Kings Arms Yard VCT PLC: Annual Financial Report

Kings Arms Yard VCT PLC

As required by the UK Listing Authority's Disclosure and Transparency Rules 4.1 and 6.3, Kings Arms Yard VCT PLC today makes public its information relating to the Annual Report and Financial Statements for the year ended 31 December 2014.

This announcement was approved for release by the Board of Directors on 27 March 2015.

This announcement has not been audited.

You will shortly be able to view the Annual Report and Financial Statements for the year to 31 December 2014 (which have been audited) at: www.albion-ventures.co.uk by clicking on 'Our Funds' and then 'Kings Arms Yard VCT PLC'. The Annual Report and Financial Statements for the year to 31 December 2014 will be available as a PDF document via a link under the 'Investor Centre' in the 'Financial Reports and Circulars' section. The information contained in the Annual Report and Financial Statements will include information as required by the Disclosure and Transparency Rules, including Rule 4.1.

Investment objectives

The Company is a Venture Capital Trust.  The investment policy is intended to produce a regular and predictable dividend stream with an appreciation in capital value as set out below.

• The Company intends to achieve its strategy by adopting an investment policy for new investments which over time will rebalance the portfolio such that approximately 50 per cent. of the portfolio comprises an asset-backed portfolio of more stable, ungeared businesses, principally operating in the healthcare, environmental and leisure sectors (the "Asset-Backed Portfolio").  The balance of the portfolio, other than funds retained for liquidity purposes, will be invested in a portfolio of higher growth businesses across a variety of sectors of the UK economy.  These will range from more stable, income producing businesses to a limited number of higher risk technology companies (the "Growth Portfolio").
• In neither category would portfolio companies normally have any external borrowing with a charge ranking ahead of the Company.  Up to two-thirds of qualifying investments by cost will comprise loan stock secured with a first charge on the portfolio company's assets.
• The Company's investment portfolio will thus be structured to provide a balance between income and capital growth for the longer term.  The Asset-Backed Portfolio is designed to provide stability and income whilst still maintaining the potential for capital growth.  The Growth Portfolio is intended to provide highly diversified exposure through its portfolio of investments in unquoted UK companies.
• Funds held pending investment or for liquidity purposes will be held as cash on deposit or in floating rate notes or similar instruments with banks or other financial institutions with high credit ratings assigned by international credit rating agencies.

Financial calendar

Financial highlights

The Directors have declared a first dividend of 0.5 pence per share for the year ending 31 December 2015, which will be paid on 30 April 2015 to shareholders on the register as at 10 April 2015.

The above financial summary is for the Company, Kings Arms Yard VCT PLC only.  Details of the financial performance of the various Quester, SPARK and Kings Arms Yard VCT 2 PLC companies, which have been merged into the Company, can be found on page 60 of the full Annual Report and Financial Statements.

Chairman's statement

Introduction
2014 saw a continuation in the rebalancing of the Company's portfolio, with £8.2 million of new investments and a further £3.2 million received from the sales of older investments. Approximately one third of net asset value is now represented by income producing, asset-backed investments. This has meant that, although the decline in the value of one quoted and one unquoted investment led to a small overall negative return of 0.16p per share, regular income from new, particularly asset backed, investments is now covering the VCT's costs. Therefore, although I am disappointed with the results for the year, I note that it is not unexpected for a venture capital portfolio to experience volatility and that the total return per share for the three years ended 31 December 2014 exceeds 34%.

Results
Net asset value per share reduced from 20.45p on 31 December 2013 to 19.31p on 31 December 2014 after allowing for the payment of dividends totalling 1 penny per share during the year. 

The Company recorded a negative return of £0.3 million for the year to 31 December 2014, driven primarily by a decline in the share price of Oxford Immunotec since the company listed on NASDAQ in November 2013, and slower progress than hoped for at Elateral. Against this, there was strong performance from our renewable energy businesses, which as well as being cash generative, benefitted from an increase in third party professional valuations of £0.6 million. In addition, strong progress at Cluster Seven and Proveca both resulted in material increases in value.

During 2014, £8.2 million was invested into unquoted companies, predominantly in the healthcare and technology sectors, including £1.0 million into renewable energy projects, £3.0 million into freehold care homes, £0.2 million into a freehold hospital and £4.0 million into the high growth portfolio. Further information on all new investments is contained in the Strategic report. The main exit in the year was the long-standing investment in Atego which realised £2.8 million (including the amounts held in escrow). This is a strong result, given the investment had been written down to c.5% of cost in June 2010 prior to Albion's appointment.

Following another year of active new investment, cash and liquid assets at the year-end fell to £0.8 million (2013: £5.0 million).

Dividend
We are pleased to declare a first dividend of 0.5p per share to be paid on 30 April 2015 to shareholders on the register on 10 April 2015 and anticipate that a second dividend will be paid later in the year in line with our current dividend target of 1 penny per share.

VCT qualifying status
As at 31 December 2014, 87% of total investments were in qualifying holdings.  The Board continues to monitor this position very carefully in order to ensure that qualifying investments comfortably exceed the minimum threshold of 70% required for the Company to continue to benefit from VCT tax status.

Albion VCTs Prospectus Top Up Offers 2014/2015
On 17 November 2014, the Company announced it was seeking to raise £6 million as part of the Albion Prospectus VCTs Top Up Offers. The Company has raised £1.1 million under this fundraising as at the date of this report, with a further allotment due on 2 April 2015.
Details of the offers are set out in a Prospectus (comprising a Securities Note, Registration Document and Summary) which has been sent to shareholders and these can be downloaded from www.albion-ventures.co.uk.

