Albion Venture Capital Trust PLC: Annual Financial Report- Correction Albion Venture Capital Trust PLC As required by the UK Listing Authority's Disclosure and Transparency Rules 4.1 and 6.3, Albion Venture Capital Trust PLC today makes public its information relating to the Annual Report and Financial Statements for the year ended 31 March 2014. This announcement was approved for release by the Board of Directors on 25 June 2014. This announcement has not been audited. You will shortly be able to view the Annual Report and Financial Statements for the year to 31 March 2014 (which have been audited) at: www.albion-ventures.co.uk by clicking on 'Our Funds' and then 'Albion Venture Capital Trust PLC'.The Annual Report and Financial Statements for the year to 31 March 2014 will be available as a PDF document via a link under the 'Investor Centre' in the 'Financial Reports and Circulars' section. The information contained in the Annual Report and Financial Statements will include information as required by the Disclosure and Transparency Rules, including Rule 4.1. Investment objectives and policy The investment strategy of Albion Venture Capital Trust PLC (the "Company") is to reduce the risk normally associated with investments in smaller unquoted companies whilst maintaining an attractive yield, through allowing investors the opportunity to participate in a balanced portfolio of asset-backed businesses. The Company's investment portfolio will thus be structured to provide a balance between income and capital growth for the longer term. This is achieved as follows: *qualifying unquoted investments are predominantly in specially-formed companies which provide a high level of asset backing for the capital value of the investment; *The Company invests alongside selected partners with proven experience in the sectors concerned; *investments are normally structured as a mixture of equity and loan stock. The loan stock represents the majority of the finance provided and is secured on the assets of the portfolio company. Funds managed or advised by Albion Ventures LLP typically own 50 per cent. of the equity of the portfolio company; *other than the loan stock issued to funds managed or advised by Albion Ventures LLP, portfolio companies do not normally have external borrowings. The Company offers tax-paying investors substantial tax benefits at the time of investment, on payment of dividends and on the ultimate disposal of the investment. Background to the Company The Company is a venture capital trust which raised a total of £39.7 million through an issue of Ordinary shares in the spring of 1996 and through an issue of C shares in the following year. The C shares merged with the Ordinary shares in 2001. The Company has raised a further £8.7 million under the Albion VCTs Top Up Offers since 2011. On 25 September 2012, the Company acquired the assets and liabilities of Albion Prime VCT PLC ("Prime") in exchange for new shares in the Company ("the Merger"). On the same day Prime was placed into members' voluntary liquidation pursuant to a scheme of reconstruction under Section 110 of the Insolvency Act 1986. All of the assets and liabilities of Prime totalling £14,338,000 were transferred to the Company in exchange for the issue of 19,307,001 new Ordinary shares in the capital of the Company at a deemed issue price of 74.2638 pence per share. Each Prime shareholder received 0.8801 shares in the Company for each Prime share that they held at the date of the Merger as describe in note 10. Financial calendar Record date for first dividend 11 July 2014 Annual General Meeting 25 July 2014 Payment of first dividend 31 July 2014 Announcement of half-yearly results for the six months ended November 2014 30 September 2014 Payment of second dividend (subject to Board approval) 31 December 2014 Financial highlights 2.0p Basic and diluted total return per share as at 31 March 2014 5.0p Total tax-free dividend per share paid during the year ended 31 March 2014 and 2.5p first tax free dividend per share declared for the year to 31 March 2015 71.3p Net asset value per share as at 31 March 2014 6.2% Annualised return since launch (without tax relief) 201.1p Net asset value plus dividends since launch to 31 March 2014 31 March 2014 31 March 2013 (pence per share) (pence per share) Dividends paid 5.00 5.00 Revenue return 1.70 2.00 Capital return 0.30 - Effect of merger (see note 10) - (0.90) Net asset value 71.30 74.20 Total shareholder net asset value return to 31 March Ordinary shares C shares 2014 Total dividends paid during the year ended : 31 March 1997 2.00 - 31 March 1998 5.20 2.00 31 March 1999 11.05 8.75 31 March 2000 3.00 2.70 31 March 2001 8.55 4.80 31 March 2002 7.60 7.60 31 March 2003 7.70 7.70 31 March 2004 8.20 8.20 31 March 2005 9.75 9.75 31 March 2006 11.75 11.75 31 March 2007 10.00 10.00 31 March 2008 10.00 10.00 31 March 2009 10.00 10.00 31 March 2010 5.00 5.00 31 March 2011 5.00 5.00 31 March 2012 5.00 5.00 31 March 2013 5.00 5.00 31 March 2014 5.00 5.00 Total dividends paid to 31 March 2014 129.80 118.25 Net asset value as at 31 March 2014 71.30 71.30 Total shareholder net asset value return to 31 March 2014 201.10 189.55 The financial summary above is for the Company, Albion Venture Capital Trust PLC only. Details of the financial performance of Albion Prime VCT PLC, which has been merged into the Company, can be found at the end of this announcement. In addition to the dividends summarised above, the Board has declared a first dividend for the year ending 31 March 2015 of 2.50 pence per share to be paid on 31 July 2014 to shareholders on the register as at 11 July 2014. Notes · Dividends paid before 5 April 1999 were paid to qualifying shareholders inclusive of the associated tax credit. The dividends for the year to 31 March 1999 were maximised in order to take advantage of this tax credit. · All dividends paid by the Company are paid free of income tax to qualifying shareholders. It is an H.M. Revenue & Customs requirement that dividend vouchers indicate the tax element should dividends have been subject to income tax. Investors should ignore this figure on their dividend voucher and need not disclose any income they receive from a VCT on their tax return. · The net asset value of the Company is not its share price as quoted on the official list of the London Stock Exchange. The share price of the Company can be found in the Investment Companies - VCTs section of the Financial Times on a daily basis. Investors are reminded that it is common for shares in VCTs to trade at a discount to their net asset value. Chairman's statement Introduction The results for the year to 31 March 2014 are the first to show a full year's combined results of Albion Venture Capital Trust PLC and Albion Prime VCT PLC since they merged in September 2012. The results show a total return of 2 pence per share, the same as the previous year, and net assets of 71.3 pence per share compared to 74.2 pence per share at 31 March 2013, following the payment of total tax-free dividends of 5 pence per share. The Company raised approximately £1.94 million during the year under the Albion VCT Top Up Offers 2012/2013 and approximately £1.40 million for the Albion VCT Top Up Offer 2013/2014, with a subsequent £1.90 million after the year end. It is disappointing that the total return for the year remains below the Company's target dividend of 5 pence per annum. On the one hand, the merger with Albion Prime VCT PLC has created cost efficiencies, with "other expenses" (excluding the write off of previously accrued income) falling. Income, however, is also lower than we would have hoped for. This was largely due to the sales of the strongly cash generative cinema portfolio at the end of 2012 and the Bear Hotel in Hungerford and Nelson House Hospital in March 2013. The total return was affected by the soft performance of our hotels and health and fitness clubs. We address this further below. Investment performance and progress In general, we continue the task of repositioning the portfolio towards greater emphasis on the healthcare and renewable energy sectors and reduced reliance on sectors that are exposed to the consumer and business cycle. Renewable energy currently accounts for 14 per cent. of the portfolio with a target of 20 per cent., while healthcare accounts for 18 per cent. of the portfolio. Hotels, meanwhile, have declined to below 30 per cent. of the portfolio. The hotel sector continued to be challenging, with market conditions at Stansted Airport proving particularly difficult, leading to a further write-down in the third party valuation of our hotel there. Prospects for the current year, however, are more promising with signs of a revival in passenger numbers at the airport leading to an improvement in the hotel's trading. The Crown Hotel in Harrogate experienced a soft year in 2013, but is expecting its current financial year to be a record year. In addition, the Stanwell Hotel is now trading profitably at an operating level, with a strong increase in revenue over previous years. In summary, we are more hopeful for this sector's current year prospects. The health and fitness clubs also saw an aggregate reduction in their third party professional valuations, following previous underperformance at our Kensington and Weybridge clubs. The management team has now been changed, and the new team has had a considerable and positive initial impact on the units' performance. We would therefore hope for a revival of these clubs' fortunes over the next two years. Our Tower Bridge club continued to trade strongly and enjoyed a pleasing uplift in its third party valuation. In the healthcare sector, Oakland Care Centre, which operates a care home in Chingford, continued to perform strongly, as did the Taunton Hospital. We are reviewing a number of further care home opportunities and we see provision of quality residential care for private payers in London and the Home Counties as being an important focus for future investment activity. Our renewable energy portfolio continues to grow towards a target of 20 per cent. of the Company's total investment portfolio. The income that it generates is also growing, with a target of 10 per cent. per annum on investment cost once all the individual energy units are generating electricity. During the course of the year we invested £1.6 million in Chonais Holdings, which is constructing a 2MW run-of-river hydro unit in North West Scotland and £387,000 in Green Highland Renewables (Ledgowan), which is constructing a hydro unit nearby. In general, the renewable energy units have been operating at or