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 2010.
This announcement was approved by the Board of Directors on 29 June 2010.
This announcement has not been audited.
Please click on the following link to view the full Annual Report and Financial
Statements (which have been audited) for the year to 31 March 2010. The
information contained in this link includes information as required by the
Disclosure and Transparency Rules, including Rule 4.1.
https://hugin.info/141807/R/1428129/375625.PDF
Alternatively you may view the Annual Report and Financial Statements at:
www.albion-ventures.co.uk by clicking on the 'Our Funds' section.
Investment objectives
The aim of Albion Enterprise VCT (the "Company") is to provide investors with a
regular and predictable source of income, combined with the prospect of longer
term capital growth. Once fully invested, the Company intends to achieve this by
investing up to 50 per cent. of the net funds raised in an asset-based portfolio
of lower risk, ungeared businesses, principally operating in the leisure sector
and related areas (the ''Asset-Based Portfolio''). The balance of the net funds
raised, other than funds retained for liquidity purposes, will be invested in a
portfolio of higher growth businesses across a variety of sectors of the UK
economy. These will range from lower risk, income producing businesses to higher
risk technology companies (the ''Growth Portfolio''). Funds awaiting investment
in Qualifying Investments or retained for liquidity purposes will be held in
gilts, on deposit or invested in floating rate notes or similar instruments, in
the latter two cases with banks with a Moody's credit rating of 'A' or above.
The Company's investment portfolio will thus be structured to provide a balance
between income and capital growth for the longer term. The Asset-Based Portfolio
is designed to provide stability and income whilst still maintaining the
potential for capital growth. The Growth Portfolio is intended to provide highly
diversified exposure through its portfolio of investments in unquoted UK
companies.
Financial calendar
Annual General Meeting 26 July 2010
Record date for first dividend 9 July 2010
Payment of first dividend 7 August 2010
Announcement of Half-yearly results for the six months ending 30 November 2010
September 2010
Payment of second dividend subject to Board approval January 2011
Financial summary
92.60p Net asset value plus dividends paid from launch to 31 March 2010.
88.25p Net asset value per share as at 31 March 2010.
2.00p Tax free dividends per share paid in the year to 31 March 2010.
1.50p First tax free dividend per share declared for the year to 31 March 2011
Financial highlights
+-----------------------+-------------------+-------------------+
| | 31 March 2010 | 31 March 2009 |
| | | |
| | (pence per share) | (pence per share) |
+-----------------------+-------------------+-------------------+
| Dividends paid | 2.00 | 1.65 |
+-----------------------+-------------------+-------------------+
| Revenue return | 1.01 | 2.11 |
+-----------------------+-------------------+-------------------+
| Capital return/(loss) | 0.43 | (5.93) |
+-----------------------+-------------------+-------------------+
| Net asset value | 88.25 | 88.82 |
+-----------------------+-------------------+-------------------+
Net asset value total return to shareholders since launch:
+-----------------------------------------------++-------------------+
| || 31 March 2010 |
| || |
| || (pence per share) |
+-----------------------------------------------++-------------------+
+-----------------------------------------------++-------------------+
| Total dividends paid during the year ended: || |
+-----------------------------------------------++-------------------+
| 31 March 2008 || 0.70 |
+-----------------------------------------------++-------------------+
| 31 March 2009 || 1.65 |
+-----------------------------------------------++-------------------+
| 31 March 2010 || 2.00 |
+-----------------------------------------------++-------------------+
| Total dividends paid to 31 March 2010 || 4.35 |
+-----------------------------------------------++-------------------+
| Net asset value as at 31 March 2010 || 88.25 |
+-----------------------------------------------++-------------------+
| Total net asset value return to 31 March 2010 || 92.60 |
+-----------------------------------------------++-------------------+
In addition to the above dividends, the Company will pay a first dividend of
1.5 pence per share on 7 August 2010 to shareholders on the register as at 9
July 2010.
Chairman's statement
Introduction
The Company's results for the year to 31 March 2010 show a positive total return
of 1.4 pence per share against a negative return of 3.8 pence per share for the
year to 31 March 2009. This is an encouraging result in light of the fact that
the UK economy was in recession for much of the period.
Portfolio progress
A total of £5.7 million was invested in the year of which £4.0 million was in
new portfolio companies or projects. This takes the proportion of qualifying
investments for those funds raised in the 2006/07 tax year to over 70 per cent.,
while the Company as a whole, including those funds raised in the 2007/08 tax
year, is on schedule to exceed the 70 per cent. threshold by the due date of 31
March 2011. New investments included £2.8 million in Geronimo Inns which has
purchased four freehold pubs in prominent locations in central London. In
addition, £664,000 was invested in Orchard Portman Hospital, which together with
Taunton Nursing Home, is developing a psychiatric care unit in the West Country.
The existing portfolio continues to develop. In the high-growth portfolio,
Mi-Pay, Mirada Medical and Opta Sports Data all saw strongly improved
operational performance during the period. Against this, partial provisions were
made against Dexela and Oxsensis, where progress in bringing products to the
market was slower than has been hoped for, and against Vibrant Energy (now
renamed Green Energy Property Services Group).
Investment income for the year was 41 per cent. below the previous year, largely
because of the high level of cash holdings within the VCT, and the resultant
effect of the sharp reduction in market interest rates. As the investment
portfolio builds up, however, we would expect the level of investment income to
start to increase again.
Risks and uncertainties
While the recession in the UK appears to be over for the time being, we remain
cautious over the longer term outlook for the UK economy in the light of high
personal, corporate and national debt levels, and this continues to be the key
risk affecting the Company. Nevertheless, despite pressures on certain of our
portfolio companies, the portfolio as a whole remains cash generative and it
remains our policy for portfolio companies to have no external bank borrowings.
Further details regarding the risks and uncertainties are shown in note 22.
Details regarding related third party transactions are shown in note 21.
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 2010, the net asset value of the Ordinary shares was 88.25 pence
per share compared to 88.82 pence at 31 March 2009. The revenue return after
taxation was £305,000 compared to £640,000 for the previous year. The Company
will pay a first dividend for the financial year to 31 March 2011 of 1.5 pence
per Ordinary share. The dividend will be paid on 7 August 2010 to shareholders
on the register as at 9 July 2010. In accordance with the offer for subscription
document, it is the Board's intention that, once fully invested, the Company
will generate dividends of at least 3 pence per share per annum. However, this
should not be regarded as a forecast.
Supporting enterprise and growth
Recent research undertaken by the Association of Investment Companies has
demonstrated that VCT investment provides substantial benefits for UK small
businesses and the economy in at least three ways: first, by creating jobs;
second, by providing additional management skill to support growing businesses;
and finally, by being cost-effective, in that the cost to the public purse is
more than offset by the increased tax returns generated by growing VCT-backed
companies. In common with other VCTs, we would recommend the new Government to
continue to encourage VCTs as one of the best ways to support enterprise and
future economic growth.
Outlook and prospects
As mentioned above, a number of portfolio companies, particularly in the
high-growth portfolio, are beginning to show a degree of traction in the
international markets within which they operate, indicating their longer term
potential for value creation. Meanwhile, though some of the asset-based
investments have been written down in line with the property markets, almost all
units remain profitable at the operating level. The VCT's strong level of cash
will enable it to take advantage of the opportunities at attractive valuations
that are now being seen in the market.