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 Company's interest, including the maintenance of sufficient resources for investment in new and existing portfolio companies and the continued payment of dividends to shareholders. It is the Board's intention for such buy-backs to be in the region of a 5% discount to net asset value, so far as market conditions and liquidity permit. During 2014, the Company purchased 8,129,000 Ordinary shares of which 6,995,000 are held in treasury and 1,134,000 were cancelled.  Further information is shown in note 14. These shares were bought at a discount resulting in a 0.02p uplift in net asset value per share for continuing shareholders. The Company intends to limit the sum available for share buy-backs for the six month period to 30 June 2015 to £750,000.

Transactions with the Manager
Details of transactions that took place with the Manager during the year can be found in note 4 and principally relate to the management fee.

Performance incentive fee
No performance fee is due for the year ended 31 December 2014 as the total return is below the hurdle. 

Further details can be found in the Strategic report below.

Annual General Meeting
The Annual General Meeting of the Company will be held at the City of London Club, 19 Old Broad Street, London EC2N 1DS at 11.00am on 14 May 2015.  Full details of the business to be conducted at the Annual General Meeting are given in the Notice of the Meeting on page 55 of the full Annual Report and Financial Statements.

The Board welcomes your attendance at the meeting as it gives an opportunity for shareholders to ask questions of the Board and Investment Manager.  If you are unable to attend the Annual General Meeting in person, we would encourage you to make use of your proxy votes.

Continuation as Venture Capital Trust
At the 2015 Annual General Meeting members will have the opportunity to confirm that they wish the Company to continue as a Venture Capital Trust. If this resolution is not passed the Board is required to make proposals for the reorganisation, reconstruction or the orderly liquidation and winding up of the Company and present these to the members at a general meeting. Those shareholders who have deferred a capital gain by investing in the VCT should note that, on a return of capital, that gain would become chargeable at the prevailing rate of capital gains tax.

Your Board believes that Kings Arms Yard VCT PLC has the potential to be a highly effective long-term savings vehicle, with strong tax-free dividend streams. Therefore the Board recommends that shareholders should vote in favour of the Company continuing as a Venture Capital Trust for a further five years, as they intend to vote in respect of their own shares.

Risks and uncertainties
The outlook for the UK economy continues to be the key risk affecting your Company.  The Company's investment risk is mitigated through a variety of processes, including our policy of ensuring that the Company has a first charge over portfolio companies' assets wherever possible.

A detailed analysis of the other risks and uncertainties facing the business is shown in the Strategic report below.

Outlook and prospects
Total return per share has exceeded 34% over the last three years and the proportion of asset backed, income producing investments now represents approximately 32% of net asset value as a result of the investment strategy instigated by the Board and implemented by the new Manager. We are encouraged by the continuing transformation of the portfolio and despite the small negative return in the year, we are positive about the Company's prospects and continue to expect the portfolio to benefit from the improving economic conditions and confidence.

Robin Field
Chairman
27 March 2015

Strategic report

Investment objective and policy
The Company is a Venture Capital Trust.  The investment policy is intended to produce a regular and predictable dividend stream with an appreciation in capital value as set out below.

The Company intends to achieve its strategy by adopting an investment policy for new investments which over time will rebalance the portfolio such that approximately 50 per cent. of the portfolio comprises an asset-backed portfolio of more stable, ungeared businesses, principally operating in the healthcare, environmental and leisure sectors (the "Asset-Backed Portfolio").  The balance of the portfolio, other than funds retained for liquidity purposes, will be invested in a portfolio of higher growth businesses across a variety of sectors of the UK economy.  These will range from more stable, income producing businesses to a limited number of higher risk technology companies (the "Growth Portfolio").

In neither category would portfolio companies normally have any external borrowing with a charge ranking ahead of the Company.  Up to two-thirds of qualifying investments by cost will comprise loan stock secured with a first charge on the portfolio company's assets.

The Company's investment portfolio will thus be structured to provide a balance between income and capital growth for the longer term.  The Asset-Backed Portfolio is designed to provide stability and income whilst still maintaining the potential for capital growth.  The Growth Portfolio is intended to provide highly diversified exposure through its portfolio of investments in unquoted UK companies.

Funds held pending investment or for liquidity purposes will be held as cash on deposit or in floating rate notes or similar instruments with banks or other financial institutions with high credit ratings assigned by international credit rating agencies.

Review of business and future changes
A detailed review of the Company's business during the year and future prospects is contained in the Chairman's statement.

One of the key aims of the Manager has been to increase the income generated by the investment portfolio to the extent that it more than covers the investment management and other charges. This has now been achieved, with total income for 2014 of £1.12 million against total costs of £1.07 million. This is equivalent to a gross yield of 2.5% on the average net asset value for the year. As the asset based portfolio increases in the current year, we would expect the Company's income to grow accordingly. 

As outlined below, the Company has recorded its first annual capital loss since Albion Ventures took over management in January 2011.  Although the majority of the portfolio companies performed well during the year and increased in value, the two largest investments offset these gains. A decrease in the share price of Oxford Immunotec Global PLC, which is listed on NASDAQ, led to its value decreasing by £1,138,000 during the year, while Elateral Group Holdings Limited saw a reduction in value of £943,000 due to slower than expected growth.

On a more positive note, the renewable energy portion of the portfolio performed particularly well, with an increase in valuations of £581,000, and at the same time the Company has reached its target holding of 20% in renewable energy investments.

The Directors do not foresee any major changes in the activity undertaken by the Company in the current year. The Company continues with its objective to invest in unquoted companies throughout the United Kingdom with a view to providing both capital growth and a reliable dividend income to shareholders over the longer term.

Details of significant events which have occurred since the end of the financial year are listed in note 20. Details of transactions with the Manager are shown in note 4.

Results and dividends

The Company paid a dividend of 1 penny per share during the year ended 31 December 2014 (2013: 1 penny per share). The Directors have declared a first dividend of 0.5 pence per share for the year ending 31 December 2015, which will be paid on 30 April 2015 to shareholders on the register at 10 April 2015.

