Regulatory Filings • Jul 27, 2012
Regulatory Filings
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If you are in any doubt about the action to be taken, you should immediately consult your bank manager, stockbroker, solicitor, accountant or other independent financial adviser authorised pursuant to the Financial Services and Markets Act 2000 (FSMA).
If you have sold or otherwise transferred all of your Shares in Albion Venture Capital Trust PLC (the Company), please send this document and accompanying documents, as soon as possible, to the purchaser or transferee or to the stockbroker, independent financial adviser or other person through whom the sale or transfer was effected for delivery to the purchaser or transferee.
This document, which comprises a prospectus relating to the Company dated 27 July 2012, has been prepared in accordance with the prospectus rules made under Part VI of FSMA.
The Company, the Directors and the Proposed Director, whose names appear on pages 24 and 25 of this document, accept responsibility for the information contained herein. To the best of the knowledge and belief of the Company, the Directors and the Proposed Director (who have taken all reasonable care to ensure that such is the case), the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information.
BDO LLP, which is authorised and regulated in the United Kingdom by the FSA, is acting as sponsor for the Company and no-one else and will not be responsible to any other person for providing the protections afforded to customers of BDO LLP (subject to the responsibilities and liabilities imposed by FSMA and the regulatory regime established thereunder) in providing advice or in relation to any matters referred to in this document.
SGH Martineau LLP, which is regulated in the United Kingdom by the Solicitors Regulation Authority, is acting as legal adviser to the Company and Albion Prime VCT PLC and no-one else and will not be responsible to any other person for providing advice in connection with any matters referred to in this document.
(Registered in England and Wales with registered number 03142609)
The existing Shares issued by the Company are listed on the premium segment of the Official List of the UKLA and traded on the London Stock Exchange's main market for listed securities. Application has also been made to the UKLA for the New Shares to be listed on the premium segment of the Official List and will be made to the London Stock Exchange for such New Shares to be admitted to trading on its main market for listed securities. It is expected that such admission will become effective and that trading in the New Shares will commence within three days of the allotment of such New Shares. The New Shares will rank pari passu with the existing issued Shares from the date of issue.
The attention of Shareholders of the Company who are resident in, or citizens of, territories outside the United Kingdom is drawn to the information under the heading "Overseas Shareholders" in paragraph 5 of Part IX of this document. In particular, the New Shares to be issued pursuant to the Scheme have not and will not be registered under the United States Securities Act 1933 or the United States Investment Company Act 1990.
Persons receiving this document should carefully consider the risk factors on pages 9 to 11 of this document.
| SUMMARY | 3 | |
|---|---|---|
| RISK FACTORS | 9 | |
| EXPECTED TIMETABLES | 12 | |
| CORPORATE INFORMATION | 13 | |
| DEFINITIONS | 14 | |
| PART I | MERGER OF THE COMPANY AND PRIME | 17 |
| PART II | INFORMATION ON THE COMPANY | 23 |
| PART III | THE INVESTMENT MANAGER | 30 |
| PART IV | FINANCIAL INFORMATION ON THE COMPANY AND PRIME | 32 |
| PART V | PRO FORMA FINANCIAL INFORMATION | 34 |
| PART VI | INVESTMENT PORTFOLIOS AND THE PRINCIPAL INVESTMENTS OF THE COMPANY AND PRIME |
37 |
| PART VII | TAX POSITION OF SHAREHOLDERS | 42 |
| PART VIII | TAX POSITION OF THE COMPANY | 43 |
| PART IX | ADDITIONAL INFORMATION | 45 |
Summaries are made up of disclosure requirements known as 'Elements'. These Elements are numbered in Sections A to E.
This summary contains all of the Elements required to be included in a summary for the type of shares being issued pursuant to this Prospectus and the Company being a closed-ended investment fund. Some of the Elements are not required to be addressed and, as a result, there may be gaps in the numbering sequence of the Elements.
Even though an Element may be required to be inserted in this summary, it is possible that no relevant information can be given regarding that Element. In these instances, a short description of the Element is included, together with an appropriate 'Not applicable' statement.
This summary should be read as an introduction to this Prospectus. Any decision to invest in the securities of the Company should be based on consideration of the Prospectus as a whole by the investor. Where a claim relating to the information contained in this Prospectus is brought before a court, the plaintiff investor might, under the national legislation of Member States, have to bear the costs of translating this Prospectus before the legal proceedings are initiated. Civil liability attaches only to those persons who have tabled this summary including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus or it does not provide, when read together with other parts of the Prospectus, key information in order to aid investors when considering whether to invest in such securities.
name
Country of incorporation
B6 Material As at 26 July 2012 (this being the latest practicable date prior to the publication of Shareholders/ this document), J M Finn Nominees held 2,159,003 Shares (representing Differing voting approximately 5.82 per cent. of the Company's total voting rights and 5.35 per cent. rights/Control of the Company's issued share capital (including Shares held in treasury)). All Shareholders have the same voting rights in respect of the existing share capital of the Company. Based on the merger illustrations at 31 March 2012, it is expected that J M Finn Nominees will hold 2,159,003 Shares and Pershing Nominees Limited will hold 2,005,728 Shares following completion of the merger, representing 3.82 per cent. and 3.55 per cent. (respectively) of the expected total voting rights of the Enlarged Company. Save as set out above, the Company is not aware of any person who, directly or indirectly, has or will have an interest in the capital of the Company or voting rights which is notifiable under UK law (under which, pursuant to CA 2006 and the Listing Rules and Disclosure and Transparency Rules of the FSA, a holding of 3 per cent. or more will be notified to the Company).
B7 Selected Certain selected historical financial information on the Company is set out below:
| information | Audited year ended 31 March (£'000) | |||
|---|---|---|---|---|
| 2012 | 2011 | 2010 | ||
| Investment Income and deposit interest Total profit/(loss) on ordinary activities |
1,314 | 1,300 | 1,330 | |
| before taxation Total net asset value return per share (pence) |
815 | 1,187 | 287 | |
| Ordinary Shares | 197.80 | 195.30 | 191.40 | |
| Former C Shares* | 186.25 | 183.75 | 179.85 | |
| Dividends paid per share (pence)** | 5.0 | 5.0 | 5.0 | |
| Net assets | 28,386 | 28,761 | 28,400 | |
| NAV per share (pence) | 78.0 | 80.50 | 81.62 |
* The C Shares merged with the Ordinary Shares on an equal basis in 2000.
**In addition to the total dividends paid in the table above the Board has declared a first interim dividend for the current financial year of 2.5 pence per Share to be paid on 31 July 2012 to Shareholders on the register on 6 July 2012.
There has been no significant change in the financial or trading position of the Company since 31 March 2012, the date to which the Annual Report was made up to, to the date of this document.
B8 Pro forma The Enlarged Company is expected to have net assets of over £40 million financial (assuming the Merger is completed based on the NAVs of the Companies as at information 31 March 2012.
This pro forma financial information has been prepared for illustrative purposes only and, because of its nature, addresses a hypothetical situation and, therefore, does not represent the Company's actual financial position or results.
This is achieved as follows:
other than the loan stock issued to funds managed or advised by Albion, investee companies do not normally have external borrowings.
B35 Borrowings The Articles restrict borrowings to 10 per cent. of the adjusted capital and reserves as defined therein; the current policy however is that the Company will not borrow.
Albion is entitled to an annual performance incentive fee of an amount equal to 8 per cent. of any excess above a total return (representing dividends paid and growth in net asset value) of 5 per cent. per annum, paid annually in cash. Any shortfall of the total return in one year will be carried forward into subsequent periods and the incentive fee will only be paid once all previous and current total returns have been met.
Albion will continue to provide investment management services to the Enlarged Company following the merger on the same basis as is currently in place with the Company, except that, the Company and Albion have agreed that the management fee will be reduced from the Effective Date to an amount equivalent to 1.9 per cent. of the Company's net assets. The administration and performance incentive arrangements currently in place with the Company shall continue unchanged for the Enlarged Company and will automatically cover the enlarged assets and New Shares issued.
| B45 Portfolio | Pursuant to its investment policy, the Company invests in a balanced portfolio of asset-backed businesses in order to provide a balance between income and capital growth for the longer term. As at 31 March 2012, the Company had, in aggregate, venture capital investments in 31 companies with a carrying value of £25.9 million. |
|
|---|---|---|
| B46 NAV | As at 31 March 2012, the Company had audited net assets of £28.4 million (78.0 pence per Share). |
|
| C C1 |
Description and | Securities The securities being offered pursuant to the Scheme are ordinary shares of 50p |
| class of securities |
each ("New Shares") (ISIN: GB0002039625). | |
| C2 | Currency | The Company's share capital comprises ordinary shares of 50p each. |
| C3 | Shares in issue | 40,348,003 Shares are in issue at the date of this document (all fully paid up), of which 3,277,373 are held in treasury. |
| C4 | Rights | Each New Share will be: |
| entitled pari passu to dividends and other distributions (on a winding-up or ● otherwise) |
||
| entitled to one vote ● |
||
| freely transferable (subject to certain restrictions in the Articles) ● |
||
| C5 | Restrictions on transfer |
The New Shares will be listed on the premium segment of the Official List and as, a result, will be freely transferable. |
| C6 | Admission | Application has been made to the UK Listing Authority for the New Shares to be listed on the Official List and will be made to the London Stock Exchange for such shares to be admitted to trading on its main market for listed securities. It is anticipated that dealings in the New Shares will commence within 3 business days following allotment. |
| C7 | Dividend policy | The current annual dividend target is 5 pence per Share per annum, which was achieved in the year ended 31 March 2012 and is consistent with the first interim dividend recently declared for the current year ending 31 March 2013. Assuming a Merger Ratio of 0.8823, a Prime Shareholder is expected to receive 4.4 pence per share in respect of his New Shares in the future, compared to 3 pence per Prime Share currently. |
D Risks
An investment in the Company is subject to a number of risks, which could materially and adversely affect its value and a summary of the material risks is set out below:
E1 Net proceeds If effected, the merger will result in an Enlarged Company with total net assets of over £40 million (after expected Merger costs of approximately £230,000). The merger will not, however, result in any proceeds actually being raised by the Company.
E2a Reasons for The Board considers that this merger will bring a number of benefits to both groups the offer of shareholders through:
participation in a larger VCT with the longer term potential for a more diversified portfolio thereby spreading the portfolio risk across a broader range of investments; and
enhancing the ability of the Enlarged Company to raise new funds, as well as pay dividends and support buy backs in the future.
