Annual Financial Report

As required by the UK Listing Authority's Disclosure and Transparency Rules 4.1 and 6.3, Albion Development VCT PLC today makes public its information relating to the Annual Report and Financial Statements for the year ended 31 December 2009. This announcement was approved by the Board of Directors on 25 March 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 December 2009. The information contained in this link includes information as required by the Disclosure and Transparency Rules, including Rule 4.1. http://hugin.info/141803/R/1397837/353624.pdf Alternatively you may view the Annual Report and Financial Statements at:www.albion-ventures.co.uk < http://www.albion-ventures.co.uk/> by clicking on the 'Our Funds' section. Investment objectives Albion Development VCT PLC (the "Company") is a venture capital trust which raised a total of Â£33.3 million through an issue of shares between 1999 and 2004. The C shares merged with the Ordinary shares in 2007. A new fundraising for up to Â£25 million through an issue of new D Shares was launched during October 2009, and to date over 3.1 million new D Shares have been allotted.Â The issue remains open until 30 April 2010. The funds raised through the issue of the D Shares will be invested in accordance with the Company's existing investment policy. The Company's investment policy is intended to provide investors with a regular and predicable source of dividend income combined with the prospects of long term capital growth. This is achieved by establishing a diversified portfolio of holdings in smaller, unquoted companies whilst at the same time selecting and structuring investments in such a way as to reduce the risks normally associated with investment in such companies. It is intended that this will be achieved as follows: â— Through investment in lower risk, often asset-backed investments that provide a strong income stream combined with a protection of capital. These include freehold-based businesses in the leisure sector, such as pubs and health clubs, as well as stable and profitable businesses in other sectors including business services and healthcare. Such investments will constitute the majority of investments by cost. â— This is balanced by a smaller number of higher risk companies with greater growth prospects in sectors such as software and computer services, and medical technology. â— In neither category do investee companies normally have any external borrowings with a prior charge ranking ahead of the VCT. â— Up to two-thirds of qualifying investments by cost comprise loan stock secured with a first charge on the investee company's assets. Financial calendar +---------------------------------------------------------------+--------------+ |Annual General Meeting | 25 June 2010| +---------------------------------------------------------------+--------------+ |Record date for first dividend | 6 April 2010| +---------------------------------------------------------------+--------------+ |Payment of first dividend | 4 May 2010| +---------------------------------------------------------------+--------------+ |Announcement of interim results for the six months ending 30 | August 2010| |June 2010 | | +---------------------------------------------------------------+--------------+ |Payment of second dividends subject to Board approval |September 2010| +---------------------------------------------------------------+--------------+ Financial highlights +-----------------+---------------------------------------+-------------------+ | Â | Ordinary shares | D shares | +-----------------+-------------------+-------------------+-------------------+ | | 31 December 2009 | 31 December 2008 | 31 December 2009 | | Â | (pence per share) | (pence per share) | (pence per share) | +-----------------+-------------------+-------------------+-------------------+ | Â | Â | Â | Â | +-----------------+-------------------+-------------------+-------------------+ | Dividends paid | 4.0 | 12.0 | - | +-----------------+-------------------+-------------------+-------------------+ | Revenue return | 2.4 | 3.9 | - | +-----------------+-------------------+-------------------+-------------------+ | Capital loss | (4.1) | (8.2) | - | +-----------------+-------------------+-------------------+-------------------+ | Net asset value | 79.3 | 84.8 | 94.6 | +-----------------+-------------------+-------------------+-------------------+ Total shareholder net asset value return to 31 December 2009: +------------------------+-----------------+-----------------+-----------------+ | | Ordinary shares| C shares| D shares| | | 31 December 2009| 31 December 2009| 31 December 2009| | Â |(pence per share)|(pence per share)|(pence per share)| +------------------------+-----------------+-----------------+-----------------+ |Â |Â |Â |Â | +------------------------+-----------------+-----------------+-----------------+ | Total dividends paid| | | -| | during the year ended:Â | | | | | 31 December 1999| 1.00| -| | +------------------------+-----------------+-----------------+-----------------+ | 31 December 2000| 2.90| -| -| +------------------------+-----------------+-----------------+-----------------+ | 31 December 2001| 3.95| -| -| +------------------------+-----------------+-----------------+-----------------+ | 31 December 2002| 4.20| -| -| +------------------------+-----------------+-----------------+-----------------+ | 31 December 2003| 4.50| 0.75| -| +------------------------+-----------------+-----------------+-----------------+ | 31 December 2004| 4.00| 2.00| -| +------------------------+-----------------+-----------------+-----------------+ | 31 December 2005| 5.20| 5.90| -| +------------------------+-----------------+-----------------+-----------------+ | 31 December 2006| 3.00| 4.50| -| +------------------------+-----------------+-----------------+-----------------+ | 31 December 2007| 5.00| 5.36| -| +------------------------+-----------------+-----------------+-----------------+ | 31 December 2008| 12.00| 12.86| -| +------------------------+-----------------+-----------------+-----------------+ | 31 December 2009| 4.00| 4.29| -| +------------------------+-----------------+-----------------+-----------------+ |Total dividends paid to | | | -| |31 December 2009 | 49.75| 35.66| | +------------------------+-----------------+-----------------+-----------------+ |Net asset value as at | | | 94.60| |31 December 2009 | 79.30| 84.97| | +------------------------+-----------------+-----------------+-----------------+ |Total shareholder return| | | 94.60| |to 31 December 2009 | 129.05| 120.63| | +------------------------+-----------------+-----------------+-----------------+ The first dividend of 4.0 pence per Ordinary share for the year ended 31 December 2009 was paid in advance on 30 December 2008. In addition to the dividends paid above, the Board has declared a first dividend for the year ending 31 December 2010, of 4.0 pence per Ordinary share (3.25 pence paid out of revenue profits and 0.75 pence paid out of realised capital gains) payable on 4 May 2010 to shareholders on the register at 6 April 2010. The Board expects the first D shares' dividend to be paid in September 2010. Chairman's statement Introduction The Company's results for the 12 months to 31 December 2009 show a resilient performance, which is a reflection of the relative maturity of the investment portfolio, and its ability to show only a small negative total return in a difficult year of recession in the UK. The Ordinary shares, some of whose investments are now in excess of eight years old, showed a negative total return of 1.7 pence per share (2008: 4.3 pence per share negative return), and a decrease in net asset value to 79.3 pence per share (2008: 84.8 pence per share) after dividends of 4.0 pence per share (2008: 12.0 pence per share).Â This represents a significant improvement as compared to the interim position at 30 June 2009, when the Company recorded a negative total return of 5.6 pence per share. The D shares were allotted on 23 December 2009 and have a net asset value as at 31 December 2009 of 94.60 pence per share. Investment progress and prospects The Company's investment income was some 46 per cent. lower than 2008, principally as a result of falling interest rates and a lower return on loan stock investments, while the investment portfolio decreased in value by just under Â£1.0 million.Â The strong performance of two of our older investments, Peakdale Molecular Limited and Consolidated PR Limited, both of which were made in 2001 and have shown an ability to increase profitability in a recessionary environment, helped partially to offset the downwards valuations of other parts of the portfolio, including Evolutions Television Limited and Chichester Holdings Limited. In addition, while third party valuations of our asset backed portfolio resulted in devaluations of our pub and health club investments, certain investments saw a marked improvement as they began to exploit global markets through their innovative products and services, including Helveta Limited, Xceleron Limited, Lowcosttravelgroup Limited and Blackbay Limited. New investments totalling Â£2.1 million were made in three new investee companies and 15 existing investee companies.Â A variety of new investment opportunities at attractive valuations are under review, particularly in the health care sector, though the environmental sector is also likely to be an area for growth over the next period. Share premium account Shareholders approved the cancellation of the Company's share premium accounts by way of special resolution at a General Meeting held on 28 October 2009. The Ordinary shares' share premium account, amounting to Â£3.3 million, was subsequently cancelled on 25 November 2009 by order of the High Court and the Notice regarding the cancellation was registered at Companies House on 11 December 2009. The purpose of this cancellation is to increase the special reserve available for distribution as dividends. The special reserve, amongst other purposes, can also be used for making market purchases of Ordinary shares. The Manager and awards As shareholders will recall, earlier in 2009, the Company novated the management contract to Albion Ventures LLP which has around Â£200 million funds under management and which was formed in January 2009, when the executive directors of Close Ventures Limited bought the business from Close Brothers Group plc. The Board is pleased to confirm to shareholders that the transition to Albion Ventures LLP has gone smoothly. The Board are also delighted to note that Albion Development VCT won 'VCT of the Year (UK) 2009 at the Investor All Stars Awards, and that Albion Ventures was awarded 'VCT Manager of the Year' at the "Unquote" British Private Equity Awards 2009. Offer for subscription of D Shares The Company launched the Offer for subscription of up to 25,000,000 D Shares on 1 October 2009. The new fundraising will enable D shareholders to capitalise on significant investment opportunities in the current economic climate, enabling further growth and diversification of the Company's investment portfolio, as well as creating greater economies of scale due to the spreading of the fixed and semi-fixed overheads. The Company is currently offering investors the opportunity to participate in the new D Share Offer. Shareholders wishing to invest can obtain a prospectus by telephoning 0808 1781680 or from the Albion Ventures website, www.albion-ventures.co.uk < http://www.albion-ventures.co.uk/>. As at 31 December 2009, 1,433,600 D Shares had been allotted under the terms of the Offer and since the year end a further 1,734,295 D Shares have been issued, making a total of 3,167,895 D Shares in issue as at the date of this report. The Offer remains open until 12 noon on 5 April 2010 for the 2009/2010 tax year, and until 12 noon on 30 April 2010 for the 2010/2011 tax year. Risks and uncertainties While the recession in the UK appeared to have eased over the last quarter of the year, we remain cautious over the longer term outlook for the UK economy in the light of personal, corporate and national debt levels, and this continues to be the key risk affecting the Company.Â Nevertheless, despite pressures on certain of our investee companies, the portfolio as a whole remains cash generative and it remains our general policy for investee companies to have no external bank borrowings.Â We therefore continue to believe that over the longer term, the current reductions in valuation represent value deferred rather than value permanently lost. A detailed analysis of the other risks and uncertainties facing the business are shown in note 24 to this announcement. Details of related party transactions are shown in note 23 to this announcement. Results and dividends As at 31 December 2009, the net asset value of the Ordinary shares was 79.3 pence per share (2008: 84.8 pence per share).