Maxwell Packe
Chairman
29 June 2010
Manager's report
Portfolio review
The sector analysis of Albion Enterprise VCT's investment portfolio as at 31
March 2010 is shown below. Asset-based investments account for 58 per cent. of
the portfolio of unquoted investments and high growth investments account for
42 per cent. It is anticipated that the health care segment, which currently
accounts for 36 per cent. of unquoted investments will increase further, as will
the environmental segment. Both these sectors have capacity for asset-backed as
well as growth investments.
https://hugin.info/141807/R/1428129/375626.pdf
Source: Albion Ventures LLP
New investments
During the year some £4.0 million was invested in new investments and £1.7
million in existing portfolio companies. We are reviewing a growing number of
investment opportunities, particularly in the healthcare and environmental
sectors. In the former area, we anticipate further activity in the psychiatric
sector and in addition, subsequent to the year end, we have invested £980,000 in
Masters Pharmaceuticals, a global distributor of special pharmaceuticals. In the
environmental sector, we are reviewing a number of opportunities within the
bio-fuel and waste-to-energy sectors.
Investment activity
Certain of the investments in the high growth portfolio have been performing
particularly strongly. Amongst these is Opta Sports Data, one of Europe's
leading compilers of sports performance data, where growth in Europe has been
robust over the period. In addition, Mirada Medical, a medical imaging business
that was bought from Siemens in 2008, has shown excellent growth in the US,
accompanied by a move into profit. Other companies in the portfolio continue to
show encouraging growth in sales, including Mi-Pay, Forth Photonics and Point
35 Microstructures. Against this, progress with customers at Oxsensis, which has
developed a sensor capable of measuring heat at exceptionally high levels for
the aerospace and power sectors, and at Dexela, which develops and sells imaging
systems for medical applications, have been slower than we would have liked. In
addition, a further write down was needed againstVibrant Energy which merged
with a competitor during the year and was renamed Green Energy Property Services
Group.
Our asset-based investments are generally performing well, despite the fact that
those investments made in 2007 have seen write downs in line with the market. A
particularly strong performance was seen from the two new investments in
Geronimo Inns.
The Company retains high cash levels which we believe will continue to enable it
to take advantage of interesting opportunities at attractive valuations.
Albion Ventures LLP
Manager
29 June 2010
Responsibility Statement
In preparing these financial statements for the year to 31 March 2010, 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 2010 for the
Company has been prepared in accordance with United Kingdom Generally Accepted
Accounting Practice (UK Accounting Standards and applicable law) and give a true
and fair view of the assets, liabilities, financial position and profit and loss
of the Company for the year ended 31 March 2010 as required by DTR 4.1.12.R;
-the Chairman's statement and Manager's report include a fair review of the
information required by DTR 4.2.7R (indication of important events during the
year ended 31 March 2010 and description of principal risks and uncertainties
that the Company faces); and
-the Chairman's statement and Manager's report include a fair review of the
information required by DTR 4.2.8R (disclosure of related parties transactions
and changes therein).
A detailed "Statement of Directors' responsibilities for the preparation of the
Company's financial statements" is contained within the full audited Annual
Report and Financial Statements which is attached to this announcement.
By order of the Board
Maxwell Packe
Chairman
Income statement
+---------------------------+----+---------------------+-----------------------+
| | | Year ended | Year ended |
+---------------------------+----+---------------------+-----------------------+
| | | 31 March 2010 | 31 March 2009 |
+---------------------------+----+-------+-------+-----+-------+-------+-------+
| | |Revenue|Capital|Total|Revenue|Capital| Total|
+---------------------------+----+-------+-------+-----+-------+-------+-------+
| |Note| £'000| £'000|£'000| £'000| £'000| £'000|
+---------------------------+----+-------+-------+-----+-------+-------+-------+
| | | | | | | | |
|Profits/(losses) on |3 | -| 547| 547| -|(1,434)|(1,434)|
|investments | | | | | | | |
+---------------------------+----+-------+-------+-----+-------+-------+-------+
|Investment income |4 | 733| -| 733| 1,248| -| 1,248|
+---------------------------+----+-------+-------+-----+-------+-------+-------+
|Investment management fees |5 | (168)| (505)|(673)| (181)| (542)| (723)|
+---------------------------+----+-------+-------+-----+-------+-------+-------+
|Recovery of VAT | | -| -| -| 10| 28| 38|
+---------------------------+----+-------+-------+-----+-------+-------+-------+
|Other expenses |6 | (177)| -|(177)| (203)| -| (203)|
+---------------------------+----+-------+-------+-----+-------+-------+-------+
| | | | | | | | |
|Return/(loss) on ordinary | | 388| 42| 430| 874|(1,948)|(1,074)|
|activities before tax | | | | | | | |
+---------------------------+----+-------+-------+-----+-------+-------+-------+
|Tax (charge)/credit on |8 | (83)| 89| 6| (234)| 153| (81)|
|ordinary activities | | | | | | | |
+---------------------------+----+-------+-------+-----+-------+-------+-------+
|Return/(loss) attributable | | 305| 131| 436| 640|(1,795)|(1,155)|
|to shareholders | | | | | | | |
+---------------------------+----+-------+-------+-----+-------+-------+-------+
|Basic and diluted | | | | | | | |
|return/(loss) per share |10 | 1.01| 0.43| 1.44| 2.11| (5.93)| (3.82)|
|(pence)* | | | | | | | |
+---------------------------+----+-------+-------+-----+-------+-------+-------+
* excluding treasury shares
The total column of this Income statement represents the profit and loss account
of the Company. The supplementary revenue and capital columns have been prepared
in accordance with the Association of Investment Companies' Statement of
Recommended Practice.
The accompanying notes form an integral part of this announcement.
All revenue and capital items in the above statement derive from continuing
operations.
There are no recognised gains or losses other than the results for the year
disclosed above. Accordingly a statement of total recognised gains and losses is
not required.
The difference between the reported profit 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 2010|31 March 2009|
+---------------------------------------------+----+-------------+-------------+
| |Note| £'000| £'000|
+---------------------------------------------+----+-------------+-------------+
|Fixed asset investments | 11| 11,908| 5,804|
+---------------------------------------------+----+-------------+-------------+
+---------------------------------------------+----+-------------+-------------+
|Current Assets | | | |
+---------------------------------------------+----+-------------+-------------+
|Trade and other debtors | 13| 111| 30|
+---------------------------------------------+----+-------------+-------------+
|Current asset investments | 13| 2,536| 12,123|
+---------------------------------------------+----+-------------+-------------+
|Cash at bank | 17| 12,281| 9,319|
+---------------------------------------------+----+-------------+-------------+
| | | 14,928| 21,472|
+---------------------------------------------+----+-------------+-------------+
+---------------------------------------------+----+-------------+-------------+
|Creditors: amounts falling due within one | 14| (78)| (348)|
|year | | | |
+---------------------------------------------+----+-------------+-------------+
+---------------------------------------------+----+-------------+-------------+
|Net current assets | | 14,850| 21,124|
+---------------------------------------------+----+-------------+-------------+
+---------------------------------------------+----+-------------+-------------+
|Net assets | | 26,758| 26,928|
+---------------------------------------------+----+-------------+-------------+
+---------------------------------------------+----+-------------+-------------+
|Capital and reserves | | | |
+---------------------------------------------+----+-------------+-------------+
|Called up share capital | 15| 15,189| 15,180|
+---------------------------------------------+----+-------------+-------------+
|Unrealised capital reserve | | (797)| (1,681)|
+---------------------------------------------+----+-------------+-------------+
|Special reserve | | 13,473| 13,473|
+---------------------------------------------+----+-------------+-------------+
|Treasury shares reserve | | (39)| (31)|
+---------------------------------------------+----+-------------+-------------+
|Realised capital reserve | | (1,368)| (614)|
+---------------------------------------------+----+-------------+-------------+
|Revenue reserve | | 300| 601|
+---------------------------------------------+----+-------------+-------------+
|Total equity shareholders' funds | | 26,758| 26,928|
+---------------------------------------------+----+-------------+-------------+
+---------------------------------------------+----+-------------+-------------+
|Basic and diluted net asset value per share | 16| 88.25| 88.82|
|(pence)* | | | |
+---------------------------------------------+----+-------------+-------------+
* excluding treasury shares
The accompanying notes form an integral part of this announcement.
