Albion Venture Capital Trust PLC : Annual Finan...

ALBION VENTURE CAPITAL TRUST PLC

ANNUAL REPORT AND FINANCIAL STATEMENTS AND NOTICE OF 2014 ANNUAL GENERAL MEETING

Copies of the Annual Report and Financial Statements of Albion Venture Capital Trust PLC (the "Company") for the year ended 31 March 2014 (the "Annual Report") and a circular to shareholders including the notice of the 2014 Annual General Meeting to be held on 25 July 2014 (the "Circular") have been submitted to the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/NSM. 

Copies of the Annual Report and the Circular will also be available shortly on the Albion Ventures LLP website at http://www.albion-ventures.co.uk/.

Below is additional information for the purposes of compliance with the Disclosure and Transparency Rules which has been extracted from the Annual Report.

Financial highlights

2.0p	Basic and diluted total return per share as at 31 March 2014
5.0p	Total tax-free dividend per share paid during the year ended 31 March 2014 and 2.5p first tax free dividend per share declared for the year to 31 March 2015
71.3p	Net asset value per share as at 31 March 2014
6.2%	Annualised return since launch (without tax relief)

201.1p

Net asset value plus dividends since launch to 31 March 2014

	31 March 2014	31 March 2013
	(pence per share)	(pence per share)
Dividends paid	5.00	5.00
Revenue return	1.70	2.00
Capital return	0.30	-
Effect of merger	-	(0.90)
Net asset value	71.30	74.20

Chairman's statement

Introduction
The results for the year to 31 March 2014 are the first to show a full year's combined results of Albion Venture Capital Trust PLC and Albion Prime VCT PLC since they merged in September 2012. The results show a total return of 2 pence per share, the same as the previous year, and net assets of 71.3 pence per share compared to 74.2 pence per share at 31 March 2013, following the payment of total tax-free dividends of 5 pence per share. The Company raised approximately £1.94 million during the year under the Albion VCT Top Up Offers 2012/2013 and approximately £1.40 million for the Albion VCT Top Up Offer 2013/2014, with a subsequent £1.90 million after the year end.

It is disappointing that the total return for the year remains below the Company's target dividend of 5 pence per annum. On the one hand, the merger with Albion Prime VCT PLC has created cost efficiencies, with "other expenses" (excluding the write off of previously accrued income) falling. Income, however, is also lower than we would have hoped for. This was largely due to the sales of the strongly cash generative cinema portfolio at the end of 2012 and the Bear Hotel in Hungerford and Nelson House Hospital in March 2013.  The total return was affected by the soft performance of our hotels and health and fitness clubs. We address this further below.

Investment performance and progress
In general, we continue the task of repositioning the portfolio towards greater emphasis on the healthcare and renewable energy sectors and reduced reliance on sectors that are exposed to the consumer and business cycle. Renewable energy currently accounts for 14 per cent. of the portfolio with a target of 20 per cent., while healthcare accounts for 18 per cent. of the portfolio. Hotels, meanwhile, have declined to below 30 per cent. of the portfolio.

The hotel sector continued to be challenging, with market conditions at Stansted Airport proving particularly difficult, leading to a further write-down in the third party valuation of our hotel there. Prospects for the current year, however, are more promising with signs of a revival in passenger numbers at the airport leading to an improvement in the hotel's trading. The Crown Hotel in Harrogate experienced a soft year in 2013, but is expecting its current financial year to be a record year.  In addition, the Stanwell Hotel is now trading profitably at an operating level, with a strong increase in revenue over previous years. In summary, we are more hopeful for this sector's current year prospects.

The health and fitness clubs also saw an aggregate reduction in their third party professional valuations, following previous underperformance at our Kensington and Weybridge clubs. The management team has now been changed, and the new team has had a considerable and positive initial impact on the units' performance. We would therefore hope for a revival of these clubs' fortunes over the next two years.  Our Tower Bridge club continued to trade strongly and enjoyed a pleasing uplift in its third party valuation.