The Scheme is conditional upon:
Shareholders and prospective Shareholders should consider carefully the following risk factors in addition to the other information presented in this document. If any of the risks described below were to occur, it could have a material effect on the Company's business, financial condition or results of operations. The risks and uncertainties described below (such as changes in legal, regulatory or tax requirements) are not the only ones the Company or Shareholders will face. Additional risks not currently known to the Company or the Board, or that the Company or the Board currently believe are not material, may also adversely affect the Company's business, financial condition or results of operations. The value of the Shares could decline due to any of the risk factors described below and Shareholders could lose part or all of their investment. Shareholders and prospective Shareholders should consult an independent financial adviser authorised under FSMA. References to the Company should be taken as including the Enlarged Company.
Completion of the Scheme is dependent upon a number of conditions precedent being fulfilled, including the approval of Shareholders. Whilst the Board has identified a number of potential benefits for the Enlarged Company, there is no certainty that these benefits will lead to improved prospects for the Enlarged Company. If the merger is not approved and effected, the benefits of the merger will not be realised.
Shareholders may be adversely affected by the performance of the investments, whether acquired from Prime or made by the Company. The performance of the investments acquired from Prime, as well as the investments of the Company, may restrict the ability of the Company following the merger to distribute any capital gains and revenue received on the investments transferred from Prime to the Company (as well as the investments of the Company). Any gains (or losses) made on the investments of the Company will, following the Scheme, be shared amongst all Shareholders pro rata to the number of Shares held.
Shareholders may be adversely affected by a change in the VCT status of the Company if a number of the investments acquired from Prime, or the investments of the Company, are, or become, unable to meet VCT requirements.
The value of Shares in the Enlarged Company, and the income from them, can fluctuate and Shareholders in the Enlarged Company may not get back the amount they invested. In addition, there is no certainty that the market price of Shares in the Enlarged Company will fully reflect their underlying NAV nor that any dividends will be paid. Shareholders in the Enlarged Company should not rely upon any share buyback policy to offer any certainty of selling their Shares in the Enlarged Company at prices that reflect the underlying NAV.
Although the existing Shares have been (and it is anticipated that the New Shares in the Enlarged Company to be issued pursuant to the Scheme will be) admitted to the premium segment of the Official List and are (or will be) traded on the London Stock Exchange's market for listed securities, the secondary market for VCT shares is generally illiquid (which may be partly attributable to the fact that initial tax reliefs are not available for VCT shares generally bought in the secondary market and because VCT shares usually trade at a discount to NAV) and Shareholders in the Enlarged Company may find it difficult to realise their investment. An investment in the Enlarged Company should, therefore, be considered as a long-term investment.
There is no guarantee the Enlarged Company will meet its objectives. The past performance of the Company, Prime and/or Albion is no indication of future performance of the Enlarged Company. The return received by Shareholders in the Enlarged Company will be dependent on the performance of the underlying investments. The value of such investments, and interest income and dividends therefrom, may rise or fall and Shareholders in the Enlarged Company may not get back the full amount invested when sold.
Although the Enlarged Company may receive customary venture capital rights in connection with some of its unquoted investments, as a minority investor it may not be in a position fully to protect its interests.
The Company's investments are, and the Enlarged Company's will generally be, in companies whose securities are not publicly traded or freely marketed and may, therefore, be difficult, and take time, to realise. There may also be constraints imposed on the realisation of investments in order to maintain the VCT tax status of the Enlarged Company.
It can take a period of years for the underlying value or quality of the businesses of smaller companies, such as those in which the Enlarged Company invests, to be fully reflected in their market values and their market values are often also materially affected by general market sentiment, which can be negative for prolonged periods.
Investment in unquoted companies, by its nature, involves a higher degree of risk than investment in companies listed on the Official List which could result in the value of such investment, and interest income and dividends therefrom, reducing. In particular, small companies often have limited financial resources and may be dependent for their management on a small number of key individuals and may not produce the hoped-for returns. In addition, the market in smaller companies is usually less liquid than that for securities in larger companies, bringing with it potential difficulties in acquiring, valuing and disposing of such companies. Investment returns will, therefore, be uncertain and involve a higher degree of risk than investment in a company listed on the Official List.
The success of some investments may be based on the ability of investee companies to establish, protect and enforce intellectual property rights, those rights being broad enough to protect proprietary interests and the rights not infringing third party patents.
The leisure sector, where a number of the Enlarged Company's asset-based investments may be made, is sensitive to any further down turn in the economic environment which may impact on the success of investments.
A charge given to the Enlarged Company over an asset will not always provide full capital protection for an investment. The Enlarged Company may not, therefore, recover the full amount invested in any one investee company.
Whilst it is the intention of the Board that the Enlarged Company will continue to be managed so as to qualify as a VCT, there can be no guarantee that such status will be maintained. Failure to continue to meet the qualifying requirements could result in the Shareholders in the Enlarged Company losing the tax reliefs available for VCT shares, resulting in adverse tax consequences including, if the holding has not been held for the relevant holding period, a requirement to repay the tax reliefs obtained. Furthermore, should the Enlarged Company lose its VCT status, dividends and gains arising on the disposal of Shares in the Enlarged Company would become subject to tax and the Enlarged Company would also lose its exemption from corporation tax on its capital gains.
Any change of governmental, economic, fiscal, monetary or political policy could materially affect, directly or indirectly, the operation of the Enlarged Company and/or the performance of the Enlarged Company and the value of and returns from Shares and/or their ability to achieve or maintain VCT status.
If a Shareholder in the Enlarged Company disposes of his or her Shares in the Enlarged Company within five years of issue (three years if such Shares were issued on or between 6 April 2000 and 5 April 2006), he or she will be subject to clawback by HMRC of any income tax reliefs originally claimed. For these purposes, the date of issue of the New Shares in the Enlarged Company issued pursuant to the Scheme will be the original date of issue of the Prime Shares in respect of which such New Shares in the Enlarged Company are issued. Any realised losses on the disposal of Shares in the Enlarged Company cannot be used to create an allowable loss for capital gains tax purposes.
If a Shareholder disposes of his or her Shares (or New Shares as the case may be), he or she will be liable to pay any capital gains tax for which such Shareholder obtained deferral relief on subscription.
If at any time VCT status is lost for the Enlarged Company, dealings in its Shares will normally be suspended until such time as proposals to continue as a VCT or to be wound-up have been announced.
The tax rules, or their interpretation, in relation to an investment in the Enlarged Company and/or the rates of tax may change during the life of the Enlarged Company and may apply retrospectively which may affect tax reliefs obtained by Shareholders in the Enlarged Company and the VCT status of the Enlarged Company.
Any purchaser of existing Shares in the Enlarged Company in the secondary market will not qualify for the then (if any) available tax reliefs afforded to subscribers of new VCT shares on the amount invested.
| Latest time for receipt of forms of proxy for the General Meeting | 12.00 noon on 15 September 2012 |
|---|---|
| Annual General Meeting | 11.00 a.m. on 17 September 2012 |
| General Meeting | 12.00 noon on 17 September 2012 |
| Calculation Date | after 5.00 p.m. on 24 September 2012 |
| Effective Date for the transfer of the assets and liabilities of Prime to the Company and the issue of New Shares pursuant to the Scheme* |
25 September 2012 |
| Announcement of the results of the Scheme | 25 September 2012 |
| Admission of and dealings in New Shares issued pursuant to the Scheme to commence |
26 September 2012 |
| CREST accounts credited with New Shares issued pursuant to the Scheme | 26 September 2012 |
| Certificates for New Shares issued pursuant to the Scheme dispatched | 3 October 2012 |
| Expected completion of the cancellation of share capital and reserves | end of November 2012 |
| (*this will, therefore, be the final expected date of trading of the Prime Shares) | |
| EXPECTED TIMETABLE FOR PRIME | |
| Date from which it is advised that dealings in Prime Shares should only be for cash settlement and immediate delivery of documents of title |
7 September 2012 |
| Latest time for receipt of forms of proxy for the Prime First General Meeting |
3.30 p.m. on 15 September 2012 |
| Prime Annual General Meeting | 2.30 p.m. on 17 September 2012 |
| Prime First General Meeting | 3.30 p.m. on 17 September 2012 |
| Latest time for receipt of forms of proxy for the Prime Second General Meeting |
10.30 a.m. on 23 September 2012 |
| Prime Register of Members closed | 24 September 2012 |
| Record Date for Prime Shareholders' entitlements under the Scheme | 5.00 p.m. on 24 September 2012 |
| Calculation Date | after 5.00 p.m. on 24 September 2012 |
| Dealings in Prime Shares suspended | 7.30 a.m. on 25 September 2012 |
| Prime Second General Meeting | 10.30 a.m. on 25 September 2012 |
| Effective Date for the transfer of the assets and liabilities of Prime to the Company and the issue of New Shares pursuant to Scheme* |
25 September 2012 |
| Announcement of the results of the Scheme | 25 September 2012 |
| Cancellation of the Prime Shares' listing | 8.00 a.m. on 24 October 2012 |
(*see the timetable for the Company with regard to admission, CREST accounts being credited and certificates being dispatched)
| Directors | David Watkins MBA Harvard (Chairman) John Kerr ACMA Jonathan Rounce FCA, FIH Jeffrey Warren ACCA (all of the registered office) |
|---|---|
| Registered Office | 1 King's Arms Yard London EC2R 7AF Telephone: 020 7601 1850 Website: www.albion-ventures.co.uk |
| Company Number | 03142609 |
| Investment Manager, Administrator and Company Secretary |
Albion Ventures LLP 1 King's Arms Yard London EC2R 7AF |
| Solicitors | SGH Martineau LLP No. 1 Colmore Square Birmingham B4 6AA |
| Sponsor | BDO LLP 125 Colmore Row Birmingham B3 3SD |
| Registrars | Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS99 6ZZ |
| Reporting Accountant | Scott-Moncrieff Exchange Place 3 Semple Street Edinburgh EH3 8BL |