Â The D share net asset value was 94.6 pence per share. The Ordinary shares' revenue return before taxation was Â£790,000 compared to Â£1.67 million for the previous period.Â The Company paid a dividend of 4.0 pence per Ordinary share during the year (the first dividend of 4.0 pence per Ordinary share for the year ended 31 December 2009 was paid in advance on 30 December 2008). The Company will pay a first dividend for the financial year to 31 December 2010 of 4.0 pence per Ordinary share, on 4 May 2010 to shareholders on the register on 6 April 2010. The Board expects the first D shares' dividend to be paid in September 2010. 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 the investment in existing and new investee companies and the continued payment of dividends to shareholders. It is the Board's policy over the longer term to achieve a discount to net asset value of around 10 per cent., which is narrower than has been the case over the past 18 months, when the discount increased during the crisis that affected financial markets. Outlook and prospects As mentioned above, a number of investee companies, particularly in the technology portfolio, are beginning to show a significant degree of traction in the international markets within which they operate, indicating their longer term potential for value creation.Â Meanwhile, though many of the asset based investments have been written down in line with the property markets, almost all units remain profitable at the operating level. Geoffrey Vero Â Â 25 March 2010 Chairman Manager's report The analysis of Albion Development VCT's investment portfolio as at 31 December 2009 is shown below.Â The lower risk element of the portfolio, including asset-backed investments, now accounts for 45 per cent. of the net assets while the higher growth portfolio accounts for 35 per cent., with cash and liquid resources providing the balance.Â It is anticipated going forwards that the healthcare segment, which currently accounts for 20 per cent., will increase further, as will the environmental segment.Â Both of these sectors have the capacity for asset-backed as well as growth investments. The investment portfolio now has some 41 holdings and provides a broad spread across a variety of sectors, with the aim of providing shareholders with a strong degree of diversification of risk, whilst at the same time including sectors and businesses with strong growth prospects. The D share portfolio is currently all held as cash. The Ordinary share portfolio valuation analysed by sector as at 31 December 2009: http://hugin.info/141803/R/1397837/353625.pdf Source: Albion Ventures LLP New investments During the year, your Company invested Â£1.2 million in three new investments and Â£0.9 million in 15 existing investments. One of the new investments was Forth Photonics Limited, which is in the healthcare sector, and has a novel form of scanning for certain forms of cancer.Â In addition, we acquired four landmark freehold London pubs through Geronimo Inns. Portfolio review Certain companies in the higher growth portfolio have been performing strongly. A particularly good performance was seen by Blackbay Limited, whose mobile solutions for the logistic sector, including a substantial contract with the Post Office and strong international orders, have led to a sharp increase in profitability.Â Significant new contracts won by Helveta Limited reinforce the company's dominant role in the traceability of tropical timber while Xceleron Limited, which provides novel drug development services to the pharmaceutical industry, also saw strong growth and a welcome return to profitability.Â Trading at Lowcosttravelgroup Limited also showed substantial growth during the year with over one million customers over the past 12 months, while sales at Opta Sports Data Limited grew by 50 per cent. The three largest write downs in the portfolio were Chichester Holdings Limited, Evolutions Television Limited and Rostima Limited, whose markets have been affected by the recession. We have also restructured some of our pub investments, resulting in an increase in income to the Company.Â The majority of our pubs are now trading profitably at the operating level and, as managed pubs, have a strong competitive edge over tenanted pubs, which remain a major feature of the UK pub sector. Again, despite the write-downs, our health and fitness clubs are profitable at the operating level, in excellent locations and with growing membership.Â However, one company went into administration, being our small investment in Riverbourne Health Club Limited in Chertsey, Surrey, resulting in the realised loss of 53 per cent. of the VCT's total investment of Â£100,000. We continue to work with our investee companies to ensure that they are adequately funded during a difficult financial environment, and at the same time seeking to ensure that the income to the Company is maintained and, where possible, increased. Albion Ventures LLPÂ Â Â Â Â 25 March 2010 Manager Responsibility statement In preparing these financial statements for the year to 31 December 2009, the Directors of the Company, being Geoffrey Vero, Andrew Phillipps, David Pinckney and Jonathan Thornton, 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 December 2009 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 December 2009 as required by DTR 4.2.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 December 2009 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 Geoffrey Vero Â Â 25 March 2010 Chairman Income statement +-----------------------+------+-----------------------+-----------------------+ | | | Combined | Combined | | | |Year ended 31 December |Year ended 31 December | | Â | Â | 2009 | 2008 | +-----------------------+------+-------+-------+-------+-------+-------+-------+ |Â | Â |Revenue|Capital| Total|Revenue|Capital| Total| +-----------------------+------+-------+-------+-------+-------+-------+-------+ |Â |NotesÂ | Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| +-----------------------+------+-------+-------+-------+-------+-------+-------+ |Losses on investments |3 | -| (986)| (986)| -|(2,326)|(2,326)| +-----------------------+------+-------+-------+-------+-------+-------+-------+ |Investment income |4 | 1,078| -| 1,078| 1,978| -| 1,978| +-----------------------+------+-------+-------+-------+-------+-------+-------+ |Investment management | | | | | | | | |fees |5 | (135)| (407)| (542)| (184)| (547)| (731)| +-----------------------+------+-------+-------+-------+-------+-------+-------+ |Recovery of VAT |6 | 26| 82| 108| 104| 310| 414| +-----------------------+------+-------+-------+-------+-------+-------+-------+ |Other expenses |7 | (178)| -| (178)| (224)| -| (224)| +-----------------------+------+-------+-------+-------+-------+-------+-------+ |Return/(loss) on | | | | | | | | |ordinary activities | | | | | | | | |before tax |Â | 791|(1,311)| (520)| 1,674|(2,563)| (889)| +-----------------------+------+-------+-------+-------+-------+-------+-------+ |Tax (charge)/credit on | | | | | | | | |ordinary activities |9 | (88)| 94| 6| (487)| 70| (417)| +-----------------------+------+-------+-------+-------+-------+-------+-------+ |Return/(loss) | | | | | | | | |attributable to | | | | | | | | |shareholders |Â | 703|(1,217)| (514)| 1,187|(2,493)|(1,306)| +-----------------------+------+-------+-------+-------+-------+-------+-------+ |Â |Â | Â | Â | Â | Â | Â | Â | +-----------------------+------+-------+-------+-------+-------+-------+-------+ The accompanying notes form an integral part of this announcement. The total column of this Income statement represents the profit and loss account of the Company. The supplementary revenue and capital columns have been prepared in accordance with the Association of Investment Companies' Statement of Recommended Practice. All revenue and capital items in the above statement derive from continuing operations. There are no ecognized gains or losses other than the results for the year disclosed above. Accordingly a Statement of total ecognized gains and losses is not required. The difference between the reported loss 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. Income statement (non statutory analysis) +-----------------------+------+-----------------------+-----------------------+ | | | Ordinary shares | Ordinary shares | | | |Year ended 31 December |Year ended 31 December | | Â | Â | 2009 | 2008 | +-----------------------+------+-------+-------+-------+-------+-------+-------+ |Â | Â |Revenue|Capital| Total|Revenue|Capital| Total| +-----------------------+------+-------+-------+-------+-------+-------+-------+ |Â |NotesÂ | Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| +-----------------------+------+-------+-------+-------+-------+-------+-------+ |Losses on investments |3 | -| (986)| (986)| -|(2,326)|(2,326)| +-----------------------+------+-------+-------+-------+-------+-------+-------+ |Investment income |4 | 1,077| -| 1,077| 1,978| -| 1,978| +-----------------------+------+-------+-------+-------+-------+-------+-------+ |Investment management | | | | | | | | |fees |5 | (135)| (406)| (541)| (184)| (547)| (731)| +-----------------------+------+-------+-------+-------+-------+-------+-------+ |Recovery of VAT |6 | 26| 82| 108| 104| 310| 414| +-----------------------+------+-------+-------+-------+-------+-------+-------+ |Other expenses |7 | (178)| -| (178)| (224)| -| (224)| +-----------------------+------+-------+-------+-------+-------+-------+-------+ |Return/(loss) on | | | | | | | | |ordinary activities | | | | | | | | |before tax |Â | 790|(1,310)| (520)| 1,674|(2,563)| (889)| +-----------------------+------+-------+-------+-------+-------+-------+-------+ |Tax (charge)/credit on | | | | | | | | |ordinary activities |9 | (88)| 94| 6| (487)| 70| (417)| +-----------------------+------+-------+-------+-------+-------+-------+-------+ |Return/(loss) | | | | | | | | |attributable to | | | | | | | | |shareholders |Â | 702|(1,216)| (514)| 1,187|(2,493)|(1,306)| +-----------------------+------+-------+-------+-------+-------+-------+-------+ |Basic and diluted | | | | | | | | |return/(loss) per share| | | | | | | | |(pence)* |11 | 2.4| (4.1)| (1.7)| 3.9| (8.2)| (4.3)| +-----------------------+------+-------+-------+-------+-------+-------+-------+ * excluding treasury shares +-----------------------------------------------+------+-----------------------+ | | | D shares | | | |Year ended 31 December | | Â | Â | 2009 | +-----------------------------------------------+------+-------+-------+-------+ |Â | Â |Revenue|Capital| Total| +-----------------------------------------------+------+-------+-------+-------+ |Â |NotesÂ | Â£'000| Â£'000| Â£'000| +-----------------------------------------------+------+-------+-------+-------+ |Â |Â | Â | Â | Â | +-----------------------------------------------+------+-------+-------+-------+ |Investment income |4 | 1| -| 1| +-----------------------------------------------+------+-------+-------+-------+ |Investment management fees |5 | -| (1)| (1)| +-----------------------------------------------+------+-------+-------+-------+ |Â |Â | Â | Â | Â | +-----------------------------------------------+------+-------+-------+-------+ |Return/(loss) on ordinary activities before tax|Â | 1| (1)| -| +-----------------------------------------------+------+-------+-------+-------+ |Tax (charge)/credit on ordinary activities |9 | -| -| -| +-----------------------------------------------+------+-------+-------+-------+ |Return attributable to shareholders |Â | 1| (1)| -| +-----------------------------------------------+------+-------+-------+-------+ |Basic and diluted return per share (pence)* |11 | -| -| -| +-----------------------------------------------+------+-------+-------+-------+ * excluding treasury shares The accompanying notes form an integral part of this announcement. Balance sheet +-------------------------------------+------+----------------+----------------+ | | | Combined| Combined| | Â | Â |31 December 2009|31 December 2008| +-------------------------------------+------+----------------+----------------+ | Â |NotesÂ | Â£'000| Â£'000| +-------------------------------------+------+----------------+----------------+ |Fixed asset investments | Â | Â | Â | +-------------------------------------+------+----------------+----------------+ |Qualifying | Â | 18,004| 17,434| +-------------------------------------+------+----------------+----------------+ |Non-qualifying | Â | 871| 856| +-------------------------------------+------+----------------+----------------+ |Total fixed asset investments | 12| 18,875| 18,290| +-------------------------------------+------+----------------+----------------+ |Â | Â | Â | Â | +-------------------------------------+------+----------------+----------------+ |Current assets | Â | Â | Â | +-------------------------------------+------+----------------+----------------+ |Trade and other debtors | 14| 406| 708| +-------------------------------------+------+----------------+----------------+ |Current asset investments | 14| -| 3,014| +-------------------------------------+------+----------------+----------------+ |Cash at bank and in hand | 19| 5,908| 3,790| +-------------------------------------+------+----------------+----------------+ |Â | Â | 6,314| 7,512| +-------------------------------------+------+----------------+----------------+ |Â | Â | Â | Â | +-------------------------------------+------+----------------+----------------+ |Creditors: amounts falling due within| | | | |one year | 15| (306)| (369)| +-------------------------------------+------+----------------+----------------+ |Â | Â | Â | Â | +-------------------------------------+------+----------------+----------------+ |Net current assets | Â | 6,008| 7,143| +-------------------------------------+------+----------------+----------------+ |Â | Â | Â | Â | +-------------------------------------+------+----------------+----------------+ |Net assets | Â | 24,883| 25,433| +-------------------------------------+------+----------------+----------------+ |Â | Â | Â | Â | +-------------------------------------+------+----------------+----------------+ |Capital and reserves | Â | Â | Â | +-------------------------------------+------+----------------+----------------+ |Called up share capital | 16| 17,074| 16,307| +-------------------------------------+------+----------------+----------------+ |Share premium | 17| 640| 3,266| +-------------------------------------+------+----------------+----------------+ |Capital redemption reserve | Â | 1,183| 1,183| +-------------------------------------+------+----------------+----------------+ |Unrealised capital reserve | Â | (6,365) | (5,622) | +-------------------------------------+------+----------------+----------------+ |Special reserve | Â | 12,507| 9,223| +-------------------------------------+------+----------------+----------------+ |Own treasury shares reserve | Â | (2,540)| (2,272)| +-------------------------------------+------+----------------+----------------+ |Realised capital reserve | Â | 1,389| 2,459 | +-------------------------------------+------+----------------+----------------+ |Revenue reserve | Â | 995| 889| +-------------------------------------+------+----------------+----------------+ |Total equity shareholders' funds | Â | 24,883| 25,433| +-------------------------------------+------+----------------+----------------+ |Â | Â | Â | Â | +-------------------------------------+------+----------------+----------------+ The accompanying notes form an integral part of this announcement. The Financial Statements were approved by the Board of Directors, and authorised for issue on 25 March 2010 and were signed on its behalf by Geoffrey Vero Chairman Company number: 3654040 Balance sheet (non statutory analysis) +-------------------------------------+------+----------------+----------------+ | | | Ordinary shares| Ordinary shares| | Â | Â |31 December 2009|31 December 2008| +-------------------------------------+------+----------------+----------------+ | Â |NotesÂ | Â£'000| Â£'000| +-------------------------------------+------+----------------+----------------+ |Fixed asset investments | Â | Â | Â | +-------------------------------------+------+----------------+----------------+ |Qualifying | Â | 18,004| 17,434| +-------------------------------------+------+----------------+----------------+ |Non-qualifying | Â | 871| 856| +-------------------------------------+------+----------------+----------------+ |Total fixed asset investments | 12| 18,875| 18,290| +-------------------------------------+------+----------------+----------------+ |Â | Â | Â | Â | +-------------------------------------+------+----------------+----------------+ |Current assets | Â | Â | Â | +-------------------------------------+------+----------------+----------------+ |Trade and other debtors | 14| 170| 708| +-------------------------------------+------+----------------+----------------+ |Current asset investments | 14| -| 3,014| +-------------------------------------+------+----------------+----------------+ |Cash at bank and in hand | 19| 4,709| 3,790| +-------------------------------------+------+----------------+----------------+ |Â | Â | 4,879| 7,512| +-------------------------------------+------+----------------+----------------+ |Â | Â | Â | Â | +-------------------------------------+------+----------------+----------------+ |Creditors: amounts falling due within| | | | |one year | 15| (228)| (369)| +-------------------------------------+------+----------------+----------------+ |Â | Â | Â | Â | +-------------------------------------+------+----------------+----------------+ |Net current assets | Â | 4,651| 7,143| +-------------------------------------+------+----------------+----------------+ |Â | Â | Â | Â | +-------------------------------------+------+----------------+----------------+ |Net assets | Â | 23,526| 25,433| +-------------------------------------+------+----------------+----------------+ |Â | Â | Â | Â | +-------------------------------------+------+----------------+----------------+ |Capital and reserves | Â | Â | Â | +-------------------------------------+------+----------------+----------------+ |Called up share capital | 16| 16,357| 16,307| +-------------------------------------+------+----------------+----------------+ |Share premium | 17| -| 3,266| +-------------------------------------+------+----------------+----------------+ |Capital redemption reserve | Â | 1,183| 1,183| +-------------------------------------+------+----------------+----------------+ |Unrealised capital reserve | Â | (6,365) | (5,622) | +-------------------------------------+------+----------------+----------------+ |Special reserve | Â | 12,507| 9,223| +-------------------------------------+------+----------------+----------------+ |Own treasury shares reserve | Â | (2,540)| (2,272)| +-------------------------------------+------+----------------+----------------+ |Realised capital reserve | Â | 1,390 | 2,459 | +-------------------------------------+------+----------------+----------------+ |Revenue reserve | Â | 994| 889| +-------------------------------------+------+----------------+----------------+ |Â | | | | | | | | | |Total equity shareholders' funds | Â | 23,526| 25,433| +-------------------------------------+------+----------------+----------------+ |Â | Â | Â | Â | +-------------------------------------+------+----------------+----------------+ |Basic and diluted net asset value per| | | | |share (pence)* | 18| 79.3| 84.8| +-------------------------------------+------+----------------+----------------+ |Â | Â | Â | Â | +-------------------------------------+------+----------------+----------------+ * excluding treasury shares The accompanying notes form an integral part of this announcement. Balance sheet (non statutory analysis) +----------------------------------------------------+------+----------------+ | | | D shares| | Â | Â |31 December 2009| +----------------------------------------------------+------+----------------+ | Â |NotesÂ | Â£'000| +----------------------------------------------------+------+----------------+ |Fixed asset investments | Â | Â | +----------------------------------------------------+------+----------------+ |Qualifying | Â | -| +----------------------------------------------------+------+----------------+ |Non-qualifying | Â | -| +----------------------------------------------------+------+----------------+ |Total fixed asset investments | 2| -| +----------------------------------------------------+------+----------------+ |Â | Â | Â | +----------------------------------------------------+------+----------------+ |Current assets | Â | Â | +----------------------------------------------------+------+----------------+ |Trade and other debtors | 14| 236| +----------------------------------------------------+------+----------------+ |Cash at bank and in hand | 19| 1,199| +----------------------------------------------------+------+----------------+ |Â | Â | 1,435| +----------------------------------------------------+------+----------------+ |Â | Â | Â | +----------------------------------------------------+------+----------------+ |Creditors: amounts falling due within one year | 15| (78)| +----------------------------------------------------+------+----------------+ |Â | Â | Â | +----------------------------------------------------+------+----------------+ |Net current assets | Â | 1,357| +----------------------------------------------------+------+----------------+ |Â | Â | Â | +----------------------------------------------------+------+----------------+ |Net assets | Â | 1,357| +----------------------------------------------------+------+----------------+ |Â | Â | Â | +----------------------------------------------------+------+----------------+ |Capital and reserves | Â | Â | +----------------------------------------------------+------+----------------+ |Called up share capital | 16| 717| +----------------------------------------------------+------+----------------+ |Share premium | Â | 640| +----------------------------------------------------+------+----------------+ |Capital redemption reserve | Â | -| +----------------------------------------------------+------+----------------+ |Unrealised capital reserve | Â | -| +----------------------------------------------------+------+----------------+ |Special reserve | Â | -| +----------------------------------------------------+------+----------------+ |Own treasury shares reserve | Â | -| +----------------------------------------------------+------+----------------+ |Realised capital reserve | Â | (1)| +----------------------------------------------------+------+----------------+ |Revenue reserve | Â | 1| +----------------------------------------------------+------+----------------+ |Â | | | | | | | |Total equity shareholders' funds | Â | 1,357| +----------------------------------------------------+------+----------------+ |Â | Â | Â | +----------------------------------------------------+------+----------------+ |Basic and diluted net asset value per share (pence)*| 18| 94.6| +----------------------------------------------------+------+----------------+ * excluding treasury shares The accompanying notes form an integral part of this announcement. Reconciliation of movement in shareholders' funds Combined +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ | | | | | | | Own| | | | | |Called-up| | Capital|Unrealised| |treasury|Realised| | | | | share| Share|redemption| capital| Special| share| capital| Revenue| | | Â | capital|premium| reserve| reserve*|reserve*|reserve*|reserve*|reserve*| Total| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ | Â | Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |As at 1 | | | | | | | | | | |January 2009| 16,307| 3,266| 1,183| (5,622)| 9,223| (2,272)| 2,459| 889| 25,433| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Net realised| | | | | | | | | | |losses on | | | | | | | | | | |investments | -| -| -| -| -| -| (3)| -| (3)| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Unrealised | | | | | | | | | | |losses on | | | | | | | | | | |investments | -| -| -| (983)| -| -| -| -| (983)| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Transfer of | | | | | | | | | | |unrealised | | | | | | | | | | |lossesÂ to | | | | | | | | | | |realised | | | | | | | | | | |losses | -| -| -| 240| -| -| (240)| -| -| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Capitalised | | | | | | | | | | |investment | | | | | | | | | | |management | | | | | | | | | | |fee | -| -| -| -| -| -| (407)| -| (407)| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Capitalised | | | | | | | | | | |recoverable | | | | | | | | | | |VAT | -| -| -| -| -| -| 82| -| 82| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Tax relief | | | | | | | | | | |on costs | | | | | | | | | | |charged to | | | | | | | | | | |capital | -Â | -Â | -Â | -Â | -Â | Â -| 94| -Â | 94| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Purchase of | | | | | | | | | | |own treasury| | | | | | | | | | |shares | -| -| -| -| -| (268)| -| -| (268)| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Issue of | | | | | | | | | | |equity (net | | | | | | | | | | |of costs) | 767| 658| -| -| -| -| -| -| 1,425| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Cancellation| | | | | | | | | | |of Share | | | | | | | | | | |premium | | | | | | | | | | |account | -|(3,284)| -| -| 3,284| -| -| -| -| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Revenue | | | | | | | | | | |return | | | | | | | | | | |attributable| | | | | | | | | | |to | | | | | | | | | | |shareholders| -| -| -| -| -| -| -| 703| 703| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Dividends | | | | | | | | | | |paid | -| -| -| -| -| -| (596)| (596)|(1,192)| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |As at 31 | | | | | | | | | | |December | | | | | | | | | | |2009 | 17,074| 640| 1,183| (6,365)| 12,507| (2,540)| 1,389| 995| 24,883| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ | | | | | | | Own| | | | | |Called-up| | Capital|Unrealised| |treasury|Realised| | | | | share| Share|redemption| capital| Special| share| capital| Revenue| | | Â | capital|premium| reserve| reserve*|reserve*|reserve*|reserve*|reserve*| Total| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ | Â | Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |As at 1 | | | | | | | | | | |January 2008| 16,219| 3,208| 1,183| 129| 9,223| (1,610)| 1,474| 1,061| 30,887| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Net realised| | | | | | | | | | |gains on | | | | | | | | | | |investments | -| -| -| -| -| -| 1,124| -| 1,124| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Unrealised | | | | | | | | | | |losses on | | | | | | | | | | |investments | -| -| -| (3,450)| -| -| -| -|(3,450)| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Transfer of | | | | | | | | | | |unrealised | | | | | | | | | | |lossesÂ to | | | | | | | | | | |realised | | | | | | | | | | |losses | -Â | -Â | -Â | (2,301)| -Â | -Â | 2,301| -Â | -| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Capitalised | | | | | | | | | | |investment | | | | | | | | | | |management | | | | | | | | | | |fees | -| -| -| -| -| -| (547)| -| (547)| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Capitalised | | | | | | | | | | |recoverable | | | | | | | | | | |VAT | -| -| -| -| -| -| 310| -| 310| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Tax relief | | | | | | | | | | |on costs | | | | | | | | | | |charged to | | | | | | | | | | |capital | -| -| -| -| -| -| 70| -| 70| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Purchase of | | | | | | | | | | |own treasury| | | | | | | | | | |shares | -| -| -| -| -| (662)| -| -| (662)| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Issue of | | | | | | | | | | |equity (net | | | | | | | | | | |of costs) | 88| 58| -| -| -| -| -| -| 146| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Revenue | | | | | | | | | | |return | | | | | | | | | | |attributable| | | | | | | | | | |to | | | | | | | | | | |shareholders| -| -| -| -| -| -| -| 1,187| 1,187| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Dividends | | | | | | | | | | |paid | -| -| -| -| -| -| (2,273)| (1,359)|(3,632)| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |As at 31 | | | | | | | | | | |December | | | | | | | | | | |2008 | 16,307| 3,266| 1,183| (5,622)| 9,223| (2,272)| 2,459| 889| 25,433| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ Included within these reserves is an amount of Â£5,986,000 (2008: Â£4,677,000) which is considered distributable. The Special reserve has been treated as distributable in determining the amounts available for distribution. Reconciliation of movement in shareholders' funds (non statutory analysis) Ordinary shares +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ | | | | | | | Own| | | | | |Called-up| | Capital|Unrealised| |treasury|Realised| | | | | share| Share|redemption| capital| Special| share| capital| Revenue| | | Â | capital|premium| reserve| reserve*|reserve*|reserve*|reserve*|reserve*| Total| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ | Â | Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |As at 1 | | | | | | | | | | |January 2009| 16,307| 3,266| 1,183| (5,622)| 9,223| (2,272)| 2,459| 889| 25,433| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Net realised| | | | | | | | | | |losses on | | | | | | | | | | |investments | -| -| -| -| -| -| (3)| -| (3)| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Unrealised | | | | | | | | | | |losses on | | | | | | | | | | |investments | -| -| -| (983)| -| -| -| -| (983)| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Transfer of | | | | | | | | | | |unrealised | | | | | | | | | | |lossesÂ to | | | | | | | | | | |realised | | | | | | | | | | |losses | -| -| -| 240| -| -| (240)| -| -| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Capitalised | | | | | | | | | | |investment | | | | | | | | | | |management | | | | | | | | | | |fee | -| -| -| -| -| -| (406)| -| (406)| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Capitalised | | | | | | | | | | |recoverable | | | | | | | | | | |VAT | -| -| -| -| -| -| 82| -| 82| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Tax relief | | | | | | | | | | |on costs | | | | | | | | | | |charged to | | | | | | | | | | |capital | -Â | -Â | -Â | -Â | -Â | -Â | 94| -Â | 94| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Purchase of | | | | | | | | | | |own treasury| | | | | | | | | | |shares | -| -| -| -| -| (268)| -| -| (268)| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Issue of | | | | | | | | | | |equity (net | | | | | | | | | | |of costs) | 50| 18| -| -| -| -| -| -| 68| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Cancellation| | | | | | | | | | |of Share | | | | | | | | | | |premium | | | | | | | | | | |account | -|(3,284)| -| -| 3,284| -| -| -| -| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Revenue | | | | | | | | | | |return | | | | | | | | | | |attributable| | | | | | | | | | |to | | | | | | | | | | |shareholders| -| -| -| -| -| -| -| 702| 702| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Dividends | | | | | | | | | | |paid | -| -| -| -| -| -| (596)| (596)|(1,192)| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |As at 31 | | | | | | | | | | |December | | | | | | | | | | |2009 | 16,357| -| 1,183| (6,365)| 12,507| (2,540)| 1,390| 994| 23,526| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ | | | | | | | Own| | | | | |Called-up| | Capital|Unrealised| |treasury|Realised| | | | | share| Share|redemption| capital| Special| share| capital| Revenue| | | Â | capital|premium| reserve| reserve*|reserve*|reserve*|reserve*|reserve*| Total| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ | Â | Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |As at 1 | | | | | | | | | | |January 2008| 16,219| 3,208| 1,183| 129| 9,223| (1,610)| 1,474| 1,061| 30,887| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Net realised| | | | | | | | | | |gains on | | | | | | | | | | |investments | -| -| -| -| -| -| 1,124| -| 1,124| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Unrealised | | | | | | | | | | |losses on | | | | | | | | | | |investments | -| -| -| (3,450)| -| -| -| -|(3,450)| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Transfer of | | | | | | | | | | |unrealised | | | | | | | | | | |lossesÂ to | | | | | | | | | | |realised | | | | | | | | | | |losses | -Â | -Â | -Â | (2,301)| -Â | -Â | 2,301| -Â | -| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Capitalised | | | | | | | | | | |investment | | | | | | | | | | |management | | | | | | | | | | |fees | -| -| -| -| -| -| (547)| -| (547)| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Capitalised | | | | | | | | | | |recoverable | | | | | | | | | | |VAT | -| -| -| -| -| -| 310| -| 310| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Tax relief | | | | | | | | | | |on costs | | | | | | | | | | |charged to | | | | | | | | | | |capital | -| -| -| -| -| -| 70| -| 70| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Purchase of | | | | | | | | | | |own treasury| | | | | | | | | | |shares | -| -| -| -| -| (662)| -| -| (662)| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Issue of | | | | | | | | | | |equity (net | | | | | | | | | | |of costs) | 88| 58| -| -| -| -| -| -| 146| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Revenue | | | | | | | | | | |return | | | | | | | | | | |attributable| | | | | | | | | | |to | | | | | | | | | | |shareholders| -| -| -| -| -| -| -| 1,187| 1,187| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |Dividends | | | | | | | | | | |paid | -| -| -| -| -| -| (2,273)| (1,359)|(3,632)| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ |As at 31 | | | | | | | | | | |December | | | | | | | | | | |2008 | 16,307| 3,266| 1,183| (5,622)| 9,223| (2,272)| 2,459| 889| 25,433| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-------+ Included within these reserves is an amount of Â£5,986,000 (2008: Â£4,677,000) which is considered distributable. The Special reserve has been treated as distributable in determining the amounts available for distribution. Reconciliation of movement in shareholders' funds (non statutory analysis) D shares +------------+---------+-------+----------+----------+--------+--------+--------+--------+-----+ | | | | | | | Own| | | | | |Called-up| | Capital|Unrealised| |treasury|Realised| | | | | share| Share|redemption| capital| Special| share| capital| Revenue| | | Â | capital|premium| reserve| reserve*|reserve*|reserve*|reserve*|reserve*|Total| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-----+ | Â | Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000| Â£'000|Â£'000| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-----+ |As at 1 | | | | | | | | | | |January 2009| -| -| -| -| -| -| -| -| -| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-----+ |Capitalised | | | | | | | | | | |investment | | | | | | | | | | |management | | | | | | | | | | |fee | -| -| -| -| -| -| (1)| -| (1)| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-----+ |Issue of | | | | | | | | | | |equity (net | | | | | | | | | | |of costs) | 717| 640| -| -| -| -| -| -|1,357| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-----+ |Revenue | | | | | | | | | | |return | | | | | | | | | | |attributable| | | | | | | | | | |to | | | | | | | | | | |shareholders| -| -| -| -| -| -| -| 1| 1| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-----+ |As at 31 | | | | | | | | | | |December | | | | | | | | | | |2009 | 717| 640| -| -| -| -| (1)| 1|1,357| +------------+---------+-------+----------+----------+--------+--------+--------+--------+-----+ * There are currently no distributable reserves. Cash flow statement +------------------------------------+-+-----+----------------+----------------+ | | | | Combined| Combined| | | |Notes| Year ended| Year ended| | | | |31 December 2009|31 December 2008| |Â |Â | | Â£'000| Â£'000| +------------------------------------+-+-----+----------------+----------------+ |Operating activities |Â | Â | Â | Â | +------------------------------------+-+-----+----------------+----------------+ |Investment income received |Â | Â | 949| 1,487| +------------------------------------+-+-----+----------------+----------------+ |Deposit interest received |Â | Â | 66| 296| +------------------------------------+-+-----+----------------+----------------+ |Dividend income received |Â | Â | 47| 62| +------------------------------------+-+-----+----------------+----------------+ |Other income received |Â | Â | 22| 203| +------------------------------------+-+-----+----------------+----------------+ |Investment management fees paid |Â | Â | (375)| (1,015)| +------------------------------------+-+-----+----------------+----------------+ |VAT recovery |Â | Â | 522| -| +------------------------------------+-+-----+----------------+----------------+ |Other cash payments |Â | Â | (180)| (252)| +------------------------------------+-+-----+----------------+----------------+ | | | Â | | | |Net cash inflow from operating | | | | | |activities |Â | 20| 1,051| 781| +------------------------------------+-+-----+----------------+----------------+ |Â |Â | Â | Â | Â | +------------------------------------+-+-----+----------------+----------------+ |Taxation |Â | Â | Â | Â | +------------------------------------+-+-----+----------------+----------------+ |UK corporation tax paid |Â | Â | (384)| (271)| +------------------------------------+-+-----+----------------+----------------+ |Â |Â | Â | Â | Â | +------------------------------------+-+-----+----------------+----------------+ |Capital expenditure and financial | | Â | | | |investments |Â | | Â | Â | +------------------------------------+-+-----+----------------+----------------+ |Purchase ofÂ fixed asset investments|Â | Â | (1,819)| (3,294)| +------------------------------------+-+-----+----------------+----------------+ |Disposal ofÂ fixed asset investments|Â | Â | 422| 6,769| +------------------------------------+-+-----+----------------+----------------+ |Net cash (outflow)/inflow from | | Â | | | |investing activities |Â | | (1,397)| 3,475| +------------------------------------+-+-----+----------------+----------------+ |Â |Â | Â | Â | Â | +------------------------------------+-+-----+----------------+----------------+ |Management of liquid resources |Â | Â | Â | Â | +------------------------------------+-+-----+----------------+----------------+ |Purchase of current asset | | Â | | | |investments |Â | | -| (50)| +------------------------------------+-+-----+----------------+----------------+ |Disposal of current asset | | Â | | | |investments |Â | | 3,050| -| +------------------------------------+-+-----+----------------+----------------+ |Â | | Â | | | | | | | | | |Net cash inflow from liquid | | | | | |resources |Â | | 3,050| (50)| +------------------------------------+-+-----+----------------+----------------+ |Â |Â | Â | Â | Â | +------------------------------------+-+-----+----------------+----------------+ |Â |Â | Â | Â | Â | +------------------------------------+-+-----+----------------+----------------+ |Equity dividends paid |Â | Â | Â | Â | +------------------------------------+-+-----+----------------+----------------+ |Dividends paid (net of cost of | | Â | | | |shares issued under the dividend | | | | | |reinvestment scheme) |Â | | (1,133)| (3,474)| +------------------------------------+-+-----+----------------+----------------+ |Net cash inflow before financing |Â | Â | 1,187| 461| +------------------------------------+-+-----+----------------+----------------+ |Â |Â | Â | Â | Â | +------------------------------------+-+-----+----------------+----------------+ |Financing |Â | Â | Â | Â | +------------------------------------+-+-----+----------------+----------------+ |Purchase of own shares |Â | 16| (268)| (662)| +------------------------------------+-+-----+----------------+----------------+ |Issue of share capital (net of | | Â | | | |costs) |Â | | 1,199| -| +------------------------------------+-+-----+----------------+----------------+ |Net cash inflow/(outflow) from | | Â | | | |financing |Â | | 931| (662)| +------------------------------------+-+-----+----------------+----------------+ |Â |Â | Â | Â | Â | +------------------------------------+-+-----+----------------+----------------+ |Cash inflow/(outflow) in the year |Â | 19| 2,118| (201)| +------------------------------------+-+-----+----------------+----------------+ Cash flow statement (non statutory analysis) +--------------------------+-----------+-----+----------------+----------------+ | | | | Ordinary shares| Ordinary shares| | | | | Year ended| Year ended| | | | |31 December 2009|31 December 2008| | Â | Â |Notes| Â£'000| Â£'000| +--------------------------+-----------+-----+----------------+----------------+ |Operating activities | Â | Â | Â | Â | +--------------------------+---------+-+-----+----------------+----------------+ |Investment income received |Â | Â | 949| 1,487| +------------------------------------+-+-----+----------------+----------------+ |Deposit interest received |Â | Â | 66| 296| +------------------------------------+-+-----+----------------+----------------+ |Dividend income received |Â | Â | 47| 62| +------------------------------------+-+-----+----------------+----------------+ |Other income received |Â | Â | 22| 203| +------------------------------------+-+-----+----------------+----------------+ |Investment management fees paid |Â | Â | (375)| (1,015)| +------------------------------------+-+-----+----------------+----------------+ |VAT recovery |Â | Â | 522| -| +------------------------------------+-+-----+----------------+----------------+ |Other cash payments |Â | Â | (180)| (252)| +------------------------------------+-+-----+----------------+----------------+ | | | Â | | | |Net cash inflow from operating | | | | | |activities |Â | 20| 1,051| 781| +------------------------------------+-+-----+----------------+----------------+ |Â |Â | Â | Â | Â | +------------------------------------+-+-----+----------------+----------------+ |Taxation |Â | Â | Â | Â | +------------------------------------+-+-----+----------------+----------------+ |UK corporation tax paid |Â | Â | (384)| (271)| +------------------------------------+-+-----+----------------+----------------+ |Â |Â | Â | Â | Â | +------------------------------------+-+-----+----------------+----------------+ |Capital expenditure and financial | | | | | |investments |Â | Â | Â | Â | +------------------------------------+-+-----+----------------+----------------+ |Purchase ofÂ fixed asset investments|Â | Â | (1,819)| (3,294)| +------------------------------------+-+-----+----------------+----------------+ |Disposal ofÂ fixed asset investments|Â | Â | 422| 6,769| +------------------------------------+-+-----+----------------+----------------+ |Net cash (outflow)/inflow from | | | | | |investing activities |Â | Â | (1,397)| 3,475| +------------------------------------+-+-----+----------------+----------------+ |Â |Â | Â | Â | Â | +------------------------------------+-+-----+----------------+----------------+ |Management of liquid resources |Â | Â | Â | Â | +------------------------------------+-+-----+----------------+----------------+ |Purchase of current asset | | | | | |investments |Â | Â | -| (50)| +------------------------------------+-+-----+----------------+----------------+ |Disposal of current asset | | | | | |investments |Â | Â | 3,050| -| +------------------------------------+-+-----+----------------+----------------+ |Â | | | | | | | | | | | |Net cash inflow/(outflow) from | | | | | |liquid resources |Â | Â | 3,050| (50)| +------------------------------------+-+-----+----------------+----------------+ |Â |Â | Â | Â | Â | +------------------------------------+-+-----+----------------+----------------+ |Â |Â | Â | Â | Â | +------------------------------------+-+-----+----------------+----------------+ |Equity dividends paid |Â | Â | Â | Â | +------------------------------------+-+-----+----------------+----------------+ |Dividends paid (net of cost of | | | | | |shares issued under dividend | | | | | |reinvestment scheme) |Â | Â | (1,133)| (3,474)| +------------------------------------+-+-----+----------------+----------------+ |Net cash outflow before financing |Â | Â | 1,187| 461| +------------------------------------+-+-----+----------------+----------------+ |Â |Â | Â | Â | Â | +------------------------------------+-+-----+----------------+----------------+ |Financing |Â | Â | Â | Â | +------------------------------------+-+-----+----------------+----------------+ |Purchase of own shares |Â | 16| (268)| (662)| +------------------------------------+-+-----+----------------+----------------+ |Net cash (outflow) from financing |Â | Â | (268)| (504)| +------------------------------------+-+-----+----------------+----------------+ |Â |Â | Â | Â | Â | +--------------------------+---------+-+-----+----------------+----------------+ |Cash inflow/(outflow) in | | | | | |the year | Â | 19| 919| (201)| +--------------------------+-----------+-----+----------------+----------------+ +---------------------------------------+---+-------+------------------+ | | | Â | | | | | | D shares | | | | Â | Year ended | | | | | 31 December 2009 | | Â | Â | Notes | Â£'000 | +---------------------------------------+---+-------+------------------+ | Â | Â | Â | Â | +---------------------------------------+---+-------+------------------+ | Financing | Â | Â | Â | +---------------------------------------+---+-------+------------------+ | | | Â | | | | | | | | Issue of share capital (net of costs) | Â | 16 | 1,199 | +---------------------------------------+---+-------+------------------+ | Net cash inflow from financing | Â | Â | 1,199 | +---------------------------------------+---+-------+------------------+ | Â | Â | Â | Â | +---------------------------------------+---+-------+------------------+ | Cash inflow in the year | Â | 19 | 1,199 | +---------------------------------------+---+-------+------------------+ | Â | Â | Â | Â | +---------------------------------------+---+-------+------------------+ 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 Quoted and 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 September 2009 revisions to the 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 Unquoted loan stock is 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 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, fully performing, renegotiated, past due and impaired, the Board considers that the fair value is equal to or greater than the security value of these assets. For unquoted loan stock, the amount of the impairment is the difference between the asset's cost and the present value of estimated future cash flows, discounted at the effective interest rate. Warrants, convertibles and unquoted equity derived instruments Warrants, convertibles and unquoted equity derived instruments are only valued if their exercise or contractual conversion terms would allow them to be exercised or converted as at the balance sheet date, and if there is additional value to the Company in exercising or converting as at the balance sheet date. Otherwise these instruments are held at nil value. The valuation techniques used are those used for the underlying equity investment. Floating rate notes In accordance with FRS 26, floating rate notes are designated as fair value through profit or loss and 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 investee 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 Quoted and 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. Floating rate note income Floating rate note income is recognised on an accrual basis using the interest rate applicable to the floating rate note at that time. Investment management fees and other expenses All expenses have been accounted for on an accruals basis. Expenses are charged through the revenue account except the following which are charged through the realised capital reserve: 75 per cent. of management fees are allocated to the capital account to the extent that these relate to an enhancement in the value of the investments and in line with the Board's expectation that over the long term 75 per cent. of the Company's investment returns will be in the form of capital gains; and * expenses which are incidental to the purchase or disposal of an investment 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 of the Company at the year end. Performance incentive fee In the event that a performance incentive fee crystallises, the fee will be allocated between revenue and realised capital reserves based upon the proportion to which the calculation of the fee is attributable to revenue and capital returns. Taxation Taxation is applied on a current basis in accordance with FRS 16 "Current tax". Taxation associated with capital expenses is applied in accordance with the SORP. In accordance with FRS 19 "Deferred tax", deferred taxation is provided in full on timing differences that result in an obligation at the balance sheet date to pay more tax or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the financial statements. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered. The 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 Share premium account This reserve accounts for the difference between the price paid for shares and the nominal value of the shares, less issue costs and transfers to the special reserve. Capital redemption reserve This reserve accounts for amounts by which the issued share capital is diminished through the repurchase and cancellation of the Company's own shares. Unrealised capital reserves 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. Own treasury shares reserve This reserve accounts for amounts by which the distributable reserves of the Company are diminished through the repurchase of the Company's own shares for treasury. Realised capital reserve The following are disclosed in this reserve: * gains and losses compared to cost on the realisation of investments; * expenses, together with the related taxation effect, charged in accordance with the above policies; and * dividends paid to equity holders. Dividends In accordance with FRS 21 "Events after the balance sheet date", dividends declared by the Company are accounted for in the period in which the dividend has been paid or approved by shareholders in an Annual General Meeting. 3. Losses on investments Ordinary shares Year ended Year ended 31 December 31 December Â 2009 2008 Â£'000 Â£'000 -------------------------------------------------------------------------------- Unrealised gains/(losses) on fixed asset investments held at fair value through profit or loss account Â Â 574 Â Â (2,922) Unrealised impairments on fixed asset investments held at amortised cost Â Â (1,557) Â Â (490) --------------------- Unrealised losses on fixed asset investments Â Â (983) Â Â (3,412) Unrealised losses on current asset investments held at fair value through profit or loss account Â Â - Â Â (38) --------------------- Unrealised losses sub-total Â Â (983) Â Â (3,450) Realised (losses)/gains on investments held at fair value through profit or loss account Â Â (2) Â Â 1,010 Realised (losses)/gains on investments held at amortised cost Â Â (37) Â Â 114 Realised gains on current asset investments held at fair value through profit or loss account Â Â 36 Â Â - --------------------- Realised (losses)/gains sub-total Â Â (3) Â Â 1,124 --------------------- Total Â Â (986) Â Â (2,326) --------------------- 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 amortised cost basis are unquoted loan stock investments as described in note 2. 