above budget, with a particularly strong performance from Dragon Hydro, which owns our first operational hydroelectricity unit, in North Wales. Radnor House School continues to perform well with 350 pupils currently in place for September and capacity for a further 100 pupils over the next two years. Our pub portfolio is stable and cash generative, with a small amount of additional investment in Bravo Inns II to purchase and refurbish further units in the North West, taking the combined Bravo Inns and Bravo Inns II portfolio to 35 pubs. Risks and uncertainties The outlook for the UK economy continues to be the key risk affecting your Company. Importantly, however, your Company remains conservatively financed with no bank borrowings. The Company's policy remains that its portfolio companies should not normally have external borrowings, and for the Company to have a first charge over portfolio companies' assets; the Board and Manager see this as an important factor in the control of investment risk. However, on an exceptional basis, certain portfolio companies may take on external borrowings, where the Board considers this will offer a significant benefit to the Company. A detailed analysis of the other risks and uncertainties facing the business is set out in the Strategic report. Share buy-backs It remains the Board's primary objective to maintain sufficient resources for investment in existing and new portfolio companies and for the continued payment of dividends to shareholders. Thereafter, it is still the Board's policy to buy back shares in the market, subject to the overall criterion that such purchases are in the Company's interest. The Company will limit the sum available for share buy-backs for the six month period to 30 September 2014 to £750,000. This compares to a total value bought in for the previous six months to 31 March 2014 of £487,000. Subject to the constraints referred to above and subject to first purchasing shares held by the market makers, the Board will target such buy-backs to be in the region of a 5 per cent. discount to net asset value, so far as market conditions and liquidity permit. Results and dividends As at 31 March 2014, the net asset value was £42.66 million or 71.3 pence per share, compared to £41.68 million or 74.2 pence per share as at 31 March 2013, after the payment of total tax-free dividends of 5 pence per share. The results comprised 1.7 pence per share revenue return (2013: 2 pence per share) and a 0.3 pence per share capital return after taking into account capitalised expenses (2013: flat). The revenue return before taxation was £1,119,000 compared to £1,114,000 for the year to 31 March 2013. The Company will pay a first dividend of 2.50 pence per share on 31 July 2014 to shareholders on the register on 11 July 2014, which is in line with the Company's current objective of paying a dividend of 5 pence per share annually. Outlook and prospects Trading at our hotels and health and fitness clubs is improving. After a challenging period for some of our more consumer oriented sectors, we are cautiously optimistic that the brighter outlook for the UK economy, combined with the more balanced nature of the current portfolio, should benefit the Company moving forward. David Watkins Chairman 25 June 2014 Strategic report The Directors present the Strategic report of the Company for the year ended 31 March 2014 which has been prepared in accordance with the requirements of section 414A of the Companies Act 2006 (the "Act"). The purpose of this report is to inform Shareholders and provide them with sufficient information to enable them to assess the extent to which the Directors have performed their duty to promote the success of the Company in accordance with section 172 of the Act. Investment objective and policy The Company's investment policy is to reduce the risk normally associated with investments in smaller, unquoted companies whilst maintaining an attractive yield, through allowing investors the opportunity to participate in a balanced portfolio of asset-backed businesses. The Company's investment portfolio will thus be structured to provide a balance between income and capital growth for the longer term. This is achieved as follows: oqualifying unquoted investments are predominantly in specially-formed companies which provide a high level of asset backing for the capital value of the investment; othe Company invests alongside selected partners with proven experience in the sectors concerned; oinvestments are normally structured as a mixture of equity and loan stock. The loan stock normally represents the majority of the finance provided and is secured on the assets of the portfolio company. Funds managed or advised by Albion Ventures LLP typically own 50 per cent. of the equity of the portfolio company; and oother than the loan stock issued to funds managed or advised by Albion Ventures LLP, portfolio companies do not normally have external borrowings. Current portfolio sector allocation The pie chart at the end of this announcement shows the split of the portfolio valuation by industrial or commercial sector as at 31 March 2014. Details of the principal investments made by the Company are shown in the Portfolio of investments on pages 16 and 17 of the full Annual Report and Financial Statements. Direction of portfolio The sector analysis of the VCT's investment portfolio shows that renewable energy now accounts for 14 per cent. of the portfolio compared to 7 per cent. at the end of the previous financial year, with a view to increasing this to the Board's target exposure for the sector of 20 per cent. as new opportunities arise. Healthcare has also risen, now accounting for 18 per cent. of the portfolio compared to 12 per cent. at the end of the previous financial year. Results and dividend policy Ordinary shares £'000 Net revenue return for the year ended 31 March 2014 999 Dividend of 2.50 pence per share paid on 31 July 2013 (1,469) Dividend of 2.50 pence per share paid on 31 December 2013 (1,460) Unclaimed dividends returned to the Company 27 Transferred from other distributable reserve (1,903) Realised and unrealised capital gain for the year transferred to reserves 165 Net assets as at 31 March 2014 42,658 Net asset value per share as at 31 March 2014 71.30p The Company paid dividends totalling 5.00 pence per share (2013: 5.00 pence per share) during the year ended 31 March 2014. The dividend objective of the Board is to provide Shareholders with a strong, predictable dividend flow, with a dividend target of 5.00 pence per share per year. As noted in the Chairman's statement, the Board has declared a first dividend of 2.50 pence per share. This dividendwill be paid on31 July 2014to shareholders on the register as at11 July 2014. As shown in the Income statement, the Company's investment income has increased to £1,718,000 (2013: £1,563,000) and the total revenue return to equity holders also increased to £999,000 (2013: £931,000), largely as a result of the merger with Albion Prime VCT PLC. With a larger number of shares in issue following the merger there was a small decrease on revenue return to 1.70 pence per share (2013: 2.00 pence per share). The capital gain on investments for the year was £626,000 (2013: £384,000), offset by management fees charged to capital, net of the related taxation impact, resulting in a capital return of 0.30 pence per share (2013:nil). The total return was 2.00 pence per share (2013: 2.00 pence per share). The Balance sheet shows that the net asset value has decreased over the last year to 71.30 pence per share (2013: 74.20 pence per share), primarily reflecting the payment of the 5.00 pence per share dividend during the year, offset by the net return for the year of 2.00 pence. The cash flow for the Company has been a net outflow of £4,391,000 for the year (2013: inflow £8,940,000), reflecting dividends paid, new investments in the year and the buyback of shares, offset by cash inflows from operations, disposal proceeds and the issue of Ordinary shares under the Albion VCTs Top Up Offers. During the year, unclaimed dividends older than twelve years of £27,000 (2013: £33,000) were returned to the Company in accordance with the terms of the Articles of Association. Review of business and future changes A review of the Company's business during the year and investment performance and progress is contained in the Chairman's statement. The healthcare sector performed particularly well again this year with an increase in valuation of £649,000 (2013: £760,000). The hotel sector continued to be challenging, resulting in a devaluation of £478,000 arising from the independent third party valuations. However prospects for the current year are brighter. In addition, there were increases in valuations in the renewable energy sector and for Radnor House School. Two of the three health and fitness clubs saw reductions during the year, however after a change of manager there are signs of improved performance. The Company continues with its objective to invest in unquoted companies throughout the United Kingdom with particular emphasis on the healthcare and renewable energy sectors with a view to providing both capital growth and a reliable dividend income to shareholders over the longer term. The Directors do not foresee any major changes in the activity undertaken by the Company in the current year. Details of significant events which have occurred since the end of the financial year are listed in note 22. Details of transactions with the Manager are shown in note 5. Future prospects The Company's performance record reflects the resilience of the strategy outlined above and has enabled the Company to maintain a predictable stream of dividend payments to shareholders. The Board believes that this model will continue to meet the investment objective and has the potential to deliver attractive returns to shareholders in the future. Further details on the Company's outlook and prospects can be found in the Chairman's statement. Key performance indicators The Directors believe that the following key performance indicators, which are typical for venture capital trusts and used in its own assessment of the Company, will provide shareholders with sufficient information to assess how effectively the Company is applying its investment policy to meet its objectives. These are: Net asset value total return relative to FTSE All Share Index total return The graph on page 4 of the full Annual Report and Financial Statements shows the Company's net asset value total return against the FTSE All-Share Index total return, in both instances with