It is the Company's policy to maintain a sustainable, predictable dividend policy with the current level of annual pay-out set at the time that Albion Ventures took over as Manager at 1 penny per share. It is disappointing that the dividend for 2014 was not covered by the total return for the year. Nevertheless, it was covered 3.1 times in 2012 and 2.35 times in 2013, and we are confident that over the medium term it will continue to be covered.

As shown in the Income statement below, investment income has decreased to £1,119,000 (2013: £1,624,000). The decrease is as a result of a one-off distribution from Antenova Limited in the prior year of £797,000 following the disposal of its main business. Excluding one-off distributions, investment income has increased by £180,000 (22%) during the year.

As a result of the prior year Antenova Limited dividend, the revenue return to equity holders has also decreased to £535,000 (2013: £1,147,000). Adjusting for this dividend, revenue return to equity holders has increased by £185,000.  General expenses decreased slightly during the year to £270,000 (2013: £289,000).

The capital loss for the year was £859,000 (2013: gain of £3,509,000). A portion of management fees also continued to be allocated to capital.

The total loss was 0.16 pence per share (2013: return of 2.35 pence per share).

The Balance sheet below shows that the net asset value has decreased over the last year to 19.31 pence per share (2013: 20.45 pence per share) which is due to the payment of 1 penny per share of dividends during the year and the small loss for the year as noted above.

There has been a net cash outflow for the year, due mainly to the purchase of new investments, the payment of dividends and buy-back of shares, offset by the net cash inflow from operating activities and disposal of fixed asset investments.

Current portfolio sector allocation
The two pie charts at the end of this announcement outline firstly the different sectors in which the Company's assets, at carrying value,  are currently invested, and secondly, delineates between those investments, at carrying value, by asset class.

Direction of portfolio
The sector analysis of the Company's investment portfolio shows that the Company has made its first investments into care homes, which enlarges the broader exposure to the Healthcare sector such that it now accounts for 9% of the portfolio after making investments in Active Lives Care and Ryefield Court Care. These portfolio companies will own and operate a residential care home for the elderly in Oxford and Greater London respectively. We anticipate the Healthcare sector increasing in importance in the current period, as it is an area that the Manager has targeted for value creation and a good potential source of recurring income.

The Company has also reached its target percentage for the renewable energy sector, which now accounts for 21% of net assets (19% by cost) compared to 17% at the end of the previous financial year.

Future prospects
The Company's performance record reflects the success of the strategy outlined above and has enabled the Company to maintain a predictable stream of dividend payments to shareholders. The Board believes that this model will continue to meet the investment objective and has the potential to continue to deliver attractive returns to shareholders and that a number of investments in the growth portfolio, both old and new, have strong prospects. Further details on the Company's outlook and prospects can be found in the Chairman's statement.

Key performance indicators
The Directors believe that the following key performance indicators, which are typical for venture capital trusts, used in its own assessment of the Company, will provide shareholders with sufficient information to assess how effectively the Company is applying its investment policy to meet its objectives

1. Net asset value total return relative to FTSE All-Share Index total return
The graph on page 4 of the full Annual Report and Financial Statements shows the Company's net asset value total return against the FTSE All-Share Index total return, with dividends reinvested, from the appointment of Albion Ventures LLP on 1 January 2011.  Details on the performance of the net asset value and return per share for the year are given above.

2. Net asset value per share and cumulative net asset value total shareholder return

Cumulative net asset value total return to shareholders decreased by 0.17% to 81.64 pence for the year ended 31 December 2014.

3. Dividend distributions

Dividends paid in respect of the year ended 31 December 2014 were 1 penny per share (2013: 1 penny per share), in line with the Board's dividend objective.  The cumulative dividend paid since inception is 62.33 pence per share.

4. Ongoing charges
The ongoing charges ratio for the year to 31 December 2014 was 2.7% (2013: 2.7%).  The ongoing charges ratio has been calculated using The Association of Investment Companies ("AIC") recommended methodology.  This figure shows shareholders the total recurring annual running expenses (including investment management fees charged to capital reserve) as a percentage of the average net assets attributable to shareholders.  The Directors expect the ongoing charges ratio for the next year to be approximately 2.7%.

VCT regulation
The investment policy is designed to ensure that the Company continues to qualify and is approved as a VCT by HMRC. In order to maintain its status under Venture Capital Trust legislation, a VCT must comply on a continuing basis with the provisions of Section 274 of the Income Tax Act 2007, details of which are provided in the Directors' report on pages 21 and 22 of the full Annual Report and Financial Statements.

As part of the Government's wider review of the VCT regime, new rules have been introduced under the Finance Act 2014, which include:

• allowing investors to subscribe for shares via nominee accounts;
• restricting individuals' entitlement to VCT income tax relief where investments have been made within six months of a disposal of shares in the same VCT; and
• preventing VCTs from returning capital that does not relate to profits on investments within three years of the end of the accounting period in which shares were issued to investors.

The Directors do not believe that updates to the Finance Act would create a material change in the way the Company is
currently run.

The relevant tests to measure compliance have been carried out and independently reviewed for the year ended 31 December 2014. These showed that the Company has compiled with all tests and continues to do so.

Investment progress
During the year, there was a very active period of new investment, with a total of £8.2 million invested in new and existing portfolio companies. We continued to bias new investment activity towards asset-backed opportunities with the potential to produce a strong level of income, whilst still investing in companies providing the potential for significant capital growth. A total of £1.0 million was invested during the year into the renewable energy sector; £3.0 million into care homes; £0.2 million into a freehold hospital; and a further £4.0 million in companies offering the potential of high growth.

Cash and liquid assets at the year-end fell to £798,000 (2013: £5.0 million), representing 2% of net asset value.

New investments were made in 9 companies and totalled £5.1 million during the year and included: two care home projects - Active Lives Care Limited (£1,912,000) and Ryefield Court Care Limited (£1,054,000); one psychiatric hospital - Orchard Portman Group (£175,000);  a wind project - Infinite Ventures (Goathill) Limited (£112,000); one medical investment - Mirada Medical Limited (£190,000); and four technology investments - Egress Software Technologies Limited (£430,000), Omprompt Limited (£900,000), Grapeshot Limited (£280,000) and Sandcroft Avenue Limited (£84,000).