4. Investment income Â YearÂ endedÂ 31Â DecemberÂ 2009 YearÂ endedÂ 31Â DecemberÂ 2008 Ordinary D shares shares Â Â£'000 Â£'000 Total Â£'000 Â Â Â£'000 -------------------------------------------------------------------------------- Income recognised on investments held at fair value through profit or loss Dividend income 70 - 70 Â Â 62 Management fees received from equity investments - - - Â Â 10 Floating rate note interest 20 - 20 Â Â 186 Bank deposit interest 67 1 68 Â Â 291 Other income -Â -Â - Â Â 4 --------------------------------------------------------------- Â 157 1 158 Â Â 553 Income recognised on investments held at amortised cost 920 - 920 Â Â 1,425 Return on loan stock investments --------------------------------------------------------------- Â 1,077 1 1,078 Â Â 1,978 --------------------------------------------------------------- Interest income earned on impaired investments at 31 December 2009 amounted to Â£368,000 (2008: Â£83,000). These investments are all held at amortised cost. 5. Investment management fees Â YearÂ endedÂ 31Â DecemberÂ 2009 YearÂ endedÂ 31Â DecemberÂ 2008 Ordinary shares D shares Total Ordinary shares Â Â£'000 Â£'000 Â£'000 Â Â Â£'000 -------------------------------------------------------------------------------- Investment management fee charged to revenue 135 - 135 Â Â 184 Investment management fee charged to capital 406 1 407 Â Â 547 ---------------------------------------------------------------- Â 541 1 542 Â Â 731 ---------------------------------------------------------------- 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 20 of the full Annual Report and Financial Statements. A sum of Â£2,000 (2008: Â£21,000) in respect of historic management fees, calculated as a consequence of the VAT reclaim has been accrued and offset against the VAT recoverable in the Income statement as detailed in note 6. 6. Recovery of Value Added Tax HMRC issued a business briefing on 24 July 2008 which permitted the recovery of historic VAT that had been charged on management fees, and which made these fees exempt from VAT with effect from 1 October 2008. The Manager, Albion Ventures LLP has made a claim for the historic VAT that Albion Development VCT PLC has paid on management fees. The Company has received a historic VAT repayment of Â£108,000 (2008:Â Â£414,000) (before the deduction of tax) which has been recognised as a separate item in the Income statement, allocated between revenue and capital return in the same proportion as that which the original VAT has been charged. An additional tax charge of Â£30,000 (2008: Â£113,000) is payable on this recovery of historic VAT and this is reflected in the tax charge shown in the Income statement. 7. Other expenses Ordinary shares Year Year ended ended Â 31 31 December December 2009 2008 Â£'000 Â£'000 ----------------------------------------------------------------------- Directors' fees (including VAT and NIC) Â Â 87 Â Â 90 Other administrative expenses Â Â 67 Â Â 107 Auditor's remuneration for statutory audit services Â Â 24 Â Â 27 ------------------- Â Â Â 178 Â Â 224 ------------------- The Auditor's remuneration charge in the prior year includes Â£4,000 (including VAT) payable to Deloitte LLP, the previous Auditors. All audit fees charged in the current year relate to PKF (UK) LLP. 8. Directors' fees The amounts paid to Directors during the year are as follows: Ordinary shares Year ended Year ended 31 December 31 December Â 2009 2008 Â£'000 Â£'000 ------------------------------------------------------------- Directors' fees Â Â 82 Â Â 82 National insurance and/or VAT Â Â 5 Â Â 8 ----------------------------- Â Â Â 87 Â Â 90 ----------------------------- Further information can be found on the Directors' remuneration report on page 27 of the full Annual Report and Financial Statements. 9. Tax charge/(credit) on ordinary activities Ordinary shares Year ended 31 December Year ended 31 December 2009 2008 -------------------------------------------------------------------------------- Revenue Capital Total Revenue Capital Total Â Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 -------------------------------------------------------------------------------- UK corporation tax in respect of current year 193 (94) 99 460 (70) 390 UK corporation tax in respect of prior year (105) - (105) 27 - 27 ------------------------------------------------- Total 88 (94) (6) 487 (70) 417 ------------------------------------------------- Factors affecting the tax charge: Year ended Year ended 31 December 31 December 2009 2008 Ordinary shares Â£'000 Â£'000 Loss on ordinary activities before taxation (520) (889) ----------------------------- Tax on loss at the standard rate (146) (253) Factors affecting the charge: Non-taxable losses 276 663 Marginal relief (12) (2) Dividends received (19) (18) Consortium relief in respect of prior years (105) 27 ----------------------------- Â (6) 417 ----------------------------- 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. (2008: 28.5 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 years. 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. 10. Dividends Ordinary shares Year ended 31 December Year ended 31 December 2009 2008 Revenue Capital Total Revenue Capital Total Â Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 -------------------------------------------------------------------------------- Dividend of 4.0p (2.0p capital and 2.0p revenue) per share paid on 25 September 2009 596 596 1,192 - - - Dividend of 4.0p (1.5p capital and 2.5p revenue) per share paid on 30 December 2008 - - - 748 450 1,198 Dividend of 5.5p (4.75p capital and 0.75p revenue) per share paid on 3 October 2008 - - - 228 1,440 1,668 Dividend of 2.5p (1.25p capital and 1.25p revenue) per share paid on 16 May 2008 - - - 383 383 766 ------------------------------------------------- Â 596 596 1,192 1,359 2,273 3,632 ------------------------------------------------- Shareholders are reminded that the first Ordinary share dividend of 4.0 pence per share for the year to 31 December 2009 was paid in advance on 30 December 2008. In addition to the dividends summarised above, the Board has declared an Ordinary share first dividend for the year ending 31 December 2010 of 4.0 pence per share. This dividend will be paid on 4 May 2010 to shareholders on the register as at 6 April 2010. This dividend totals approximately Â£1,186,777. The Board expects the first D shares' dividend to be paid in September 2010. 11. Basic and diluted return/(loss) per share Ordinary Year ended 31 December 2009 Year ended 31 December 2008 shares Â Revenue Capital Total Revenue Capital Total --------------------------------------------------------------------------------- The return per share has been based on the following figures: Return/(loss) attributable 1,187 (2,493) (1,306) to equity shares (Â£'000) 702 (1,216) (514) Weighted average 29,842,149 29,842,149 29,842,149 30,366,813 30,366,813 30,366,813 shares in issue (excluding treasury shares) Return/(loss) attributable 2.4 (4.1) (1.7) 3.9 (8.2) (4.3) per equity share (pence) The weighted average number of shares is calculated excluding the treasury shares of 3,043,726 (2008: 2,619,715). There are no convertible instruments, derivatives or contingent share agreements in issue so basic and diluted return/(loss) per share are the same. There is no return or loss per share for the D shares. These were allotted on 23 December 2009. 12. Fixed asset investments Ordinary shares 31 December 2009 31 December 2008 Â Â£'000 Â£'000 ------------------------------------------------------------------------- Qualifying quoted investments 1,270 1,193 Qualifying unquoted investments 16,734 16,241 Non-qualifying investments 871 856 --------------------------------------- Total 18,875 18,290 --------------------------------------- The classification of investments by nature of instruments is as follows: Â 31 December 31 December 2009 2008 Â£'000 Â£'000 -------------------------------------------------------------------------- Unquoted equity Â Â 4,733 Â Â 3,250 Quoted equity Â Â 1,270 Â Â 1,193 Unquoted equity derived instruments Â Â - Â Â 72 Unquoted loan stock Â Â 12,852 Â Â 13,498 Warrants and convertibles Â Â 20 Â Â 277 ----------------------------------- Â Â Â 18,875 Â Â 18,290 ----------------------------------- Qualifying Qualifying Non- quoted unquoted qualifying investments investments investments Total Â Â Â£'000 Â£'000 Â£'000 Â£'000 -------------------------------------------------------------------------------- Opening valuation as at 1 January 2009 Â 1,193 16,241 856 18,290 Purchases at cost Â - 2,929 30 2,959 Disposal proceeds Â - (384) (48) (432) Realised losses Â - (76) - (76) Movement in loan stock accrued income Â - (734) - (734) Unrealised gains/(losses) Â 77 (1,242) 33 (1,132) ----------------------------------------------- Closing valuation as at 31 December 2009 Â 1,270 16.734 871 18,875 ----------------------------------------------- Movement in loan stock accrued income Opening accumulated movement in loan stock accrued income Â - 1,111 (1) 1,110 Movement in loan stock accrued income Â - (734) - (734) ----------------------------------------------- Closing accumulated movement in loan stock accrued income as at 31 December 2009 Â - 377 (1) 376 ----------------------------------------------- Movement in unrealised losses Opening accumulated unrealised losses Â (407) (5,012) (154) (5,573) Movement in unrealised losses Â 77 (1,242) 33 (1,132) TransferÂ of previously unrealised (gains)/losses on disposal Â - 205 - 205 ----------------------------------------------- Closing accumulated unrealised losses as at 31 December 2009 Â (330) (6,049) (121) (6,500) ----------------------------------------------- Historic cost basis Opening book cost Â 1,600 20,142 1,011 22,753 Purchases at cost Â - 2,929 30 2,959 Sales at cost Â - (665) (48) (713) ----------------------------------------------- Closing book cost as at 31 December 2009 Â 1,600 22,406 993 24,999 ----------------------------------------------- Fixed asset investments held at fair value through the profit or loss account total Â£6,023,000 (2008: Â£4,792,000). Investments held at amortised cost total Â£12,852,000 (2008: Â£13,498,000). There has been no re-designation of fixed asset investments during the year. Movements in realised and unrealised losses differ from the amounts shown in note 3 as a result of the capitalisation of historic accrued loan stock income and deferred consideration. The disposal of fixed assets of Â£422,000 included in the Cash flow statement differs from the disposal proceeds above of Â£432,000, due to the proceeds of the restructuring of Vibrant Energy Services Limited of Â£47,000 reinvested in Green Energy Property Services Limited and deferred consideration of Â£37,000 received from the investment in Grosvenor Health Limited which was sold in the prior year. Additions of Â£1,819,000 included in the Cash flow statement differ from the additions in the note above, of Â£2,959,000, due to the capitalisation of Â£883,000 in respect of capital redemption premium for Evolutions Limited, the investment of Â£210,000 in Forth Photonics which had been a settlement debtor as at 31 December 2008, and Â£47,000 added to the cost of Green Energy Property Services Limited as a result of restructuring. In September 2009, Albion Development VCT PLC exchanged its shareholdings in Welland Inns VCT Limited (formerly Clear Pub Company VCT Limited), Novello Pub Limited and Pelican Inn Limited for a shareholding in Charnwood Pub Company Limited. The reorganisation resulted in the pubs being managed by a single management team. Fixed asset investment class valuation methodologies Quoted equity investments (both qualifying and non-qualifying) are valued at market bid price as at the balance sheet date. Unquoted loan stock investments are valued on an amortised cost basis. Loan stock using a fixed interest rate total Â£12,566,000 (2008: Â£13,049,000) and loan stock using a floating rate total Â£286,000 (2008: Â£449,000). 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 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. 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 | |Â | | +--------------------+---------------------------------------------------------+ |Level 3 |Inputs to valuations not based on observable market data.