dividends reinvested. Details on the performance of the net asset value and return per share for the year are shown on page 9 of the full Annual Report and Financial Statements. Net asset value per share and cumulative net asset value total shareholder return Net asset value decreased by 4 per cent. to 71.30 pence per share for the year ended 31 March 2014. Cumulative NAV total shareholder return increased by 1.1 per cent. to 201.10 pence per share for the year ended 31 March 2014. Dividend distributions Dividends paid in respect of the year ended 31 March 2014 were 5.00 pence per share (2013: 5.00 pence per share), in line with the Board's dividend objective. Cumulative dividends paid since inception amount to 129.80 pence per Ordinary share and 118.25 pence per C share. Ongoing charges The ongoing charges ratio for the year to 31 March 2014 was 2.5 per cent. (2013: 2.5 per cent.). The ongoing charges ratio has been calculated using the Association of Investment Companies' (AIC) recommended methodology. This figure shows shareholders the total recurring annual running expenses (including investment management fees charged to capital reserve) as a percentage of the average net assets attributable to shareholders. The Directors expect the ongoing charges ratio for the year ahead to be approximately 2.5 per cent. Maintenance of VCT qualifying status The Company continues to comply with H.M. Revenue & Customs ("HMRC") rules in order to maintain its status under Venture Capital Trust legislation as highlighted below. VCT Regulation The investment policy is designed to ensure that the Company continues to qualify and is approved as a VCT by HMRC. In order to maintain its status under Venture Capital Trust legislation, a VCT must comply on a continuing basis with the provisions of Section 274 of the Income Tax Act 2007 as follows: 1.The Company's income must be derived wholly or mainly from shares and securities; 2.At least 70 per cent. of the HMRC value of its investments must have been represented throughout the year by shares or securities that are classified as 'qualifying holdings'; 3.At least 30 per cent. by HMRC value of its total qualifying holdings must have been represented throughout the year by holdings of 'eligible shares'. For funds raised after 5 April 2011 the figure is 70 per cent.; 4.At no time in the year must the Company's holdings in any one company (other than another VCT) have exceeded 15 per cent. by HMRC value of its investments; 5.The Company must not have retained greater than 15 per cent. of its income earned in the year from shares and securities; 6.Eligible shares must comprise at least 10 per cent. by HMRC value of the total of the shares and securities that the Company holds in any one portfolio company; and 7.The Company's shares, throughout the year, must have been listed in the Official List of the Stock Exchange. These tests drive a spread of investment risk through disallowing holdings of more than 15 per cent. in any portfolio company. The tests have been carried out and independently reviewed for the year ended 31 March 2014. The Company has complied with all tests and continues to do so. 'Qualifying holdings' include shares or securities (including loans with a five year or greater maturity period) in companies which operate a 'qualifying trade' wholly or mainly in the United Kingdom. 'Qualifying trade' excludes, amongst other sectors, dealing in property or shares and securities, insurance, banking and agriculture. Details of the sectors in which the Company is invested can be found in the pie chart at the end of this announcement. Portfolio company gross assets must not exceed £15 million immediately prior to the investment and £16 million immediately thereafter. With effect from 6 April 2012, the legislation has been amended so as to prevent any company from receiving more than £5 million in aggregate from all state-aided providers of risk capital, including VCTs, in the 12 month period up to and including the most recent such investment. Gearing As defined by the Articles of Association, the Company's maximum exposure in relation to gearing is restricted to 10 per cent. of the adjusted share capital and reserves. As at 31 March 2014, the Company's maximum permitted exposure was £4,110,000 (2013: £4,168,000) and its actual short term and long term gearing at this date was £nil (2013: £nil). The Directors do not currently have any intention to utilise long term gearing for the Company. On an exceptional basis, certain portfolio companies may take on external borrowings, where the Board considers this will offer a significant benefit to the Company. Operational arrangements The Company has delegated the investment management of the portfolio to Albion Ventures LLP, which is authorised and regulated by the Financial Conduct Authority. Albion Ventures LLP also provides company secretarial and other accounting and administrative support to the Company. Management agreement Under the Management agreement, the Manager provides investment management, secretarial and administrative services to the Company. The Management agreement can be terminated by either party on 12 months' notice. The Management agreement is subject to earlier termination in the event of certain breaches or on the insolvency of either party. The Manager is paid an annual fee equal to 1.9 per cent. of the net asset value of the Company, and an annual secretarial and administrative fee of £46,539 (2013: £44,883) increased annually by RPI. These fees are payable quarterly in arrears. Total annual normal expenses, including the management fee, are limited to 3.5 per cent. of the net asset value. In line with common practice, the Manager is also entitled to an arrangement fee, payable by each portfolio company, of approximately 2 per cent. on each investment made and any applicable monitoring fees. Management performance incentive In order to provide the Manager with an incentive to maximise the return to investors, the Company has entered into a management performance incentive arrangement with the Manager. Under the incentive arrangement, the Company will pay an incentive fee to the Manager of an amount equal to 8 per cent. of the excess total return above 5 per cent. per annum, paid out annually in cash as an addition to the management fee. Any shortfall of the target return will be carried forward into subsequent periods and the incentive fee will only be paid once all previous and current target returns have been met. For the year to 31 March 2014, no incentive fee became due to the Manager (2013: £nil). No further performance fee will become due until the hurdle rate comprising net asset value, plus dividends from 31 March 2004, has been reached. As of 31 March 2014 the total return from 31 March 2004 amounted to 147.8 pence per share which compared to the hurdle of 184.2 pence per share at that date. Evaluation of the Manager The Board has evaluated the performance of the Manager based on the returns generated by the Company, the continuing achievement of the 70 per cent. investment requirement for Venture Capital Trust status, the long term prospects of current investments, a review of the Management agreement and the services provided therein, and benchmarking the performance of the Manager to other service providers. The Board believes that it is in the interests of shareholders as a whole, and of the Company, to continue the appointment of the Manager for the forthcoming year. Alternative Investment Fund Managers Directive ("AIFMD") The Board has considered the impact on your Company of the AIFMD, an EU Directive that came into force in July 2013 to regulate the Managers of Alternative Investment Funds. The Board has agreed to appoint Albion Ventures LLP as the Company's AIFM as required by the AIFMD. This will not impact on the day-to-day investment activities. Social and community issues, employees and human rights The Board recognises the requirement under section 414C of the Act to detail information about social and community issues, employees and human rights; including any policies it has in relation to these matters and effectiveness of these policies. As an externally managed investment company with no employees, the Company has no policies in these matters and as such these requirements do not apply. Further policies The Company has adopted a number of further policies relating to: oEnvironment oGlobal greenhouse gas emissions oAnti-bribery oDiversity and these are set out in the Directors' report on page 21 of the full Annual Report and Financial Statements. Risk management The Board carries out a regular review of the risk environment in which the Company operates. The principal risks and uncertainties of the Company as identified by the Board and how they are managed are as follows: Risk Possible consequence Risk management Economic risk Changes in economic conditions, To reduce this risk, in including, for example, interest addition to investing equity rates, rates of inflation, in portfolio companies, the industry conditions, Company often invests in competition, political and secured loan stock and has a diplomatic events and other policy of not normally factors could substantially and permitting any external bank adversely affect the Company's borrowings within portfolio prospects in a number of ways. companies. Additionally, the Manager has been rebalancing the sector exposure of the portfolio with a view to reducing reliance on consumer led sectors. Investment risk This is the risk of investment To reduce this risk, the in poor quality assets which Board places reliance upon reduces the capital and income the skills and expertise of returns to shareholders, and the Manager and its strong negatively impacts on the track record for investing in Company's reputation. By nature, this segment of the market. smaller unquoted businesses, In addition, the Manager such as those that qualify for operates a formal and venture capital trust purposes, structured investment are more fragile than larger, process, which includes an long established businesses. Investment Committee, comprising investment professionals from the Manager and at least one external investment professional. The Manager also invites and takes account of comments from non-executive Directors of the Company on investments discussed at the Investment Committee meetings. Investments are actively and regularly monitored by the Manager (investment managers normally sit on portfolio company boards) and the Board receives detailed reports on each investment as part of the Manager's report at quarterly board