Follow-on investments were made in 13 portfolio companies and totalled £3.1 million during the year. The three largest follow-on investments were £1 million into Elateral Group Holdings Limited; and £573,000 into Chonais Holdings Limited and £330,000 in Green Highland Renewables (Ledgowan) Limited, to complete the development of two new hydroelectricity plants in Scotland.

During the year Atego was disposed of, realising proceeds of £2.75 million and a gain on cost of £1.8 million. The Company also sold 26,640 Oxford Immnotec Global shares with proceeds of £227,000 and a realised gain of £124,000 on cost.

The policy of increasing the income generating capacity of the Company continues to bear fruit. The Company received £892,000 of loan stock income during the year, representing a rise of over 55% on the £574,000 income received from the portfolio during the previous year.

The pie chart at the bottom of this announcement outlines the different sectors in which the Company's assets, at carrying value, are currently invested.

Gearing
As defined by the Articles of Association, the Company's maximum exposure in relation to gearing is restricted to the amount equal to the adjusted capital and reserves, being £37,905,000 (2013:  £38,276,000).  As at 31 December 2014, the Company's actual short term and long term gearing was £nil (2013: £nil).  The Directors do not currently have any intention to utilise long term gearing.

Operational arrangements
The Company has delegated the investment management of the portfolio to Albion Ventures LLP, which is authorised and regulated by the Financial Conduct Authority. Albion Ventures LLP also provides company secretarial and other accounting and administrative support to the Company.

Management agreement
Under the Management agreement, Albion Ventures LLP provides investment management, company secretarial and administrative services to the Company.  Albion Ventures LLP is entitled to an annual management fee of 2% of net asset value of the Company, payable quarterly in arrears, along with an annual administration fee of £50,000. 

Under the terms of the Management agreement, the aggregate payable for management and administration (normal running costs) are subject to an aggregate annual cap of 3% of the year end closing net asset value, for accounting periods commencing after 31 December 2011.

The Management agreement can be terminated by either party on 12 months' notice and is subject to earlier termination in the event of certain breaches or on the insolvency of either party.

In line with common practice, the Manager is entitled to arrangement fees payable by portfolio companies (up to a maximum of 2% of the amount invested) and to fees charged for the monitoring of investments (up to a maximum of £20,000 per company per annum). 

Performance incentive fee
In order to provide the Manager with an incentive to maximise the return to investors, the Manager is entitled to charge an incentive fee in the event that the returns exceed minimum target levels.

The performance hurdle is equal to the greater of the Starting NAV of 20 pence per share, increased by the increase in RPI plus 2% per annum from the Start Date of 1 January 2014 (calculated on a simple and not compound basis) and the highest Total Return for any earlier period after the Start Date (the 'high watermark'). An annual fee (in respect of each share in issue) of an amount equal to 15 per cent. of any excess of the Total Return (this being NAV per share plus dividends paid after the Start Date) as at the end of the relevant accounting period over the performance hurdle will be due to the Manager.

There was no management performance incentive fee payable during the year (2013: nil). As at 31 December 2014 the cumulative shortfall of the target return was 0.90 pence per share and this amount needs to be made up in the next accounting period before an incentive fee becomes payable.

Evaluation of the Manager
The Board has evaluated the performance of the Manager based on the returns generated by the Company from the management and sale of existing investments, the continuing achievement of the 70% investment requirement for Venture Capital Trust status, the making of new investments in accordance with the investment policy, the long term prospects of current investments, a review of the Management agreement and the services provided therein and benchmarking the performance of the Manager to other service providers.

The Board believes that it is in the interests of shareholders as a whole, and of the Company, to continue the appointment of the Manager for the forthcoming year.

Alternative Investment Fund Managers Directive ("AIFMD")
The Board has considered the impact on your Company of the AIFMD, an EU Directive that came into force in July 2013 to regulate the Managers of Alternative Investment Funds. The Board appointed Albion Ventures LLP as the Company's AIFM as required by the AIFMD. Albion Ventures LLP's registration as an AIFM was approved by the Financial Conduct Authority on 3 June 2014.

Discount management and share buy-back policy
It remains the Board's primary objective to maintain sufficient resources for investment in existing and new portfolio companies and for the continued payment of dividends to shareholders.  The Board's policy is to buy back shares in the market, subject to the overall constraint that such purchases are in the Company's interest.

It is the Board's intention for such buy-backs to be in the region of a 5% discount to net asset value, so far as market conditions and liquidity permit.

Further details of shares bought back during the year ended 31 December 2014 can be found in note 14 of the Financial Statements.

Social and community issues, employees and human rights
The Board recognises the requirement under section 414c of the Companies Act 2006 (the "Act") to detail information about social and community issues, employees and human rights; including any policies it has in relation to these matters and effectiveness of these policies. As an externally managed investment company with no employees, the Company has no policies in these matters and as such these requirements do not apply.

Further policies
The Company has adopted a number of further policies relating to:

• Environment
• Global greenhouse gas emissions
• Anti-bribery
• Diversity

and these are set out in the Directors' report on page 22 of the full Annual Report and Financial Statements.

Risk management
The Board carries out a regular review of the risk environment in which the Company operates. The principal risks and uncertainties of the Company as identified by the Board and how they are managed are as follows:

This Strategic report of the Company for the year ended 31 December 2014 has been prepared in accordance with the requirements of section 414A of the Companies Act 2006 (the "Act"). The purpose of this report is to provide Shareholders with sufficient information to enable them to assess the extent to which the Directors have performed their duty to promote the success of the Company in accordance with section 172 of the Act.

