Albion Venture Capital Trust PLC : Annual Finan...

As required by the UK Listing Authority's Disclosure and Transparency Rules 4.1 and 6.3, Albion Venture Capital Trust PLC today makes public its information relating to the Annual Report and Financial Statements for the year ended 31 March 2012.

This announcement was approved for release by the Board of Directors on 28 June 2012.

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 2012 (which have been audited) at: www.albion-ventures.co.uk by clicking on 'Our Funds' and then 'Albion Venture Capital Trust PLC'.  The Annual Report and Financial Statements for the year to 31 March 2012 will be available as a PDF document via a link under the 'Investor Centre' in the 'Financial Reports and Circulars' section. The information contained in the Annual Report and Financial Statements will include information as required by the Disclosure and Transparency Rules, including Rule 4.1.

Investment objectives

Albion Venture Capital Trust PLC (the "Company") is a venture capital trust which raised a total of £39.7 million through an issue of Ordinary shares in the spring of 1996 and through an issue of C shares in the following year. The C shares merged with the Ordinary shares in 2001. The Company raised a further £3.1 million under the Albion VCTs Linked Top Up Offers in 2011 and 2012.

The Company's investment strategy is to reduce the risk, normally associated with investments in smaller, unquoted companies. This is achieved as follows:

• qualifying unquoted investments are predominantly in specially-formed companies which provide a high level of asset backing for the capital value of the investment;
• Albion Venture Capital Trust PLC invests alongside selected partners with proven experience in the sectors concerned;
• investments are normally structured as a mixture of equity and loan stock. The loan stock represents the majority of the finance provided and is secured on the assets of the investee company. Funds managed or advised by Albion Ventures LLP typically own 50 per cent. of the equity of the investee company;
• other than the loan stock issued to funds managed or advised by Albion Ventures LLP, investee companies do not normally have external borrowings.

The Company offers tax-paying investors substantial tax benefits at the time of investment, on payment of dividends and on the ultimate disposal of the investment.

Financial calendar

Record date for first dividend	6 July 2012
Payment of first dividend	31 July 2012
Annual General Meeting	17 September 2012
Announcement of half-yearly results for the six months ended 30 September 2012	November  2012
Payment of second dividend subject to Board approval	December 2012

Financial highlights

197.8p	Net asset value plus dividends from launch to 31 March 2012
5.0p	Tax-free dividend per share paid in the year to 31 March 2012
2.5p	The Board has declared a first tax free dividend per share for the year to 31 March 2013
78.0p	Net asset value per share as at 31 March 2012

	31 March 2012	31 March 2011
	(pence per share)	(pence per share)
Dividends paid	5.0	5.0
Revenue return	2.1	2.5
Capital return	-	1.2
Net asset value	78.0	80.5

Total shareholder net asset value return to 31 March 2012	Ordinary shares	C shares
Total dividends paid during the year ended :        31 March 1997	2.00	-
31 March 1998	5.20	2.00
31 March 1999	11.05	8.75
31 March 2000	3.00	2.70
31 March 2001	8.55	4.80
31 March 2002	7.60	7.60
31 March 2003	7.70	7.70
31 March 2004	8.20	8.20
31 March 2005	9.75	9.75
31 March 2006	11.75	11.75
31 March 2007	10.00	10.00
31 March 2008	10.00	10.00
31 March 2009	10.00	10.00
31 March 2010	5.00	5.00
31 March 2011	5.00	5.00
31 March 2012	5.00	5.00
Total dividends paid to 31 March 2012	119.80	108.25
Net asset value as at 31 March 2012	78.00	78.00
Total shareholder net asset value return to 31 March 2012	197.80	186.25

In addition to the dividends summarised above, the Board has declared a first dividend for the year ending 31 March 2013 of 2.5 pence per share to be paid on 31 July 2012 to shareholders on the register as at 6 July 2012.
Notes

• Dividends paid before 5 April 1999 were paid to qualifying shareholders inclusive of the associated tax credit. The dividends for the year to 31 March 1999 were maximised in order to take advantage of this tax credit.
• A capital dividend of 2.55 pence paid in the year to 31 March 2000 enabled the Ordinary shares and the C shares to merge on an equal basis.
• 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.

Chairman's statement

Introduction
The results for the year to 31 March 2012 show a total return of 2.1 pence per share before dividends, compared to 3.7 pence per share for the previous year.  The lower return reflects weaker trading within our hotel portfolio.   The VCT raised approximately £1.3m under the Albion VCTs Linked Top Up Offer 2011/2012, and has recently announced a proposal to merge with Albion Prime VCT PLC.

Investment performance and progress
As stated last year, it is the Company's strategy to reduce its exposure to the hotel sector, which we see as being more vulnerable to the current broader economic uncertainties than many other sectors.  With this aim in mind, the Company successfully sold The Place Sandwich VCT Limited, realising proceeds of £1,785,000 compared to the holding value of £1,501,000 and cost of £1,640,000.  In addition to the sale proceeds, the Company received £785,000 in interest over the course of the investment, producing a total return of approximately 1.6 times cost.  A further, £1.2m was returned by other investee companies, principally through the repayment of loan stock.

During the year the Company invested £2.6m in three new and seven existing investee companies.  The great majority of the investment was in the healthcare and environmental sectors, with £1.3m invested in scheduled follow-on investments in Oakland Care Centre, which opened its care home for the elderly in Chingford in October 2011; Nelson House Hospital, which has recently opened a psychiatric hospital in Gosport, Hampshire; and in Orchard Portman Hospital, which opened a psychiatric hospital near Taunton in Somerset in May 2011. £1.2m was invested in renewable energy companies, principally in wind and solar projects.

Following third party professional valuations, the Company saw a pleasing uplift in the value of its cinema investments following strong trading; in Oakland Care Centre; and in Radnor House School in Twickenham which successfully opened in September with twice the budgeted level of pupils.  These were tempered by downward valuations of The Stanwell Hotel, which has taken longer to establish itself than anticipated; Kew Green VCT (Stansted) and The Crown Hotel, Harrogate, both of which were less profitable than the previous period.  The net movement in valuations, including realised movements, was an increase of £0.3m in the year.

