring and management of investment risk.
The Manager and the Board formally review investment risk (which includes market
price risk), both at the time of initial investment and at quarterly Board
meetings.
The Board monitors the prices at which sales of investments are made to ensure
that profits to the Company are maximised, and that valuations of investments
retained within the portfolio appear sufficiently prudent and realistic compared
to prices being achieved in the market for sales of unquoted investments.
The maximum investment risk as at the balance sheet date is the value of the
fixed and current asset investment portfolio which is £20,671,000 (2010:
£14,444,000). Fixed and current asset investments form 75 per cent. of the net
asset value as at 31 March 2011 (2010: 54 per cent.).
More details regarding the classification of fixed and current asset investments
are shown in notes 11 and 13.
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 Company currently invests in a broad spread of
industries with approximately 65 per cent. of the unquoted investments
comprising debt securities, which, owing to the structure of their yield and the
fact that they are usually secured, have a lower level of price volatility than
equity. Details of the industries in which investments have been made are
contained in the Portfolio of investments section on pages 11 and 12 of the full
Annual Report and Financial Statements an in the Manager's report.
Valuations are based on the most appropriate valuation methodology for an
investment within its market, with regard to the financial health of the
investment and the September 2009 IPEVCV Guidelines.
As required under FRS 29 'Financial Instruments: Disclosures', the Board is
required to illustrate by way of a sensitivity analysis, the degree of exposure
to market risk. The Board considers that the value of the fixed 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 £2,067,100 (2010: £1,444,000).
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 rise of 1.0 per cent. in all
interest rates would have increased total return before tax for the year by
approximately £138,000. Furthermore, it is considered that a fall of interest
rates below current levels during the year would have been very unlikely.
The weighted average interest rate applied to the Company's fixed rate assets
during the year was approximately 5.2 per cent. (2010: 7.5 per cent.). The
weighted average period to expected maturity for the fixed rate assets is
approximately 3.7 years (2010: 3.9 years).
The Company's financial assets and liabilities as at 31 March 2011, all
denominated in pounds sterling, consist of the following:
 31 March 2011 31 March 2010
 Non-  Non-
Fixed Floating interest Fixed Floating interest
rate rate bearing Total rate rate bearing Total
 £'000 £'000 £'000 £'000 £'000 £'000  £'000 £'000
--------------------------------------------------------------------------------
Floating
rate notes - 2,507 - 2,507 - 2,536 - 2,536
Unquoted
loan stock
(including
convertible
and
discounted
bonds) 11,587 228 - 11,815 5,001 1,381 - 6,382
Unquoted
equity - - 6,349 6,349 - - 5,526 5,526
Debtors - - 144 144 - - 111 111
Current
liabilities - - (284) (284) - - (78) (78)
Cash 4,144 2,858 - 7,002 10,163 2,118 - 12,281
--------------------------------------------------------------------
Total net
assets 15,731 5,593 6,209 27,533 15,164 6,035 5,559 26,758
--------------------------------------------------------------------
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 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 portfolio
company in order to mitigate the gross credit risk. The Manager receives
management accounts from portfolio companies, and members of the investment
management team often sit on the boards of unquoted portfolio companies; this
enables the close identification, monitoring and management of investment-
specific credit risk.
The Manager and the Board formally review credit risk (including debtors) and
other risks, both at the time of initial investment and at quarterly Board
meetings.
The Company's total gross credit risk at 31 March 2011 was limited to
£11,815,000 (2010: £6,382,000) of unquoted loan stock instruments, £7,002,000
(2010: £12,281,000) cash deposits with banks and £2,507,000 (2010: £2,536,000)
held in floating rate notes.
The cost, impairment and carrying value of impaired loan stocks held at
amortised cost at 31 March 2011 and 31 March 2010 are as follows:
 31 March 2011 31 March 2010
 Cost Impairment Carrying value Cost Impairment Carrying value
 £'000 £'000 £'000 £'000 £'000 £'000
----------------------------------------------------------------
Impaired loan
stock 795 (143) 652 862 (229) 633
----------------------------------------------------------------
Impaired loan stock instruments have a first fixed charge or a fixed and
floating charge over the assets of the portfolio company and the Board estimate
that the security value approximates to the carrying value.
As at the balance sheet date, the cash held by the Company is with the Royal
Bank of Scotland plc, Bank of Scotland plc, Lloyds TSB Bank plc, Scottish Widows
Bank plc, Standard Life Cash Savings (part of Barclays Bank Plc) and UBS Wealth
Management (part of UBS AG). 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.
Floating rate note investments and bank deposits are held with banks which have
a Moody's credit rating of at least 'A'.
Liquidity risk
Liquid assets are held as cash on current account, cash on deposit or short term
money market account, 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 £2,753,000 (2010: £2,676,000) as at 31 March 2011.
The Company has no committed borrowing facilities as at 31 March 2011 (2010:
nil) and had cash balances of £7,002,000 (2010: £12,281,000), together with
£2,507,000 (2010: £2,536,000) invested in floating rate notes, 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 £284,000 (2010: £78,000) at 31 March 2011.