| Auditor | PKF (UK) LLP Farringdon Place 20 Farringdon Road London EC1M 3AP |
| "Albion" | Albion Ventures LLP, the investment manager of the Company and Prime, of 1 King's Arms Yard, London EC2R 7AF |
|---|---|
| "Annual General Meeting" | the annual general meeting of the Company for the year ended 31 March 2012 to be held on 17 September 2012 |
| "Annual Report" | the annual report of the Company for the 12 month period ended 31 March 2012 |
| "Articles" | the articles of association of the Company, as amended from time to time |
| "BDO" | BDO LLP, which is recognised and regulated by the FSA, is a UKLA registered sponsor and is a member of the London Stock Exchange |
| "Board" | the board of directors of the Company |
| "CA 1985" | Companies Act 1985, as amended from time to time |
| "CA 2006" | Companies Act 2006, as amended from time to time |
| "Calculation Date" | the date on which the Roll-Over Value and the Merger Value will be calculated, anticipated as being after the close of business on 24 September 2012 |
| "Circular" | the circular to Shareholders dated 27 July 2012 |
| "Companies" | the Company and Prime |
| "Companies Acts" | CA 1985 and CA 2006 |
| "Company" or "Albion VCT" | Albion Venture Capital Trust PLC |
| "Computershare" | a trading name for Computershare Investor Services PLC |
| "Continuation Resolutions" | resolution 7 to be proposed at the Annual General Meeting of the Company to approve the extension of the life of the Company as a VCT and resolution 8 to be proposed at the Prime Annual General Meeting to approve the extension of the life of Prime as a VCT |
| "Directors" | the directors of the Company (and each a "Director") |
| "Disclosure & Transparency Rules" | the disclosure and transparency rules of the FSA |
| "EEA States" | the member states of the European Economic Area |
| "Effective Date" | the date on which the Scheme will be completed, anticipated as being 25 September 2012 |
| "Enlarged Company" | the Company, following implementation of the Scheme |
| "FSA" | the Financial Services Authority |
| "FSMA" | the Financial Services and Markets Act 2000, as amended |
| "General Meeting" | the general meeting of the Company to be held on 17 September 2012 |
| "HMRC" | Her Majesty's Revenue & Customs |
|---|---|
| "IA 1986" | Insolvency Act 1986, as amended |
| "IPEVC Guidelines" | the International Private Equity and Venture Capital Guidelines |
| "ITA 2007" | Income Tax Act 2007, as amended |
| "Liquidators" | William Duncan and Sarah Louise Burge of RSM Tenon Limited, 2 Wellington Place, Leeds LS1 4AP, being the proposed liquidators for Prime |
| "Listing Rules" | the listing rules of the UKLA |
| "London Stock Exchange" | London Stock Exchange PLC |
| "Merger Ratio" | the Roll-Over Value divided by the Merger Value |
| "Merger Regulations" | Venture Capital Trusts (Winding-up and Mergers) (Tax) Regulations 2004 |
| "Merger Value" | the value of a Share calculated in accordance with the formula set out on page 19 of Part I of this document |
| "NAV" or "net asset value" | net asset value |
| "New Shares" | the Shares with ISIN GB0002039625 to be issued by the Company to Prime Shareholders in accordance with the Scheme (and each a "New Share") |
| "Official List" | the official list of the UKLA |
| "Prime" | Albion Prime VCT PLC, registered in England and Wales under number 03265074, whose registered office is at 1 King's Arms Yard, London EC2R 7AF |
| "Prime Annual General Meeting" | the annual general meeting of Prime to be held on 17 September 2012 |
| "Prime Annual Report" | the audited annual report of Prime for the 12 month period ended 31 March 2012 |
| "Prime Board" | the board of directors of Prime |
| "Prime Circular" | the circular to Prime Shareholders dated 27 July 2012 |
| "Prime First General Meeting" | the general meeting of Prime to be held on 17 September 2012 |
| "Prime Meetings" | the Prime First General Meeting and the Prime Second General Meeting |
| "Prime Second General Meeting" | the general meeting of Prime to be held on 25 September 2012 |
| "Prime Shareholders" | holders of Prime Shares (and each a "Prime Shareholder") |
| "Prime Shares" | ordinary shares of 1 penny each in the capital of Prime (and each a "Prime Share") |
| "Proposed Director" | Ebbe Dinesen |
| "Prospectus" | this document |
| "Prospectus Rules" | the prospectus rules of the UKLA |
|---|---|
| "Qualifying Company" | a company satisfying the requirements of Chapter 4 of Part 6 of ITA 2007 |
| "Record Date" | the record date to which entitlements will be allocated pursuant to the Scheme, anticipated as being 24 September 2012 |
| "Resolutions" | the resolutions set out in the Circular to be proposed at the General Meeting (and each a "Resolution") |
| "Roll-Over Value" | the value of a Prime Share calculated in accordance with the formula set out on page 19 of Part I of this document |
| "RPI" | Retail Price Index |
| "Scheme" | the proposed merger of the Company with Prime by means of placing Prime into members' voluntary liquidation pursuant to Section 110 of IA 1986 and the acquisition by the Company of all of Prime's assets and liabilities in consideration for New Shares, further details of which are set out in Part I of this document |
| "Shareholders" | holders of Shares (and each a "Shareholder") |
| "Shares" | ordinary shares of 50 pence each in the capital of the Company (and each a "Share") |
| "Statutes" | means every statute (including any orders, regulations or other subordinate legislation made under it) from time to time in force concerning companies insofar as it applies (as may be applicable) |
| "TCGA 1992" | Taxation of Chargeable Gains Act 1992, as amended |
| "Transfer Agreement" | the agreement between the Company and Prime (acting through the Liquidators) for the transfer of all of the assets and liabilities of Prime by the Liquidators to the Company pursuant to the Scheme |
| "UK" | the United Kingdom |
| "UKLA" or "UK Listing Authority" | the UK Listing Authority, being the Financial Services Authority acting in its capacity as the competent authority for the purposes of Part VI of FSMA |
| "VCT" or "venture capital trust" | a company satisfying the requirements of Chapter 3 of Part 6 of ITA 2007 for venture capital trusts |
| "VCT Value" | the value of an investment calculated in accordance with Section 279 of ITA 2007 |
The Board considers that the interests of the shareholders of the Company and Prime will be better served by a single, larger VCT. The most cost-effective way to achieve this is for the Company to complete a merger with Prime by placing Prime into members' voluntary liquidation and for all of its assets and liabilities to be transferred to the Company in exchange for the issue of New Shares to holders of Prime Shares. The New Shares to be issued pursuant to the Scheme are not being offered to the existing Shareholders of the Company or the public save as may be the case in connection with the Scheme.
VCTs are required to be listed on the premium segment of the Official List, which involves a significant level of listing costs as well as related fees to ensure they comply with all relevant legislation. A larger VCT should be better placed to spread such running costs across a larger asset base and, as a result, may be able to maximise investment opportunities and pay a higher level of dividends to shareholders over its life.
In September 2004, the Merger Regulations were introduced allowing VCTs to be acquired by, or merge with, each other without prejudicing the VCT tax reliefs obtained by their shareholders. A number of VCTs (including other VCTs managed by Albion) have taken advantage of these regulations to create larger VCTs for economic and administration efficiencies. In addition, the changes announced to the VCT investment limits and size test, in particular the removal of the £1 million per annum investment limit per VCT in an investee company, will reduce the need for co-investment between sister VCTs to participate in larger investments (effective for investments made on or after 6 April 2012).
With the above in mind, the Board entered into discussions with the Prime Board and Albion to consider a merger of the Company and Prime to create a single, larger VCT. The aim of the Board is to achieve strategic benefits and reductions in the annual running costs for both sets of shareholders and establish a platform from which the investment mandate can be better operated.
The Board considers that this merger will bring a number of benefits to both groups of shareholders through:
The mechanism by which the merger will be completed is as follows:
The merger will be completed on a relative net asset value basis, adjusted for merger costs. The merger is conditional upon the approval by the shareholders of the Company and of Prime of resolutions to be proposed at the General Meeting and the Prime Meetings, and the other conditions set out below. These conditions include the passing of the Continuation Resolutions by the Companies' shareholders at their respective annual general meetings, these being resolutions to continue as a VCT proposed every five years. Should either of these resolutions not be passed, the Board will withdraw Resolution 1 to 4 and consider further the future of the Company.
The merger will result in the creation of an enlarged company and should result in savings in running costs and simpler administration. As both Companies have the same investment policy, investment manager and other main advisers, this is achievable without major additional cost or disruption to the Companies and their combined portfolio of investments.
The portfolio of assets which will be transferred from Prime to the Company as part of the Scheme are all considered to be in keeping with the Company's investment policy, particularly as all but one of Prime's venture capital investments are common across the Companies' respective portfolios as at 31 March 2012. The extent of the liabilities (if any) which will be transferred from Prime to the Company as part of the merger will be those which are incurred in the ordinary course of business, together with the merger costs which remain unpaid at the time of transfer. Any such liabilities are expected to be de minimis in comparison to the value of the assets.
Following the transfer of the assets and liabilities by Prime to the Company, the listing of the Prime Shares will be cancelled and Prime will be wound up.
The Scheme is conditional upon:
Subject to the above, the Scheme shall become effective immediately after the passing of the special resolution for the winding up of Prime to be proposed at the Prime Second General Meeting. If it becomes effective, the Scheme shall be binding on all Shareholders and all persons claiming through or under them. If the conditions of the Scheme have not been satisfied by 30 November 2012, then the Scheme shall not become effective and the Company will continue in its current form and the Board will continue to keep the future of the Company under review.
On or immediately prior to the Effective Date, Albion (on the instruction of the Liquidators) shall calculate the Merger Value and the Roll-Over Value in accordance with the formulae set out below.
On the Effective Date, the Liquidators shall receive all the cash, undertakings and other assets and liabilities of Prime, and shall deliver to the Company:
On the Effective Date, the Company and the Liquidators (on behalf of Prime) will enter into the Transfer Agreement (subject to such modifications as may be agreed between the parties thereto) pursuant to which the Liquidators will procure the transfer of all of the assets and liabilities of Prime to the Company in exchange for the issue of New Shares (credited as fully paid up) to the Prime Shareholders on the basis set out below.
In further consideration of such transfer of assets and liabilities of Prime to the Company, the Company will, pursuant to the Transfer Agreement, undertake to pay all liabilities incurred by the Liquidators including, but not limited to, the implementation of the Scheme, the winding up of Prime and the purchase for cash of any holdings of dissenting Prime Shareholders.