In the healthcare sector, Oakland Care Centre, which operates a care home in Chingford, continued to perform strongly, as did the Taunton Hospital. We are reviewing a number of further care home opportunities and we see provision of quality residential care for private payers in London and the Home Counties as being an important focus for future investment activity.

Our renewable energy portfolio continues to grow towards a target of 20 per cent. of the Company's total investment portfolio. The income that it generates is also growing, with a target of 10 per cent. per annum on investment cost once all the individual energy units are generating electricity. During the course of the year we invested £1.6 million in Chonais Holdings, which is constructing a 2MW run-of-river hydro unit in North West Scotland and £387,000 in Green Highland Renewables (Ledgowan), which is constructing a hydro unit nearby. In general, the renewable energy units have been operating at or above budget, with a particularly strong performance from Dragon Hydro, which owns our first operational hydroelectricity unit, in North Wales.

Radnor House School continues to perform well with 350 pupils currently in place for September and capacity for a further 100 pupils over the next two years.

Our pub portfolio is stable and cash generative, with a small amount of additional investment in Bravo Inns II to purchase and refurbish further units in the North West, taking the combined Bravo Inns and Bravo Inns II portfolio to 35 pubs.

Risks and uncertainties
The outlook for the UK economy continues to be the key risk affecting your Company. Importantly, however, your Company remains conservatively financed with no bank borrowings. The Company's policy remains that its portfolio companies should not normally have external borrowings, and for the Company to have a first charge over portfolio companies' assets; the Board and Manager see this as an important factor in the control of investment risk. However, on an exceptional basis, certain portfolio companies may take on external borrowings, where the Board considers this will offer a significant benefit to the Company.

A detailed analysis of the other risks and uncertainties facing the business is set out in the Strategic report on pages 12 and 13 of the full Annual Report and Financial Statements for the year ended 31 March 2014.

Share buy-backs
It remains the Board's primary objective to maintain sufficient resources for investment in existing and new portfolio companies and for the continued payment of dividends to shareholders. Thereafter, it is still the Board's policy to buy back shares in the market, subject to the overall criterion that such purchases are in the Company's interest. The Company will limit the sum available for share buy-backs for the six month period to 30 September 2014 to £750,000.  This compares to a total value bought in for the previous six months to 31 March 2014 of £487,000.  Subject to the constraints referred to above and subject to first purchasing shares held by the market makers, the Board will target such buy-backs to be in the region of a 5 per cent. discount to net asset value, so far as market conditions and liquidity permit. 

Results and dividends
As at 31 March 2014, the net asset value was £42.66 million or 71.3 pence per share, compared to £41.68 million or 74.2 pence per share as at 31 March 2013, after the payment of total tax-free dividends of 5 pence per share.  The results comprised 1.7 pence per share revenue return (2013: 2 pence per share) and a 0.3 pence per share capital return after taking into account capitalised expenses (2013: flat).  The revenue return before taxation was £1,119,000 compared to £1,114,000 for the year to 31 March 2013.  The Company will pay a first dividend of 2.50 pence per share on 31 July 2014 to shareholders on the register on 11 July 2014, which is in line with the Company's current objective of paying a dividend of 5 pence per share annually.

Outlook and prospects
Trading at our hotels and health and fitness clubs is improving. After a challenging period for some of our more consumer oriented sectors, we are cautiously optimistic that the brighter outlook for the UK economy, combined with the more balanced nature of the current portfolio, should benefit the Company moving forward.