Continuation as a venture capital trust
At the 2012 Annual General Meeting members have the opportunity to confirm that they wish the Company to continue as a venture capital trust. Otherwise the Board is required to make proposals for the reorganisation, reconstruction or the orderly liquidation and winding up of the Company and present these to the members at a general meeting.  Those shareholders who have been using their investment in the VCT to defer a capital gain should note that, on a return of capital, that gain would become chargeable at the prevailing rate of capital gains tax.

Since its launch in 1996, the portfolio has paid out dividends of 119.8 pence per share and achieved a total return (net asset value plus dividends but not counting the upfront tax benefits) of just under 198 pence per share. This puts the Company firmly in the top quartile of all venture capital trusts.

Your Board believes that Albion VCTs have the potential to be highly effective long-term savings vehicles, with strong tax-free dividend streams.  Therefore the Board recommends that shareholders should vote in favour of the Company continuing as a venture capital trust for a further five years, as they intend to vote in respect of their own shares.

Merger with Albion Prime VCT PLC and Board changes
Following the year end, your Company announced the proposed merger with Albion Prime VCT PLC which had net assets of £14.7m at 31 March 2012, has the same investment policy and a near identical investment portfolio.   It is intended, subject to the consent of both VCTs' shareholders, that this will take effect in September 2012.  A circular and prospectus in relation to the merger is expected to be posted to shareholders at the same time as the Annual Report.

Assuming the merger goes ahead, Jonathan Rounce has agreed to stand down at time of the merger, and Ebbe Dinesen, a director of Albion Prime VCT PLC will be appointed in his place. The Board thanks Jonathan for his excellent service to the Company since his appointment in 2010.

Risks and uncertainties
The outlook for the UK economy continues to be the key risk affecting your Company, with both the UK and much of Europe returning to recession.  Importantly, however, your Company remains conservatively financed with no bank borrowings having a prior charge at either corporate or investee company level. This is in addition to the policy of ensuring that the Company has a first charge over investee companies' assets.

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.

Share buy-backs
It remains the Board's primary objective to maintain sufficient resources for investment in existing and new investee companies and for the continued payment of dividends to shareholders. Thereafter, it is still the Board's policy to buy back shares in the market, subject to the overall constraint that such purchases are in the Company's interest. The Company will limit the sum available for share buy-backs for the six month period to 30 September 2012 to £350,000.  This compares to a total value bought in for the previous six months of £310,000.  Subject to the constraints referred to above, and subject to first purchasing shares held by the marketmakers, the Board will target such buy-backs to be in the region of a 10% to 15% discount to net asset value, so far as market conditions and liquidity permit. 

Results and dividends
As at 31 March 2012, the net asset value was £28.4 million or 78.0 pence per share, compared to £28.8 million or 80.5 pence per share as at 31 March 2011, after the payment of tax-free dividends of 5.0 pence per share.  The results comprised 2.1 pence per share revenue return (2011: 2.5 pence per share) and a flat capital return per share (2011: 1.2 pence per share).   The revenue return before taxation was £933,000 compared to £911,000 for the year to 31 March 2011, though the tax charge was higher than the previous year.  The Company will pay a first dividend of 2.5 pence per share on 31 July 2012 to those shareholders on the share register on 6 July 2012, which is in line with the Company's current objective of paying dividends of 5.0 pence per share annually.

Outlook and prospects
The outlook for the UK economy remains uncertain but, despite this, trading within the majority of our portfolio companies is encouraging. In the meantime, we are concentrating our investment activities in sectors that we see as being of long term value; in the current investment climate, where there is a general shortage of finance, we are seeing interesting investment opportunities at attractive prices.

David Watkins
Chairman
28 June 2012
Manager's report

Investment portfolio
Over the year we have made progress in re-balancing the Company's investment portfolio by increasing the  weighting in the healthcare and renewable energy sectors, which we believe to have less exposure to the consumer and business cycle, and reducing the weighting in hotels. The sector split of the portfolio by valuation as at 31 March 2012 is shown below:

Please see the end of this announcement for the PDF of the sector split of the portfolio by valuation as at 31 March 2012.

Source: Albion Ventures LLP

Investment activity
During the year the Company sold its investment in The Place Sandwich VCT, which owned the Bell Hotel in Sandwich, realising proceeds of £1,785,000 compared to the holding value of £1,501,000 and cost of £1,640,000.  Including interest of £785,000 over the course of the investment, the total return was approximately 1.6 times cost.  In addition, £294,000 of loan stock was repaid by Kew Green VCT (Stansted).  This has led to hotels falling to 38% of the Company's portfolio at 31 March 2012 (2011: 48%).

A total of £1,263,000 was invested in three healthcare companies during the year.  These comprised £992,000 as a scheduled follow-on investment in Oakland Care Centre, which opened a 46 bedroom care home for the elderly in Chingford in October 2011; £240,000 in Nelson House Hospital, which opened a psychiactric hospital in Gosport, Hampshire in April 2012; and £31,000 in Orchard Portman Hospital, which opened a psychiatric hospital near Taunton, Somerset in May 2011.  The occupancies of all three units are building up steadily.

In the renewable energy sector, £1,197,000 was invested in six companies. These comprised £432,000 in Alto Prodotto Wind, which is erecting single unit wind turbines on industrial sites in Wales; £280,000 in The Street by Street Solar Programme which has been installing photovoltaic panels on residential buildings in the Thames Valley; £248,000 in Regenerco Renewable Energy which has been installing photovoltaic panels on a number of commercial buildings on the South Coast and in Birmingham and domestic buildings in Cambridgeshire; £140,000 in AVESI; and £90,000 in Greenenerco.  These last two are also to fund wind projects on industrial and brown field sites.  Finally, an additional £7,000 was invested in TEG Biogas (Perth) whose anaerobic digestion plant in Scotland, converting food waste to energy, is now operational.

Investment portfolio review
In the hotel portfolio, revenue at the Holiday Inn Express at Stansted Airport marginally increased over the year, but profits were lower and the independent valuation reduced.  The Crown Hotel in Harrogate also experienced lower profitability and a decrease in valuation, but prospects for the current year are more encouraging.  The Stanwell Hotel, in the village of Stanwell near Heathrow's Terminal 5, continued to disappoint, leading to a decision to change our operating partner.  The valuation of the Stanwell Hotel was sharply lower.  Meanwhile the Bear Hotel in Hungerford saw its valuation remain steady.