For the purposes of calculating the Roll-Over Value, the Merger Value and the number of New Shares to be issued, the following provisions will apply:
The Roll-Over Value will be calculated as:
$$
\frac{(A+B+C)-(D+E))}{F}
$$
where:
The Merger Value will be calculated as follows:
$$
\frac{(G+H+I)-J}{K}
$$
where:
I = any adjustment that both the Board and the Prime Board considers appropriate to reflect any other actual or contingent benefit or liability of the Company;
J = the Company's pro rata proportion (by reference to the relative aggregate Roll-Over Value of all the Prime Shares and the aggregate Merger Value of all Shares, but ignoring merger costs) of the costs of the merger; and
The number of New Shares to be issued to Prime Shareholders (save for any dissenting Prime Shareholders) will be calculated as follows:
$$
\left(\frac{L}{M}\right)\times N
$$
where:
L = the Roll-Over Value;
M = the Merger Value; and
N = the number of Prime Shares in issue as at close of business on the Record Date (save for any Prime Shares held by dissenting Prime Shareholders).
The number of New Shares to be issued pursuant to the Scheme will not be greater than 25 million and will be issued directly to Prime Shareholders pro rata to their existing holdings (disregarding Prime Shares held by dissenting Prime Shareholders) on the instruction of the Liquidators.
The merger ratio will be rounded to four decimal places and entitlements will be rounded down to the nearest whole number. Any fractional entitlements in respect of each holding (which, in each case, will not exceed £1) will be sold and the proceeds retained for the benefit of the Enlarged Company.
Where Prime Shareholders hold their Prime Shares in certificated form, they will receive a new certificate for the New Shares issued and where Prime Shareholders hold their Prime Shares in uncertificated form, their CREST accounts will be credited with the new holding in New Shares.
Prime Shareholders who are members of the dividend reinvestment scheme operated by Prime will, unless a Prime Shareholder advises otherwise in writing to Computershare, be transferred into the dividend reinvestment scheme operated by the Company in respect of the New Shares issued pursuant to the Scheme. Further, dividend payment mandates provided for Prime Shares will, unless a Prime Shareholder advises otherwise in writing to Computershare, be transferred to the Company.
An application has been made to the UKLA for the New Shares to be listed on the premium segment of the Official List and will be made to the London Stock Exchange for such New Shares to be admitted to trading on its market for listed securities. The New Shares will rank pari passu with the existing issued Shares from the date of issue (for the avoidance of doubt, however, holders of the New Shares will not be entitled to the Company's first interim dividend in respect of the current financial year, payable on 31 July 2012 to Shareholders on the Company's register on 6 July 2012).
As at 31 March 2012, the audited NAV per Share of the Company (taken from the Annual Report) was 78.0 pence. The Merger Value of a Share (had the merger been completed on that date and calculated in accordance with this Part I, including an adjustment for the first interim dividend declared for the current year ending 31 March 2013 and buybacks and issues of shares by the Company between 31 March 2012 and 16 July 2012) would have been 75.19 pence.
As at 31 March 2012, the audited NAV of a Prime Share (taken from the Prime Annual Report) was 68.0 pence. The Roll-Over Value of a Prime Share (had the merger been completed on that date and calculated in accordance with this Part I, including an adjustment for the interim dividend declared by the Prime Board for the current year ending 31 March 2013 and buybacks and issues of shares by Prime between 31 March 2012 and 16 July 2012) would have been 66.35 pence (assuming no dissenting Prime Shareholders).
The number of New Shares that would have been issued to Prime Shareholders (had the merger been completed on 31 March 2012 and calculated in accordance with this Part I and taking into account the interim dividends declared by the Companies for the current year ending 31 March 2013 and buybacks and issues of shares in the Companies between 31 March 2012 and 16 July 2012) would be 19,378,681 (0.8823 New Shares for every Prime Share held). The New Shares would have been issued to all Prime Shareholders pro rata to their holdings in Prime (assuming no dissenting Prime Shareholders). This ignores the Shares and the Prime Shares held in treasury to which no value is attributed and, in respect of the Prime Shares held in treasury, which will be cancelled prior to the Effective Date
As is required by CA 2006, prior to the allotment of the New Shares pursuant to the Scheme, the Company will be posting to Prime Shareholders at their registered addresses and uploading on to the Company's website a valuation report which will be prepared by Scott-Moncrieff. This report will confirm to the Company that the value of Prime's assets and liabilities which are being transferred to the Company as part of the Scheme is not less than the aggregate amount treated as being paid up on the New Shares being issued to Prime Shareholders.
Further information is set out in Part V of this document on the financial position of the Enlarged Company had the merger by way of the Scheme been implemented as at 31 March 2012.
The following paragraphs apply to the Company and to persons holding Shares as an investment in the Company who are the absolute beneficial owners of such Shares (or, as the case may be, New Shares) and are resident in the UK. They may not apply to certain classes of persons, such as dealers in securities. The following information is based on current UK law and practice, is subject to changes therein, is given by way of general summary and does not constitute legal or tax advice.
If you are in any doubt about your position, or if you may be subject to tax in a jurisdiction other than the UK, you should consult your independent financial adviser.
The implementation of the Scheme should not affect the status of the Company as a VCT or the tax reliefs obtained by Shareholders on subscription for existing Shares. It is the intention of the Board to continue to comply with the requirements of ITA 2007 following implementation of the Scheme so as to continue to qualify as a VCT.
The effective exchange of existing Prime Shares for New Shares should not constitute a disposal of the existing Prime Shares for the purposes of UK taxation. Instead, the new holding of New Shares should be treated as having been acquired at the same time and at the same cost as the existing Prime Shares from which they are derived. Any capital gains tax deferral relief obtained on subscription of the existing Shares in the Company should not, therefore, be crystallised for payment but will be transferred to the New Shares.
For Prime Shareholders holding (together with their associates) more than 5 per cent. of the Prime Shares in issue, clearance has been obtained from HMRC in terms of Section 138 of TCGA 1992 that the treatment described above for persons who (together with their associates) own less than 5 per cent. of the Prime Shares should also apply to them.
Shareholders in the Company as a VCT, should be afforded the usual tax reliefs available to shareholders in VCTs. Qualifying shareholders should continue to receive tax-free dividends and should not be subject to UK taxation on any capital gains on the disposal of Shares.
Dissenting Prime Shareholders whose holdings are purchased for cash at the break value price shall be treated as having disposed of their existing Prime Shares. Prime should still be able to claim the benefit of VCT status and the dissenting Prime shareholder should not be subject to any UK taxation in respect of any capital gains arising on disposal. However, the purchase will constitute a disposal of the existing holding in Prime and a dissenting Prime shareholder will be liable to pay any capital gains tax for which such dissenting Prime shareholder obtained deferral relief on subscription. If the dissenting Prime shareholder has disposed of Prime Shares within the holding period required to retain upfront tax relief, income tax relief on those subscriptions will also be repayable.
Although the Company will be required to pay UK stamp duty or stamp duty reserve tax on the transfer to it of the assets and liabilities of Prime (which form part of the merger costs being allocated to both the Company and Prime), no UK stamp duty or stamp duty reserve tax will be payable by Prime Shareholders as a result of the implementation of the Scheme.
Clearance has been obtained from HMRC in respect of the Scheme under Section 701 ITA 2007 and Section 138 TCGA 1992. With regard to the former, the receipt of New Shares should, except in the case of dealers, be regarded as an income receipt for the purposes of UK taxation.
Clearance has also been obtained from HMRC that the Scheme meets the requirements of the Merger Regulations and as such the receipt by Shareholders of New Shares should not prejudice tax reliefs obtained by Shareholders on existing Shares in the Company and should not be regarded as a disposal.
The Company was incorporated and registered in England and Wales under CA 1985 as a public company with limited liability on 22 December 1995 with registered number 03142609 and the name Close Brothers Venture Capital Trust PLC. The Company changed its name to Albion Venture Capital Trust PLC on 27 March 2009.
The Company was issued with a trading certificate under Section 117 of CA 1985 (now Section 761 of CA 2006) on 15 February 1996.
The Company operates under CA 2006 and the regulations made thereunder.
VCTs are unregulated, but are required to manage their affairs to obtain and maintain approval as a VCT under the provisions of chapter 3 of Part 6 of ITA 2007. HMRC has granted approval of the Company as a VCT under Section 259 of ITA 2007. The business of the Company has been, and it is intended will be, carried on so as to continue to comply with that section to maintain full approval.
The Company is not authorised and/or regulated by the FSA or an equivalent overseas regulator. The Company's Shares are listed on the premium segment of the Official List.
The share capital of the Company comprises ordinary shares of 50 pence each of which 40,348,003 are currently in issue (as at 26 July 2012). The Company holds 3,277,373 Shares in the treasury.
At the General Meeting, the Board proposes, so as to enhance the Company's ability to support the future payment of dividends, to restructure the Company's balance sheet through 49 pence of the amount paid up or credited as paid up in respect of the nominal value of its issued Shares being cancelled and extinguished. Resolution 5 to be proposed at the General Meeting seeks, amongst other things, the approval of this cancellation of share capital, subject to the sanction of the Court. If this resolution is approved, the Board intends to apply to Court to sanction the cancellation (which is not conditional on the merger being completed). It is expected that the completion of the cancellation will take place before the end of the year. Share certificates for shares (including New Shares issued pursuant to the merger, if approved) will continue to be valid and will not be replaced as the cancellation will not affect the number of shares held.
Certain selected financial information is set out below:
| Audited year ended 31 March (£'000) | |||
|---|---|---|---|
| 2012 | 2011 | 2010 | |
| Investment Income and deposit interest | 1,314 | 1,300 | 1,330 |
| Total profit/(loss) on ordinary activities before taxation | 815 | 1,187 | 287 |
| Total net asset value return per share (pence) | |||
| Ordinary Shares | 197.80 | 195.30 | 191.40 |
| Former C Shares* | 186.25 | 183.75 | 179.85 |
| Dividends paid per share (pence)** | 5.0 | 5.0 | 5.0 |
| Net assets | 28,386 | 28,761 | 28,400 |
| NAV per share (pence) | 78.0 | 80.50 | 81.62 |
* The C Shares merged with the Ordinary Shares on an equal basis in 2000.
**In addition to the total dividends paid in the table above the Board has declared a first interim dividend for the current financial year of 2.5 pence per Share to be paid on 31 July 2012 to Shareholders on the register on 6 July 2012.