| +--------------------+---------------------------------------------------------+ The Ordinary shares' investments can be categorised in accordance with FRS 29 as follows; Â Â 31 December 2009 Â Â Level 1 Level 2 Level 3 Total Â Â Â£'000 Â£'000 Â£'000 Â£'000 -------------------------------------------------------------------------------- Financial assets at fair value through profit or loss: Quoted equity Â 1,270 - - 1,270 Unquoted equity Â - - 4,753 4,753 ------------------------------- Â Â 1,270 - 4,753 6,023 ------------------------------- The Ordinary shares' unquoted equity investments valued at fair value through profit or loss (level 3) had the following movements in the year to 31 December 2009: Â Â£'000 -------------------------------------------------- Opening balance as at 1 January 2009 3,599 Additions 1,081 Disposals (410) Unrealised gains on equity investments 483 --------- Closing balance as at 31 December 2009 4,753 --------- The Ordinary shares' unquoted equity investments are valued in accordance with the IPEVCV guidelines as follows; 31 31 Â December December 2009 2008 Valuation methodology Â£'000 Â£'000 ------------------------------------------------------------------------- Cost (reviewed for impairment) Â Â 431 Â Â 839 Net asset value supported by third party valuation Â Â 992 Â Â 839 Recent investment price Â Â 1,384 Â Â 808 Earning multiple Â Â 1,946 Â Â 1,113 ---------------------- Â Â Â 4,753 Â Â 3,599 ---------------------- The Ordinary shares portfolio had the following movements between valuation methodologies between 31 December 2008 and 31 December 2009: Value as at Change in valuation 31 December 2009 methodology (2008 to 2009) Â£'000 Explanatory note -------------------------------------------------------------------------------- Cost (reviewed for impairment) to recent investment price 551 Most recent investment price Cost (reviewed for impairment) Earnings are now being to earnings multiple 59 generated Recent investment price to Earnings are now being earnings multiple 69 generated 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 IPEVCV Guidelines. The Directors believe that, within these parameters, there are no other possible methods of valuation which would be reasonable as at 31 December 2009. 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 notingÂ that the valuation methodology applied to 50 per cent. of the equity investments (by valuation) is based on third party evidence,Â the Directors do not believe that changes to reasonable possible alternative assumptions for the valuation of the portfolio 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 investee company, it will not take a controlling interest or become involved in the day-to-day management of an investee company. The size and structure of the companies with unquoted securities may result in certain holdings in the portfolio representing a participating interest without there being any partnership, joint venture or management consortium agreement. The Company has interests of greater than 20 per cent. of the nominal value of any class of the allotted shares in the investee companies as at 31 December 2009, as described below: Company Country of Principal activity % class and % total incorporation share type voting rights -------------------------------------------------------------------------------- Xceleron Limited Great Britain Bio-analytical 26.0% A 3.9% services Ordinary Evolutions Great Britain Television and 27.0% A 23.7% Television post production Ordinary Limited The Q Garden Great Britain Garden centre 67.0% A 16.5% Company Limited operator Ordinary Consolidated PR Great Britain Public relations 50.0% A 12.3% Limited agency Ordinary Smiles Pub Great Britain Owner of 22.6% A 48.4% Company Limited residential Ordinary property Blackbay Limited Great Britain Mobile data 24.2% A 7.0% solutions Ordinary Prime Care Great Britain Domiciliary care 32.1% A 8.1% Holdings Limited services Ordinary As permitted by FRS 9, the investments listed above are held as part of an investment portfolio, and their value to the Company is as part of a portfolio of investments. Therefore these investments are not considered to be associated undertakings. 14. Current assets Current assets include the 31 December 2009 31 December 2008 following Ordinary shares D shares Total Ordinary shares Trade and other debtors Â£'000 Â£'000 Â£'000 Â£'000 -------------------------------------------------------------------------------- Prepayments and accrued income 24 1 25 4 VAT recovery - - - 488 UK corporation taxable receivable 136 - 136 - Other debtors 10 235 245 216 ------------------------------------------------- Â 170 236 406 708 ------------------------------------------------- The Directors consider that the carrying amount of debtors is not materially different from their fair value. Â 31 December 2009 31 December 2008 Ordinary shares D shares Total Ordinary shares Current asset investment Â£'000 Â£'000 Â£'000 Â£'000 -------------------------------------------------------------------------------- Citigroup floating rate note 26 March 2009 - - - 3,014 The Citigroup floating rate note matured on 26 March 2009 realising proceeds of Â£3,050,000. 15. Creditors: amounts falling due within one year Â 31 December 2009 31 December 2008 Ordinary shares D shares Total Ordinary shares Â Â£'000 Â£'000 Â£'000 Â£'000 ------------------------------------------------------------------------------ UK corporation tax payable - - - 255 Accruals and deferred income 200 78 278 103 Other creditors 28 - 28 11 ------------------------------------------------- Â 228 78 306 369 ------------------------------------------------- The Directors consider that the carrying amount of creditors is not materially different from their fair value. 16. Called up share capital Ordinary shares 31 December 31 December 2009 2008 Â Â£'000 Â£'000 -------------------------------------------------------------------------------- Authorised 50,000,000 Ordinary shares of 50p each (2008: 50,000,000) 25,000 25,000 ------------------------- Allotted, called up and fully paid 32,713,157 Ordinary shares of 50p each (2008: 32,613,482) 16,357 16,307 ------------------------- Shares in issue 29,669,431 Ordinary shares of 50p each in issue (net of treasury shares) (2008: 29,993,767) D shares 31 December 2009 Â£'000 ------------------------------------------------------------------------------- Authorised 40,000,000 D shares of 50p each 20,000 ------------- Allotted, called up and fully paid 1,433,600 D shares of 50p each 717 ------------- Shares in issue 1,433,600 D shares of 50p each in issue (net of treasury shares) The Company purchased 424,011 Ordinary shares (2008: 781,392) to be held in treasury at a cost of Â£268,000 (2008: Â£662,000) representing 1.4 per cent. of the shares in issue (excluding treasury shares) as at 31 December 2009. The Company holds a total of 3,043,726 Ordinary shares in treasury, representing 9.3 per cent. of the issued share capital as at 31 December 2009. As at 31 December 2009 there are no D shares held in treasury. Under the terms of the Ordinary shares' Dividend Reinvestment Scheme Circular dated 27 August 2008, the following Ordinary shares of 50 pence nominal value were allotted at a price of 75.2 pence per share during the year. Ordinary shares Opening market price per share on Aggregate allotment Number of nominal value Consideration date shares of shares received (pence per Date of allotment allotted Â£ Â£ share) -------------------------------------------------------------------------------- 25Â SeptemberÂ 2009 Â 99,675 Â 49,838 Â 74,956 Â 55 The first closing for the Offer for Subscription for D shares in the Company, at an issue price of 100 pence per D share, took place on 23 December 2009. Applications were received for 1,419,500 D Shares and, in addition, subscribers for the D shares whose applications were received on or before 23 December 2009 were entitled to receive 1 additional D share for every 100 D shares subscribed for; an additional 14,100 D shares were allotted under these arrangements. There were 1,433,600 D shares is issue as at 31 December 2009. D shares Aggregate nominal NetÂ consideration Number of shares value of shares received Date of allotment allotted Â£ Â£ -------------------------------------------------------------------------------- 23Â DecemberÂ 2009 Â 1,433,600 Â 716,800 Â 1,354,000 Subsequent to the year end, the following D shares of 50 pence nominal value have been allotted. Aggregate nominal Net consideration Number of shares value of shares received Date of allotment allotted Â£ Â£ -------------------------------------------------------------------------------- 28Â JanuaryÂ 2010 Â 561,425 Â 280,713 Â 530,000 -------------------------------------------------------------------------------- 25Â FebruaryÂ 2010 Â 112,150 Â 56,075 Â 106,000 -------------------------------------------------------------------------------- 15Â MarchÂ 2010 Â 408,425 Â 204,213 Â 386,000 -------------------------------------------------------------------------------- 23Â MarchÂ 2010 Â 652,295 Â 326,147 Â 617000 The net proceeds of all allotments to date under the terms of the Offer are Â£2,993,000. The Offer will remain open until 5 April 2010 in respect of the 2009/2010 tax year and 30 April 2010 in respect of the 2010/2011 tax year unless closed earlier. 17. Cancellation of the Ordinary share premium account Shareholders approved the cancellation of the Company's share premium account by way of special resolution at a General Meeting held on 28 October 2009. The ordinary shares share premium account amounting to Â£3.3 million was subsequently cancelled on 25 November 2009 by order of the High Court and the Notice regarding the cancellation was registered at Companies House on 11 December 2009. The purpose of this cancellation is to increase the special reserve available for distribution as dividends. The special reserve, amongst other purposes, can be used for making market purchases of Ordinary shares. The D shares' share premium account of Â£640,000 has arisen as a result of the allotments of D shares during the year as described in note 16. 18. Basic and diluted net asset values per share Â 31 December 2009 31 December 2008 Ordinary shares D shares Ordinary shares Â (pence per share) (pence per share) (pence per share) -------------------------------------------------------------------------------- Basic and diluted net asset values per share 79.3 94.6 84.8 TheÂ 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 the treasury shares of 29,669,431 Ordinary shares (2008: 29,993,767) and 1,433,600Â D shares as at 31 December 2009. 19. Analysis of changes in cash during the year Â YearÂ endedÂ 31Â DecemberÂ 2009 YearÂ endedÂ 31Â DecemberÂ 2008 Ordinary Ordinary shares D shares shares Â Â£'000 Â£'000 Â£'000 -------------------------------------------------------------------------------- Opening cash balances 3,790 - 3,991 Net cash inflow 919 1,199 (201) ------------------------------------------------------------------ Closing cash balances 4,709 1,199 3,790 ------------------------------------------------------------------ 20. Reconciliation of net return on ordinary activities before taxation to net cash inflow from operating activities Â YearÂ endedÂ 31Â DecemberÂ 2009 Â YearÂ endedÂ 31Â DecemberÂ 2008 Ordinary shares D shares Total Ordinary shares Â Â£'000 Â£'000 Â£'000 Â£'000 Revenue return on ordinary activities before taxation 790 1 791 1,674 Investment management fee charged to capital (406) (1) (407) (547) Recoverable VAT capitalised 82 - 82 310 Movement in accrued amortised loan stock interest 22 - 22 64 Decrease/(increase) in debtors 463 - 463 (481) Increase/(decrease) Â in creditors 100 - 100 (239) Net cash inflow from operating activities 1,051 - 1,051 781 21. Capital and financial instruments risk management The Company's capital comprises Ordinary shares and D 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 on page 22 of the Directors' report and enhanced business review within the full Annual Report and Financial Statements. The Company's financial instruments comprise equity and loan stock investments in unquoted companies, equity in main market quoted companies, floating rate notes, 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: * Investment (or market) risk (which comprises investment price and cash flow interest rate risk); * credit risk; and * liquidity risk. The Board regularly reviews and agrees policies for managing each of these risks. There have been no changes in the nature of the risks that the Company has faced during the past year, and apart from where noted below, there have been no changes in the objectives, policies or processes for managing risks during the past year. The key risks are summarised below. Investment risk As a venture capital trust, it is the Company's specific nature to evaluate and control the