These Financial Statements were approved by the Board of Directors, and
authorised for issue on 29 June 2010 and were signed on its behalf by
Maxwell Packe
Chairman
Company number 05990732
Reconciliation of movement in shareholders' funds
+-------------+----------+----------+--------+--------+--------+--------+------+
| | Called-up|Unrealised| Special|Treasury|Realised| Revenue| |
| | share| capital|reserve*| shares| capital|reserve*| Total|
| | capital| reserve*| |reserve*|reserve*| | |
+-------------+----------+----------+--------+--------+--------+--------+------+
| | £'000| £'000| £'000| £'000| £'000| £'000| £'000|
+-------------+----------+----------+--------+--------+--------+--------+------+
|As at 1 April| 15,180| (1,681)| 13,473| (31)| (614)| 601|26,928|
|2009 | | | | | | | |
+-------------+----------+----------+--------+--------+--------+--------+------+
|Issue of | 9| -| -| -| -| -| 9|
|share capital| | | | | | | |
+-------------+----------+----------+--------+--------+--------+--------+------+
|Capitalised | | | | | | | |
|investment | -| -| -| -| (505)| -| (505)|
|management | | | | | | | |
|fees | | | | | | | |
+-------------+----------+----------+--------+--------+--------+--------+------+
|Tax relief on| | | | | | | |
|costs charged| -| -| -| -| 89| -| 89|
|to capital | | | | | | | |
+-------------+----------+----------+--------+--------+--------+--------+------+
|Purchase of | | | | | | | |
|own treasury | -| -| -| (8)| -| -| (8)|
|shares | | | | | | | |
+-------------+----------+----------+--------+--------+--------+--------+------+
|Net realised | | | | | | | |
|gains on | -| -| -| -| 198| -| 198|
|investments | | | | | | | |
+-------------+----------+----------+--------+--------+--------+--------+------+
|Unrealised | | | | | | | |
|gains on | -| 349| -| -| -| -| 349|
|investments | | | | | | | |
+-------------+----------+----------+--------+--------+--------+--------+------+
|Transfer of | | | | | | | |
|previously | | | | | | | |
|unrealised | -| 536| -| -| (536)| -| -|
|losses on | | | | | | | |
|sale of | | | | | | | |
|investments | | | | | | | |
+-------------+----------+----------+--------+--------+--------+--------+------+
|Revenue | | | | | | | |
|return | | | | | | | |
|attributable | -| -| -| -| -| 305| 305|
|to | | | | | | | |
|shareholders | | | | | | | |
+-------------+----------+----------+--------+--------+--------+--------+------+
|Dividends | -| -| -| -| -| (606)| (606)|
|paid | | | | | | | |
+-------------+----------+----------+--------+--------+--------+--------+------+
|As at 31 | 15,189| (797)| 13,473| (39)| (1,368)| 300|26,758|
|March 2010 | | | | | | | |
+-------------+----------+----------+--------+--------+--------+--------+------+
Reconciliation of movement in shareholders' funds
+------------+---------+-------+----------+--------+--------+--------+--------+-------+
| |Called-up| Share|Unrealised| Special|Treasury|Realised| Revenue| |
| | share|premium| capital|reserve*| shares| capital|reserve*| Total|
| | capital| | reserve*| |reserve*|reserve*| | |
+------------+---------+-------+----------+--------+--------+--------+--------+-------+
| | £'000| £'000| £'000| £'000| £'000| £'000| £'000| £'000|
+------------+---------+-------+----------+--------+--------+--------+--------+-------+
|As at 1 | 9,897| -| (262)| 8,787| -| (238)| 420| 18,604|
|April 2008 | | | | | | | | |
+------------+---------+-------+----------+--------+--------+--------+--------+-------+
|Issue of | | | | | | | | |
|share | 5,283| 5,283| -| -| -| -| -| 10,566|
|capital | | | | | | | | |
+------------+---------+-------+----------+--------+--------+--------+--------+-------+
|Issue costs | -| (580)| -| -| -| -| -| (580)|
+------------+---------+-------+----------+--------+--------+--------+--------+-------+
|Cost of | | | | | | | | |
|cancellation| | | | | | | | |
|of share | -| -| -| (17)| -| -| -| (17)|
|premium | | | | | | | | |
|account | | | | | | | | |
+------------+---------+-------+----------+--------+--------+--------+--------+-------+
|Cancellation| | | | | | | | |
|of share | -|(4,703)| -| 4,703| -| -| -| -|
|premium | | | | | | | | |
|account | | | | | | | | |
+------------+---------+-------+----------+--------+--------+--------+--------+-------+
|Capitalised | | | | | | | | |
|investment | -| -| -| -| -| (542)| -| (542)|
|management | | | | | | | | |
|fees | | | | | | | | |
+------------+---------+-------+----------+--------+--------+--------+--------+-------+
|Capitalised | | | | | | | | |
|recoverable | -| -| -| -| -| 28| -| 28|
|VAT | | | | | | | | |
+------------+---------+-------+----------+--------+--------+--------+--------+-------+
|Tax relief | | | | | | | | |
|on costs | | | -| -| -| 153| -| 153|
|charged to | -| -| | | | | | |
|capital | | | | | | | | |
+------------+---------+-------+----------+--------+--------+--------+--------+-------+
|Purchase of | | | | | | | | |
|own treasury| -| -| -| -| (31)| -| -| (31)|
|shares | | | | | | | | |
+------------+---------+-------+----------+--------+--------+--------+--------+-------+
|Net realised| | | | | | | | |
|losses on | -| -| -| -| -| (15)| -| (15)|
|investments | | | | | | | | |
+------------+---------+-------+----------+--------+--------+--------+--------+-------+
|Unrealised | | | | | | | | |
|losses on | -| -| (1,419)| -| -| -| -|(1,419)|
|investments | | | | | | | | |
+------------+---------+-------+----------+--------+--------+--------+--------+-------+
|Revenue | | | | | | | | |
|return | | | | | | | | |
|attributable| -| -| -| -| -| -| 640| 640|
|to | | | | | | | | |
|shareholders| | | | | | | | |
+------------+---------+-------+----------+--------+--------+--------+--------+-------+
|Dividends | -| -| -| -| -| -| (459)| (459)|
|paid | | | | | | | | |
+------------+---------+-------+----------+--------+--------+--------+--------+-------+
|As at 31 | 15,180| -| (1,681)| 13,473| (31)| (614)| 601| 26,928|
|March 2009 | | | | | | | | |
+------------+---------+-------+----------+--------+--------+--------+--------+-------+
* Included within these reserves is an amount of £11,569,000 (2009: £11,748,000)
which is considered distributable. The Special reserve has been treated as
distributable in determining the amounts available for distribution.