The cinema portfolio had another good year, leading to a further uplift in valuations, especially of the Cambridge Arts and Greenwich Picturehouses and the Ritzy Cinema in Brixton. City Screen (Cambridge) and CS (Greenwich) repaid £100,000 and £36,000 loan stock respectively, while CS (Brixton) retained cash for refurbishment.   The Picturehouse at FACT in Liverpool, the Exeter Picturehouse and Cinema City in Norwich also saw strong increases in profitability. 

In the health and fitness portfolio, the 37o health and fitness club near Tower Bridge continued to experience strong trading and repaid £36,000 loan stock to the Company and independent valuations of it and the Weybridge Club led to a small increase in the Company's holding values. The 37o health and fitness club at Kensington Olympia meanwhile saw a slight decline in valuation.  All these clubs, however, continue to experience growth in membership.

In the pub portfolio, The Charnwood Pub Company, which operates food-led pubs in central England, repaid £140,000 loan stock; and GB Pub Company VCT sold one of its two remaining pubs and repaid £29,000.  Trading grew in the wet-led Bravo Inns pubs in the North-West, leading to an increase in valuations, but a write down in the value of GB's remaining pub and a small decline in Charnwood's portfolio led to the portfolio, as a whole remaining stable.

One of the highlights of the year was the successful opening of Radnor House School in Twickenham in September with twice the budgeted level of pupils.  This led to a pleasing uplift in valuation.  We were also delighted that it has recently been rated "outstanding" in an OFSTED inspection.  The residential development companies, meanwhile, returned £560,000 to the Company.

Albion Ventures LLP
Manager
28 June 2012

Responsibility Statement

In preparing these financial statements for the year to 31 March 2012, the Directors of the Company, being David Watkins, John Kerr, Jonathan Rounce and Jeff Warren, 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 2012 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 2012 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 2012 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

David Watkins
Chairman

Income statement

		Year ended 31 March 2012			Year ended 31 March 2011
		Revenue	Capital	Total	Revenue	Capital	Total
	Note	£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments	3	-	310	310	-	700	700
Investment income	4	1,314	-	1,314	1,300	-	1,300
Investment management fees	5	(143)	(428)	(571)	(141)	(424)	(565)
Other expenses	6	(238)	-	(238)	(248)	-	(248)
Return/(loss) on ordinary activities before tax		933	(118)	815	911	276	1,187
Tax (charge)/credit on ordinary activities	8	(188)	118	(70)	(41)	126	85
Return attributable to shareholders		745	-	745	870	402	1,272
Basic and diluted return per share (pence)*	10	2.1	-	2.1	2.5	1.2	3.7

* excluding treasury shares

The accompanying notes form an integral part of these Financial Statements.

The total column of this Income statement represents the profit and loss account of the Company. The supplementary revenue and capital columns have been prepared in accordance with the Association of Investment Companies' Statement of Recommended Practice.

All revenue and capital items in the above statement derive from continuing operations.

There are no recognised gains or losses other than the results for the year disclosed above. Accordingly a statement of total recognised gains and losses is not required.

The difference between the reported return 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 2012	31 March 2011
	Note	£'000	£'000
Fixed asset investments	11	25,945	25,974
Current assets
Trade and other debtors	13	10	130
Cash at bank and in hand	17	2,956	2,971
		2,966	3,101
Creditors: amounts falling due within one year	14	(525)	(314)
Net current assets		2,441	2,787
Net assets		28,386	28,761
Capital and reserves
Called up share capital	15	19,733	18,886
Share premium		1,005	538
Capital redemption reserve		1,914	1,914
Unrealised capital reserve		(3,067)	(3,871)
Treasury shares reserve		(2,187)	(1,524)
Realised capital reserve		10,087	10,891
Revenue reserve		901	1,927
Total equity shareholders' funds		28,386	28,761
Basic and diluted net asset value per share (pence)*	16	78.0	80.5

* 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 28 June 2012, and were signed on its behalf by

David Watkins
Chairman

Company number: 3142609

Reconciliation of movements in shareholders' funds

	Called-up share capital	Share premium	Capital redemption reserve	Unrealised capital reserve*	Special reserve*	Treasury shares reserve*	Realised capital reserve*	Revenue reserve*	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
As at 1 April 2011	18,886	538	1,914	(3,871)	-	(1,524)	10,891	1,927	28,761
(Loss)/return for the period	-	-	-	(13)	-	-	13	745	745
Transfer of previously unrealised losses on disposal of investments	-	-	-	817	-	-	(817)	-	-
Purchase of own treasury shares	-	-	-	-	-	(663)	-	-	(663)
Issue of equity (net of costs)	847	467	-	-	-	-	-	-	1,314
Net dividends paid (note 9)	-	-	-	-	-	-	-	(1,771)	(1,771)
As at 31 March 2012	19,733	1,005	1,914	(3,067)	-	(2,187)	10,087	901	28,386

	Called-up share capital	Share premium	Capital redemption reserve	Unrealised capital reserve*	Special reserve*	Treasury shares reserve*	Realised capital reserve*	Revenue reserve*	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
As at 1 April 2010	18,050	69	1,914	(4,599)	13,236	(1,032)	(295)	1,057	28,400
Return/(loss) for the period	-	-	-	707	-	-	(305)	870	1,272
Transfer of previously unrealised losses on disposal of investments	-	-	-	21	-	-	(21)	-	-
Purchase of own treasury shares	-	-	-	-	-	(492)	-	-	(492)
Issue of equity (net of costs)	836	469	-	-	-	-	-	-	1,305
Dividends paid	-	-	-	-	-	-	-	(1,724)	(1,724)
Transfer from Special reserve to realised capital reserve	-	-	-	-	(11,512)	-	11,512	-	-
Transfer from Special reserve to Revenue reserve	-	-	-	-	(1,724)	-	-	1,724	-
As at 31 March 2011	18,886	538	1,914	(3,871)	-	(1,524)	10,891	1,927	28,761

           
* Included within the aggregate of these reserves is an amount of £5,734,000 (2011: £7,423,000) which is considered distributable.