meetings. Valuation risk The Company's As described in note 2 of the Financial investment valuation Statements, the unquoted equity methodology is reliant investments, convertible loan stock and on the accuracy and debt issued at a discount held by the completeness of Company are designated at fair value information that is through profit or loss and valued in issued by portfolio accordance with the International companies. In Private Equity and Venture Capital particular, the Valuation Guidelines. These guidelines Directors may not be set out recommendations, intended to aware of or take into represent current best practice on the account certain events valuation of venture capital or circumstances which investments. These investments are occur after the valued on the basis of forward looking information issued by estimates and judgments about the such companies is business itself, its market and the reported. environment in which it operates, together with the state of the mergers and acquisitions market, stock market conditions and other factors. In making these judgments the valuation takes into account all known material facts up to the date of approval of the Financial Statements by the Board. All other unquoted loan stock is measured at amortised cost. The values of all of the investments are at cost (reviewed for impairment) or underpinned by independent third party professional valuations. VCT approval The Company's current To reduce this risk, the Board has risk approval as a venture appointed the Manager, which has a team capital trust allows with significant experience in venture investors to take capital trust management, used to advantage of tax operating within the requirements of reliefs on initial the venture capital trust legislation. investment and ongoing In addition, to provide further formal tax free capital gains reassurance, the Board has appointed and dividend income. PricewaterhouseCoopers LLP as its Failure to meet the taxation adviser. qualifying PricewaterhouseCoopers LLP reports requirements could quarterly to the Board to independently result in investors confirm compliance with the venture losing the tax relief capital trust legislation, to highlight on initial investment areas of risk and to inform on changes and loss of tax relief in legislation. Each investment in a on any tax-free income new portfolio company is also or capital gains pre-cleared with H.M. Revenue & received. In addition, Customs. failure to meet the qualifying requirements could result in a loss of listing of the shares. Compliance risk The Company is listed Board members and the Manager have on The London Stock experience of operating at senior Exchange and is levels within or advising quoted required to comply businesses. In addition, the Board and with the rules of the the Manager receive regular updates on UK Listing Authority, new regulation from its auditor, as well as with the lawyers and other professional bodies. 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. Internal Failures in key The Audit Committee meets with the control risk controls, within the Manager's Internal Auditor, PKF Board or within the Littlejohn LLP, when required, Manager's business, receiving a report regarding the last could put assets of formal internal audit performed on the the Company at risk or Manager, and providing the opportunity result in reduced or for the Audit Committee to ask specific inaccurate information and detailed questions. John Kerr, as being passed to the Chairman of the Audit Committee, met Board or to with the internal audit Partner of PKF shareholders. Littlejohn LLP in January 2014 to discuss the most recent Internal Audit Report on the Manager. The Manager has a comprehensive business continuity plan in place in the event that operational continuity is threatened. Further details regarding the Board's management and review of the Company's internal controls through the implementation of the Turnbull guidance are detailed on page 27 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. Reliance upon The Company is reliant There are provisions within the third parties upon the services of management agreement for the change of risk Albion Ventures LLP Manager under certain circumstances for the provision of (for further detail, see the management investment management agreement paragraph on page 11 of the and administrative full Annual Report and Financial functions. 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. Financial risk By its nature, as a The Company's policies for managing venture capital trust, these risks and its financial the Company is exposed instruments are outlined in full in to investment risk note 20 to the Financial Statements. (which comprises investment price risk All of the Company's income and and cash flow interest expenditure is denominated in sterling rate risk), credit and hence the Company has no foreign risk and liquidity currency risk. The Company is financed risk. through equity and does not have any borrowings. The Company does not use derivative financial instruments for speculative purposes. On behalf of the Board, David Watkins Chairman 25 June 2014 Responsibility Statement In preparing the financial statements for the year to 31 March 2014, the Directors of the Company, being David Watkins, John Kerr, Jeff Warren and Ebbe Dinesen, confirm that to the best of their knowledge: - summary financial information contained in this announcement and the full Annual Report and Financial Statements for the year ended 31 March 2014 for the Company has been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (UK Accounting Standards and applicable law) and give a true and fair view of the assets, liabilities, financial position and profit and loss of the Company for the year ended 31 March 2014 as required by DTR 4.1.12.R; - the Chairman's statement and Strategic report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the year ended 31 March 2014 and description of principal risks and uncertainties that the Company faces); and - the Chairman's statement and Strategic Report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties transactions and changes therein). A detailed "Statement of Directors' responsibilities for the preparation of the Company's financial statements" is contained within the full audited Annual Report and Financial Statements. By order of the Board David Watkins Chairman 25 June 2014 Income statement Year ended 31 March 2014 Year ended 31 March 2013 Revenue Capital Total Revenue Capital Total Note £'000 £'000 £'000 £'000 £'000 £'000 Gains on investments 3 - 626 626 - 384 384 Investment income 4 1,718 - 1,718 1,563 - 1,563 Investment management fees 5 (201) (601) (802) (171) (514) (685) Other expenses 6 (398) - (398) (278) - (278) Return/(loss) on ordinary activities before tax 1,119 25 1,144 1,114 (130) 984 Tax (charge)/credit on ordinary activities 8 (120) 140 20 (183) 129 (54) Return/(loss) attributable to shareholders 999 165 1,164 931 (1) 930 Basic and diluted return per share (pence)* 11 1.70 0.30 2.00 2.00 - 2.00 * excluding treasury shares The accompanying notes form an integral part of these Financial Statements. The total column of this Income statement represents the profit and loss account of the Company. The supplementary revenue and capital columns have been prepared in accordance with The Association of Investment Companies' Statement of Recommended Practice. All revenue and capital items in the above statement derive from the continuing operations. There are no recognised gains or losses other than the results for the year disclosed above. Accordingly a statement of total recognised gains and losses is not required. The difference between the reported return/(loss) on ordinary activities before tax and the historical profit/(loss) 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 2014 31 March 2013 Note £'000 £'000 Fixed asset investments 12 35,580 30,198 Current assets Trade and other debtors 14 48 24 Current asset investments 14 - 50 Cash at bank and in hand 18 7,505 11,896 7,553 11,970 Creditors: amounts falling due within one year 15 (475) (487) Net current assets 7,078 11,483 Net assets 42,658 41,681 Capital and reserves Called up share capital 16 645 603 Share premium 3,525 8 Capital redemption reserve 7 - Unrealised capital reserve (3,343) (4,890) Realised capital reserve 10,527 11,909 Other distributable reserve 31,297 34,051 Total equity shareholders' funds 42,658 41,681 Basic and diluted net asset value per share (pence)* 17 71.30 74.20 * excluding treasury shares The accompanying notes form an integral part of these Financial Statements. These Financial Statements were approved by the Board of Directors and authorised for issue on 25 June 2014, and were signed on its behalf by David Watkins Chairman Company number: 03142609 Reconciliation of movements in shareholders' funds Called-up Capital Unrealised Realised Other share Share redemption capital capital distributable capital premium reserve reserve* reserve* reserve* Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 As at 1 April 2013 603 8 - (4,890) 11,909 34,051 41,681 Return/(loss) for the year - - - 576 (411) 999 1,164 Transfer of previously unrealised gains on realisations of investments - - - 971 (971) - - Purchase of treasury shares - - - - - (364) (364) Issue of equity (net of costs) 49 3,517 - - - - 3,566 Purchase of shares for cancellation (7) - 7 - - (487) (487) Net dividends paid (note 9) - - - - - (2,902) (2,902) As at 31 March 2014 645 3,525 7 (3,343) 10,527 31,297 42,658 Called-up Capital Unrealised Realised Other share Share redemption capital capital distributable capital premium reserve reserve* reserve* reserve* Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 As at 1 April 2012 19,733 1,005 1,914 (3,067) 10,087 (1,286) 28,386 (Loss)/return for the year - - - (694) 693 931 930 Transfer of previously unrealised gains on disposal of investments - - - (1,129) 1,129 - - Purchase of treasury shares - - - - - (720) (720) Issue of equity (net of costs) 772 383 - - - - 1,155 Reduction in share capital and cancellation of capital redemption and share premium reserves** (29,556) (5,955) (1,914) - - 37,425 - Shares issued to acquire net assets of Albion Prime VCT PLC (net of merger costs) *** 9,654 4,575 - - - - 14,229 Net dividends paid (note 9) - - - - - (2,299) (2,299) As at 31 March 2013 603 8 - (4,890) 11,909 34,051 41,681 * Included within the aggregate of these reserves is an amount of £38,481,000 (2012: £41,070,000) which is considered distributable. ** The reduction in the nominal value of shares from 50 pence to 1 