David Watkins
Chairman
25 June 2014

Responsibility Statement

In preparing the financial statements for the year to 31 March 2014, the Directors of the Company, being David Watkins, John Kerr, Jeff Warren and Ebbe Dinesen, 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 2014 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 2014 as required by DTR 4.1.12.R;

 - the Chairman's statement and Strategic report include a fair review of the information required by DTR 4.2.7R (indication of important events during the year ended 31 March 2014 and description of principal risks and uncertainties that the Company faces); and

 -  the Chairman's statement and Strategic 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
25 June 2014

Portfolio of investments

The following list is a summary of investments as at 31 March 2014:

			As at 31 March 2014			As at 31 March 2013
Portfolio company	%  voting rights	% voting rights held by all AVL* managed companies	Accountingcost** £'000	Cumulative movement in value £'000	Value £'000	Accounting cost** £'000	Cumulative movement in value £'000	Value £,000	Change in value for the year £'000***
Hotels
Kew Green VCT (Stansted) Limited	45.2	50.0	6,723	656	7,379	6,723	1,034	7,757	(378)
The Crown Hotel Harrogate Limited	24.1	50.0	4,245	(1,329)	2,916	4,245	(1,233)	3,012	(96)
The Stanwell Hotel  Limited	39.2	50.0	4,677	(2,339)	2,338	4,614	(2,335)	2,279	(4)
Total investment in the hotel sector			15,645	(3,012)	12,633	15,582	(2,534)	13,048	(478)
Healthcare
Oakland Care Centre Limited	31.6	50.0	2,998	1,611	4,609	2,998	1,176	4,174	435
Active Lives Care Ltd	100.0	100.0	1,800	-	1,800	-	-	-	-
Taunton Hospital Limited	7.2	50.0	958	260	1,218	775	47	822	214
Total investment in the healthcare sector			5,756	1,871	7,627	3,773	1,223	4,996	649
Renewable energy
Chonais Holdings Limited	16.1	50.0	1,611	6	1,617	-	-	-	6
Alto Prodotto Wind Limited	7.4	50.0	670	231	901	670	187	857	44
The Street by Street Solar Programme Limited	6.5	50.0	676	163	839	650	94	744	69
Erin Solar Limited	18.6	50.0	520	3	523	-	-	-	3
Regenerco Renewable Energy Limited	4.5	50.0	427	36	463	427	24	451	12
Green Highland Renewables (Ledgowan) Limited	20.8	50.0	387	-	387	-	-	-	-
Dragon Hydro Limited	7.3	30.0	311	61	372	141	1	142	60
TEG Biogas (Perth) Limited	4.9	50.0	306	23	329	306	21	327	1
Harvest AD Limited	n/a****	n/a	307	-	307	-	-	-	-
AVESI Limited	7.4	50.0	230	16	246	230	-	230	16
Greenenerco Limited	3.9	50.0	135	49	184	135	-	135	49
Total investment in the renewable energy sector			5,580	588	6,168	2,559	327	2,886	260
Pubs
The Charnwood Pub Company Limited	14.8	50.0	3,532	(1,889)	1,643	3,532	(1,897)	1,635	8
Bravo Inns II Limited	6.4	50.0	1,085	38	1,123	935	7	942	30
Bravo Inns Limited	7.6	50.0	589	(156)	433	596	(155)	441	-
The Dunedin Pub Company VCT Limited	8.3	50.0	75	(2)	73	80	(3)	77	1
Total investment in the pub sector			5,281	(2,009)	3,272	5,143	(2,048)	3,095	39
Health and fitness clubs
The Weybridge Club Limited	14.3	50.0	2,136	(650)	1,486	2,136	(208)	1,928	(442)
Kensington Health Clubs  Limited	13.8	50.0	1,889	(800)	1,089	1,889	(535)	1,354	(265)
Tower Bridge Health Clubs Limited	8.4	50.0	347	321	668	403	172	575	149
Total investment in the health and fitness club sector			4,372	(1,129)	3,243	4,428	(571)	3,857	(558)
Education
Radnor House School (Holdings) Limited	7.1	50.0	1,381	850	2,231	1,381	426	1,807	526
Total investment in the education sector			1,381	850	2,231	1,381	426	1,807	526
Residential property development
G&K Smart Developments VCT Limited +	42.9	50.0	276	(40)	236	1,488	(1,144)	344	30
Total investment in the residential property development sector			276	(40)	236	1,488	(1,144)	344	30
Other leisure
Premier Leisure (Suffolk) Limited	9.9	47.3	468	(298)	170	468	(303)	165	5
Total investment in the other leisure sector			468	(298)	170	468	(303)	165	5
Total fixed asset investments			38,759	(3,179)	35,580	34,821	(4,623)	30,198	473