Cash flow statement

		Year ended 31 March 2012	Year ended 31 March 2011
	Note	£'000	£'000
Operating activities
Investment income received		1,244	1,285
Deposit interest received		37	19
Investment management fees paid		(571)	(601)
Other cash payments		(261)	(203)
Net cash flow from operating activities	18	449	500
Taxation
UK corporation tax received		205	379
Capital expenditure and financial investments
Purchase of fixed asset investments		(2,618)	(2,365)
Disposal of fixed asset investments		3,000	3,280
Net cash flow from investing activities		382	915
Equity dividends paid (net of costs of issuing shares under the Dividend Reinvestment Scheme and unclaimed dividends)		(1,635)	(1,644)
Net cash flow before financing		(599)	150
Financing
Purchase of own shares	15	(663)	(492)
Issue of share capital (net of costs)		1,247	1,210
Net cash flow from financing		584	718
Cash flow in the year	17	(15)	868

Notes to the Financial Statements

1. Accounting convention
The Financial Statements have been prepared in accordance with the historical cost convention, modified to include the revaluation of investments, in accordance with applicable United Kingdom law and accounting standards and with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" ("SORP") issued by The Association of Investment Companies ("AIC") in January 2009. Accounting policies have been applied consistently in current and prior periods.

2. Accounting policies
Investments
Unquoted equity investments, debt issued at a discount and convertible bonds
In accordance with FRS 26 "Financial Instruments Recognition and Measurement", unquoted equity, debt issued at a discount and convertible bonds are designated as fair value through profit or loss ("FVTPL"). Fair value is determined by the Directors in accordance with the International Private Equity and Venture Capital Valuation Guidelines (IPEVCV guidelines).

Desk top reviews are carried out by independent RICS qualified surveyors by updating previously prepared full valuations for current trading and market indices.  Full valuations are prepared by similarly qualified surveyors, but in full compliance with the RICS Red Book.

Fair value movements and gains and losses arising on the disposal of investments are reflected in the capital column of the Income statement in accordance with the AIC SORP; realised gains or losses on the sale of investments will be reflected in the realised capital reserve; and unrealised gains or losses arising from the revaluation of investments will be reflected in the unrealised capital reserve.

Warrants and unquoted equity derived instruments
Warrants and unquoted equity derived instruments are only valued if there is additional value to the Company in exercising or converting as at the balance sheet date. Otherwise these instruments are held at nil value. The valuation techniques used are those used for the underlying equity investment.

Unquoted loan stock
Unquoted loan stock (excluding convertible bonds and debt issued at a discount) is classified as loans and receivables as permitted by FRS 26 and measured at amortised cost using the effective interest rate method ("EIR") less impairment. Movements in respect of capital provisions are reflected in the capital column of the Income statement and are reflected in the realised capital reserve following sale, or in the unrealised capital reserve on impairment arising from revaluations of the fair value of the security.

For all unquoted loan stock, fully performing, renegotiated, past due and impaired, the Board considers that the fair value is equal to or greater than the security value of these assets. For unquoted loan stock, the amount of the impairment is the difference between the asset's cost and the present value of estimated future cash flows, discounted at the original effective interest rate. The future cash flows are estimated based on the fair value of the security held less estimated selling costs.

Investments are recognised as financial assets on legal completion of the investment contract and are de-recognised on legal completion of the sale of an investment.

Dividend income is not recognised as part of the fair value movement of an investment, but is recognised separately as investment income through the revenue reserve when a share becomes ex-dividend.

Loan stock accrued interest is recognised in the Balance sheet as part of the carrying value of the loans and receivables at the end of each reporting period.

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 as part of an investment portfolio 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 the effective interest rate over the life of the financial instrument. Income which is not capable of being received within a reasonable period of time is reflected in the capital value of the investment.

Bank interest income
Interest income is recognised on an accrual basis using the rate of interest agreed with the bank.

Investment management fees and other expenses
All expenses have been accounted for on an accruals basis. Expenses are charged through the revenue account except the following which are charged through the realised capital reserve:

75 per cent. of management fees are allocated to the capital account to the extent that these relate to an enhancement in the value of the investments and in line with the Board's expectation that over the long term 75 per cent. of the Company's investment returns will be in the form of capital gains; and
expenses which are incidental to the purchase or disposal of an investment.

Total recurring expenses including management fees and excluding performance fees will not exceed 3.5 per cent. of net asset value of the Company at year end.

Performance incentive fee
In the event that a performance incentive fee crystallises, the fee will be allocated between revenue and realised capital reserves based upon the proportion to which the calculation of the fee is attributable to revenue and capital returns.

Taxation
Taxation is applied on a current basis in accordance with FRS 16 "Current tax". Taxation associated with capital expenses is applied in accordance with the SORP. In accordance with FRS 19 "Deferred tax", deferred taxation is provided in full on timing differences that result in an obligation at the balance sheet date to pay more tax or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the Financial Statements. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered.

The Directors have considered the requirements of FRS 19 and do not believe that any provision for deferred tax should be made.

Reserves
Share premium account
This reserve accounts for the difference between the price paid for shares and the nominal value of the shares, less issue costs and transfers to the Special reserve.

Capital redemption reserve
This reserve accounts for amounts by which the issued share capital is diminished through the repurchase and cancellation of the Company's own shares.

Unrealised capital reserve
Increases and decreases in the valuation of investments held at the year end against cost are included in this reserve.

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. Gains on investments

	Year ended 31 March 2012	Year ended 31 March 2011
	£'000	£'000
Unrealised gains on fixed asset investments held at fair value through profit or loss	782	725
Impairments on fixed asset investments held at amortised cost	(795)	(18)
Unrealised (losses)/gains sub total	(13)	707
Realised gains on fixed asset investments held at fair value through profit or loss	283	8
Realised gains/(losses) on fixed asset investments held at amortised cost	40	(15)
Realised gains/(losses) sub-total	323	(7)
	310	700

Investments measured at amortised cost are unquoted loan stock investments as described in note 2.

4. Investment income

	Year ended 31 March 2012	Year ended 31 March 2011
	£'000	£'000
Income recognised on investments held at fair value through profit or loss
Income from convertible bonds and discounted debt	22	-
Other income	-	13
	22	13
Income recognised on investments held at amortised cost
Return on loan stock investments	1,250	1,266
Bank deposit interest	42	21
	1,292	1,287
	1,314	1,300

Interest income earned on impaired investments at 31 March 2012 amounted to £323,000 (2011: £276,000). These investments are all held at amortised cost.