penny, the cancellation of capital redemption and share premium reserves (as approved by shareholders at the General Meeting held on 17 September 2012 and by order of the Court dated 30 January 2013) has increased the value of the other distributable reserve. ***The assets and liabilities transferred through the acquisition of Albion Prime VCT PLC are shown in note 10. In addition, £109,000 of the merger costs attributable to Albion Venture Capital Trust PLC has been deducted from the share premium account in so far as they relate to the issue of new shares. Cash flow statement Year ended Year ended 31 March 2014 31 March 2013 Note £'000 £'000 Operating activities Loan stock income received 1,534 1,416 Deposit interest received 131 66 Dividend income received 22 - Investment management fees paid (817) (629) Other cash payments (289) (281) Net cash flow from operating activities 19 581 572 Taxation UK corporation tax (paid)/received (99) (161) Capital expenditure and financial investments Purchase of fixed asset investments (5,182) (420) Disposal of fixed asset investments 550 9,624 Net cash flow from investing activities (4,632) 9,204 Equity dividends paid (net of costs of issuing shares under the Dividend Reinvestment Scheme and unclaimed dividends) (2,719) (2,210) Net cash flow before financing (6,869) 7,405 Financing Issue of share capital (net of costs) 3,359 1,033 Purchase of own shares (including costs) (876) (695) Cash acquired from Albion Prime VCT PLC 10 - 1,450 Cost of Merger (paid on behalf of the Company and Albion Prime VCT PLC) (5) (253) Net cash flow from financing 2,478 1,535 Cash flow in the year 18 (4,391) 8,940 Notes to the Financial Statements 1. Accounting convention The Financial Statements have been prepared in accordance with the historical cost convention, modified to include the revaluation of investments, in accordance with applicable United Kingdom law and accounting standards and with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" ("SORP") issued by The Association of Investment Companies ("AIC") in January 2009. Accounting policies have been applied consistently in current and prior periods. 2. Accounting policies Investments Unquoted equity investments, debt issued at a discount and convertible bonds In accordance with FRS 26 "Financial Instruments Recognition and Measurement", unquoted equity, debt issued at a discount and convertible bonds are designated as fair value through profit or loss ("FVTPL"). Fair value is determined by the Directors in accordance with the International Private Equity and Venture Capital Valuation Guidelines (IPEVCV guidelines). Fair value movements and gains and losses arising on the disposal of investments are reflected in the capital column of the Income statement in accordance with the AIC SORP. Realised gains or losses on the sale of investments will be reflected in the realised capital reserve, and unrealised gains or losses arising from the revaluation of investments will be reflected in the unrealised capital reserve. Unquoted equity derived instruments Unquoted equity derived instruments are only valued if there is additional value to the Company in exercising or converting as at the balance sheet date. Otherwise these instruments are held at nil value. The valuation techniques used are those used for the underlying equity investment. Unquoted loan stock Unquoted loan stock (excluding convertible bonds and debt issued at a discount) are classified as loans and receivables as permitted by FRS 26 and measured at amortised cost using the Effective Interest Rate method ("EIR") less impairment. Movements in the amortised cost relating to interest income are reflected in the revenue column of the Income statement, and hence are reflected in the other distributable 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 movements arising from revaluations of the fair value of the security. For all unquoted loan stock, whether fully performing, past due or impaired, the Board considers that the fair value is equal to or greater than the security value of these assets. For unquoted loan stock, the amount of the impairment is the difference between the asset's cost and the present value of estimated future cash flows, discounted at the original effective interest rate. The future cash flows are estimated based on the fair value of the security held less estimated selling costs. Investments are recognised as financial assets on legal completion of the investment contract and are de-recognised on legal completion of the sale of an investment. Dividend income is not recognised as part of the fair value movement of an investment, but is recognised separately as investment income through the revenue reserve when a share becomes ex-dividend. Loan stock accrued interest is recognised in the Balance sheet as part of the carrying value of the loans and receivables at the end of each reporting period. In accordance with the exemptions under FRS 9 "Associates and joint ventures", those undertakings in which the Company holds more than 20 per cent. of the equity as part of an investment portfolio are not accounted for using the equity method. In these circumstances the investment is accounted for according to FRS 26 " Financial instruments Recognition and Measurement" and measured at fair value through profit and loss Current asset investments Contractual future contingent receipts on the disposal of fixed asset investments are designated at fair value through profit or loss and are subsequently measured at fair value. Investment income Unquoted equity income Dividend income is included in revenue when the investment is quoted ex-dividend. Unquoted loan stock and other preferred income Fixed returns on non-equity shares and debt securities are recognised on a time apportionment basis using the effective interest rate over the life of the financial instrument. Income which is not capable of being received within a reasonable period of time is reflected in the capital value of the investment. Bank interest income Interest income is recognised on an accrual basis using the rate of interest agreed with the bank. Investment management fees and other expenses All expenses have been accounted for on an accruals basis. Expenses are charged through the revenue account except the following which are charged through the realised capital reserve: o75 per cent. of management fees are allocated to the capital account to the extent that these relate to an enhancement in the value of the investments and in line with the Board's expectation that over the long term 75 per cent. of the Company's investment returns will be in the form of capital gains; and oexpenses which are incidental to the purchase or disposal of an investment. Performance incentive fee In the event that a performance incentive fee crystallises, the fee will be allocated between revenue and realised capital reserves based upon the proportion to which the calculation of the fee is attributable to revenue and capital returns. Taxation Taxation is applied on a current basis in accordance with FRS 16 "Current tax". Taxation associated with capital expenses is applied in accordance with the SORP. In accordance with FRS 19 "Deferred tax", deferred taxation is provided in full on timing differences that result in an obligation at the balance sheet date to pay more tax or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the Financial Statements. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered. The Directors have considered the requirements of FRS 19 and do not believe that any provision for deferred tax should be made. Reserves Share premium account This reserve accounts for the difference between the price paid for shares and the nominal value of the shares, less issue costs and transfers to the other distributable reserve. Capital redemption reserve This reserve accounts for amounts by which the issued share capital is diminished through the repurchase and cancellation of the Company's own shares. Unrealised capital reserve Increases and decreases in the valuation of investments held at the year end against cost are included in this reserve. Realised capital reserve The following are disclosed in this reserve: ogains and losses compared to cost on the realisation of investments, or permanent diminutions in value; oexpenses, together with the related taxation effect, charged in accordance with the above policies; and odividends paid to equity holders. Other distributable reserve This reserve accounts for movements from the revenue column of the Income statement, the payment of dividends, the buyback of shares and other non capital realised movements. Dividends In accordance with FRS 21 "Events after the balance sheet date", dividends by the Company are accounted for in the period in which the dividend is declared. 3. Gains on investments Year ended Year ended 31 March 2014 31 March 2013 £'000 £'000 Unrealised gains on fixed asset investments held at fair value through profit or loss 1,113 293 Impairments on fixed asset investments held at amortised cost (537) (987) Unrealised gains/(losses) sub-total 576 (694) Realised gains on fixed asset investments held at fair value through profit or loss 40 1,133 Realised gains/(losses) on fixed asset investments held at amortised cost 10 (105) Realised gains on fixed asset investments sub-total 50 1,028 Realised gains on current asset investments held at fair value through profit or loss - 50 Realised gains sub-total 50 1,078 626 384 Investments measured at amortised cost are unquoted loan stock investments as described in note 2. 