Cash flow statement
+---------------------------------------------------+----+----------+----------+
| | |Year ended|Year ended|
| | | | |
| | | 31 March| 31 March|
| |Note| | |
| | | 2010| 2009|
| | | | |
| | | £'000| £'000|
+---------------------------------------------------+----+----------+----------+
|Operating activities | | | |
+---------------------------------------------------+----+----------+----------+
|Investment income received | | 626| 776|
+---------------------------------------------------+----+----------+----------+
|Deposit interest received | | 136| 311|
+---------------------------------------------------+----+----------+----------+
|Investment management fees paid | | (890)| (527)|
+---------------------------------------------------+----+----------+----------+
|Other cash payments | | (229)| (188)|
+---------------------------------------------------+----+----------+----------+
|Net cash (outflow)/inflow from operating activities| 18| (357)| 372|
+---------------------------------------------------+----+----------+----------+
+---------------------------------------------------+----+----------+----------+
|Taxation | | | |
+---------------------------------------------------+----+----------+----------+
|UK corporation tax paid | | (134)| (126)|
+---------------------------------------------------+----+----------+----------+
+---------------------------------------------------+----+----------+----------+
|Capital expenditure and financial investments | | | |
+---------------------------------------------------+----+----------+----------+
|Purchase of fixed asset investments | | (5,644)| (4,286)|
+---------------------------------------------------+----+----------+----------+
|Net cash outflow from investing activities | | (5,644)| (4,286)|
+---------------------------------------------------+----+----------+----------+
+---------------------------------------------------+----+----------+----------+
|Management of liquid resources | | | |
+---------------------------------------------------+----+----------+----------+
|Purchase of current asset investments | | (4,399)| (22,544)|
+---------------------------------------------------+----+----------+----------+
|Disposal of current asset investments | | 14,108| 11,933|
+---------------------------------------------------+----+----------+----------+
|Net cash inflow/(outflow) from liquid resources | | 9,709| (10,611)|
+---------------------------------------------------+----+----------+----------+
+---------------------------------------------------+----+----------+----------+
|Equity dividends paid (net of cost of shares issued| | (597)| (459)|
|under the Dividend Reinvestment Scheme) | | | |
+---------------------------------------------------+----+----------+----------+
|Net cash inflow/(outflow) before financing | | 2,977| (15,110)|
+---------------------------------------------------+----+----------+----------+
+---------------------------------------------------+----+----------+----------+
|Financing | | | |
+---------------------------------------------------+----+----------+----------+
|Issue of ordinary share capital | | -| 10,568|
+---------------------------------------------------+----+----------+----------+
|Purchase of own shares | 15| (15)| (24)|
+---------------------------------------------------+----+----------+----------+
|Expenses of issue of ordinary share capital | | -| (478)|
+---------------------------------------------------+----+----------+----------+
|Net cash (outflow)/inflow from financing | | (15)| 10,066|
+---------------------------------------------------+----+----------+----------+
+---------------------------------------------------+----+----------+----------+
|Cash inflow/(outflow) in the year | 17| 2,962| (5,044)|
+---------------------------------------------------+----+----------+----------+
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
Unquoted equity investments
In accordance with FRS 26 "Financial Instruments: Recognition and Measurement",
unquoted equity investments are designated as fair value through profit or loss.
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). The revised September 2009 IPEVCV
guidelines have not had a material impact on the portfolio.
Fair value movements on equity investments and gains and losses arising on the
disposal of investments are reflected in the capital column of the Income
statement in accordance with the AIC SORP. Realised gains or losses on the sale
of investments will be reflected in the realised capital reserve, and unrealised
gains or losses arising from the revaluation of investments will be reflected in
the unrealised capital reserve.
Unquoted loan stock and Euro commercial paper
Unquoted loan stock and Euro commercial paper are classified as loans and
receivables in accordance with FRS 26 and carried at amortised cost using the
Effective Interest Rate method 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 effective interest rate.
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, Euro commercial paper income 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:
* Â Â Â Â Â Â 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
* Â Â Â Â Â Â expenses which are incidental to the purchase or disposal of an
investment are charged through the realised capital reserve.
Under the terms of the management agreement, total expenses including management
fees and excluding performance fees will not exceed 3.5 per cent. of net asset
value per annum.
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 specific nature of taxation of venture capital trusts means that it is
unlikely that any deferred tax will arise. The Directors have considered the
requirements of FRS 19 and do not believe that any provision should be made.
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:
* Â Â Â Â Â Â gains and losses compared to cost on the realisation of investments;
and
* Â Â Â Â Â Â expenses, together with the related taxation effect, charged in
accordance with the above policies.
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/(losses) on investments
+--------------------------------------------------------+----------+----------+
| |Year ended|Year ended|
| | | |
| | 31 March| 31 March|
| | | |
| | 2010| 2009|
+--------------------------------------------------------+----------+----------+
| | £'000| £'000|
+--------------------------------------------------------+----------+----------+
|Unrealised gains/(losses) on fixed asset investments | | |
|held at fair value through profit | 425| (1,251)|
| | | |
|or loss account | | |
+--------------------------------------------------------+----------+----------+
|Unrealised losses on investments held at amortised cost | (112)| (108)|
+--------------------------------------------------------+----------+----------+
|Unrealised gains/(losses) on fixed asset investments | 313| (1,359)|
+--------------------------------------------------------+----------+----------+
+--------------------------------------------------------+----------+----------+
|Unrealised gains/(losses) on current asset investments | | |
|held at fair value | 36| (60)|
| | | |
|through profit or loss account | | |
+--------------------------------------------------------+----------+----------+
|Unrealised gains/(losses) sub total | 349| (1,419)|
+--------------------------------------------------------+----------+----------+
|Realised gains/(losses) on current asset investments | | |
|held at fair value through profit | 198| (15)|
| | | |
|or loss account | | |
+--------------------------------------------------------+----------+----------+
|Realised gains/(losses) sub total | 198| (15)|
+--------------------------------------------------------+----------+----------+
+--------------------------------------------------------+----------+----------+
|Total | 547| (1,434)|
+--------------------------------------------------------+----------+----------+
The prior year analysis has been represented to reflect a separate transfer
between reserves for accumulated unrealised gains or losses that had taken place
in previous periods relating to investments sold during the current period.
Investments valued on an amortised cost basis are unquoted loan stock
investments as described in note 2.
4. Investment income
+--------------------------------------------------------+----------+----------+
| |Year ended|Year ended|
| | | |
| | 31 March| 31 March|
| | | |
| | 2010| 2009|
+--------------------------------------------------------+----------+----------+
| | £'000| £'000|
+--------------------------------------------------------+----------+----------+
|Income recognised on investments held at fair value | | |
|through profit or loss | | |
+--------------------------------------------------------+----------+----------+
|Floating rate note interest | 145| 317|
+--------------------------------------------------------+----------+----------+
|Bank deposit interest | 135| 312|
+--------------------------------------------------------+----------+----------+
|Treasury gilt edged stock interest | -| 348|
+--------------------------------------------------------+----------+----------+
| | 280| 977|
+--------------------------------------------------------+----------+----------+
|Income recognised on investments held at amortised cost | | |
+--------------------------------------------------------+----------+----------+
|Return on loan stock investments | 402| 159|
+--------------------------------------------------------+----------+----------+
|Euro commercial paper interest | 51| 112|
+--------------------------------------------------------+----------+----------+
| | 733| 1,248|
+--------------------------------------------------------+----------+----------+
Interest income earned on impaired investments at 31 March 2010 amounted to
£39,000 (2009: £41,000). These investments are held at amortised cost.
5. Investment management fees
+----------------------------------------------+------------+------------+
| | Year ended | Year ended |
| | | |
| | 31 March | 31 March |
| | | |
| | 2010 | 2009 |
+----------------------------------------------+------------+------------+
| | £'000 | £'000 |
+----------------------------------------------+------------+------------+
| | 168 | 181 |
| Investment management fee charged to revenue | | |
+----------------------------------------------+------------+------------+
| Investment management fee charged to capital | 505 | 542 |
+----------------------------------------------+------------+------------+
| | 673 | 723 |
+----------------------------------------------+------------+------------+
Further details of the management agreement under which the investment
management fee is paid are given in the Directors' report and enhanced business
review on page 19 to the full Annual Report and Financial Statements.