5. Investment management fees

	Year ended 31 March 2012			Year ended 31 March 2011
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Investment management fee	143	428	571	141	424	565

Further details of the Management agreement under which the investment management fee is paid are shown in the Directors' report in the full Annual Report and Financial Statements

6. Other expenses

	Year ended 31 March 2012	Year ended 31 March 2011
	£'000	£'000
Directors' fees (including VAT and NIC)	87	94
Secretarial and administration fee	44	41
Other administrative expenses	68	76
Tax services	16	15
Auditor's remuneration for statutory audit services (exc. VAT)	23	22
	238	248

7. Directors' fees
The amounts paid to Directors during the year are as follows:

	Year ended 31 March 2012	Year ended 31 March 2011
	£'000	£'000
Directors' fees	80	86
National insurance and/or VAT	7	8
	87	94

Further information regarding Directors' remuneration can be found in the Directors' remuneration report in the full Annual Report and Financial Statements.

8. Tax (charge)/credit on ordinary activities

	Year ended 31 March 2012			Year ended 31 March 2011
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
UK corporation tax in respect of current year	(234)	118	(116)	(245)	126	(119)
UK corporation tax in respect of prior year	46	-	46	204	-	204
	(188)	118	(70)	(41)	126	85

           
Factors affecting the tax charge:

	Year ended 31 March 2012 £'000	Year ended 31 March 2011 £'000
Return on ordinary activities before taxation	815	1,187
Tax on profit at the standard rate (26%)	(212)	(333)
Factors affecting the charge:
Non-taxable gains	81	197
Consortium relief in respect of prior years	46	204
Marginal relief	15	17
	(70)	85

The tax charge/(credit) for the year shown in the Income statement is lower than the standard rate of corporation tax in the UK of 26 per cent. (2011: 28 per cent.). The differences are explained above.

Consortium relief is recognised in the accounts in the period in which the claim is submitted to HMRC and is shown as tax in respect of prior year.

Notes

(i)         Venture Capital Trusts are not subject to corporation tax on capital gains.
(ii)         Tax relief on expenses charged to capital has been determined by allocating tax relief to expenses by reference to the applicable corporation tax rate and allocating the relief between revenue and capital in accordance with the SORP.
(iii)        No deferred tax asset or liability has arisen in the year.

9. Dividends

				Year ended 31 March 2012 £'000		Year ended 31 March 2011 £'000
First dividend paid on 25 June 2010 - 2.5 pence per share					-	867
Second dividend paid on 31 December 2010 - 2.5 pence per share					-	857
First dividend paid 29 July 2011 - 2.5 pence per share					897	-
Second dividend paid 30 December 2011 - 2.5 pence per share					888	-
Unclaimed dividends					(14)
					1,771	1,724

In addition to the dividends summarised above, the Board has declared a first dividend for the year ending 31 March 2013 of 2.5 pence per share. This dividend will be paid on 27 July 2012 to shareholders on the register as at 2 July 2012. The total dividend will be approximately £930,000.

During the year, unclaimed dividends older than twelve years of £14,000 (2011: £nil) were returned to the Company in accordance with the terms of the Articles of Association.

10. Basic and diluted return per share

	Year ended 31 March 2012			Year ended 31 March 2011
	Revenue	Capital	Total	Revenue	Capital	Total
The return per share has been based on the following figures:
Return attributable to equity shares (£'000)	745	-	745	870	402	1,272
Weighted average shares in issue (excluding treasury shares)		35,974,300			34,764,240
Return attributable per equity share (pence)	2.1	-	2.1	2.5	1.2	3.7

The weighted average number of shares is calculated excluding treasury shares of 3,079,373 (2011: 2,043,273).

There are no convertible instruments, derivatives or contingent share agreements in issue, and therefore no dilution affecting the return per share. The basic return per share is therefore the same as the diluted return per share.

11. Fixed asset investments
     

	31 March 2012 £'000	31 March 2011 £'000
Unquoted equity investments at fair value through profit or loss	8,490	7,792
Discounted debt and convertible loan stock at fair value through profit or loss	1,315	119
Preference share investments at fair value through profit or loss	-	439
Unquoted loan stock investments measured at amortised cost	16,140	17,624
	25,945	25,974

					£'000
Opening valuation					25,974
Purchases at cost					2,635
Disposal proceeds					(3,012)
Realised gains					323
Movement in loan stock accrued income					38
Unrealised loss					(13)
Closing valuation					25,945
Movement in loan stock accrued income
Opening accumulated movement in loan stock accrued income					160
Movement in loan stock accrued income					38
Closing accumulated movement in loan stock accrued income					198
Movement in unrealised losses
Opening accumulated unrealised losses					(3,871)
Transfer of previously unrealised losses to realised reserve on disposal of investments					817
Movement in unrealised gains/reversal of impairments					(13)
Closing accumulated unrealised losses					(3,067)
Historic cost basis
Opening book cost					29,685
Purchases at cost					2,635
Sales at cost					(3,506)
Closing book cost					28,814

Fixed asset investments held at fair value through the profit or loss account total £9,805,000 (2011: £8,350,000). Investments held at amortised cost total £16,140,000 (2011: £17,624,000).

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 investment settlement debtors and creditors.

Unquoted loan stock investments (excluding debt issued at a discount) are measured at amortised cost. Loan stocks using a fixed interest rate total £16,076,000 (2011: £17,624,000). Loan stocks with a floating rate of interest total £64,000 (2011: £60,000).

The Directors believe that the carrying value of loan stock measured at amortised cost is not materially different to fair value.

The Company does not hold any assets as the result of the enforcement of security during the period, and believes that the carrying values for both impaired and past due assets are covered by the value of security held for these loan stock investments.

Unquoted equity investments and convertible and discounted debts are valued in accordance with the IPEVCV guidelines as follows:

	31 March 2012	31 March 2011
Valuation methodology	£'000	£'000
Cost (reviewed for impairment)	1,909	1,513
Net asset value supported by independent desktop reviews	23	54
Net asset value supported by third party valuation	7,873	6,783
	9,805	8,350

There have been no changes in valuation methodologies of unquoted equity investments between 31 March 2011 and 31 March 2012.

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 2012.

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 not based on observable market data.

Unquoted equity, preference share and convertible and discounted bond investments are all valued according to Level 3 valuation methods.