The Strategic report was approved by the Board of Directors on 27 March 2015 and was signed on its behalf by:

Robin Field
Chairman
27 March 2015

Responsibility Statement

In preparing these Financial Statements for the year to 31 December 2014, the Directors of the Company, being Robin Field, Thomas Chambers and Martin Fiennes, 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 2014 for the Company has been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (UK Accounting Standards and applicable law) and give a true and fair view of the assets, liabilities, financial position and profit and loss of the Company for the year ended 31 December 2014 as required by DTR 4.1.12.R;
 -the Chairman's statement and Strategic report include a fair review of the information required by DTR 4.2.7R (indication of important events during the year ended 31 December 2014 and description of principal risks and uncertainties that the Company faces); and
  -the Chairman's statement and Strategic report include a fair review of the information required by DTR 4.2.8R (disclosure of related parties transactions and changes therein).
 A detailed "Statement of Directors' responsibilities for the preparation of the Company's Financial Statements" is contained within the full audited Annual Report and Financial Statements.

By order of the Board

Robin Field
Chairman
27 March 2015

Income statement

* excluding treasury shares

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

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

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

The Company has only one class of business and derives its income from investments made in shares and securities and from bank deposits.

There are no recognised gains or losses other than the results for the year disclosed above. Accordingly a Statement of total recognised gains and losses has not been prepared.

The difference between the reported profit/(loss) on ordinary activities before tax and the historical cost profit/(loss) is due to the fair value movements on investments.  As a result, a note on historical cost profits and losses has not been prepared.

Balance sheet

* excluding treasury shares

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

The Financial Statements were approved by the Board of Directors and authorised for issue on 27 March 2015 and were signed on its behalf by:

Robin Field
Chairman

Company number: 03139019

Reconciliation of movements in shareholders' funds

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

Unrealised gains and losses arising on investments held at fair value are transferred to the investment holding reserve.

The total reserves available for distribution are £29,240,000 (2013:  £35,370,000).

Cash flow statement

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

* The equity dividends paid shown in the cash flow are different to the dividends posted to reserves due to the release of dividend creditors recoverable by the Company and the non-cash effect of the Dividend Reinvestment Scheme.

Notes to the Financial Statements

1. Accounting policies
A summary of the principal accounting policies which have been applied consistently in the current and in prior periods, is set out below. 

Basis of accounting
The Financial Statements have been prepared in accordance with the historical cost convention, modified to include the revaluation of investments, in accordance with applicable UK 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.  The accounts are prepared on a going concern basis.

Consolidation
As permitted by FRS 2 "Accounting for Subsidiary Undertakings", holdings in excess of 50% of the equity of a portfolio company may be excluded from consolidation where the holding is held exclusively for subsequent resale.

The results of UniServity Limited, where the Company holds in excess of 50% of that company's equity are, therefore, excluded from consolidation as the interest in UniServity Limited is held exclusively for subsequent resale and has not previously been consolidated.

Fixed asset investments
The Company's business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth.  This portfolio of financial assets is managed and its performance evaluated on a fair value basis, in accordance with a documented investment policy, and information about the portfolio is provided internally on that basis to the Board.

Upon initial recognition (using trade date accounting) investments are designated by the Company as 'at fair value through profit or loss' and are included at their initial fair value, which is cost (excluding expenses incidental to the acquisition which are written off to the Income statement).

Subsequently, the investments are valued at 'fair value', which is measured as follows:

• Investments listed on recognised exchanges are valued at their bid prices at the end of the accounting period or otherwise at fair value based on published price quotations;
  
  
• Unquoted investments, where there is not an active market, are valued using an appropriate valuation technique in accordance with the IPEVCV Guidelines. Indicators of fair value are derived using established methodologies including earnings multiples, the level of third party offers received, prices of recent investment rounds, net assets and industry valuation benchmarks. Where the Company has an investment in an early stage enterprise, the price of a recent investment round is often the most appropriate approach to determining fair value. In situations where a period of time has elapsed since the date of the most recent transaction, consideration is given to the circumstances of the portfolio company since that date in determining fair value.  This includes consideration of whether there is any evidence of deterioration or strong definable evidence of an increase in value. In the absence of these indicators, the investment in question is valued at the amount reported at the previous reporting date. Examples of events or changes that could indicate a diminution include:
   
• the performance and/or prospects of the underlying business are significantly below the expectations on which the investment was based;
• a significant adverse change either in the portfolio company's business or in the technological market, economic, legal or regulatory environment in which the business operates; or
• market conditions have deteriorated, which may be indicated by a fall in the share prices of quoted businesses operating in the same or related sectors.

In accordance with the exemptions under FRS 9 "Associates and joint ventures", those undertakings in which the Company holds more than 20 per cent. of the equity as part of an investment portfolio are not accounted for using the equity method. In these circumstances the investment is accounted for according to FRS 26 "Financial instruments Recognition and Measurement" and measured at fair value through profit and loss.

Current asset investments
Contractual future contingent receipts on disposal of fixed asset investments held as current assets are designated at fair value through profit or loss and are subsequently measured at fair value.

In accordance with FRS 26, fixed term deposits used for cash management are designated as fair value through profit or loss. These investments are classified as current asset investments as they are investments held for the short term.

Gains and losses on investments
Gains and losses arising from changes in the fair value of the investments are included in the Income statement for the year as a capital item and are allocated to Investment holding reserves.

Investment income
Dividends receivable on quoted equity shares are recognised on the ex-dividend date.  Income receivable on unquoted equity and non-equity shares and loan notes is recognised when the Company's right to receive payment and expect settlement is established.  Fixed income returns on non-equity shares and debt securities are recognised on an effective interest rate, provided there is no reasonable doubt that payment will be received in due course.

Investment management fees and other expenses
All expenses, including expenses incidental to the acquisition or disposal of an investment, are accounted for on an accruals basis and are charged wholly to the Income statement except for 75% of management fees which are allocated to capital to the extent that these relate to an enhancement in the value of the investments.  This is in line with the Board's expectation that over the long term 75% of the Company's investment returns will be in the form of capital gains.