6. Other expenses
+---------------------------------------------------+----------+----------+
| |Year ended|Year ended|
| | | |
| | 31 March| 31 March|
| | | |
| | 2010| 2009|
+---------------------------------------------------+----------+----------+
| | £'000| £'000|
+---------------------------------------------------+----------+----------+
| | 84| 83|
|Directors' fees and associated costs | | |
+---------------------------------------------------+----------+----------+
|Auditors' remuneration for statutory audit services| 24| 22|
+---------------------------------------------------+----------+----------+
|Other administrative expenses | 69| 98|
+---------------------------------------------------+----------+----------+
| | 177| 203|
+---------------------------------------------------+----------+----------+
7. Directors' fees
The amounts paid to Directors during the year are as follows:
+-------------------------------+------------+------------+
| | Year ended | Year ended |
| | | |
| | 31 March | 31 March |
| | | |
| | 2010 | 2009 |
+-------------------------------+------------+------------+
| | £'000 | £'000 |
+-------------------------------+------------+------------+
| | 74 | 71 |
| Directors' fees | | |
+-------------------------------+------------+------------+
| National Insurance and/or VAT | 8 | 9 |
+-------------------------------+------------+------------+
| Expenses | 2 | 3 |
+-------------------------------+------------+------------+
| | 84 | 83 |
+-------------------------------+------------+------------+
Expenses charged relate to travel expenses in furtherance of their duties as
Directors. Further information regarding Directors' remuneration can be found in
the Directors' remuneration report on page 27 of the full Annual report and
Financial Statements.
8. Tax charge/(credit) on ordinary activities
+----------------------------------+---------------------+---------------------+
| | Year ended 31 March | Year ended 31 March |
| | 2010 | 2009 |
+----------------------------------+-------+-------+-----+-------+-------+-----+
| |Revenue|Capital|Total|Revenue|Capital|Total|
| | | | | | | |
| | £'000| £'000|£'000| £'000| £'000|£'000|
+----------------------------------+-------+-------+-----+-------+-------+-----+
|UK corporation tax in respect of | 89| (89)| -| 234| (153)| 81|
|the current year | | | | | | |
+----------------------------------+-------+-------+-----+-------+-------+-----+
|UK corporation tax in respect of | (6)| -| (6)| -| -| -|
|prior year | | | | | | |
+----------------------------------+-------+-------+-----+-------+-------+-----+
| | 83| (89)| (6)| 234| (153)| 81|
+----------------------------------+-------+-------+-----+-------+-------+-----+
The tax charge for the year shown in the Income statement is lower than the
standard rate of corporation tax in the UK of 28 per cent. (2009: 28 per cent.).
The differences are explained below.
+--------------------------------------------------+------------+------------+
| | Year ended | Year ended |
| | | |
| | 31 March | 31 March |
| | | |
| | 2010 | 2009 |
| | | |
| | £'000 | £'000 |
+--------------------------------------------------+------------+------------+
| Return/(loss) on ordinary activities before tax | 430 | (1,074) |
+--------------------------------------------------+------------+------------+
+--------------------------------------------------+------------+------------+
| Tax on profit/(loss) at the standard rate | 120 | (300) |
+--------------------------------------------------+------------+------------+
| Factors affecting the charge: | | |
+--------------------------------------------------+------------+------------+
| Capital (profits)/losses not subject to taxation | (153) | 401 |
+--------------------------------------------------+------------+------------+
| Consortium relief | (6) | - |
+--------------------------------------------------+------------+------------+
| Losses | 33 | - |
+--------------------------------------------------+------------+------------+
| Marginal relief | - | (20) |
+--------------------------------------------------+------------+------------+
| Current tax charge | (6) | 81 |
+--------------------------------------------------+------------+------------+
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.
No provision for deferred tax has been made in the current or prior accounting
period. The Company has not recognised a deferred tax asset of £25,000 (2009:
£nil) in respect of unutilised management expenses.
9. Dividends
+----------------------------------+---------------------+---------------------+
| | Year ended 31 March | Year ended 31 March |
| | 2010 | 2009 |
+----------------------------------+-------+-------+-----+-------+-------+-----+
| |Revenue|Capital|Total|Revenue|Capital|Total|
| | | | | | | |
| | £'000| £'000|£'000| £'000| £'000|£'000|
+----------------------------------+-------+-------+-----+-------+-------+-----+
|Dividend of 0.4p per share paid on| -| -| -| 79| -| 79|
|15 August 2008 | | | | | | |
+----------------------------------+-------+-------+-----+-------+-------+-----+
|Dividend of 1.25p per share paid | -| -| -| 380| -| 380|
|on 9 January 2009 | | | | | | |
+----------------------------------+-------+-------+-----+-------+-------+-----+
|Dividend of 1.0p per share paid on| 303| -| 303| -| -| -|
|7 August 2009 | | | | | | |
+----------------------------------+-------+-------+-----+-------+-------+-----+
|Dividend of 1.0p per share paid on| 303| -| 303| -| -| -|
|6 January 2010 | | | | | | |
+----------------------------------+-------+-------+-----+-------+-------+-----+
| | 606| -| 606| 459| -| 459|
+----------------------------------+-------+-------+-----+-------+-------+-----+
In addition to the dividends summarised above, the Directors have declared a
first dividend for the year ending 31 March 2011 of 1.5 pence per share to be
paid on 7 August 2010 to shareholders on the register as at 9 July 2010. The
total dividend will be approximately £455,000.
10. Basic and diluted return/(loss) per share
+--------------------------------+---------------------+-----------------------+
| | Year ended 31 March | Year ended 31 March |
| | 2010 | 2009 |
+--------------------------------+-------+-------+-----+-------+-------+-------+
| |Revenue|Capital|Total|Revenue|Capital| Total|
+--------------------------------+-------+-------+-----+-------+-------+-------+
|The return per share has been | | | | | | |
|based on the following figures: | | | | | | |
+--------------------------------+-------+-------+-----+-------+-------+-------+
|Return/(loss) attributable to | 305| 131| 436| 640|(1,795)|(1,155)|
|equity shares (£'000) | | | | | | |
+--------------------------------+-------+-------+-----+-------+-------+-------+
|Weighted average shares in issue| 30,314,795| 30,266,779|
|(excluding treasury shares) | | |
+--------------------------------+-------+-------+-----+-------+-------+-------+
|Return/(loss) attributable per | | | | | | |
|Ordinary share (pence) (basic | 1.01| 0.43| 1.44| 2.11| (5.93)| (3.82)|
|and diluted) | | | | | | |
+--------------------------------+-------+-------+-----+-------+-------+-------+
The weighted average number of shares is calculated excluding treasury shares of
54,967 (2009: 43,300).
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.
The Company's policy is to sell treasury shares at a price greater than the
purchase price hence the net asset value per share on a diluted basis would be
equal to or greater than the basic net asset value per share, depending on the
actual price achieved for selling the treasury shares.