The carrying value of loan stock investments at 31 March 2011 is analysed by
expected maturity date as follows:
Fully performing loan Past due loan Impaired loan
stock stock stock Total
Redemption date £'000 £'000 £'000 £'000
--------------------------------------------------------------------------------
1-2 years 527 - 439 966
2-3 years 1,695 - - 1,695
3-5 years 6,428 2,513 213 9,154
-----------------------------------------------------------------
 8,650 2,513 652 11,815
-----------------------------------------------------------------
Loan stock categorised as past due includes:
* Loan stock valued at £255,000 yielding 13.2 per cent., which has interest
past due by 12 months;
* Loan stock valued at £1,469,000 which has interest overdue for 1 month; loan
stock valued at £789,000 which has interest overdue for 5 months.
The carrying value of loan stock investments held at amortised cost at 31 March
2010 is analysed by expected maturity date as follows:
Fully performing Renegotiated loan Impaired loan
loan stock stock stock Total
Redemption date £'000 £'000 £'000 £'000
--------------------------------------------------------------------------------
2-3 years 515 - 400 915
3-4 years 1,660 - - 1,660
4-5 years 3,309 265 233 3,807
-----------------------------------------------------------------
 5,484 265 633 6,382
-----------------------------------------------------------------
In view of the factors above, the Board considers that the Company is subject to
low liquidity risk.
Fair values of financial assets and financial liabilities
All the Company's financial assets and liabilities as at 31 March 2011 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. The Directors believe that the carrying value
of loan stock is not materially different to the fair value. There are no
financial liabilities other than creditors. The Company's financial liabilities
are all non-interest bearing. It is the Directors' opinion that the book value
of the financial liabilities is not materially different to the fair value, and
all are payable within one year.
20. Commitments and contingencies
As at 31 March 2011, the Company was committed to making a further investment of
£853,000 in Nelson House Hospital Limited, following its initial investment of
£1,000,000. In addition the Company was committed to making a further investment
of £700,000 in Radnor House School Limited following its initial investment of
£1,000,000.
There are no contingent liabilities or guarantees given by the Company as at 31
March 2011 (31 March 2010: nil).
21. Post balance sheet events
Since 31 March 2011 the Company has had the following post balance sheet
events:
* April 2011: Bravo Inns II Limited investment drawdown of £77,000
* May 2011: Abcodia Limited investment of £225,000
* June 2011: Radnor House School Limited investment of £700,000
* June 2011: Mi-Pay Limited investment of £72,000
* June 2011: Nelson House Hospital Limited of £613,000
* June 2011: Disposal of Dexela Limited for £867,000 with a further potential
earn-out of £132,000
* The following Ordinary shares of nominal value 50 pence per share were
allotted under the Offer:
 Opening
Aggregate Issue price market price
Number of nominal Net including per share on
Date of shares value of consideration issue costs allotment
allotment allotted shares received date
(pence per (pence per
  £'000 £'000 share) share)
--------------------------------------------------------------------------------
5 April 2011 470,928 235 404 90.7 77.5
16 May 2011 39,309 19 34 92.3 77.5
22. 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
(details disclosed on page 19 of the full Annual Report and Financial
Statements).
During the year, services of a total value of £673,000 (2010: £673,000) were
purchased by the Company from Albion Ventures LLP. At the financial year end,
the amount due to Albion Ventures LLP disclosed within accruals and deferred
income was £5,000 (2010: £2,000).
The Company was also charged £21,000 (including VAT) by Albion Ventures LLP in
respect of Patrick Reeve's services as a Director (2010: £21,000). At the year
end, the amount due to Albion Ventures LLP in respect of these services
disclosed as accruals and deferred income was £4,000 (2010: £5,000).
Maxwell Packe was a director of Green Energy Property Services Group Limited, a
company in which Albion Enterprise VCT PLC is invested.
23. 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 portfolio company boards) and the Board receives detailed 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, 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 advisers. PricewaterhouseCoopers LLP
reports quarterly to the Board to independently confirm compliance with the
venture capital trust legislation, to highlight areas of risk and to inform on
changes in legislation.
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 the auditor, 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 auditor, Littlejohn LLP,
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 Audit
Committee met with the partner of Littlejohn LLP responsible for the internal
audit of Albion Ventures LLP 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 25 of the full 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
on page 19 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 19 to the full Annual
Report and Financial Statements.
All of the Company's income and expenditure is denominated in sterling and hence
the Company has no foreign currency risk. The Company is financed through equity
and does not have any borrowings. The Company does not use derivative financial
instruments for speculative purposes.
24. 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 March 2011 and 31 March 2010, 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 March 2011, 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 21 July 2011 at 12.30 pm.
25. 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 Enterprise 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.
Split of investment portfolio by sector as at 31 March 2011:
http://hugin.info/141807/R/1526345/462084.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 Enterprise VCT PLC via Thomson Reuters ONE
[HUG#1526345]
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