The Board has four non-executive directors; David Watkins (Chairman), John Kerr, Jeff Warren and Jonathan Rounce.
The Board and the Prime Board have considered what the size and future composition of the Enlarged Company's board should be following the merger and it has been agreed that, subject to the Scheme becoming effective, Jonathan Rounce will step down as a Director of the Company and that Ebbe Dinesen (a director of Prime) will be appointed as a director of the Company.
From 1972 until 1991, David Watkins worked for Goldman Sachs, where he was head of Euromarkets Syndication and Head of European Real Estate. He subsequently joined Mountleigh Group PLC where he worked as a director on the restructuring of the business prior to the Group being placed into administration. Until late 1995, he worked at Baring Securities Limited as Head of Equity Capital Markets – London, before leaving ultimately to become Chief Financial Officer and one of the principal shareholders of his current company, The Distinguished Programs Group LLC, an insurance distribution and underwriting group. From 1986 to 1990 he was a member of the Council of the London Stock Exchange. David Watkins became a Director of the Company on 9 February 1996.
John Kerr has worked as a venture capitalist and also in manufacturing and service industries. He held a number of finance and general management posts in the UK and USA, before joining SUMIT Equity Ventures, an independent Midlands based venture capital company, where he was managing director from 1985 to 1992. He then became chief executive of Price & Pierce Limited, which acted as the UK agent for overseas producers of forestry products, before leaving in 1997 to become finance director of Ambion Brick, a building materials company bought out from Ibstock PLC. After retiring in 2002, he now works as a consultant. He is a non-executive director of Albion Income & Growth VCT PLC (from which he will be retiring on 30 September 2012), which is also managed by Albion, and he is also an external member of the Albion investment committee. John Kerr became a Director of the Company on 9 February 1996.
Jeff Warren has 30 years' financial management experience, including high level corporate governance and regulatory environment experience. He held the post of CFO of Bristol & West Building Society from 1992. Following the acquisition of Bristol & West by Bank of Ireland, he was appointed CEO of Bristol & West PLC in 1999, and subsequently also took responsibility for the Bank of Ireland UK Branch network. In 2003 he moved to take on a role at Group level in Dublin, as Group Chief Development Officer, reporting to the Bank of Ireland CEO. In 2004 he returned to the UK to develop a career as a non-executive director. Jeff Warren became a Director of the Company on 2 October 2007.
Building on formal qualifications as both an hotelier and a chartered accountant, Jonathan Rounce's 30 year career has spanned property development, management consultancy, finance and operations. As a management consultant he established and ran Coopers & Lybrand (now PricewaterhouseCoopers) tourism and leisure consultancy practice (between 1977 and 1988). From 1983 to 1985 he was development director of Penta Hotels NV. While managing director of the leisure development interests of Arlington Securities Plc (from 1988 to 1991), he was responsible for the pioneering Port Solent marina complex in Portsmouth and the development of the 27-hole Wisley golf course complex in Surrey. Between 1992 and 1999 he served as Vice-Chairman of the West Middlesex University Hospital Trust where he also established and chaired the audit committee. That non-executive role was held in parallel with his executive directorship of Grant Leisure Group, a leisure industry consultancy. In 2000 he launched and now runs Petersham Group, a specialist leisure and hospitality consultancy. Jonathan Rounce became a Director of the Company on 21 June 2010.
Ebbe Dinesen qualified as a chartered accountant in Denmark before working in senior positions in Danish industry. In 1985 he came to the United Kingdom and became CEO of Carlsberg UK in 1987. He later became CEO of Carlsberg-Tetley PLC (now Carlsberg UK) and became executive chairman of the company in 2001. He stepped down in 2006. He was chairman of the British Brewers from 2002 to 2006. Ebbe Dinesen was Danish vice-consul for The Midlands from 1987 to 2006. In 2000 he was knighted by the Queen of Denmark.
The Financial Services Authority requires all listed companies to disclose how they have applied the principles and complied with the provisions of the UK Corporate Governance Code ("the Code") issued by the Financial Reporting Council ("FRC") in May 2010.
The Board has also considered the principles and recommendations of the AIC Code of Corporate Governance ("AIC Code") by reference to the AIC Corporate Governance Guide for Investment Companies ("AIC Guide"). The AIC Code, as explained by the AIC Guide, addresses all the principles set out in section 1 of the Code, as well as setting out additional principles and recommendations on issues that are of specific relevance to the Company.
The Board considers that reporting against the principles and recommendations of the AIC Code, and by reference to the AIC Guide (which incorporates the UK Corporate Governance Code), will provide better information to shareholders than reporting under the Code above.
For the year ended 31 March 2012 and as at the date of this document, the Company has complied with the recommendations of the AIC Code and the relevant provisions of the Code, except where noted below. There are certain areas of the Code that the AIC does not consider relevant to venture capital trusts and with which the Company does not specifically comply, for which the AIC Code provides dispensation.
The areas and reasons for non-compliance are set out below.
The Board attaches importance to matters set out in the Code and applies its principles. However, as a venture capital trust company, most of the Company's day-to-day responsibilities are delegated to third parties and the Directors are all non-executive. Thus, not all the provisions of the Code are directly applicable to the Company.
The Board consists solely of non-executive Directors. Since all Directors are non-executive and day-to-day management responsibilities are sub-contracted to Albion, the Company does not have a Chief Executive Officer.
The Board does not have a policy of limiting the tenure of the Directors as the Board does not consider that a Director's length of services reduces his ability to act independently of Albion. In accordance with the AIC Code, Directors who have been appointed for more than nine years are subject to annual re-election.
As the Board has delegated the investment management and administration to Albion, the Board feels that it is not necessary to have its own internal audit function. Instead, the Board has access to Littlejohn LLP, which, as internal auditor for Albion, undertakes periodic examination of the business processes and controls environment at Albion, and ensures that any recommendations to implement improvements in controls are carried out.
Further details on the Company's corporate governance including the constitution of the Board, various committees and other internal controls are set out in paragraph 7 of Part IX of this document.
The Company's investment manager is Albion Ventures LLP. Albion (telephone 020 7601 1850), was incorporated and registered in England and Wales on 6 November 2008 as a limited liability partnership with registered number OC341254. Albion's registered office and principal place of business is at 1 King's Arms Yard, London EC2R 7AF. Albion is authorised and regulated by the FSA to provide investment management services. The principal legislation under which Albion operates is the provisions of the Limited Liability Partnership Act 2000 and CA 2006 (and regulations made thereunder).
The Company's investment strategy is to reduce the risk normally associated with investments in smaller, unquoted companies whilst maintaining an attractive yield, through allowing investors the opportunity to participate in a balanced portfolio of asset-backed businesses. Albion VCT's investment portfolio will thus be structured to provide a balance between income and capital growth for the longer term.
This is achieved as follows:
As at 31 March 2012, the Company had audited net assets of £28.4 million (78.0 pence per Share) and, in aggregate, venture capital investments in 31 companies with a carrying value of £25.9 million. As at 31 March 2012, Prime had audited net assets of £14.7 million (68.0 pence per Prime Share) and, in aggregate, venture capital investments in 30 companies with a carrying value of £13.5 million.
The two Companies now have the same investment policy. As a result, the venture capital investments which are common across the Companies' respective portfolios represented approximately 93 per cent. of the aggregate value of venture capital investments as at 31 March 2012.
The total return to Shareholders and Prime Shareholders for every £1 invested as at 31 March 2012 is set out in the table below:
| Shares** | |
|---|---|
| Total dividends paid* Audited NAV |
119.80p 78.00p ––––––––––– |
| Total net asset value return since launch | 197.80p ––––––––––– ––––––––––– |
* Dividends paid before 5 April 1999 were paid to Qualifying Shareholders inclusive of associated tax credits. In addition to the total dividends paid in the table above the Board has declared a first interim dividend for the current financial year of 2.5 pence per Share to be paid on 31 July 2012 to Shareholders on the register on 6 July 2012.
**The equivalent amount of dividends paid, audited NAV and total net asset value return to the former holders of C ordinary shares in the Company is 108.25p, 78.0p and 186.25p respectively. These C ordinary shares were merged into the Shares in 2000.
| ––––––––––– | |
|---|---|
| Total net asset value return since launch | 115.45p ––––––––––– |
| Total dividends paid * Audited NAV |
47.45p 68.00p ––––––––––– |
| Prime Shares |
* Dividends paid before 5 April 1999 were paid to qualifying Prime Shareholders inclusive of associated tax credits. In addition, to the total dividends paid in the table above the Prime Board has declared an interim dividend for the current Prime financial year of 1.5 pence per Prime Share to be paid on 31 August 2012 to Prime Shareholders on the register on 3 August 2012.
The current annual dividend target is 5 pence per Share per annum, which was achieved in the year ended 31 March 2012 and is consistent with the first interim dividend recently declared for the current year ending 31 March 2013. Assuming a Merger Ratio of 0.8823, a Prime Shareholder is expected to receive 4.4 pence per share in respect of his New Shares in the future, compared to 3 pence per Prime Share currently.
It remains the Board's primary objective to maintain sufficient resources for investment in existing and new investee companies and for the continued payment of dividends to Shareholders. Thereafter, 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. The Company will limit the sum available for share buy-backs for the six months to 30 September 2012 to £350,000 which compares to £310,000 bought in for the previous six months. Subject to the constraints referred to above, and subject to first purchasing shares held by market makers, it is the Board's target for such buy-backs to be in the region of a 10 to 15 per cent. discount to net asset value, so far as market conditions and liquidity permit. The amount to be allocated for the six months to 31 March 2013 will be announced at the time the results for the six months to 30 September 2012 are announced.
Albion is the investment manager of the Company and of Prime and also provides administration services to both Companies.
In respect of the Company, Albion is entitled to an annual investment management fee of an amount equivalent to 2 per cent. of the net assets of the Company and an annual administration fee which amounted to £43,528 for the year ended 31 March 2012 and is increased annually by RPI (in each case exclusive of VAT, if any). The normal annual running costs of the Company (including investment management and administration fees due to Albion, directors' remuneration, registrars' fees, stockbrokers' fees, company secretarial fees, fees of the Company's auditors and irrecoverable VAT) are capped at an amount equivalent to 3.5 per cent. of net asset value of the Company, with any excess being paid by Albion or refunded by a reduction in Albion's management and administration fees. Albion's appointment is terminable on 12 months' notice.