Unquoted equity investments, debt issued at a discount and convertible bonds valued at fair value through profit or loss (level 3) had the following movements in the year to 31 March 2012:

			Equity	31 March 2012 Convertible and discounted bonds	Total	Equity	31 March 2011 Convertible and discounted  bonds	Total
			£'000	£'000	£'000	£'000	£'000	£'000
Opening balance			8,231	119	8,350	7,684	-	7,684
Additions			720	797	1,517	787	79	866
Disposal proceeds			(1,127)	-	(1,127)	(933)	-	(933)
Realised gains			283	-	283	(2)	10	8
Unrealised gains			383	399	782	695	30	725
Closing balance			8,490	1,315	9,805	8,231	119	8,350

FRS 29 requires the Directors to consider the impact of changing one or more of the inputs used as part of the valuation process to reasonable possible alternative assumptions. After due consideration and noting that the valuation methodology applied to 100 per cent. of the equity investments (by valuation) is based on cost or independent third party market information, the Directors do not believe that changes to reasonable possible alternative assumptions for the valuation of the portfolio as a whole would lead to a significant change in the fair value of the portfolio.

12. Significant interests

The principal activity of the Company is to select and hold a portfolio of investments in unquoted securities. Although the Company, through the Manager, will, in some cases, be represented on the board of the investee company, it will not take a controlling interest or become involved in the management. The size and structure of the companies with unquoted securities may result in certain holdings in the portfolio representing a participating interest without there being any partnership, joint venture or management consortium agreement. The Company has interests of greater than 20 per cent. of the nominal value of any class of the allotted shares in the investee companies as at 31 March 2012 as described below:

Company	Country of incorporation	Principal activity	% class and voting rights
City Screen (Cambridge) Limited	Great Britain	Art house cinema	50.0% Ordinary shares
G&K Smart Developments VCT Limited	Great Britain	Residential property developer	42.9% Ordinary shares
Kew Green VCT (Stansted) Limited	Great Britain	Hotel owner and operator	28.2% Ordinary shares
The Bear Hungerford Limited	Great Britain	Hotel owner and operator	26.2% Ordinary shares
The Stanwell Hotel Limited	Great Britain	Hotel owner and operator	24.6% Ordinary shares
Oakland Care Centre Limited	Great Britain	Care home	21.1% Ordinary shares

The investments listed above are held as part of an investment portfolio, and therefore, as permitted by FRS 9, they are measured at fair value and not accounted for using the equity method.

13. Current assets

	31 March 2012	31 March 2011
Trade and other debtors	£'000	£'000
Prepayments and accrued income	10	9
UK corporation tax receivable	-	99
Other debtors	-	22
	10	130

The Directors consider that the carrying amount of debtors is not materially different to their fair value.

14. Creditors: amounts falling due within one year

	31 March 2012	31 March 2011
	£'000	£'000
Trade creditors	31	3
UK Corporation tax payable	175	-
Accruals and deferred income	319	311
	525	314

The Directors consider that the carrying amount of creditors is not materially different to their fair value.

15. Called up share capital
                                                                                                                       

31 March 2012

31 March 2011

                                                                                                                                  £'000                            £'000

Allotted, called up and fully paid
39,467,119 Ordinary shares of 50p each (2011: 37,772,181)	19,733	18,886
Shares in issue
36,387,746 Ordinary shares of 50p each (net of treasury shares) (2011: 35,728,908)

The Company purchased 1,036,100 Ordinary shares (2011: 739,995) to be held in treasury at a cost of £663,000 (2011: £492,000) representing 2.8 per cent of the shares in issue (excluding treasury shares) as at 31 March 2012. The shares purchased for treasury were funded from the Treasury shares reserve. 

The Company holds a total of 3,079,373 shares (2011: 2,043,273) in treasury, representing 7.8 per cent. of the Ordinary share capital in issue as at 31 March 2012.

Under the terms of the Dividend Reinvestment Scheme Circular dated 10 July 2008, the following Ordinary shares of nominal value 50 pence were allotted during the year:

Date of allotment	Number of shares allotted	Aggregate nominal value of shares	Net consideration received	Issue price incl. issue costs                (pence per	Opening market price per share on allotment date
		£'000	£'000	share)	(pence per share)
29 July 2011	64,021	32	41	78.0	66.0
30 December  2011	66,479	33	47	77.0	66.5
	130,500	65	88

During the year the following Ordinary shares of nominal value 50 pence were allotted under the Albion VCT's Linked Top Up Offers:

Date of allotment	Number of shares allotted	Aggregate nominal value of shares	Net consideration received	Issue price incl. issue costs          (pence per	Opening market price per share on allotment date
		£'000	£'000	share)	(pence per share)
5 April 2011	514,084	257	404	83.1	60.0
16 May 2011	43,662	22	34	83.1	61.0
10 January 2012	489,770	245	378	81.5	66.5
20 March 2012	516,922	258	410	83.8	66.5
	1,564,438	782	1,226

                       
16. Basic and diluted net asset values per share

	31 March 2012	31 March 2011
Basic and diluted net asset values per share (pence)	78.0	80.5

The basic and diluted net asset values per share at the year end are calculated in accordance with the Articles of Association and are based upon total shares in issue (less treasury shares) of 36,387,746 Ordinary shares (2011: 35,728,908).

There are no convertible instruments, derivatives or contingent share agreements in issue.

17.  Analysis of changes in cash during the year

	Year ended 31 March 2012 £'000	Year ended 31 March 2011 £'000
Opening cash balances	2,971	2,103
Net cash flow	(15)	868
Closing cash balances	2,956	2,971

18. Reconciliation of net return on ordinary activities before taxation to net cash flow from operating activities

	Year ended 31 March 2012	Year ended 31 March 2011
	£'000	£'000
Revenue return on ordinary activities before taxation	933	911
Investment management fee charged to capital	(428)	(424)
Movement in accrued amortised loan stock interest	(38)	20
Increase in debtors	(1)	(29)
Increase in creditors	(17)	22
Net cash flow from operating activities	449	500

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 in the Chairman's statement.

The Company's financial instruments comprise equity and loan stock investments in unquoted companies, cash balances and short term debtors and creditors which arise from its operations. The main purpose of these financial instruments is to generate 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 within the full Annual Report and Financial Statements.

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 pages 11 to12 of the full Annual Report and Financial Statements. Investment risk is the exposure of the Company to the revaluation and devaluation of investments. The main driver of investment risk is the operational and financial performance of the investee company and the dynamics of market quoted comparators. The Manager receives management accounts from investee companies, and members of the investment management team often sit on the boards of unquoted investee companies; this enables the close identification, monitoring and management of investment risk.

The Manager and the Board formally review investment risk (which includes market price risk), both at the time of initial investment and at quarterly Board meetings.