11. Fixed asset investments
+-------------------------------------+----------+----------+
| | 31 March | 31 March |
| | | |
| | 2010 | Â 2009 |
| | | |
| | £'000 | £'000 |
+-------------------------------------+----------+----------+
| Qualifying unquoted investments | 11,070 | 5,804 |
+-------------------------------------+----------+----------+
| Non-qualifying unquoted investments | 838 | - |
+-------------------------------------+----------+----------+
| | 11,908 | 5,804 |
+-------------------------------------+----------+----------+
+--------------------+-----------------+-----------+-------------------+-------+
| | Qualifying| | | |
| | | | | |
| | equity and| Qualifying|Non-qualifying loan| |
| | preference| | stock investments| |
| | | loan stock| | |
| | share| | £'000| |
| | |investments| | |
| | investments| | | Total|
| | | £'000| | |
| | £'000| | | £'000|
+--------------------+-----------------+-----------+-------------------+-------+
|Opening valuation as| 2,624| 3,180| -| |
|at 1 April 2009 | | | | 5,804|
+--------------------+-----------------+-----------+-------------------+-------+
|Purchases at cost | 2,084| 2,808| 800| 5,692|
+--------------------+-----------------+-----------+-------------------+-------+
|Movement in loan | -| 60| 38| |
|stock revenue | | | | |
|accrued income | | | | 98|
+--------------------+-----------------+-----------+-------------------+-------+
|Debt/equity swap | 426| (426)| -| -|
+--------------------+-----------------+-----------+-------------------+-------+
|Unrealised | 392| (79)| -| |
|gains/(losses) | | | | 313|
+--------------------+-----------------+-----------+-------------------+-------+
|Closing valuation as| 5,526| 5,544| 838| |
|at 31 March 2010 | | | | 11,908|
+--------------------+-----------------+-----------+-------------------+-------+
+--------------------+-----------------+-----------+-------------------+-------+
|Movement in loan | | | | |
|stock revenue | | | | |
|accrued income | | | | |
+--------------------+-----------------+-----------+-------------------+-------+
|Opening accumulated | | | | |
|movement in loan | | 38| -| |
|stock revenue | | | | |
|accrued income as at| | | | |
|1 April 2009 | -| | | 38|
+--------------------+-----------------+-----------+-------------------+-------+
|Movement in loan | | 60| 38| |
|stock revenue | | | | |
|accrued income | -| | | 98|
+--------------------+-----------------+-----------+-------------------+-------+
|Closing accumulated | | | | |
|movement in loan | | 98| 38| |
|stock revenue | | | | |
|accrued income as at| | | | |
|31 March 2010 | -| | | 136|
+--------------------+-----------------+-----------+-------------------+-------+
+--------------------+-----------------+-----------+-------------------+-------+
|Movement in | | | | |
|unrealised losses | | | | |
+--------------------+-----------------+-----------+-------------------+-------+
|Opening accumulated | | | | |
|unrealised losses as| | (108)| -| |
|at 1 April 2009 | (1,491)| | |(1,599)|
+--------------------+-----------------+-----------+-------------------+-------+
|Movement in | | (79)| -| |
|unrealised | | | | |
|gains/(losses) | 392| | | 313|
+--------------------+-----------------+-----------+-------------------+-------+
|Transfer of | | | | |
|previously | | -| -| |
|unrealised losses on| | | | |
|disposal | 454| | | 454|
+--------------------+-----------------+-----------+-------------------+-------+
|Closing accumulated | | | | |
|unrealised losses as| | (187)| -| |
|at 31 March 2010 | (646)| | | (833)|
+--------------------+-----------------+-----------+-------------------+-------+
+--------------------+-----------------+-----------+-------------------+-------+
|Historic cost basis | | | | |
+--------------------+-----------------+-----------+-------------------+-------+
|Opening book cost as| | 3,249| -| |
|at 1 April 2009 | 4,116| | | 7,365|
+--------------------+-----------------+-----------+-------------------+-------+
|Purchases at cost | 2,084| 2,808| 800| 5,692|
+--------------------+-----------------+-----------+-------------------+-------+
|Debt/equity swap | 426| (426)| -| -|
+--------------------+-----------------+-----------+-------------------+-------+
|Sales at cost | (454)| -| -| (454)|
+--------------------+-----------------+-----------+-------------------+-------+
|Closing book cost as| | 5,633| 800| |
|at 31 March 2010 | 6,172| | | 12,605|
+--------------------+-----------------+-----------+-------------------+-------+
Fixed asset investments held at fair value through the profit or loss account
total £5,526,000 (2009: £2,624,000). Investments held at amortised cost total
£6,382,000 (2009: £3,180,000). There has been no re-designation of fixed asset
investments during the year.
Additions of £5,644,000 included in the Cash flow statement differ from the
additions of £5,692,000 shown in the note above due to an investment settlement
creditor of £48,000 in respect of Bravo Inns II Limited.
In September 2009, Albion Enterprise VCT PLC exchanged its shareholdings in
Welland VCT Limited (formerly Clear Pub Company VCT Limited) for a shareholding
in the Charnwood Pub Company VCT Limited. The reorganisation resulted in the
pubs being managed by a single team.
Fixed asset investment class valuation methodologies
Unquoted loan stock investments are valued on an amortised cost basis. Loan
stock using a fixed interest rate totals £5,001,000 (2009: £1,897,000). Loan
stock using a floating interest rate totals £1,381,000 (2009: £1,283,000).
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.
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 based on observable market data |
+--------------------+---------------------------------------------------------+
+--------------------+---------------------------------------------------------+
The investments are categorised in accordance with FRS 29 as follows:
+---------------------------------------+-------------------------------------+
| | 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
2010:
+----------------------------------------+-------+
| | £'000 |
+----------------------------------------+-------+
| Opening balance as at 1 April 2009 | 2,624 |
+----------------------------------------+-------+
| Additions | 2,084 |
+----------------------------------------+-------+
| Debt/equity swap | 426 |
+----------------------------------------+-------+
| Unrealised gains on equity investments | 392 |
+----------------------------------------+-------+
| Closing balance as at 31 March 2010 | 5,526 |
+----------------------------------------+-------+
The classification of investments by nature of instruments is as follows:
+---------------------------------------+--+--------------------------------+
+---------------------------------------+++++---------------+---------------+
| ||||| 31 March 2010 | 31 March 2009 |
+---------------------------------------+++++---------------+---------------+
| ||||| £'000 | £'000 |
+---------------------------------------+++++---------------+---------------+
| ||||| 5,526 | 2,624 |
| Unquoted equity and preference shares ||||| | |
+---------------------------------------+++++---------------+---------------+
| Unquoted loan stock ||||| 6,382 | 3,180 |
+---------------------------------------+++++---------------+---------------+
| ||||| 11,908 | 5,804 |
+---------------------------------------+++++---------------+---------------+
Unquoted equity investments are valued in accordance with the IPEVCV guidelines
as follows:
+--------------------------------------------------+-------------+-------------+
| |31 March 2010|31 March 2009|
+--------------------------------------------------+-------------+-------------+
|Valuation methodology | £'000| £'000|
+--------------------------------------------------+-------------+-------------+
|Cost (reviewed for impairment) | 1,566| 1,436|
+--------------------------------------------------+-------------+-------------+
|Net asset value supported by third party valuation| 1,667| 239|
+--------------------------------------------------+-------------+-------------+
|Recent investment price | 1,739| 685|
+--------------------------------------------------+-------------+-------------+
|Earnings multiple | 554| 264|
+--------------------------------------------------+-------------+-------------+
| | 5,526| 2,624|
+--------------------------------------------------+-------------+-------------+
The portfolio had the following movements between valuation methodologies
between 31 March 2009 and 31 March 2010:
+--------------------------------+-------------+-------------------------------+
| | Value as at| |
|Change in valuation methodology | | |
|(2009 to 2010) |31 March 2010|Explanatory note |
| | | |
| | £'000| |
+--------------------------------+-------------+-------------------------------+
|Â Â Â Â Â Â | | |
+--------------------------------+-------------+-------------------------------+
|Cost (reviewed for impairment) | 3,680|Most recent price information |
|to recent investment price | |available |
+--------------------------------+-------------+-------------------------------+
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 possible methods of valuation which
would be reasonable as at 31 March 2010.
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 68 per cent. of the equity investments (by valuation) is
based on third party independent evidence and recent investment price or new
investments supported by cash, the Directors do not believe that changes to
reasonable possible alternative assumptions for the valuation of the remainder
of the portfolio 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 portfolio 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 does not have interests of greater than 20 per cent. in the nominal
value of any class of the allotted shares in the portfolio companies as at 31
March 2010.
13. Current assets
   Current assets include the following:
+--------------------------------+---------------+---------------+
| | 31 March 2010 | 31 March 2009 |
| Trade and other debtors | | |
| | £'000 | £'000 |
+--------------------------------+---------------+---------------+
| | 25 | 30 |
| Prepayments and accrued income | | |
+--------------------------------+---------------+---------------+
| UK corporation tax receivable | 86 | - |
+--------------------------------+---------------+---------------+
| | 111 | 30 |
+--------------------------------+---------------+---------------+
The Directors consider that the carrying amount of debtors is not materially
different to their fair value.