Albion is entitled to an annual performance incentive fee of an amount equal to 8 per cent. of any excess above a total return (representing dividends paid and growth in net asset value) of 5 per cent. per annum, paid annually in cash. Any shortfall of the total return in one year will be carried forward into subsequent periods and the incentive fee will only be paid once all previous and current total returns have been met.
Albion will continue to provide investment management and administration services to the Enlarged Company following the merger on the same basis as is currently in place with the Company, except that the Company and Albion have agreed that the management fee will be reduced from the Effective Date to an amount equivalent to 1.9 per cent. of the Company's net assets. The administration and performance incentive arrangements currently in place with the Company shall continue unchanged for the Enlarged Company and will automatically cover the enlarged assets and New Shares issued. As from the Effective Date, Albion will no longer receive the administration fee previously paid by Prime.
Normal annual running costs for the Company and Prime are approximately £816,000 and £456,000 respectively (£1,272,000 in aggregate). Normal running costs means the annual expenses incurred in the ordinary course of business including investment management and administration fees, directors' remuneration, listing fees and normal fees payable to service providers. It does not include exceptional items, for example merger costs. These annual costs represent approximately 2.9 per cent. of the Company's audited net asset value and 3.1 per cent. of Prime's audited net asset value, in each case as at 31 March 2012.
The aggregate anticipated cost of undertaking the merger is approximately £230,000, including VAT, legal and professional fees, stamp duty and the costs of winding up Prime. The costs of the merger will be split proportionately between the Company and Prime by reference to their respective merger net assets (ignoring merger costs).
On the assumption that the net assets of the Enlarged Company will remain the same immediately after the merger, annual cost savings for the Enlarged Company are estimated to be approximately £168,000 per annum (this represents a saving of £60,000 in respect of directors' fees, £74,000 for secretarial, administration, registrars, auditors and tax compliance fees and with the balance of the savings being made up of regulatory fees and general day-to-day expenses). This would represent 0.4 per cent. per annum of the expected net assets of the Enlarged Company. On this basis, and assuming that no new funds are raised or investments realised to meet annual costs, the Board believes that the costs of the merger would be recovered within 18 months.
Investments in portfolio companies, comprising shares and loan stock, are held by Albion as custodian in the name of the Company.
PricewaterhouseCoopers LLP is the Company's VCT status adviser. It carries out reviews of the Company's investment portfolio to ensure compliance and, when requested to do so by the Board or Albion, reviews prospective investments to ensure that they are qualifying investments.
The VCT tax implications of the merger have been advised upon by SGH Martineau LLP.
The Articles provide for a resolution to be proposed for the continuation of the Company as a VCT at the annual general meeting of the Company in 2012, and at five-yearly intervals thereafter. Accordingly, resolution 7 at the Annual General Meeting proposes the continuation of the Company for a further five years.
The Board places a great deal of importance on communications with its Shareholders and supports open communication with Shareholders. In addition to the announcement and publication of the annual report and accounts and the half-yearly financial report, the Company also publishes interim management statements as required by the Disclosure and Transparency Rules. Albion also sends 'Venture Matters' newsletters to Shareholders and holds annual shareholder conferences.
| Year End | 31 March |
|---|---|
| Announcement and publication of annual report and accounts to Shareholders | June |
| Announcement and publication of half-yearly results | November |
The Company's unquoted investments are valued at fair value through profit or loss in accordance with the International Private Equity and Venture Capital Valuation Guidelines. These guidelines set out recommendations, intended to represent current best practice on the valuation of venture capital investments. These investments are valued on the basis of forward looking estimates and judgments about the business itself, its market and the environment in which it operates, together with the state of the mergers and acquisitions market, stock market conditions and other factors. In making these judgments the valuation takes into account all known material facts up to the date of approval of the financial statements by the Board.
Albion Ventures LLP is authorised and regulated by the Financial Services Authority and is the investment manager of both the Company and Albion Prime VCT PLC. In addition to the Company and Prime, Albion manages a further six venture capital trusts and currently has total funds under management of approximately £230 million.
The following are specifically responsible for the management and administration of the VCTs managed by Albion, including the Company:
Patrick Reeve, MA, ACA, qualified as a chartered accountant with Deloitte Haskins & Sells before joining Cazenove & Co where he spent three years in the corporate finance department. He joined Close Brothers Group in 1989, initially in the development capital subsidiary, where he was a director specialising in the financing of smaller unquoted companies. He joined the corporate finance division in 1991, where he was also a director. He established Albion (formerly Close Ventures) with the launch of the Company in the spring of 1996. He is the managing partner of Albion and is director of Albion Enterprise VCT PLC, Albion Income & Growth VCT PLC, Albion Prime VCT PLC and Albion Technology & General VCT PLC, all managed by Albion. He is also a director of UCL Business, the technology transfer arm of University College, London. He read modern languages at Oxford University.
Will Fraser-Allen, BA (Hons), ACA, qualified as a chartered accountant with Cooper Lancaster Brewers in 1996 and then joined their corporate finance team providing corporate finance advice to small and medium sized businesses. He joined Albion (then Close Ventures) in 2001 since when he has focused on leisure and healthcare investing. Will became deputy managing partner of Albion in 2009. He has a BA in History from Southampton University.
Isabel Dolan, BSc (Hons), ACA, MBA, qualified as a chartered accountant with Moore Stephens. From 1993 to 1997 she was Head of Recoveries at the Specialised Lending Services of the Royal Bank of Scotland PLC and from 1997 to 2001 she was at 3i plc, latterly as a portfolio director. She joined Albion (then Close Ventures) in 2005, having previously been finance director for a number of unquoted companies. Isabel became operations partner at Albion in 2009. She has a BSc in Biochemistry with Pharmacology from Southampton University and an MBA from London Business School.
Dr Andrew Elder, MA, FRCS, joined Albion (then Close Ventures) in 2005 and became a partner in 2009. He initially practised as a surgeon for six years, specialising in neurosurgery, before joining the Boston Consulting Group (BCG) as a consultant in 2001. Whilst at BCG he specialised in healthcare strategy, gaining experience with many large, global clients across the full spectrum of healthcare including biotechnology, pharmaceuticals, service and care providers, software and telecommunications. He has an MA plus Bachelors of Medicine and Surgery from Cambridge University and is a Fellow of the Royal College of Surgeons (England).
Emil Gigov, BA (Hons), ACA, graduated from the European Business School, London, with a BA (Hons) Degree in European Business Administration in 1994. He then joined KPMG in their financial services division and qualified as a chartered accountant in 1997. Following this he transferred to KPMG Corporate Finance where he specialised in the leisure, media and marketing services sectors acting on acquisitions, disposals and fundraising mandates. He joined Albion (then Close Ventures) in 2000 and has since made and exited investments in a number of industry sectors, including healthcare, education, technology, leisure and engineering. Emil became a partner in Albion in 2009.
David Gudgin, BSc (Hons), ACMA, qualified as a management accountant with ICL before spending 3 years at the BBC. In 1999 he joined 3i plc as an investor in European technology based in London and Amsterdam. In 2002 he moved to Foursome Investments (now Frog Capital) as the lead investor of an environmental technology and a later stage development capital fund. David joined Albion (then Close Ventures) in 2005 and became a partner in 2009. David has a BSc in Economics from Warwick University.
Michael Kaplan, BA, MBA. Prior to joining Albion (then Close Ventures) in 2007, Michael was a project leader with the Boston Consulting Group (BCG) where he focused on the retail and financial services sectors. More recently, Michael was part of BCG's growing Private Equity practice – which provides strategic due diligence to some of the world's biggest private equity funds. Prior to his time with BCG, Michael was the chief financial officer for Widevine Technologies, a security software company based in Seattle. Michael has a BA from the University of Washington and an MBA from INSEAD. He became a partner in Albion Ventures in 2010.
Ed Lascelles, BA (Hons), joined Albion (then Close Ventures) in 2004. Ed began by advising quoted UK companies on IPOs, takeovers and other corporate transactions, first with Charterhouse Securities and then ING Barings. Companies ranged in value from £10 million to £1 billion, across the healthcare and technology sectors among others. After moving to Albion in 2004 (then Close Ventures), Ed started investing in the technology, healthcare, financial and business service sectors. Ed became a partner in 2009 and is responsible for a number of Albion's technology investments. He graduated from University College London with a first class degree in Philosophy.
Dr Christoph Ruedig, MA, MBA, joined Albion as an investment manager in October 2011 and primarily focuses on Albion's healthcare investments, alongside Andrew Elder. He initially practised as a radiologist, before spending 3 years at Bain & Company. In 2006 he joined 3i plc working for their Healthcare Venture Capital arm leading investments in biotechnology, pharmaceuticals and medical technology. Most recently he has worked for General Electric UK, where he was responsible for mergers and acquisitions in the medical technology and healthcare IT sectors. He holds a degree in medicine from Ludwig-Maximilians University, Munich and an MBA from INSEAD.
Henry Stanford, MA, ACA, qualified as a chartered accountant with Arthur Andersen before joining the corporate finance department of Close Brothers Group in 1992, becoming an assistant director in 1996. He moved to Albion (then Close Ventures) in 1998, where he has focused principally on hotel, cinema and other leisure investments. Henry became a partner in Albion in 2009. He holds an MA degree in Classics from Oxford University.
Robert Whitby-Smith, BA (Hons), MSI, ACA, after graduating in History at Reading University, Robert qualified as a chartered accountant at KPMG and subsequently worked in corporate finance at Credit Suisse First Boston and ING Barings. Since joining Albion (then Close Ventures) in 2005, Robert has assisted in the workout of three VCT portfolios (Murray VCT PLC, Murray VCT 2 PLC and Murray VCT 3 PLC now renamed Crown Place VCT PLC), formerly managed by Aberdeen Murray Johnson, and is responsible for investments in the leisure, manufacturing and technology sectors. Robert became a partner in Albion in 2009.
Marco Yu, MPhil, MA, MRICS, spent two and a half years at Bouygues (UK), developing cost management systems for PFI schemes, before moving to EC Harris in 2005 where he advised senior lenders on large capital projects. He joined Albion (then Close Ventures) in 2007 and became an investment manager in Albion in 2009. Marco graduated from Cambridge University with a first class degree in Economics and is a Chartered Surveyor.