4. Investment income Year ended Year ended 31 March 2014 31 March 2013 £'000 £'000 Income recognised on investments held at fair value through profit or loss Dividend income 27 - Income from convertible bonds and discounted debt 203 112 230 112 Income recognised on investments held at amortised cost Return on loan stock investments 1,369 1,379 Bank deposit interest 119 72 1,488 1,451 1,718 1,563 Interest income earned on impaired investments at 31 March 2014 amounted to £294,000 (2013: £311,000). These investments are all held at amortised cost. 5. Investment management fees Year ended Year ended 31 March 2014 31 March 2013 £'000 £'000 Investment management fee charged to revenue 201 171 Investment management fee charged to capital 601 514 802 685 Further details of the Management agreement under which the investment management fee is paid are given in the Strategic report During the year, services of a total value of £849,000 (2013: £730,000), were purchased by the Company from Albion Ventures LLP; this includes £802,000 (2013: £685,000) of investment management fee and £47,000 (2013: £45,000) administration fee. At the financial year end, the amount due to Albion Ventures LLP in respect of these services disclosed within accruals and deferred income was £214,000 (2013: £201,000). Albion Ventures LLP is, from time to time, eligible to receive transaction fees and Directors' fees from portfolio companies. During the year ended 31 March 2014, fees of £167,000 attributable to the investments of the Company were received pursuant to these arrangements (2013: £87,000). Albion Ventures LLP, the Manager, holds 2,534 Ordinary shares as a result of fractional entitlements arising from the merger of Albion Prime VCT PLC into Albion Venture Capital Trust PLC on 25 September 2012. These shares will be sold and the proceeds retained for the benefit of the Company. During the year the Company raised new funds through the Albion VCTs Top Up Offers 2012/2013 and Albion VCTs Top Up Offers 2013/2014 as detailed in note 16. The total cost of the issue of these shares was 3.0 per cent. of the sums subscribed. Of these costs, an amount of £5,450 (2013: £3,854) was paid to the Manager, Albion Ventures LLP in respect of receiving agent services. There were no sums outstanding in respect of receiving agent services at the year end. 6. Other expenses Year ended Year ended 31 March 2014 31 March 2013 £'000 £'000 Directors' fees (including NIC) 87 87 Secretarial and administration fee 47 45 Other administrative expenses 88 105 Impairment of accrued interest 139 - Tax services 12 15 Auditor's remuneration for statutory audit services (exc. VAT) 25 26 398 278 7. Directors' fees The amounts paid to and on behalf of Directors during the year are as follows: Year ended Year ended 31 March 2014 31 March 2013 £'000 £'000 Directors' fees 80 80 National insurance 7 7 87 87 Further information regarding Directors' remuneration can be found in the Directors' remuneration report on page 29 of the full Annual Report and Financial Statements. 8. Tax (charge)/credit on ordinary activities Year ended 31 March 2014 Year ended 31 March 2013 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 UK corporation tax in respect of current year (246) 140 (106) (264) 129 (135) UK corporation tax in respect of prior year 126 - 126 81 - 81 Total (120) 140 20 (183) 129 (54) Factors affecting the tax charge: Year ended Year ended 31 March 2014 31 March 2013 £'000 £'000 Return on ordinary activities before taxation 1,144 984 Tax on profit at the standard rate of 23% (2013: 24%) (263) (236) Factors affecting the charge: Non-taxable gains 144 92 Income not taxable 6 - Consortium relief in respect of prior years 126 81 Marginal relief 7 9 20 (54) The tax charge for the year shown in the Income statement is lower than the standard rate of corporation tax in the UK of 23 per cent. (2013: 24 per cent.). The differences are explained above. Consortium relief is recognised in the accounts in the period in which the claim is submitted to HMRC and is shown as tax in respect of prior year. Notes (i) Venture Capital Trusts are not subject to corporation tax on capital gains. (ii) Tax relief on expenses charged to capital has been determined by allocating tax relief to expenses by reference to the applicable corporation tax rate and allocating the relief between revenue and capital in accordance with the SORP. (iii) No deferred tax asset or liability has arisen in the year. 9. Dividends Year ended Year ended 31 March 2014 31 March 2013 £'000 £'000 First dividend paid 31 July 2012 - 2.50 pence per share - 928 Second dividend paid 31 December 2012 - 2.50 pence per share - 1,404 First dividend paid on 31 July 2013 - 2.50 pence per share 1,469 - Second dividend paid on 31 December 2013 - 2.50 pence per share 1,460 - Unclaimed dividends (27) (33) 2,902 2,299 In addition to the dividends summarised above, the Board has declared a first dividend for the year ending 31 March 2015 of 2.50 pence per share. This dividend will be paid on 31 July 2014 to shareholders on the register as at 11 July 2014. The total dividend will be approximately £1,562,000. During the year, unclaimed dividends older than twelve years of £27,000 (2013: £33,000) were returned to the Company in accordance with the terms of the Articles of Association. 10. Acquisition of the assets and liabilities of Albion Prime VCT PLC On 25 September 2012, the following assets and liabilities of Albion Prime VCT PLC ("Prime") were transferred to the Company in exchange for the issue to Prime shareholders of 19,307,001 shares in the Company, at an issue price of 74.2638 pence per share: £'000 Fixed asset investments 13,123 Debtors 16 Cash at bank and in hand 1,450 Creditors (162) Merger costs (89) 14,338 Shareholders should note that under accounting standards, the calculation of the net asset value per share uses the total shares in issue (less treasury shares), whereas the calculation of the total return uses the weighted average shares in issue during the period. Due to the amount of shares issued last year as a result of the merger with Albion Prime VCT PLC, the difference between the total shares in issue (less treasury shares) and the weighted average share in issue during that period resulted in the total return per share being higher than if the shares in issue (less treasury shares) had been applied to the movement in the Balance sheet since merger. On 25 September 2012, Prime was placed into members' voluntary liquidation pursuant to a scheme of reconstruction under section 110 of the Insolvency Act 1986. The net asset values ("NAVs") per share of each fund used for the purposes of conversion at the calculation date of 24 September 2012 were 74.2638 pence per share and 65.3663 pence per share for the Company and Prime respectively. The conversion ratio for each Prime share was 0.8801 Albion Venture Capital Trust PLC share for each Prime share. 11. Basic and diluted return per share Year ended 31 March 2014 Year ended 31 March 2013 Revenue Capital Total Revenue Capital Total The return per share has been based on the following figures: Return/(loss) attributable to equity shares (£'000) 999 165 1,164 931 (1) 930 Weighted average shares in issue (excluding treasury shares) 58,689,669 46,973,203 Return attributable per equity share (pence) 1.70 0.30 2.00 2.00 - 2.00 The weighted average number of shares is calculated excluding treasury shares of 4,695,440 (2013: 4,152,440). There are no convertible instruments, derivatives or contingent share agreements in issue, and therefore no dilution affecting the return per share. The basic return per share is therefore the same as the diluted return per share. 12. Fixed asset investments 31 March 2014 31 March 2013 £'000 £'000 Investments held at fair value through profit or loss Unquoted equity 11,093 8,489 Unquoted debt issued at a discount and convertible bonds 5,790 2,231 16,883 10,720 Investments held at amortised cost Unquoted loan stock 18,697 19,478 35,580 30,198 £'000 Opening valuation 30,198 Purchases at cost 5,218 Disposal proceeds (359) Realised gains 50 Movement in loan stock accrued income (103) Unrealised gains 576 Closing valuation 35,580 Movement in loan stock accrued income Opening accumulated movement in loan stock accrued income 268 Movement in loan stock accrued income (103) Closing accumulated movement in loan stock accrued income 165 Movement in unrealised losses Opening accumulated unrealised losses (4,890) Transfer of previously unrealised gains to realised reserve on realisations of investments 971 Unrealised gains 576 Closing accumulated unrealised losses (3,343) Historic cost basis Opening book cost 34,821 Purchases at cost 5,218 Sales at cost* (1,280) Closing book cost 38,759 *Includes an amount of £1,074,000 written off in respect of G&K Smarts Developments VCT Limited which is still held at the Balance sheet date. The Directors believe that the carrying value of loan stock measured at amortised cost is not materially different to fair value. The Company does not hold any assets as a result of the enforcement of security during the period, and believes that the carrying values for both impaired and past due assets are covered by the value of security held for these loan stock investments. Unquoted equity investments and convertible and discounted debts are valued in accordance with the IPEVCV guidelines as follows: 31 March 2014 31 March 2013 Valuation methodology £'000 £'000 Cost (reviewed for impairment) 4,633 506 Net asset value supported by third party or desktop valuation 12,250 10,214 16,883 10,720 Full valuations are prepared by independent RICS qualified surveyors in full compliance with the RICS Red Book. Desktop reviews are carried out by similarly RICS qualified surveyors by updating previously prepared full valuations for current trading and market indices. Fair value investments had the following movements between valuation methodologies between 31 March 2013 and 31 March 2014: Value as at Change in valuationmethodology (2013 to 31 March 2014 2014) £'000 Explanatory note Cost (reviewed for impairment) to net asset value supported by third party More recent valuation 246 information 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 methods of valuation which would be reasonable as at 31 March 2014. The amended FRS 29 'Financial Instruments: Disclosures' requires the Company to disclose the valuation methods applied to its investments measured at fair value through profit or loss in a fair value hierarchy according to the following definitions: Fair value hierarchy Definition of valuation method Level 1 Unadjusted quoted (bid) prices applied Level 2 Inputs to valuation are from observable sources and are directly or indirectly derived from prices Level 3 Inputs to valuations not based on observable market data. All of the company's fixed asset investments as at 31 March 2014 which are valued at fair value through profit or loss, are all valued according to Level 3 methods. Investments held at fair value through profit or loss (level 3) had the following movements in the year to 31 March 2014: 31 March 2014 31 March 2013 Convertible and Convertible discounted and discounted Equity bonds Total Equity bonds Total £'000 £'000 £'000 £'000 £'000 £'000 Opening balance 8,489 2,231 10,720 8,490 1,315 9,805 Additions 415 4,638 5,053 3,187 913 4,100 Debt/equity swap 1,257 (1,257) - - - - Disposal proceeds (40) - (40) (4,662) - (4,662) Accrued loan stock interest - (3) (3) - - - Realised gains 40 - 40 1,184 - 1,184 Unrealised gains 932 181 1,113 290 3 293 Closing balance 11,093 5,790 16,883 8,489 2,231 10,720 FRS 29 requires the Directors to consider the impact of changing one or more of the inputs used as part of the valuation process to reasonable possible alternative assumptions. After due consideration and noting that the valuation methodology applied to 100 per cent. of the level 3 investments (by valuation) is based on cost or independent third party market information, the Directors do not believe that changes to reasonable possible alternative assumptions for the valuation of the portfolio as a whole would lead to a significant change in the fair value of the portfolio. 