+--------------------------------------------------+-------------+-------------+
| |31 March 2010| |
|Current asset investment | |31 March 2009|
| | £'000| |
| | | £'000|
+--------------------------------------------------+-------------+-------------+
|UBS AG floating rate note 20 May 2011 | 2,536| -|
+--------------------------------------------------+-------------+-------------+
|Lloyds TSB Euro Commercial Paper 30 June 2009 | -| 3,949|
+--------------------------------------------------+-------------+-------------+
|Barclays Bank floating rate note 2 July 2010 | -| 3,744|
+--------------------------------------------------+-------------+-------------+
|Bank of Nova Scotia floating rate note 22 | -| 2,167|
|September 2010 | | |
+--------------------------------------------------+-------------+-------------+
|Nationwide Building Society floating rate note 7 | -| 1,826|
|June 2010 | | |
+--------------------------------------------------+-------------+-------------+
|HBOS floating rate note 17 December 2009 | -| 437|
+--------------------------------------------------+-------------+-------------+
| | 2,536| 12,123|
+--------------------------------------------------+-------------+-------------+
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.
14. Creditors: amounts falling due within one year
+------------------------------+---------------+----------+
| | | 31 March |
| | 31 March 2010 | |
| | | Â Â 2009 |
| | £'000 | |
| | | £'000 |
+------------------------------+---------------+----------+
| | - | 54 |
| UK corporation tax payable | | |
+------------------------------+---------------+----------+
| Accruals and deferred income | 29 | 266 |
+------------------------------+---------------+----------+
| Other creditors | 49 | 28 |
+------------------------------+---------------+----------+
| | 78 | 348 |
+------------------------------+---------------+----------+
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|
| | | |
| | 2010| 2009|
| | | |
| | £'000| £'000|
+------------------------------------------------------------+--------+--------+
|Authorised | | |
+------------------------------------------------------------+--------+--------+
|50,000,000 shares of 50p each (2009: 50,000,000) | 25,000| 25,000|
+------------------------------------------------------------+--------+--------+
| | | |
|Allotted, called up and fully paid | | |
+------------------------------------------------------------+--------+--------+
|30,377,492 shares of 50p each (2009: 30,360,885) | 15,189| 15,180|
+------------------------------------------------------------+--------+--------+
| | | |
|Allotted, called up and fully paid excluding treasury shares| | |
+------------------------------------------------------------+--------+--------+
|30,322,525 shares of 50p each (2009: 30,317,585) | | |
+------------------------------------------------------------+--------+--------+
The Company purchased 11,667 shares (2009: 43,300) to be held in treasury at a
cost of £8,000 (2009: £31,000) representing 0.04 per cent. of the shares in
issue as at 1 April 2009. The shares purchased for treasury were funded from the
Treasury shares reserve.
The Company holds a total of 54,967 shares representing 0.2 per cent. of the
shares in issue as at 31 March 2010.
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 at a price of 86.71 pence per share:
+---------------+-------------+--------------+------------------+--------------+
| | | | |Opening market|
| | | Aggregate| Consideration| price per|
|Date of | Number of| nominal value| received| share on|
|allotment | shares| of shares| |allotment date|
| | allotted| | £'000| |
| | | £'000| | pence per|
| | | | | share|
+---------------+-------------+--------------+------------------+--------------+
+---------------+-------------+--------------+------------------+--------------+
|6 January 2010 | 16,607| 9| 14| 74.0|
+---------------+-------------+--------------+------------------+--------------+
16. Basic and diluted net asset value per share
++----------------------------------------------------------++--------+--------+
|| ||31 March|31 March|
|| || | |
|| || 2010| 2009|
++---------------------------------------------------------+++--------+--------+
|Basic and diluted net asset value per share attributable ||| 88.25| 88.82|
|(pence) ||| | |
+----------------------------------------------------------+++--------+--------+
The net asset value per share at the year end is calculated in accordance with
the Articles of Association and is based upon total shares in issue less
treasury shares of 30,322,525 shares (2009: 30,317,585) at 31 March 2010.
17. Analysis of changes in cash during the year
+---------------------------+++----------+-----------+
| ||| 31 March | 31 March |
| ||| | |
| ||| 2010 | 2009 |
| ||| | |
| ||| £'000 | £'000 |
+---------------------------+++----------+-----------+
| ||| 9,319 | Â Â Â 14,363 |
| Opening cash balances ||| | |
+---------------------------+++----------+-----------+
| Net cash inflow/(outflow) ||| 2,962 | (5,044) |
+---------------------------+++----------+-----------+
| Closing cash balances ||| 12,281 | 9,319 |
+---------------------------+++----------+-----------+
18. Reconciliation of net return on ordinary activities before taxation to net
cash (outflow)/inflow from operating activities
+------------------------------------------------+++-------------+-------------+
| ||| Year ended| Year ended|
| ||| | |
| |||31 March 2010|31 March 2009|
| ||| | |
| ||| £'000| £'000|
+------------------------------------------------+++-------------+-------------+
|Revenue return on ordinary activities before ||| 388| 874|
|taxation ||| | |
+------------------------------------------------+++-------------+-------------+
|Investment management fee charged to capital ||| (505)| (542)|
+------------------------------------------------+++-------------+-------------+
|Recovery of VAT charged to capital ||| -| 28|
+------------------------------------------------+++-------------+-------------+
|Movement in accrued amortised loan stock ||| 14| (30)|
|interest ||| | |
+------------------------------------------------+++-------------+-------------+
|Decrease/(increase) in debtors ||| 5| (128)|
+------------------------------------------------+++-------------+-------------+
|(Decrease)/increase in creditors ||| (259)| 170|
+------------------------------------------------+++-------------+-------------+
|Net cash (outflow)/inflow from operating ||| (357)| 372|
|activities ||| | |
+------------------------------------------------+++-------------+-------------+
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 20 of the Directors'
report and enhanced business review in 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:
* Â Â Â Â Â Â Investment (or market) risk (which comprises investment price and cash
flow interest rate risk);
* Â Â Â Â Â Â credit risk; and
* Â Â Â Â Â Â 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 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 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 £14,444,000 (2009:
£17,927,000). Fixed and current asset investments form 54 per cent. of the net
asset value as at 31 March 2010 (2009: 67 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 54 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 page 11 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 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 £1,444,000 (2009: £1,793,000).
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 or fall of 0.5 per cent. in
all interest rates would have increased or reduced total return before tax for
the year by approximately £169,000 (2009: £191,000).
The weighted average interest rate applied to the Company's fixed rate assets
during the year was approximately 7.5 per cent. (2009: 6.6 per cent.). The
weighted average period to expected maturity for the fixed rate assets is
approximately 3.9 years (2009: 2.7 years).