Audited financial information on the Company is published in the annual reports for the three years ended 31 March 2010, 2011 and 2012.
Audited financial information on Prime is published in the annual reports for the three years ended 31 March 2010, 2011 and 2012.
The annual reports for the Company for the years ended 31 March 2010, 2011 and 2012 were audited by PKF (UK) LLP of Farringdon Place, 20 Farringdon Road, London EC1M 3AP (a member of the Institute of Chartered Accountants) and were reported on without qualification and contained no statements under Section 495 to Section 497A of CA 2006.
The annual reports for Prime for the years ended 31 March 2010, 2011 and 2012 were audited by PKF (UK) LLP of Farringdon Place, 20 Farringdon Road, London EC1M 3AP (a member of the Institute of Chartered Accountants) and were reported on without qualification and contained no statements under Section 495 to Section 497A of CA 2006.
All of the annual reports referred to above were prepared in accordance with UK generally accepted accounting practice (GAAP), the requirements of CA 2006 and the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts'.
It should be noted that the Company is not proposing to acquire Prime itself, rather, all of the assets and liabilities of Prime (as more specifically set out in Part VI) will be transferred to the Company once Prime has been placed in members' voluntary liquidation.
The annual reports contain a description of the relevant company's financial condition, changes in financial condition and results of operation for each relevant financial year. The annual reports are incorporated by reference (which contain the information as detailed below) and can be accessed at the following website:
and are also available for inspection through the national storage mechanism, which can be accessed at the following website:
● www.morningstar.co.uk/uk/NSM
| 2010 | 2011 | 2012 | |
|---|---|---|---|
| Description | Annual Report | Annual Report | Annual Report |
| Balance Sheet | Page 32 | Page 31 | Page 31 |
| Income Statement (or equivalent) | Page 31 | Page 30 | Page 30 |
| Statement showing all changes in equity | |||
| (or equivalent note) | Page 33 | Page 32 | Page 32 |
| Cash Flow Statement | Page 34 | Page 33 | Page 33 |
| Accounting Policies and Notes | Pages 35 to 46 | Pages 34 to 45 | Pages 34 to 45 |
| Auditor's Report | Page 30 | Page 29 | Page 29 |
This information has been prepared in a form consistent with that which will be adopted in the Company's next published annual financial statements having regard to accounting standards and policies and legislation applicable to those financial statements.
The annual report also includes operating/financial reviews as follows:
| 2010 | 2011 | 2012 | |
|---|---|---|---|
| Description | Annual Report | Annual Report | Annual Report |
| Objectives | Page 3 | Page 3 | Page 3 |
| Financial Highlights | Page 4 | Page 4 | Page 4 |
| Chairman's Statement | Pages 6 to 7 | Pages 6 to 7 | Pages 6 to 7 |
| Manager's Report | Page 8 | Page 8 | Page 8 |
| Portfolio Summary | Pages 11 to 12 | Pages 11 to 12 | Pages 11 to 12 |
| Investment Policy | Page 16 | Pages 15 to 16 | Pages 15 to 16 |
| Valuation Policy | Page 35 | Page 34 | Page 34 |
| 2010 | 2011 | 2012 | |
|---|---|---|---|
| Description | Annual Report | Annual Report | Annual Report |
| Balance Sheet | Page 30 | Page 28 | Page 28 |
| Income Statement (or equivalent) | Page 29 | Page 27 | Page 27 |
| Statement showing all changes in equity | |||
| (or equivalent note) | Page 31 | Page 29 | Page 29 |
| Cash Flow Statement | Page 32 | Page 30 | Page 30 |
| Accounting Policies and Notes | Pages 33 to 46 | Pages 31 to 43 | Pages 31 to 43 |
| Auditor's Report | Page 28 | Page 26 | Page 26 |
This information in the annual reports has been prepared in a form consistent with that which will be adopted in Prime's next published annual financial statements (if the merger is not effected) having regard to accounting standards and policies and legislation applicable to those financial statements.
Such information also includes operating/financial reviews as follows:
| 2010 | 2011 | 2012 | |
|---|---|---|---|
| Description | Annual Report | Annual Report | Annual Report |
| Objectives | Page 3 | Page 3 | Page 3 |
| Financial Highlights | Page 4 | Page 4 | Page 4 |
| Chairman's Statement | Pages 5 to 6 | Page 5 | Page 5 |
| Manager's Report | Page 7 | Page 6 | Page 6 |
| Portfolio Summary | Pages 10 to 11 | Pages 9 to 10 | Pages 9 to 10 |
| Investment Policy | Page 15 | Pages 13 to 14 | Pages 13 to 14 |
| Valuation Policy | Page 33 | Page 31 | Page 31 |
The Directors and Proposed Director Albion Venture Capital Trust PLC 1 King's Arms Yard London EC2R 7AF
27 July 2012
Dear Sirs
We report on the pro forma financial information ("the pro forma financial information") set out in Part V of the prospectus dated 27 July 2012 ("Prospectus"), which has been prepared on the basis described, for illustrative purposes only, to provide information about how the Scheme (as defined in the Prospectus) might have affected the financial information presented on the basis of the accounting policies adopted by the Company in preparing the financial statements for the yearly report ended 31 March 2012. This report is required by paragraph 20.2 of Annex I of the Commission Regulation (EC) 809/2004 and is given for the purpose of complying with that item and for no other purpose.
Save for any responsibility arising under Prospectus Rule 5.5.3R(2)(f) to any person as and to the extent there provided, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report or our statement, required by and given solely for the purposes of complying with paragraph 23.1 of Annex I to the Commission Regulation (EC) 809/2004, consenting to its inclusion in the Prospectus.
It is the responsibility of the directors of the Company to prepare the pro forma financial information in accordance with item 20.2 of Annex I of the Commission Regulation (EC) 809/2004.
It is our responsibility to form an opinion, as required by item 7 of Annex II of the Prospectus Directive Regulation, as to the proper compilation of the pro forma financial information and to report that opinion to you.
In providing this opinion we are not updating or refreshing any reports or opinions previously made by us on any financial information used in the compilation of the pro forma financial information, nor do we accept responsibility for such reports or opinions beyond that owed to those to whom those reports or opinions were addressed by us at the dates of their issue.
We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. The work that we performed for the purpose of making this report, which involved no independent examination of any of the underlying financial information, consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments and discussing the pro forma financial information with the directors of the Company.
We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with reasonable assurance that the pro forma financial information has been properly compiled on the basis stated and that such basis is consistent with the accounting policies of the Company.
Our work has not been carried out in accordance with auditing or other standards and practices generally accepted in other jurisdictions and accordingly should not be relied upon as if it had been carried out in accordance with those standards and practices.
In our opinion:
For the purposes of Prospectus Rule 5.5.3R(2)(f) we are responsible for this report as part of the Prospectus and declare that we have taken all reasonable care to ensure that the information contained in this report is, to the best of our knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration is included in the Prospectus in compliance with paragraph 1.2 of Annex I of the Commission Regulation (EC) 809/2004.
Yours faithfully
Scott-Moncrieff
The following pro forma financial information of the Company has been prepared for illustrative purposes only, to show the impact of the Scheme on the Company's audited net assets as at 31 March 2012 on the basis that the Scheme and the acquisition of the investment portfolio and all of the other assets and liabilities of Prime by the Company had been completed on that date. This pro forma financial information has been prepared in a manner consistent with the accounting policies of the Company and Prime as adopted in their last published accounts.
The pro forma financial information has been prepared for illustrative purposes only and, because of its nature, addresses a hypothetical situation and, therefore, does not represent the Company's actual financial position or results:
| Adjustments | ||||||
|---|---|---|---|---|---|---|
| Company (£'000) (Note 1) |
Acquisition of the assets and liabilities of Prime (£'000) (Note 2) |
Expenses of the Scheme (£'000) (Note 3) |
Enlarged Company pro forma |
(£'000) (Note 4) |
||
| Investments (at fair value) | 25,945 | 13,498 | 39,443 | |||
| Debtors | 10 | 11 | 21 | |||
| Other current assets | – | – | – | |||
| Cash at bank and in hand Creditors: amounts falling |
2,956 | 1,404 | 4,360 | |||
| due within one year | (525) ––––––––– |
(242) ––––––––– |
(230) | (997) ––––––––– |
||
| Net current assets | 2,441 ––––––––– |
1,173 ––––––––– |
(230) ––––––––– |
3,384 ––––––––– |
||
| Net assets | 28,386 | 14,671 | (230) | 42,827 |
Notes:
The following audited information represents all the investments of the Company and Prime (with a carrying value or an accounting cost) as at the date of this document.
The valuations in this Part VI have been sourced from the Company's and Prime's respective audited annual financial statements for the year ended 31 March 2012, these being the most recent valuations of the relevant companies.
In respect of the information on investee companies' sales, profits and losses and net assets, these have been taken from the financial year end accounts published by those investee companies as referred to in this Part VI. The information on the investee companies is, for the purpose of this paragraph, "Third Party Information". The Third Party Information has been accurately reproduced and, as far as the Company is aware and is able to ascertain from information published by those third parties, no facts have been omitted which would render the reproduced information inaccurate or misleading.