13. 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 has interests of greater than 20 per cent. of the nominal value of any class of the allotted shares in the portfolio companies as at 31 March 2014 as described below: Country of % class and Company incorporation Principal activity voting rights G&K Smart Developments VCT Great Britain Residential 42.9% Ordinary Limited property developer shares Green Highland Renewables Great Britain Hydroelectric power 20.8% Ordinary (Ledgowan) Limited generator shares Kew Green VCT (Stansted) Great Britain Hotel owner and 45.2% Ordinary Limited operator shares Oakland Care Centre Limited Great Britain Care home 31.6% Ordinary shares The Crown Hotel Harrogate Great Britain Hotel owner and 24.1% Ordinary Limited operator shares The Stanwell Hotel Limited Great Britain Hotel owner and 39.2% Ordinary operator shares The investments listed above are held as part of an investment portfolio, and therefore, as permitted by FRS 9, they are measured at fair value and not accounted for using the equity method. Active Lives Ltd whose holding is in excess of 50 per cent. of that company's equity, is excluded from consolidation as the interest in Active Lives Ltd is only being temporarily controlled and is not material to the view given by the Financial Statements. 14. Current assets 31 March 2014 31 March 2013 Trade and other debtors £'000 £'000 Prepayments and accrued income 17 24 Other debtors 12 - UK corporation tax receivable 19 - 48 24 The Directors consider that the carrying amount of debtors is not materially different to their fair value. 31 March 2014 31 March 2013 Current asset investments £'000 £'000 Contingent future receipts from the disposal of fixed asset investments - 50 - 50 The fair value hierarchy applied to contingent future receipts on disposal of fixed asset investments is Level 3. 15. Creditors: amounts falling due within one year 31 March 2014 31 March 2013 £'000 £'000 Trade creditors 13 40 UK Corporation tax payable - 100 Other creditors 192 - Accruals and deferred income 270 347 475 487 The Directors consider that the carrying amount of creditors is not materially different to their fair value. Other creditors include an amount of £118,000 held on behalf of a portfolio company. 16. Called up share capital 31 March 2014 31 March 2013 £'000 £'000 Allotted, called up and fully paid 64,490,852 Ordinary shares of 1p each (2013: 60,317,650) 645 603 Voting rights 59,795,412 Ordinary shares of 1p each (net of treasury shares) (2013: 56,165,210) The Company purchased 543,000 Ordinary shares (2013: 1,073,067) to be held in treasury at a cost of £364,000 (2013: £720,000) representing 0.8 per cent. of its issued share capital as at 31 March 2014. The shares purchased for treasury were funded from other distributable reserve. During the period the Company purchased 729,000 Ordinary shares for cancellation (2013: nil) at a cost of £487,000 including stamp duty (2013: nil), representing 1.1 per cent. of its issued share capital as at 31 March 2014. The shares purchased for cancellation were funded from the other distributable reserve. The Company holds a total of 4,695,440 shares (2013: 4,152,440) in treasury, representing 7.3 per cent. of the issued Ordinary share capital as at 31 March 2014. Under the terms of the Dividend Reinvestment Scheme Circular dated 10 July 2008, the following Ordinary shares were allotted during the year: Issue Number of Aggregate Net price Opening market Date of shares nominal value consideration (pence price per share on allotment allotted of shares received per allotment date £'000 £'000 share) (pence per share) 31 July 2013 144,173 1 100 71.70 67.50 31 December 2013 150,017 2 105 70.50 67.25 294,190 3 205 During the year the following Ordinary shares were allotted under the Albion VCT's Top Up Offers 2012/2013 and the Albion VCT's Top Up Offers 2013/2014: Aggregate Number of nominal Net Issue Opening market Date of shares value of consideration price price per share on allotment allotted shares received (pence per allotment date £'000 £'000 share) (pence per share) 5 April 2013 2,505,191 25 1,872 76.80 68.50 12 June 2013 99,020 1 74 76.80 67.50 31 January 2014 1,123,737 11 794 72.00 67.25 31 January 2014 859,027 9 606 72.40 67.25 31 January 2014 21,037 - 15 71.30 67.25 4,608,012 46 3,361 17. Basic and diluted net asset values per share 31 March 2014 31 March 2013 Basic and diluted net asset values per share (pence) 71.30 74.20 The basic and diluted net asset values per share at the year end are calculated in accordance with the Articles of Association and are based upon total shares in issue (less treasury shares) of 59,795,412 Ordinary shares (2013: 56,165,210). There are no convertible instruments, derivatives or contingent share agreements in issue. 18. Analysis of changes in cash during the year Year ended Year ended 31 March 2014 31 March 2013 £'000 £'000 Opening cash balances 11,896 2,956 Net cash flow (4,391) 8,940 Closing cash balances 7,505 11,896 19. Reconciliation of net return on ordinary activities before taxation to net cash flow from operating activities Year ended Year ended 31 March 2014 31 March 2013 £'000 £'000 Revenue return on ordinary activities before taxation 1,119 1,114 Investment management fee charged to capital (601) (514) Movement in accrued amortised loan stock interest 103 (70) Increase in debtors (8) (13) Increase/(decrease) in creditors (32) 55 Net cash flow from operating activities 581 572 20. Capital and financial instruments risk management The Company's capital comprises Ordinary shares as described in note 16. The Company is permitted to buy-back its own shares for cancellation or treasury purposes, and this is described in more detail in the Chairman's statement. The Company's financial instruments comprise equity and loan stock investments in unquoted companies, contingent receipts on disposal of fixed assets investments, cash balances and short term debtors and creditors which arise from its operations. The main purpose of these financial instruments is to generate cashflow and revenue and capital appreciation for the Company's operations. The Company has no gearing or other financial liabilities apart from short term creditors. The Company does not use any derivatives for the management of its balance sheet. The principal risks arising from the Company's operations are: oInvestment (or market) risk (which comprises investment price and cash flow interest rate risk); ocredit risk; and oliquidity risk. The Board regularly reviews and agrees policies for managing each of these risks. There have been no changes in the nature of the risks that the Company has faced during the past year and, apart from where noted below, there have been no changes in the objectives, policies or processes for managing risks during the past year. The key risks are summarised below. Investment risk As a venture capital trust, it is the Company's specific nature to evaluate and control the investment risk of its portfolio in unquoted investments, details of which are shown on pages 16 and 17 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 company 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 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 investment portfolio which is £35,580,000 (2013: £30,198,000). Fixed asset investments form 83 per cent. of the net asset value as at 31 March 2014 (2013: 72.5 per cent.). More details regarding the classification of fixed asset investments are shown in note 12. Investment price risk Investment price risk is the risk that the fair value of future investment cash flows will fluctuate due to factors specific to an investment instrument or to a market in similar instruments. To mitigate the investment price risk for the Company as a whole, the strategy of the Company is to invest in a broad spread of industries with approximately two-thirds of the unquoted investments comprising debt securities, which, owing to the structure of their yield and the fact that they are usually secured, have a lower level of price volatility than equity. Details of the industries in which investments have been made are contained in the Portfolio of investments section on pages 16 and 17 of the full Annual Report and Financial Statements. Valuations are based on the most appropriate valuation methodology for an investment within its market, with regard to the financial health of the investment and the IPEVCV Guidelines. As required under FRS 29 "Financial Instruments: Disclosures", the Board is required to illustrate by way of a sensitivity analysis the degree of exposure to market risk. The Board considers that the value of the fixed asset investment portfolio is sensitive to a 10 per cent. change based on the current economic climate. The impact of a 10 per cent. change has been selected as this is considered reasonable given the current level of volatility observed both on a historical basis and future expectations. The sensitivity of a 10 per cent. increase or decrease in the valuation of the fixed and current asset investments (keeping all other variables constant) would increase or decrease the net asset value and return for the year by £3,558,000 (2013: £3,025,000). Cash flow interest rate risk It is the Company's policy to accept a degree of interest rate risk on its financial assets through the effect of interest rate changes. On the basis of the Company's analysis, it is estimated that a rise of one percentage point in all interest rates would have increased total return before tax for the year by approximately £80,000 (2013: £55,000). Furthermore, it is considered that a fall of interest rates below current levels during the year would have been very unlikely. The weighted average interest rate applied to the Company's fixed rate assets during the year was approximately 5.80 per cent. (2013: 6.30 per cent.). The weighted average period to maturity for the fixed rate assets is approximately 3.34 years (2013: 3.16 years). The Company's financial assets and liabilities, all denominated in pounds sterling, consist of the following: 