* Albion Ventures LLP
** Amounts shown as accounting cost represent the acquisition cost in the case of investments originally made by the Company and/or the fair value attributed to the investments acquired from Albion Prime VCT PLC on the Merger on 25 September 2012, as adjusted for changes in value since acquisition.
*** As adjusted for additions and disposals during the year.
**** Loan stock investment only
+ Closing cost is net of £1,074,000 written off in respect of G&K Smart Developments VCT Limited which is still held at the balance sheet date.

Total change in value of investments for the year	473
Realised gain in current year	50
Movement in loan stock accrued interest	103
Total gains on investments as per Income statement	626

Fixed asset investment realisations during the year to 31 March 2014	Accounting cost* £'000	Opening carrying value £'000	Disposal proceeds £'000	Total realised gain/(loss) £'000	Gain on opening value £'000
The Bear Hungerford Limited***	-	-	40	40	40
Radnor House School (Holdings) Limited (redemption premium repaid)	-	103	111	111	8
Wickenhall Mill VCT Limited***	-	-	2	2	2
G&K Smart Developments VCT Limited**	1,212	138	138	(1,074)	-
Tower Bridge Health Clubs Limited (loan stock repayment)	55	55	55	-	-
Bravo Inns Limited (loan stock repayment)	8	8	8	-	-
The Dunedin Pub Company VCT Limited (loan stock repayment)	5	5	5	-	-
Total	1,280	309	359	(921)	50

*The cost includes the original cost from Albion Venture Capital Trust PLC and the carried over value on merger from Albion Prime VCT PLC as at 25 September 2012.
** Includes an amount of £1,074,000 written off in respect of investment still held at the balance sheet date.
***This refers to additional proceeds from the sale which was realised in the prior year.

Income statement

		Year ended 31 March 2014			Year ended 31 March 2013
		Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments		-	626	626	-	384	384
Investment income		1,718	-	1,718	1,563	-	1,563
Investment management fees		(201)	(601)	(802)	(171)	(514)	(685)
Other expenses		(398)	-	(398)	(278)	-	(278)
Return/(loss) on ordinary activities before tax		1,119	25	1,144	1,114	(130)	984
Tax (charge)/credit on ordinary activities		(120)	140	20	(183)	129	(54)
Return/(loss) attributable to shareholders		999	165	1,164	931	(1)	930
Basic and diluted return per share (pence)*		1.70	0.30	2.00	2.00	-	2.00

* excluding treasury shares

Balance sheet           

		31 March 2014	31 March 2013
		£'000	£'000
Fixed asset investments		35,580	30,198
Current assets
Trade and other debtors		48	24
Current asset investments		-	50
Cash at bank and in hand		7,505	11,896
		7,553	11,970
Creditors: amounts falling due within one year		(475)	(487)
Net current assets		7,078	11,483
Net assets		42,658	41,681
Capital and reserves
Called up share capital		645	603
Share premium		3,525	8
Capital redemption reserve		7	-
Unrealised capital reserve		(3,343)	(4,890)
Realised capital reserve		10,527	11,909
Other distributable reserve		31,297	34,051
Total equity shareholders' funds		42,658	41,681
Basic and diluted net asset value per share (pence)*		71.30	74.20

* excluding treasury shares

The Financial Statements were approved by the Board of Directors and authorised for issue on 25 June 2014, and were signed on its behalf by

David Watkins
Chairman
Company number: 03142609

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 years ended 31 March 2014 and 31 March 2013, 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 2014, which will be, delivered to the Registrar of Companies. The Auditor reported on those accounts; the 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 25 July 2014 at 11.00am.

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This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Albion Venture Capital Trust PLC via Globenewswire

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