Costs associated with the issue of shares are charged to the share premium account.  Costs associated with the buy-back of shares are charged to other distributable reserve, which now includes the special reserve to which these costs were previously charged.

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. Deferred tax assets and liabilities are not discounted.

Foreign exchange
The currency of the primary economic environment in which the Company operates (the functional currency) is pounds Sterling ("Sterling"), which is also the presentational currency of the Company.  Transactions involving currencies other than Sterling are recorded at the exchange rate ruling on the transaction date.  At each Balance sheet date, monetary items and non-monetary assets and liabilities that are measured at fair value, which are denominated in foreign currencies, are retranslated at the closing rates of exchange.  Exchange differences arising on settlement of monetary items and from retranslating at the Balance sheet date of investments and other financial instruments measured at fair value through profit or loss, and other monetary items, are included in the Income statement.  Exchange differences relating to investments and other financial instruments measured at fair value are subsequently included in the Investment holding reserve.

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 other distributable reserve.

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

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

Other distributable reserve
This reserve accounts for movements from the revenue column of the Income statement, gains and losses compared to cost on the realisation of investments, expenses charged in accordance with the above policies, the payment of dividends, the buy-back of shares and other non capital realised movements.

Dividends
In accordance with FRS 21 "Events after the balance sheet date", dividends by the Company are accounted for in the period in which the dividend is paid or approved at the Annual General Meeting. 

Interest income earned on impaired investments at 31 December 2014 was £nil (2013:  £nil).

Further details of the Management agreement under which the investment management fee is paid are given in the Strategic report.

During the year, services with a value of £801,000 (2013: £761,000) and £50,000 (2013:  £50,000) were purchased by the Company from Albion Ventures LLP in respect of management and administration fees respectively.  At the financial year end, the amount due to Albion Ventures LLP in respect of these services disclosed as accruals was £426,000 (2013: £195,000).

Albion Ventures LLP is, from time to time, eligible to receive transaction fees and Directors' fees from portfolio companies.  During the year ended 31 December 2014, fees of £294,000 attributable to the investments of the Company were received pursuant to these arrangements (2013: £190,000).

Albion Ventures LLP holds 17,593 shares as a result of fractional entitlements and dissenting shareholders arising from the merger with Kings Arms Yard VCT 2 PLC on 30 September 2011. These shares will be sold for the benefit of the Company at a future date. In addition, Albion Ventures LLP holds a further 25,606 Ordinary shares in the Company.

Further information regarding Directors' remuneration can be found in the Directors' remuneration report on pages 31 and 32 of the full Annual accounts and Financial Statements.

The UK government changed the rate of corporation tax from 23% to 21% with effect from 1 April 2014. The effective rate of tax for the year ended 31 December 2014 is 21.49% (91 days at 23% and 275 days at 21%).  The tax charge for the year shown in the Income statement is lower than the standard rate of corporation tax for the reasons shown above.

The Company has excess management expenses of £10,047,000 (2013: £9,922,000) that are available for offset against future profits.  A deferred tax asset of £2,009,000 (2013:  £2,281,000) has not been recognised in respect of those losses as they will be recoverable only to the extent that the Company has sufficient future taxable profits.

The Directors have declared a first dividend of 0.5 pence per share for the year ending 31 December 2015, which will amount to approximately £1,036,000.  This dividend will be paid on 30 April 2015 to shareholders on the register at 10 April 2015.

The weighted average number of Ordinary shares is calculated excluding the treasury shares of 24,875,000 (2013: 17,880,000).

There are no convertible instruments, derivatives or contingent share agreements in issue so basic and diluted return/(loss) per share are the same.

Closing cost is net of amounts of £1,196,000 written off in respect of investments still held at balance sheet date.

Amounts shown as cost represent the acquisition cost in the case of investments made by the Company and/or the valuation attributed to the investments acquired from other VCTs at the dates of merger, plus any subsequent acquisition cost.

Purchases and disposals detailed above may not agree to purchases and disposals in the Cash flow statement due to restructuring of investments, conversion of convertible loan stock and settlement debtors and creditors.

Third party valuations are prepared by PricewaterhouseCoopers and independent RICS qualified surveyors in full compliance with the RICS Red Book. 

Fair value investments had the following movements between valuation methodologies between 31 December 2013 and 31 December 2014.

The valuation 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, the methods used are the most appropriate methods of valuation as at 31 December 2014.

Fair value hierarchy
FRS 29 'Financial Instruments: Disclosures' requires the Company to disclose the inputs to the valuation methods applied to its investments at fair value through profit or loss in a fair value hierarchy according to the following definitions:

Fixed asset investments at fair value through profit or loss as at 31 December 2014 are categorised in accordance with FRS 29 as follows:

Fixed asset investments at fair value through profit or loss as at 31 December 2013 are categorised in accordance with FRS 29 as follows:

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.  The valuation methodology applied to 57% of the unquoted portfolio (Level 3) is based on third party independent evidence, price of recent investment and cost reviewed for impairment. The Directors believe that changes to reasonable possible alternative assumptions for the valuation of the remaining part of the portfolio could result in an increase of £1,622,000 or a decrease of £1,530,000 in the valuation of the unquoted investments.

11.  Significant holdings
The principal activity of the Company is to select and hold a portfolio of investments in quoted and unquoted securities.  Although the Company, through the Manager, will, in some cases, be represented on the board of the portfolio company, it will not ordinarily take a controlling interest or become involved in the management.  The size and structure of 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% of the nominal value of any class (some of which are non-voting) of the allotted shares in the portfolio companies as at 31 December 2014 as described below. 

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

As permitted by FRS 2, UniServity Limited, whose holding is in excess of 50% of that company's equity, is excluded from consolidation as the interest in UniServity Limited is held exclusively for subsequent resale and has not previously been consolidated with the Company. 