31 March 2014 31 March 2013 Fixed Floating Non-interest Fixed Floating Non-interest rate rate bearing Total rate rate bearing Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Unquoted equity - - 11,093 11,093 - - 8,489 8,489 Convertible and discounted bonds 3,378 279 2,133 5,790 1,866 - 365 2,231 Unquoted loan stock 18,697 - - 18,697 19,478 - - 19,478 Current asset investments - - - - - - 50 50 Debtors * - - 24 24 - - 20 20 Current liabilities* - - (475) (475) - - (387) (387) Cash - 7,505 - 7,505 11,217 679 - 11,896 Total net assets 22,075 7,784 12,775 42,634 32,561 679 8,537 41,777 * The debtors and current liabilities do not reconcile to the balance sheet as prepayments and tax receivable/(payable) are not included in the above table. Credit risk Credit risk is the risk that the counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company. The Company is exposed to credit risk through its debtors, investment in unquoted loan stock, and through the holding of cash on deposit with banks. The Manager evaluates credit risk on loan stock prior to investment, and as part of its ongoing monitoring of investments. In doing this, it takes into account the extent and quality of any security held. Typically loan stock instruments have a first fixed charge or a fixed and floating charge over the assets of the 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 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 as at 31 March 2014 was limited to £24,487,000 (2013: £21,709,000) of unquoted loan stock instruments (all of which is secured on the assets of the portfolio company) and £7,505,000 cash deposits with banks (2013: £11,896,000). The credit profile of the unquoted loan stock is described under liquidity risk below. The cost, impairment and carrying value of impaired loan stocks held at amortised cost at 31 March 2014 and 31 March 2013 are as follows: 31 March 2014 31 March 2013 Carrying Carrying Cost Impairment value Cost Impairment value £'000 £'000 £'000 £'000 £'000 £'000 Impaired loan stock 13,750 (3,601) 10,149 11,907 (3,021) 8,886 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 consider the security value to be the carrying value. As at the balance sheet date, the cash held by the Company is held with Lloyds Bank plc, Scottish Widows Bank plc (part of Lloyds Banking Group), Barclays Bank plc and National Westminster Bank plc. Credit risk on cash transactions is mitigated by transacting with counterparties that are regulated entities subject to prudential supervision, with high credit ratings assigned by international credit-rating agencies. The Company has an informal policy of limiting counterparty banking and floating rate note exposure to a maximum of 20 per cent. of net asset value for any one counterparty. Liquidity risk Liquid assets are held as cash on current, deposit or short term money market accounts. Under the terms of its Articles, the Company has the ability to borrow up to 10 per cent. of its adjusted capital and reserves of the latest published audited balance sheet, which amounts to £4,110,000 as at 31 March 2014 (2013: £4,168,000). The Company has no committed borrowing facilities as at 31 March 2014 (2013: £nil) and had cash balances of £7,505,000 (2013: £11,896,000). The main cash outflows are for new investments, buy-back of shares and dividend payments, which are within the control of the Company. The Manager formally reviews the cash requirements of the Company on a monthly basis, and the Board on a quarterly basis as part of its review of management accounts and forecasts. All the Company's financial liabilities are short term in nature and total £475,000 for the year to 31 March 2014 (2013: £487,000). The carrying value of loan stock investments at 31 March 2014 as analysed at each year end by expected maturity dates is as follows: Fully performing Impaired Past due Total Redemption date £'000 £'000 £'000 £'000 Less than one year 443 1,716 375 2,534 1-2 years 2,355 604 3,862 6,821 2-3 years 1,375 7,829 65 9,269 3-5 years 3,061 - - 3,061 Greater than 5 years 2,376 - 426 2,802 Total 9,610 10,149 4,728 24,487 Loan stock categorised as past due includes: oLoan stock with a carrying value of £3,778,000 has interest overdue for 4 months, yielded 11.92 per cent. on cost; oLoan stock with a carrying value of £524,000 has loan stock interest past due of 12 months (through not paying all of its contractual interest). This investment has yielded 6.7 per cent. on cost during the year; oLoan stock with a carrying value of £426,000 had loan stock interest reduced for the last 12 months, yielded 5.57 per cent. on cost. The carrying value of loan stock investments held at amortised cost at 31 March 2013 as analysed by expected maturity dates is as follows: Fully performing Impaired Past due Total Redemption date £'000 £'000 £'000 £'000 Less than one year 355 - 471 826 1-2 years 109 2,241 3,846 6,196 2-3 years 2,345 - 296 2,641 3-5 years 1,904 6,645 2,164 10,713 Greater than 5 years 1,103 - 230 1,333 Total 5,816 8,886 7,007 21,709 In view of the information shown, the Board considers that the Company is subject to low liquidity risk. Fair values of financial assets and financial liabilities All the Company's financial assets and liabilities as at 31 March 2014 are stated at fair value as determined by the Directors, with the exception of loans and receivables included within investments, cash, debtors and creditors which are carried at amortised cost, as permitted by FRS 26. The Directors believe that the current carrying value of loan stock is not materially different to the fair value. There are no financial liabilities other than creditors. The Company's financial liabilities are all non-interest bearing. It is the Directors' opinion that the book value of the financial liabilities is not materially different to the fair value and all are payable within one year. 21. Commitments and contingencies The company had the following financial commitment in respect of the following investments: oChonais Holdings Limited, £1,385,000 oGreen Highland Renewables (Ledgowan) Limited, £591,000 oDragon Hydro Limited, £3,000 There are no contingent liabilities or guarantees given by the Company as at 31 March 2014 (31 March 2013: nil). 22. Post balance sheet events Since 31 March 2014 the Company has had the following post balance sheet events: Shares issued under the Albion VCTs Top Up Offers 2013/2014: Opening market Aggregate price per Number of nominal Net Issue price incl. issue share on Date of shares value of consideration costs (pence allotment allotment allotted shares received per date (pence per £'000 £'000 share) share) 5 April 2014 748,273 7 531 73.10 67.25 5 April 2014 18,621 - 13 72.80 67.25 5 April 2014 17,201 - 12 72.40 67.25 Shares issued under the Albion VCTs Prospectus Offers 2013/2014: Opening market Aggregate price per Number of nominal Net Issue price incl. share on Date of shares value of consideration issue costs allotment allotment allotted shares received (pence per date (pence per £'000 £'000 share) share) 5 April 2014 1,899,867 19 1,347 73.10 67.25 oInvestment of £992,000 in Albion Small Company Growth Limited oInvestment of £183,150 in Taunton Hospital Limited oInvestment of £312,098 in Green Highland Renewables (Ledgowan) Limited 23. Related party transactions There are no related party transactions or balances requiring disclosure. 24. Other information The information set out in this announcement does not constitute the Company's statutory accounts within the terms of section 434 of the Companies Act 2006 for the years ended 31 March 2014 and 31 March 2013, and is derivedfrom thestatutory accounts for those financial years, which have been, or in the case of the accounts for the year ended 31 March 2014, which will be, delivered to the Registrar of Companies. The Auditor reported on those accounts; the reports were unqualified and did not contain a statement under s498 (2) or (3) of the Companies Act 2006. The Company'sAnnual General Meeting will be held at The City of London Club, 19 Old Broad Street, London, EC2N 1DS on 25 July 2014 at 11.00am. 25. Publication The full audited Annual Report and Financial Statementsare being sent to shareholders and copies will be made available to the public at the registered office of the Company, Companies House, the National Storage Mechanism and also electronically atwww.albion-ventures.co.ukunder the 'Our Funds' section, by clicking on 'Albion Venture Capital Trust PLC', where the Report can be accessed as a PDF document via a link under the 'Investor Centre' in the 'Financial Reports and Circulars' section. Dividend history for Albion Prime VCT PLC now merged with Albion Venture Capital Trust PLC (unaudited) Proforma^(i) Albion Prime VCT PLC Total shareholder net asset value return to 31 March 2014 (pence per share) Total dividends paid during the year ended 31 March 1998 1.10 31 March 1999(ii) 6.40 31 March 2000 1.50 31 March 2001 4.25 31 March 2002 2.75 31 March 2003 2.00 31 March 2004 1.25 31 March 2005 2.20 31 March 2006 4.50 31 March 2007 4.00 31 March 2008 5.00 31 March 2009 4.50 31 March 2010 2.00 31 March 2011 3.00 31 March 2012 3.00 31 March 2013 3.70 31 March 2014 4.40 Total dividends paid to 31 March 2014 55.55 Proforma net asset value as at 31 March 2014 62.75 Total proforma shareholder net asset value return to 31 March 2014 118.30 Notes i.The proforma shareholder returns presented above are based on the dividends paid to shareholders before the merger and the pro-rata net asset value per share and pro-rata dividends per share paid to 31 March 2014. Albion Prime VCT PLC was merged with Albion Venture Capital Trust PLC on 25^th September 2012. This pro-forma is based upon 0.8801 Albion Venture Capital Trust PLC shares for every Albion Prime VCT PLC share which merged with Albion Venture Capital Trust PLC on 25 September 2012. ii.Dividends paid before 5 April 1999 were paid to qualifying shareholders inclusive of the associated tax credit. The dividends for the year to 31 March 1999 were maximised in order to take advantage of this tax credit. iii.The above table excludes the tax benefits investors received upon subscription for shares in the Company. Albion Venture Capital Trust pie chart for announcement 31 Mar 14 ------------------------------------------------------------------------------ This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients. The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Albion Venture Capital Trust PLC via Globenewswire HUG#1804796
Albion Venture Capital Trust PLC: Annual Financial Report- Correction
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