The Company's financial assets and liabilities as at 31 March 2010, all
denominated in pounds sterling, consist of the following:
+-----------+-----------------------------------+-----------------------------------+
| | 31 March 2010 | 31 March 2009 |
+-----------+------+--------+------------+------+------+--------+------------+------+
| | |Floating| | | |Floating| | |
| | Fixed| rate|Non-interest| Total| Fixed| rate|Non-interest| Total|
| | rate| | £'000| | rate| | £'000| |
| | | £'000| | £'000| | £'000| | £'000|
| | £'000| | | | £'000| | | |
+-----------+------+--------+------------+------+------+--------+------------+------+
| | | | | | | | | |
|Floating | -| 2,536| -| 2,536| -| 8,174| -| 8,174|
|rate notes | | | | | | | | |
+-----------+------+--------+------------+------+------+--------+------------+------+
|Euro | | | | | | | | |
|Commercial | -| -| -| -| 3,949| -| -| 3,949|
|Paper | | | | | | | | |
+-----------+------+--------+------------+------+------+--------+------------+------+
|Unquoted | 5,001| 1,381| -| 6,382| 2,299| 881| -| 3,180|
|loan stock | | | | | | | | |
+-----------+------+--------+------------+------+------+--------+------------+------+
|Unquoted | -| -| 5,526| 5,526| -| -| 2,624| 2,624|
|equity | | | | | | | | |
+-----------+------+--------+------------+------+------+--------+------------+------+
|Debtors | -| -| 111| 111| -| -| 30| 30|
+-----------+------+--------+------------+------+------+--------+------------+------+
|Current | -| -| (78)| (78)| -| -| (348)| (348)|
|liabilities| | | | | | | | |
+-----------+------+--------+------------+------+------+--------+------------+------+
|Cash |10,163| 2,118| -|12,281| 4,500| 4,819| -| 9,319|
+-----------+------+--------+------------+------+------+--------+------------+------+
|Total net |15,164| 6,035| 5,559|26,758|10,748| 13,874| 2,306|26,928|
|assets | | | | | | | | |
+-----------+------+--------+------------+------+------+--------+------------+------+
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 2010 was limited to £6,382,000
(2009: £3,180,000) of unquoted loan stock instruments, £12,281,000 (2009:
£9,319,000) cash deposits with banks and £2,536,000 (2009: £12,123,000) held in
floating rate notes.
The cost, impairment and carrying value of impaired loan stocks held at
amortised cost at 31 March 2010 and 31 March 2009 are as follows:
+--------------+-------------------------------+-------------------------------+
| | 31 March 2010 | 31 March 2009 |
+--------------+-----+----------+--------------+-----+----------+--------------+
| | Cost|Impairment|Carrying value| Cost|Impairment|Carrying value|
+--------------+-----+----------+--------------+-----+----------+--------------+
| |£'000| £'000| £'000|£'000| £'000| £'000|
+--------------+-----+----------+--------------+-----+----------+--------------+
|Impaired loan | | | | | | |
|stock | 862| (229)| 633| 706| (118)| 588|
+--------------+-----+----------+--------------+-----+----------+--------------+
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 held with the
Royal Bank of Scotland plc, Bank of Scotland plc, The Lloyds Banking Group plc,
HSBC plc, Scottish Widows Bank plc, Standard Life Bank plc and UBS Wealth
Management plc. Credit risk on cash transactions is mitigated by transacting
with counterparties that are regulated entities subject to prudential
supervision, with Moody's credit ratings of at least 'A' or equivalent as
assigned by international credit-rating agencies.
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 £2,676,000 (2009: £2,693,000) as at 31 March 2010.
The Company has no committed borrowing facilities as at 31 March 2010 (2009:
nil) and had cash balances of £12,281,000 (2009: £9,319,000), together with
£2,536,000 (2009: £8,174,000) 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 £78,000 (2009: £348,000) at 31 March 2010.
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 loan| Past due loan| Impaired loan| |
| | stock| stock (i)| 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|
+---------------+---------------------+---------------+------------------+-----+
The carrying value of loan stock investments held at amortised cost at 31 March
2009 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|
+---------------+------------------+--------------------+----------------+-----+
|3-4 years | 635| | 588|1,223|
+---------------+------------------+--------------------+----------------+-----+
|4-5 years | 1,957| -| -|1,957|
+---------------+------------------+--------------------+----------------+-----+
| | 2,592| -| 588|3,180|
+---------------+------------------+--------------------+----------------+-----+
+---------------+------------------+--------------------+----------------+-----+
i. Â Â Â Â Interest (not capital) is overdue.
Loan stock with a carrying value of £265,000 owed loan stock interest of £11,000
as at 31 March 2010 which was four months overdue.
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 2010 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. Post balance sheet events
Since 31 March 2010 the Company has completed the following investments:
* Â Â Â Â Â Â April 2010: the non-qualifying investment in Geronimo Inns VCT I
Limited became qualifying
* Â Â Â Â Â Â April 2010: the non-qualifying investment in Geronimo Inns VCT II
Limited became qualifying
*       June 2010: investment in Masters Pharmaceuticals Limited of £980,000
21. 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 (2009: £723,000) 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 £2,000 (2009: £219,000).
The Company was also charged £21,000 (including VAT) by Albion Ventures LLP in
respect of Patrick Reeve's services as a Director (2009: £20,000). At the year
end, the amount due to Albion Ventures LLP in respect of these services
disclosed as accruals and deferred income was £5,000 (2009: £5,000).
Maxwell Packe is the chairman of the Board of Green Energy Property Services
Group Limited, a company in which Albion Enterprise VCT PLC is invested. During
the year, Green Energy Property Services Group Limited paid Albion Enterprise
VCT PLC loan stock interest of £nil (2009: £3,000).
Vibrant Energy Surveys Limited went into administration in the year, and the
investment was restructured into a new Company, Vibrant Energy Assessors
Limited. This subsequently merged with Green Energy Property Services Group
Limited. During the year, Albion Enterprise VCT PLC made a further investment in
Green Energy Property Services Group Limited of £70,000.
22. Principal risks and uncertainties
In addition to the current economic risks outlined in the Chairman's statement,
the Board considers that the Company faces the following major risks and
uncertainties:
1. Investment risk
This is the risk of investment in poor quality assets which reduces the capital
and income returns to shareholders, and negatively impacts on the Company's
reputation. By nature, smaller unquoted businesses, such as those that qualify
for venture capital trust purposes, are more fragile than larger, long
established businesses.
To reduce this risk, the Board places reliance upon the skills and expertise of
the Manager and its strong track record for investing in this segment of the
market. In addition, the Manager operates a formal and structured investment
process, which includes an Investment Committee, comprising investment
professionals from the Manager and at least one external investment
professional. The Manager also invites comments from all non-executive Directors
on investments discussed at the Investment Committee meetings. Investments are
actively and regularly monitored by the Manager (investment managers normally
sit on investee company boards) and the Board receives 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, used to operating
within the requirements of the venture capital trust legislation. In addition,
to provide further formal reassurance, the Board has appointed
PricewaterhouseCoopers LLP as its taxation advisors. PricewaterhouseCoopers LLP
report quarterly to the Board to independently confirm compliance with the
venture capital trust legislation, to highlight areas of risk and to inform on
changes in legislation.
3. Compliance risk
The Company is listed on The London Stock Exchange and is required to comply
with the rules of the UK Listing Authority, as well as with the Companies Act,
Accounting Standards and other legislation. Failure to comply with these
regulations could result in a delisting of the Company's shares, or other
penalties under the Companies Act or from financial reporting oversight bodies.
Board members and the Manager have experience of operating at senior levels
within quoted businesses. In addition, the Board and the Manager receive regular
updates on new regulation from its auditors, lawyers and other professional
bodies.
4. Internal control risk
Failures in key controls, within the Board or within the Manager's business,
could put assets of the Company at risk or result in reduced or inaccurate
information being passed to the Board or to shareholders.
The Audit Committee meets with the Manager's internal auditors, Littlejohn 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 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.
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.
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.
23. 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 2010 and 31 March 2009, and is derived from
the statutory accounts for those financial years, which have been, or in the
case of the accounts for the year ended 31Â March 2010, which will be, delivered
to the Registrar of Companies. The Auditors reported on those accounts; their
reports were unqualified and did not contain a statement under s498 (2) or (3)
of the Companies Act 2006.
The Company's Annual General Meeting will be held at The City of London Club,
19 Old Broad Street, London, EC2N 1DS on 26 July 2010 at 12 noon.
24. 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 FSA viewing facility and also
electronically at www.albion-ventures.co.uk under the 'Our Funds' section.
[HUG#1428236]
Full report and accounts :
http://hugin.info/141807/R/1428236/375651.PDF
Pie chart:
http://hugin.info/141807/R/1428236/375652.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.
All reproduction for further distribution is prohibited.
Source: Albion Enterprise VCT PLC via Thomson Reuters ONE
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