There is a deficit of £309,000 in respect of the aggregate share capital and reserves of UniServity Limited as at 31 July 2014 and a loss after tax of £97,350 for the year then ended.  Details of transactions and balances with UniServity Limited are given in note 21.  The investment in UniServity Limited has been included at a fair value that is £3,660,000 less than its original cost.  No dividends were received during, or are receivable for the year ended 31 December 2014 from UniServity Limited.

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

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

Voting rights
201,628,705 Ordinary shares of 1 penny (net of 24,875,000 treasury shares) (2013: 191,997,614).

The Company operates a share buy-back programme, as detailed in the Chairman's statement.  During the year the Company purchased 6,995,000 Ordinary shares (2013: 13,638,000) representing 3% of the issued Ordinary share capital as at 31 December 2014, at a cost of £1,297,000 (2013:  £2,317,000), including stamp duty, to be held in treasury.  The Company holds a total of 24,875,000 Ordinary shares in treasury, representing 11% of the issued Ordinary share capital as at 31 December 2014. The Company purchased 1,134,000 Ordinary shares (2013: nil) for cancellation representing 0.5% of the issued Ordinary share capital as at 31 December 2014 at a cost of £214,000 (2013: nil), including stamp duty.  The shares purchased for treasury and for cancellation were funded from the other distributable reserve.

Under the terms of the Dividend Reinvestment Scheme, the following Ordinary shares of nominal value 1 penny per share were allotted during the year:

During the period from 1 January 2014 to 31 December 2014, the Company issued the following new Ordinary shares of nominal value 1 penny per share each under the Albion VCTs Top Up Offers 2013/2014 and Albion VCT Prospectus Top Up Offers 2013/2014:

15.  Basic and diluted net asset value per share
The basic and diluted net asset value per share as at 31 December 2014 of 19.31 pence (2013: 20.45 pence) is based on net assets of £38,941,000 (2013: £39,262,000) divided by the 201,628,705 shares in issue (net of treasury shares) at that date (2013: 191,997,614).

18. Capital and financial instruments risk management
The Company's capital comprises Ordinary shares as described in note 14.  The Company is permitted to buy back its own shares for cancellation or treasury purposes and this policy is described in more detail in the Chairman's statement.

The Company's financial instruments comprise equity and loan stock investments in unquoted and quoted companies, cash balances and liquid cash instruments and short term debtors and creditors which arise from its operations.  The main purpose of these financial instruments is to generate cash flow, 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 financial instrument risks arising from the Company's operations are:

• investment (or market) risk (which comprises investment price, foreign currency on investments 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 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 in its portfolio in unquoted and quoted investments, details of which are shown on pages 17 and 18 of the full Annual Report and Financial Statements. Investment risk is the exposure of the Company to the revaluation and devaluation of investments.  The main driver of investment risk is the operational and financial performance of the portfolio company and the dynamics of market quoted comparators.  The Manager receives management accounts from portfolio companies and members of the investment management team often sit on the boards of unquoted portfolio companies; this enables the close identification, monitoring and management of investment risk.

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

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

The maximum investment risk as at the Balance sheet date is the value of the fixed asset investment portfolio which is £38,055,000 (2013: £33,904,000).  Fixed asset investments form 98% of the net asset value as at 31 December 2014 (2013: 86%).

More details regarding the classification of fixed asset investments are shown in note 10.

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.  As a venture capital trust the Company invests in unquoted companies in accordance with the investment policy set out above. The management of risk within the venture capital portfolio is addressed through careful investment selection, by diversification across different industry segments, by maintaining a wide spread of holdings in terms of financing stage and by limitation of the size of individual holdings.  Furthermore, new unquoted investments are often made with up to two-thirds of the 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.  The Directors monitor the Manager's compliance with the investment policy, review and agree policies for managing this risk and monitor the overall level of risk on the investment portfolio on a regular basis.

Valuations are based on the most appropriate valuation methodology for an investment within its market, with regard to the financial health of the investment and the IPEVCV guidelines. Details of the sectors in which the Company is currently invested are shown in the pie chart at the end of this announcement.

As required under FRS 29 "Financial Instruments: Disclosures", the Board is required to illustrate by way of a sensitivity analysis the degree of exposure to market risk.  The Board considers that the value of the fixed asset investment portfolio is sensitive to a 10% change based on the current economic climate.  The impact of a 10% 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% increase or decrease in the valuation of the fixed asset investment portfolio (keeping all other variables constant) would increase or decrease the net asset value and return for the year by £3,806,000 (2013: £3,390,000).

Foreign currency risk
Foreign currency risk is the risk of exposure to movements in foreign exchange rates relative to sterling. 

The majority of the Company's assets are denominated in sterling; however, the Company is exposed to US dollars through its investment in a US dollar denominated security.  No hedging of the currency exposure is currently undertaken.  The Manager monitors the Company's exposure and reports to the Board on a regular basis. 

Investment and revenue received in currencies other than sterling is converted into sterling on or shortly after the date of investment or receipt of revenue as are any proceeds from the disposal of a foreign currency investment.

As at 31 December 2014, the Company held an investment denominated in US dollars of £3,190,000 (2013: £5,112,000).

During the year to 31 December 2014, sterling appreciated by 5.79% (2013: depreciated by 2.0%) against the US dollar. 

Interest rate risk
It is the Company's policy to accept a degree of interest rate risk on its financial assets through the effect of interest rate changes. On the basis of the Company's analysis, it is estimated that a rise of one percentage point in all interest rates would have increased total return before tax for the year by approximately £171,000 (2013: £195,000).  Furthermore, it is considered that a fall of interest rates below current levels during the year would have been unlikely.

The weighted average effective interest rate applied to the Company's fixed rate fixed asset investments during the year was approximately 7.8% (2013: 6.8%).  The weighted average period to expected maturity for the fixed rate fixed asset investments is approximately 6.5 years (2013: 8.1 years).