investment risk of its portfolio in quoted and unquoted investments, details of which are shown on pages 11 to 12 of the full annual report and financial statements. Investment risk is the exposure of the Company to the revaluation and devaluation of investments. The main driver of investment risk is the operational and financial performance of the investee company and the dynamics of market quoted comparators. The Manager receives management accounts from investee companies, and members of the investment management team often sit on the boards of unquoted investee companies; this enables the close identification, monitoring and management of investment risk. The Manager and the Board formally reviews 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 Ordinary shares maximum investment risk as at the balance sheet date is the value of the fixed and current asset investment portfolio which is Â£18,875,000 (2008: Â£21,304,000). Fixed and current asset investments form 80 per cent. of the Ordinary shares' net asset value as at 31 December 2009 (2008: 84 per cent.). More details regarding the classification of fixed and current asset investments are shown in notes 12 and 14. Investment price risk Investment price risk is the risk that the fair value of future investment cash flows will fluctuate due to factors specific to an investment instrument or to a market in similar instruments. To mitigate the investment price risk for the Company as a whole, the strategy of the Company is to invest in a broad spread of industries with approximately two-thirds of the unquoted investments comprising debt securities, which, owing to the structure of their yield and the fact that they are usually secured, have a lower level of price volatility than equity. Details of the industries in which investments have been made are contained in the Portfolio of Investments section on pages 11 to 12 in 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 and return for the year of Ordinary shares by Â£1,888,000 . 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. change in all LIBOR and base rates would have reduced total return before tax for the year by approximately Â£35,000. The weighted average interest rate applied to the Company's fixed rate assets during the year was approximately 6.1 per cent. (2008: 8.0 per cent.). The weighted average period to maturity for the fixed rate assets is approximately 2.8 years (2008:Â 2.4 years). The Company's financial assets and liabilities, all denominated in pounds sterling, consist of the following: Ordinary shares Â 31 December 2009 31 December 2008 Fixed Floating Non-interest Fixed Floating Non-interest rate rate bearing Total rate rate bearing Total Â Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 ------------------------------------------------------------------------------------- Unquoted equity - - 4,753 4,753 - - 3,599 3,599 Quoted equity - - 1,270 1,270 - - 1,193 1,193 Unquoted loan stock 12,566 286 - 12,852 13,049 449 - 13,498 Debtors - - 170 170 - - 708 708 Current liabilities - - (228) (228) - - (369) (369) Floating rate notes - - - - - 3,014 - 3,014 Cash 4,420 289 - 4,709 - 3,790 - 3,790 ------------------------------------------------------------------------- Total net assets 16,986 575 5,965 23,526 13,049 7,253 5,131 25,433 ------------------------------------------------------------------------- D shares Â 31 December 2009 Fixed rate Floating rate Non-interest bearing Total Â Â£'000 Â£'000- Â£'000 Â£'000 ------------------------------------------------------------------------- Debtors - - 236 236 Current liabilities - - (78) (78) Cash - 1,199 - 1,199 ----------------------------------------------------- Total net assets - 1,199 158 1,357 ----------------------------------------------------- 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 floating rate notes and cash on deposit with banks. The Manager evaluates credit risk on loan stock and floating rate note 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 investee company in order to mitigate the gross credit risk. The Manager receives management accounts from investee companies, and members of the investment management team often sit on the boards of unquoted investee companies; this enables the close identification, monitoring and management of investment specific credit risk. The Manager and the Board formally review credit risk (including debtors) and other risks, both at the time of initial investment and at quarterly Board meetings. The Company's total gross credit risk for Ordinary shares at 31 December 2009 was limited to Â£12,852,000 (2008: Â£13,498,000) of unquoted loan stock instruments, Â£170,000 debtors (2008: Â£708,000) and Â£4,709,000 (2008: Â£3,790,000) cash deposits with banks. The cost, impairment and carrying value of impaired loan stocks held at amortised cost at 31 December 2009 and 31 December 2008 are as follows: Â 31 December 2009 31 December 2008 Cost Impairment Carrying value Cost Impairment Carrying value Â Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 -------------------------------------------------------------------------------- Impaired loan stock 8,143 (2,742) 5,522 2,939 (885) 2,054 Impaired loan stock instruments have a first fixed charge or a fixed and floating charge over the assets of the investee company and the Board deem the security value to be the carrying value. The Company's total gross credit risk for D shares at 31 December 2009 was limited to Â£236,000 debtors and Â£1,199,000 of cash on deposit with banks. As at the balance sheet date, the cash held by the Company is held with the Royal Bank of Scotland plc, The Lloyds Group plc, HSBC plc, Standard Life and BNP Paribas Securities Services Custody Bank Limited. Credit risk on cash transactions is mitigated by transacting with counterparties that are regulated entities subject to regulatory supervision, with Moody's credit ratings of at least 'A' or equivalent as assigned by international credit-rating agencies. The Company has an informal policy of limiting counterparty banking and floating rate note exposure to a maximum of 20 per cent. of net asset value for any one counterparty. As at the year end the Company did not hold any floating rate notes. Liquidity risk Liquid assets are held as cash on current account, cash on deposit or short term money market account and as floating rate notes. 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 Â£2,488,300 (2008: Â£2,543,000) as at 31 December 2009. The Company has no committed borrowing facilities as at 31 December 2009 (2008: Â£nil) and the Company had cash balances of Â£5,908,000 (2008: Â£3,790,000). 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 Â£306,000 (2008: Â£369,000). The carrying value of Ordinary shares' loan stock investments held at amortised cost at 31 December 2009 as analysed by expected maturity dates is as follows: Fully performing Renegotiated loan Impaired loan loan stock stock stock Total Redemption date Â£'000 Â£'000 Â£'000 Â£'000 -------------------------------------------------------------------------------- Less than one year 114 34 97 245 1-2 years 1,583 905 134 2,622 2-3 years 429 48 3,995 4,472 3-5 years 2,820 1,397 1,296 5,513 -------------------------------------------------------------- Total 4,946 2,384 5,522 12,852 -------------------------------------------------------------- The carrying value of Ordinary shares' loan stock investments held at amortised cost at 31 December 2008 as analysed by expected maturity dates is as follows: Fully performing Renegotiated loan Impaired loan loan stock stock stock Total Redemption date Â£'000 Â£'000 Â£'000 Â£'000 -------------------------------------------------------------------------------- Less than one year 3,238 - 401 3,639 1-2 years 737 1,278 450 2,465 2-3 years 1,258 552 562 2,372 3-5 years 3,268 1,113 641 5,022 -------------------------------------------------------------- Total 8,501 2,943 2,054 13,498 -------------------------------------------------------------- Loan stock investments disclosed above as renegotiated would otherwise have been disclosed as past due. In view of the factors identified above, the Board considers that the Company is subject to low liquidity risk. Fair values of financial assets and financial liabilities All of the Company's financial assets and liabilities as at 31 December 2009 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 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 from the fair value and all are payable within one year. 22. Post balance sheet events Since 31 December 2009 the Company has had the following post balance sheet events: * Investment in Mi-Pay Limited of Â£55,000 in February 2010. * Investment in GB Pub Company VCT Limited of Â£4,000 in February 2010. * Investment in Prime Care Holdings Limited of Â£130,000 in March 2010. * Investment in Oxsensis Limited of Â£47,000 in March 2010 23. Related party transactions The Manager, Albion Ventures LLP, is considered to be a related party by virtue of the fact that the Manager is party to a Management Agreement from the Company (details disclosed on page 20 of the full Annual Report and Financial Statements). During the year, services of a total value of Â£542,000 (2008: Â£731,000) were purchased by the Company from Albion Ventures LLP. At the financial year end, the amount due to Albion Ventures LLP disclosed as accruals and deferred income was Â£143,000 (2008: Â£49,000). Albion Ventures LLP acts as receiving agent and a promoter for the Offer for Subscription of D shares. Under the terms of the Offer, Albion Ventures is entitled to receive 5.5 per cent. of funds raised under the Offer in exchange for underwriting the costs of the Offer. As at 31 December 2009, Albion Ventures LLP had charged, and was owed Â£48,000 in respect of the fee due following the first allotment on 23 December 2009. Albion Ventures LLP has reclaimed VAT from HMRC as described in note 6. A sum of Â£108,000 for Ordinary shares (2008: Â£414,000 for Ordinary shares) has been recognised in the Income statement for the year reflecting a gross receipt of Â£110,000 (2008: Â£488,000), less a creditor for Â£2,000 (2008: Â£74,000) in respect of related historic fees to be paid to Albion Ventures LLP. Albion Ventures LLP holds 331 fractional entitlement shares of the Company as a result of the conversion of C shares to Ordinary shares in March 2007. These shares will be sold for the benefit of the Company at a future date. Albion Ventures LLP also holds 14,000 Ordinary shares as a result of the failure of an original subscriber to pay cleared funds on initial subscription. 24. 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 external investment professionals. 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 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 advisers. PricewaterhouseCoopers LLP report quarterly to the Board to independently confirm compliance with the venture capital trust legislation, to highlight areas of risk and to inform on changes in legislation. 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, 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 Board met with the Partner of Littlejohn LLP responsible for the Albion Ventures LLP internal audit 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 20 of the full Annual Report and Financial Statements). In addition, the Manager has demonstrated to the Board that there is no undue reliance placed upon any one individual within Albion Ventures LLP. 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 21 to the financial statements. All of the Company's income and expenditure is denominated in sterling and hence the Company has no foreign currency risk. The Company is financed through equity and does not have any borrowings. The Company does not use derivative financial instruments. Key financial risks are noted in note 21 above. 25. 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 31Â December 2009 and 31Â DecemberÂ 2008, and is derivedÂ from theÂ statutory accounts for the financial year, which have been or in the case of the accounts for the year ended 31Â DecemberÂ 2009, 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'sÂ Annual General Meeting will be held at the City ofÂ London Club,Â 19 Old Broad Street,Â London,Â EC2N 1DSÂ on 25 June 2010Â at 12 noon. 26. Publication The full audited Annual Report and Financial StatementsÂ is 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 atÂ www.albion-ventures.co.uk < http://www.albion-ventures.co.uk/>Â under the 'Our Funds' section. [HUG#1397912] Albion Development pie chart.pdf: http://hugin.info/141803/R/1397912/353666.pdf Annual Financial Report: http://hugin.info/141803/R/1397912/353665.pdf

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Albion Development VCT (AADV)

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