The Board monitors the prices at which sales of investments are made to ensure that profits to the Company are maximised, and that valuations of investments retained within the portfolio appear sufficiently prudent and realistic compared to prices being achieved in the market for sales of unquoted investments.

The maximum investment risk as at the balance sheet date is the value of the fixed investment portfolio which is £25,945,000 (2011: £25,974,000).  Fixed asset investments form 91.4 per cent. of the net asset value as at 31 March 2012 (2011: 90.3  per cent.).

More details regarding the classification of fixed asset investments are shown in note 11.

Investment price risk
Investment price risk is the risk that the fair value of future investment cash flows will fluctuate due to factors specific to an investment instrument or to a market in similar instruments. To mitigate the investment price risk for the Company as a whole, the strategy of the Company is to invest in a broad spread of industries with approximately two-thirds of the unquoted investments comprising debt securities, which, owing to the structure of their yield and the fact that they are usually secured, have a lower level of price volatility than equity. Details of the industries in which investments have been made are contained in the Portfolio of investments section on pages 11 and 12 of the full Annual Report and Financial Statements and 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 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 asset investment portfolio is sensitive to a 10 per cent. change based on the current economic climate. The impact of a 10 per cent. change has been selected as this is considered reasonable given the current level of volatility observed both on a historical basis and future expectations.

The sensitivity of a 10 per cent. increase or decrease in the valuation of the fixed and current asset investments (keeping all other variables constant) would increase or decrease the net asset value and return for the year by £2,595,000 (2011: £2,597,000).

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 one percentage point in all interest rates would have increased total return before tax for the year by approximately £24,000 (2011: £13,000). 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 6.4 per cent. (2011: 6.3 per cent.). The weighted average period to maturity for the fixed rate assets is approximately 2.6 years (2011: 2.2 years).

The Company's financial assets and liabilities as at 31 March 2012, all denominated in pounds sterling, consist of the following:

	31 March 2012				31 March 2011
	Fixed rate £'000	Floating rate £'000	Non-interest bearing £'000	Total £'000	Fixed rate £'000	Floating rate £'000	Non-interest bearing £'000	Total £'000
Unquoted equity	-	-	8,490	8,490	-	-	8,231	8,231
Convertible and discounted bonds	-	-	1,315	1,315	-	-	119	119
Unquoted loan stock	16,076	64	-	16,140	17,624	-	-	17,624
Debtors *			8	8	-	-	25	25
Current liabilities			(350)	(350)	-	-	(314)	(314)
Cash	1,479	1,477	-	2,956	1,874	1,097	-	2,971
Total net assets	17,555	1,541	9,463	28,559	19,498	1,097	8,061	28,656

* The debtors and current liabilities do not reconcile to the balance sheet as prepayments and tax payable are not included in the above table.

Credit risk
Credit risk is the risk that the counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company. The Company is exposed to credit risk through its debtors, investment in unquoted loan stock, and through the holding of cash on deposit with banks.

The Manager evaluates credit risk on loan stock prior to investment, and as part of its ongoing monitoring of investments. In doing this, it takes into account the extent and quality of any security held. Typically loan stock instruments have a first fixed charge or a fixed and floating charge over the assets of the 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.

The Manager and the Board formally review credit risk (including debtors) and other risks, both at the time of initial investment and at quarterly Board meetings.

The Company's total gross credit risk as at 31 March 2012 was limited to £17,455,000 (2011: £17,743,000) of unquoted loan stock instruments (all of which is secured on the assets of the investee company), £2,956,000 cash deposits with banks (2011: £2,971,000) and £10,000 debtors (2011: £130,000).

The credit risk profile of unquoted loan stock is described under liquidity risk below.

The cost, impairment and carrying value of impaired loan stocks held at amortised cost at 31 March 2012 and 31 March 2011 are as follows:

	31 March 2012			31 March 2011
	Cost £'000	Impairment £'000	Carrying value £'000	Cost £'000	Impairment £'000	Carrying value £'000
Impaired loan stock	9,104	(2,345)	6,759	6,166	(1,454)	4,712

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 consider the security value to be the carrying value.

As at the balance sheet date, the cash held by the Company is held with the Royal Bank of Scotland plc, Lloyds TSB Bank Plc, Barclays Bank plc and Scottish Widows Bank plc. Credit risk on cash transactions is mitigated by transacting with counterparties that are regulated entities subject to regulatory supervision, with Moody's credit ratings of at least 'A' or equivalent as assigned by international credit-rating agencies.

The Company has an informal policy of limiting counterparty banking and floating rate note exposure to a maximum of 20 per cent. of net asset value for any one counterparty.

Liquidity risk
Liquid assets are held as cash on current, deposit or short term money market accounts. Under the terms of its Articles, the Company has the ability to borrow up to 10 per cent. of its adjusted capital and reserves of the latest published audited balance sheet, which amounts to £2,842,000 as at 31 March 2012 (2011: £2,876,000).

The Company has no committed borrowing facilities as at 31 March 2012 (2011: £nil) and had cash balances of £2,956,000 (2011: £2,971,000). The main cash outflows are for new investments, buy-back of shares and dividend payments, which are within the control of the Company. The Manager formally reviews the cash requirements of the Company on a monthly basis, and the Board on a quarterly basis as part of its review of management accounts and forecasts. All the Company's financial liabilities are short term in nature and total £490,000 for the year to 31 March 2012 (2011: £314,000).

The carrying value of loan stock investments at 31 March 2012 as analysed at each year end by expected maturity dates is as follows:

Redemption date		Fully performing loan stock £'000	Impaired loan stock £'000	Past due £'000	Total £'000
Less than one year		1,326	788	-	2,114
1-2 years		2,782	4,041	1,797	8,620
2-3 years		249	1,623	701	2,573
3-5 years		2,777	307	781	3,865
5+ years		-	-	283	283
Total		7,134	6,759	3,562	17,455

Loan stock categorised as past due includes:
Loan stock valued at £24,000 yielding 14% and loan stock valued at £265,000 yielding 6.6% which has capital past due by 12 months;
Loan stock valued at £181,000 yielding 14%, loan stock valued at £675,000 yielding 8% and loan stock valued at £802,000 yielding 6.6% all of which has capital past due between 15 and 26 months;
Loan stock valued at £1,095,000 has interest overdue less than 3 months
Loan stock valued at £250,000 which has interest overdue by 5 months; and
Loan stock valued at £270,000 which has capital overdue by six years.