The Company's financial assets and liabilities as at 31 December 2014, denominated in pounds sterling, consist of the following:

* The debtors do not reconcile to the Balance sheet as prepayments are not included in the above table.

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

The Manager evaluates credit risk on loan stock 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.  In the past loan stock may or may not have a fixed or floating charge, which may or may not have been subordinated, over the assets of the portfolio company.  However, for new investments, typically loan stock instruments will have a first fixed charge or a fixed and floating charge over the assets of the portfolio company in order to mitigate the gross credit risk. 

The Manager receives management accounts from portfolio companies and members of the investment management team often sit on the boards of unquoted portfolio companies; this enables the close identification, monitoring and management of investment specific credit risk.

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

The Company's total gross credit risk at 31 December 2014 was limited to £15,575,000 (2013: £11,000,000) of unquoted loan stock instruments, £798,000 (2013: £1,225,000) cash on deposit with banks and £457,000 (2013: £784,000) of other debtors.

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

As at the Balance sheet date, cash and liquid investments held by the Company are held with the NatWest Bank plc, Scottish Widows Bank plc (part of Lloyds Banking Group plc), Barclays Bank plc and UBS Wealth Management AG.  Credit risk on cash transactions is mitigated by transacting with counterparties that are regulated entities subject to regulatory supervision, with high credit ratings assigned by international credit-rating agencies.

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

Liquidity risk
Liquid assets are held as cash on current account, deposit or short term money market accounts or similar instruments.  Under the terms of its Articles, the Company has the ability to borrow an amount equal to its adjusted capital and reserves of the latest published audited Balance sheet.

The Company has no committed borrowing facilities as at 31 December 2014 (2013: £nil) and had cash, of £798,000 (2013: £1,225,000), with the intention to raise £6 million from its current fundraising, plus current asset investments of £150,000 (2013: £3,750,000). Against this the Company has an investment commitment as at 31 December 2014 of £923,000 (2013: £2,205,000).

There are no externally imposed capital requirements other than the minimum statutory share capital requirements for public limited companies.

The main cash outflows are for new investments, the 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.  The Company's financial liabilities at 31 December 2014 are short term in nature and total £534,000 (2013: £418,000).

The carrying value of loan stock investments analysed by expected maturity dates is as follows:

Loan stock can be past due as a result of interest or capital not being paid in accordance with contractual terms. This includes:

• loan stock valued at £1,145,000 yielding an average of 12% which has interest past due by less than one year; and
• loan stock valued at £322,000 with interest past due by less than 20 months.

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 2014, stated at fair value as determined by the Directors.  There are no financial liabilities other than short term trade and other payables.  The Company's financial liabilities are all non-interest bearing.  It is the Directors' opinion that the book value of the financial liabilities is not materially different to the fair value and all are payable within one year and that the Company is subject to low financial risk as a result of having nil gearing and positive cash balances.

19.  Commitments, contingencies and guarantees
As at 31 December 2014, the Company had the following financial commitments totalling £923,000 (2013: £2,205,000), which are expected to be invested during the next 12 months:

• £550,000 Chonais Holdings Limited;
• £104,000 Green Highland Renewables (Ledgowan) Limited;
• £95,000 Haemostatix Limited;
• £73,000 MyMeds&Me Limited;
• £56,000 Proveca Limited;
• £37,000 Cisiv Limited; and
• £8,000 Dragon Hydro Limited.

There were no contingent liabilities or guarantees given by the Company as at 31 December 2014 (2013: £nil).

20.  Post balance sheet events
Since the year end, the Company made the following investments:

• Investment of £550,000 in Chonais Holdings Limited;
• Investment of £104,000 in Green Highland Renewables (Ledgowan) Limited;
• Investment of £55,000 in Haemostatix Limited;
• Investment of £53,000 in Regenerco Renewable Energy Limited;
• Investment of £24,000 in AVESI Limited;
• Investment of £20,000 in Cisiv Limited;
• Investment of £20,000 in Silent Herdsman Holdings Limited; and
• Disposal of £225,000 in Orchard Portman Group (Taunton Hospital Limited)

Albion VCTs Prospectus Top Up Offers 2014/2015
On 17 November 2014 the Company announced the publication of a prospectus in relation to an offer for subscription for new Ordinary shares. A Securities Note, which forms part of the prospectus, has been sent to shareholders.

A copy of the prospectus may be obtained from www.albion-ventures.co.uk.

The following Ordinary shares of nominal value 1 penny per share were allotted under the Offers after 31 December 2014:

21.  Related party transactions
Albion Ventures LLP, the Company's Manager and Company Secretary did not receive any monitoring or arrangement fees from UniServity Limited during the year (2013:£16,000).

Kings Arms Yarc VCT PLC received loan stock interest of £10,000 (2013:£5,000) from UniServity Limited. Details of the holding in UniServity Limited can be found in notes 11 and 12.

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

22. Other Information

The information set out in this announcement does not constitute the Company's statutory accounts within the terms of section 434 of the Companies Act 2006 for the years ended 31 December 2014 and 31 December 2013, and is derived from the statutory accounts for those financial years, which have been, or in the case of the accounts for the year ended 31 December 2014, which will be, delivered to the Registrar of Companies. The Auditor reported on those accounts; the reports were unqualified and did not contain a statement under s498 (2) or (3) of the Companies Act 2006.

The Company's Annual General Meeting will be held at The City of London Club, 19 Old Broad Street, London, EC2N 1DS on 14 May 2015 at 11.00am.

23. Publication

The full audited Annual Report and Financial Statements are being sent to shareholders and copies will be made available to the public at the registered office of the Company, Companies House, the National Storage Mechanism and also electronically at www.albion-ventures.co.uk under the 'Our Funds' section, by clicking on 'Kings Arms Yard VCT PLC', where the Report can be accessed as a PDF document via a link under the 'Investor Centre' in the 'Financial Reports and Circulars' section.