The carrying value of loan stock investments held at amortised cost at 31 March 2011 as analysed by expected maturity dates is as follows:

Redemption date	Fully performing loan stock £'000	Renegotiated loan stock £'000	Impaired loan stock £'000	Past due £'000	Total £'000
Less than one year	971	1,287	922	460	3,640
1-2 years	34	-	1,068	950	2,052
2-3 years	668	-	1,452	5,195	7,315
3-5 years	1,749	-	1,270	1,598	4,617
Total	3,422	1,287	4,712	8,203	17,624

In view of the information shown, the Board considers that the Company is subject to low liquidity risk.

Fair values of financial assets and financial liabilities
All the Company's financial assets and liabilities as at 31 March 2012 are stated at fair value as determined by the Directors, with the exception of loans and receivables included within investments, cash, debtors and creditors which are carried at amortised cost, as permitted by FRS 26. The Directors believe that the current carrying value of loan stock is not materially different to the fair value. There are no financial liabilities other than creditors. The Company's financial liabilities are all non-interest bearing. It is the Directors' opinion that the book value of the financial liabilities is not materially different to the fair value and all are payable within one year.

20. Commitments and contingencies
As at 31 March 2012, the Company was not committed to making any investments.

There are no contingent liabilities or guarantees given by the Company as at 31 March 2012 (31 March 2011: nil).

21. Post balance sheet events
Since 31 March 2012 the Company has had the following post balance sheet events:

• On 16 May 2012, the Company announced that they had reached an agreement in principle to merge with Albion Prime VCT PLC. Details can be found in the Chairman's statement
• Investment of £25,000 in Nelson House Hospital Limited
• Investment of £100,000 in Bravo Inns II Limited;
• The following Ordinary shares of nominal value 50 pence per share were allotted under the Albion VCTs Linked Top Up Offer:

Date of allotment	Number of shares allotted	Aggregate nominal value of shares	Net consideration received	Issue price incl. issue costs          (pence per	Opening market price per share on allotment date
		£'000	£'000	share)	(pence per share)
5 April 2012	791,924	396	627	83.8	68.50
31 May 2012	88,960	44	71	83.8	65.50

22. Related party transactions

The Manager, Albion Ventures LLP, could be considered to be a related party by virtue of the fact that it is party to a Management agreement from the Company. During the year, services of a total value of £615,000 (2011: £606,000), were purchased by the Company from Albion Ventures LLP; this includes £571,000 (2011: £565,000) of investment management fee and £44,000 (2011: £41,000) administration fee (including VAT). At the financial year end, the amount due to Albion Ventures LLP in respect of these services disclosed within accruals and deferred income was £169,000 (2011: £170,000).

During the year the Company raised new funds through the Albion VCTs Linked Top Up Offer as detailed in note 15. The total cost of the issue of these shares was 5.5% of the sums subscribed. Of these costs, an amount of £6,740 (2011: £3,450) was paid to the Manager, Albion Ventures LLP in respect of receiving agent services. There were no sums outstanding in respect of receiving agent services at 31 March 2012.

There are no other related party transactions or balances requiring disclosure.

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:

Economic risk
Changes in economic conditions, including, for example, interest rates, rates of inflation, industry conditions, competition, political and diplomatic events and other factors could substantially and adversely affect the Company's prospects in a number of ways.

To reduce this risk, in addition to investing equity in portfolio companies, the Company often invests in secured loan stock and has a policy of not permitting any external bank borrowings within portfolio companies. Additionally, the Manager has been rebalancing the sector exposure of the portfolio with a view to reducing reliance on consumer led sectors.

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, and takes account of, comments from non-executive Directors of the Company 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. It is the policy of the Company for portfolio companies to not normally have external borrowings.

Valuation risk
The Company's investment valuation method is reliant on the accuracy and completeness of information that is issued by portfolio companies. In particular, the Directors may not be aware of or take into account certain events or circumstances   which occur after the information issued by such companies is reported.

As described in note 2 of the Financial Statements, the unquoted equity investments, convertible loan stock and debt issued at a discount held by the Company are designated at fair value through profit or loss and valued in accordance with the International Private Equity and Venture Capital Valuation Guidelines. These guidelines set out recommendations, intended to represent current best practice on the valuation of venture capital investments. These investments are valued on the basis of forward looking estimates and judgments about the business itself, its market and the environment in which it operates, together with the state of the mergers and acquisitions market, stock market conditions and other factors. In making these judgments the valuation takes into account all known material facts up to the date of approval of the Financial Statements by the Board. All other unquoted loan stock is measured at amortised cost.

4. 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, which has a team with significant experience in venture capital trust management, used to operating within the requirements of the venture capital trust legislation. In addition, to provide further formal reassurance, the Board has appointed PricewaterhouseCoopers LLP as its taxation advisers. PricewaterhouseCoopers LLP report quarterly to the Board to independently confirm compliance with the venture capital trust legislation, to highlight areas of risk and to inform on changes in legislation.

5. Compliance risk
The Company is listed on The London Stock Exchange and is required to comply with the rules of the UK Listing Authority, as well as with the Companies Act, Accounting Standards and other legislation. Failure to comply with these regulations could result in a delisting of the Company's shares, or other penalties under the Companies Act or from financial reporting oversight bodies.

Board members and the Manager have experience of operating at senior levels within quoted businesses. In addition, the Board and the Manager receive regular updates on new regulation from its auditor, lawyers and other professional bodies.

6. 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, when required, receiving a report regarding the last formal internal audit performed on the Manager, and providing the opportunity for the Audit Committee to ask specific and detailed questions. John Kerr, as Audit Committee Chairman, met with the internal audit Partner of Littlejohn LLP in January 2012 to discuss the most recent Internal Audit Report on the Manager. The Manager has a comprehensive business continuity plan in place in the event that operational continuity is threatened. Further details regarding the Board's management and review of the Company's internal controls through the implementation of the 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.

7. 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 20 of the full 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.

8. 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 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 2012 and 31 March 2011, 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 31 March 2012, 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 17 September 2012 at 11 am.

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 Venture Capital Trust PLC', where the Report can be accessed as a PDF document via a link under the 'Investor Centre' in the 'Financial Reports and Circulars' section.

SECTOR split for announcement

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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 Venture Capital Trust PLC via Thomson Reuters ONE

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