| Investments | Company's | Prime's | ||
|---|---|---|---|---|
| Unquoted investments | Value | Value | ||
| (£'000s) | % | (£'000s) | % | |
| Alto Prodotto Wind Limited | 432 | 1.5 | 238 | 1.6 |
| AVESI Limited | 160 | 0.6 | 70 | 0.5 |
| The Bear Hungerford Limited | 1,322 | 4.6 | 739 | 4.9 |
| Bravo Inns Limited | 284 | 1.0 | 145 | 1.0 |
| Bravo Inns II Limited | 573 | 2.0 | 211 | 1.4 |
| The Charnwood Pub Company Limited | 1,142 | 3.9 | 785 | 5.3 |
| City Screen (Cambridge) Limited | 2,215 | 7.7 | – | – |
| City Screen (Liverpool) Limited | 180 | 0.6 | 226 | 1.5 |
| The Crown Hotel Harrogate Limited | 2,110 | 7.3 | 1,139 | 7.6 |
| CS (Brixton) Limited | 482 | 1.7 | 222 | 1.5 |
| CS (Exeter) Limited | 93 | 0.4 | 42 | 0.3 |
| CS (Greenwich) Limited | 1,211 | 4.1 | 500 | 3.3 |
| CS (Norwich) Limited | 62 | 0.2 | 25 | 0.2 |
| The Dunedin Pub Company VCT Limited | 44 | 0.2 | 40 | 0.3 |
| G&K Smart Developments VCT Limited | 476 | 1.6 | – | – |
| GB Pub Company VCT Limited | 24 | 0.1 | 12 | 0.1 |
| Greenenerco Limited | 90 | 0.3 | 45 | 0.3 |
| Kensington Health Clubs Limited | 765 | 2.6 | 765 | 5.1 |
| Kew Green VCT (Stansted) Limited | 5,859 | 20.3 | 3,373 | 22.6 |
| Nelson House Hospital Limited | 396 | 1.4 | 219 | 1.5 |
| Oakland Care Centre Limited | 2,293 | 7.9 | 1,143 | 7.7 |
| Orchard Portman Hospital Limited | 140 | 0.5 | 159 | 1.1 |
| Premier Leisure (Suffolk) Limited | 85 | 0.3 | 88 | 0.6 |
| Radnor House School (Holdings) Limited | 1,043 | 3.6 | 569 | 3.8 |
| Regenerco Renewable Energy Limited | 249 | 0.9 | 179 | 1.2 |
| The Stanwell Hotel Limited | 1,749 | 6.0 | 1,038 | 6.9 |
| The Street by Street Solar Programme Limited | 384 | 1.3 | 271 | 1.8 |
| Taunton Hospital Limited | 381 | 1.3 | 101 | 0.7 |
| TEG Biogas (Perth) Limited | 217 | 0.8 | 81 | 0.5 |
| Tower Bridge Health Clubs Limited | 383 | 1.3 | 205 | 1.4 |
| The Weybridge Club Limited | 1,101 | 3.8 | 808 | 5.4 |
| Wickenhall Mill VCT Limited | – ––––––––––– |
– ––––––––––– |
60 ––––––––––– |
0.4 ––––––––––– |
| Total fixed asset investments | 25,945 ––––––––––– |
89.8 ––––––––––– |
13,498 ––––––––––– |
90.5 ––––––––––– |
| Current assets | 10 | – | 11 | 0.1 |
| Cash at bank | 2,956 | 10.2 | 1,404 | 9.4 |
| Gross assets | ––––––––––– 28,911 |
––––––––––– 100.0 |
––––––––––– 14,913 |
––––––––––– 100.0 |
| ––––––––––– ––––––––––– |
––––––––––– ––––––––––– |
––––––––––– ––––––––––– |
––––––––––– ––––––––––– |
Set out below are further details of the largest fixed asset investments of the Company and Prime representing more than 50 per cent. of the gross assets of each of the Company and Prime (including investments representing 5 per cent. of each of the gross assets of the Company and Prime) as at the date of this document.
| Kew Green VCT (Stansted) Limited | Accounts for the year ended 31 August 2011 £'000 |
||||
|---|---|---|---|---|---|
| 254 bedroom Holiday Inn Express hotel at London Stansted Airport | |||||
| Profit before tax Retained profit Net assets |
705 569 4,261 |
||||
| Holding | Equity percentage (%) |
Accounting cost (£'000) |
Valuation (£'000) |
Percentage of gross assets (%) |
|
| Company | Equity Loan stock |
28.2 – |
1,500 2,485 |
3,343 2,516 |
11.6 8.7 |
| Prime | Equity Loan stock |
16.9 – |
900 1,350 |
2,005 1,368 |
13.4 9.2 |
| Oakland Care Centre Limited | Accounts for the year | ||||
| ended 30 September 2011 | |||||
| Care home for elderly residents in Chingford, Essex | £'000 | ||||
| Loss before tax Retained loss Net assets |
(126) (142) 1,164 |
||||
| Holding | Equity percentage (%) |
Accounting cost (£'000) |
Valuation (£'000) |
Percentage of gross assets (%) |
|
| Company Prime |
Equity Loan stock Equity Loan stock |
21.1 – 10.5 – |
606 1,229 302 613 |
970 1,323 483 660 |
3.4 4.5 3.2 4.5 |
| The Crown Hotel Harrogate Limited | Accounts for the year ended 31 March 2011 £'000 |
||||
|---|---|---|---|---|---|
| 114 bedroom Crown Hotel in Harrogate | |||||
| Loss before tax Retained loss Net liabilities |
(795) (795) (3,886) |
||||
| Holding | Equity percentage (%) |
Accounting cost (£'000) |
Valuation (£'000) |
Percentage of gross assets (%) |
|
| Company | Equity Loan stock |
15.6 – |
825 2,275 |
– 2,110 |
– 7.3 |
| Prime | Equity Loan stock |
8.4 – |
445 1,229 |
– 1,139 |
– 7.6 |
| The Stanwell Hotel Limited | 52 bedroom Stanwell Hotel near Heathrow | Accounts for the year ended 31 August 2011 £'000 |
|||
| Loss before tax Retained loss Net liabilities |
(2,790) (2,790) (2,731) |
||||
| Holding | Equity percentage (%) |
Accounting cost (£'000) |
Valuation (£'000) |
Percentage of gross assets (%) |
|
| Company | Equity Loan stock |
24.6 – |
1,056 2,440 |
– 1,749 |
– 6.0 |
| Prime | Equity Loan stock |
14.6 – |
627 1,448 |
– 1,038 |
– 6.9 |
| City Screen (Cambridge) Limited | ended 31 December 2011 | Accounts for the year £'000 |
|||
| Profit before tax Retained profit Net assets |
Cambridge Arts Picturehouse cinema in Cambridge | 503 392 3,530 |
|||
| Holding | Equity percentage (%) |
Accounting cost (£'000) |
Valuation (£'000) |
Percentage of gross assets (%) |
|
| Company Prime |
Equity Loan stock Equity Loan stock |
50.0 – – – |
181 304 – – |
1,911 304 – – |
6.6 1.1 – – |
| The Bear Hungerford Limited | Accounts for the year ended 31 March 2011 £'000 |
||||
|---|---|---|---|---|---|
| 39 bedroom Bear Hotel in Hungerford | |||||
| Loss before tax Retained loss Net liabilities |
(233) (233) (1,735) |
||||
| Holding | Equity percentage (%) |
Accounting cost (£'000) |
Valuation (£'000) |
Percentage of gross assets (%) |
|
| Company | Equity Loan stock |
26.2 – |
510 1,578 |
– 1,322 |
– 4.6 |
| Prime | Equity Loan stock |
14.6 – |
285 882 |
– 739 |
– 4.9 |
| The Charnwood Pub Company Limited 10 pubs and a hotel in Central England |
Accounts for the year ended 31 March 2011 £'000 |
||||
| Loss before tax Retained loss Net liabilities |
(534) (534) (1,142) |
||||
| Holding | Equity percentage (%) |
Accounting cost (£'000) |
Valuation (£'000) |
Percentage of gross assets (%) |
|
| Company | Equity Loan stock |
8.8 – |
872 2,073 |
– 1,142 |
– 3.9 |
| Prime | Equity Loan stock |
6.0 – |
594 1,385 |
– 785 |
– 5.3 |
| The Weybridge Club Limited | ended 30 September 2011 | Accounts for the year £'000 |
|||
| Loss before tax Retained loss Net loss |
Health and fitness club in Weybridge, Surrey | (839) (839) (2,205) |
|||
| Holding | Equity percentage (%) |
Accounting cost (£'000) |
Valuation (£'000) |
Percentage of gross assets (%) |
|
| Company Prime |
Equity Loan stock Equity Loan stock |
8.2 – 6.0 – |
399 931 294 686 |
35 1,066 25 783 |
0.1 3.7 0.2 5.2 |
| CS (Greenwich) Limited Accounts for the year ended 31 December 2011 |
|||||
|---|---|---|---|---|---|
| Greenwich Picturehouse cinema in Greenwich, London | £'000 | ||||
| Profit before tax Retained profit Net assets |
322 242 2,425 |
||||
| Holding | Equity percentage (%) |
Accounting cost (£'000) |
Valuation (£'000) |
Percentage of gross assets (%) |
|
| Company | Equity Loan stock |
18.3 – |
301 644 |
559 652 |
1.9 2.2 |
| Prime | Equity Loan stock |
7.5 – |
124 266 |
231 269 |
1.5 1.8 |
| Radnor House School (Holdings) Limited Radnor House School in Twickenham, London |
Accounts for the year ended 31 August 2011 £'000 |
||||
| Loss before tax Retained loss Net assets |
(1,645) (1,162) 638 |
||||
| Holding | Equity percentage (%) |
Accounting cost (£'000) |
Valuation (£'000) |
Percentage of gross assets (%) |
|
| Company | Equity Loan stock |
4.6 – |
160 641 |
356 687 |
1.2 2.4 |
| Prime | Equity Loan stock |
2.5 – |
87 350 |
194 375 |
1.3 2.5 |
| Kensington Health Clubs Limited 37° health and fitness club at Olympia, London |
ended 30 September 2011 | Accounts for the year £'000 |
|||
| Profit before tax Retained profit Net assets |
(817) (817) 322 |
||||
| Holding | Equity percentage (%) |
Accounting cost (£'000) |
Valuation (£'000) |
Percentage of gross assets (%) |
|
| Company Prime |
Equity Loan stock Equity Loan stock |
4.9 – 4.9 – |
387 737 387 737 |
18 747 18 747 |
– 2.6 0.1 5.0 |
The following paragraphs apply to the Company and to persons holding Shares as an investment who are the absolute beneficial owners of such Shares and are resident in the UK. They may not apply to certain classes of persons, such as dealers in securities. The following information is based on current UK law and practice, is subject to changes therein, is given by way of general summary and does not constitute legal or tax advice.
If you are in any doubt about your position, or if you may be subject to a tax in a jurisdiction other than the UK, you should consult your independent financial adviser.
The tax reliefs set out below are available to individuals aged 18 or over who receive Shares under the Scheme.
The Company has obtained approval as a VCT under Chapter 3 of Part 6 ITA 2007.
The Board considers that the Company has conducted its affairs and will continue to do so to enable it to qualify as a VCT.
The effective exchange of existing Prime Shares for New Shares will not constitute a disposal of such shares for the purposes of UK taxation. Instead, the new holding of New Shares will be treated as having been acquired at the same time and at the same cost as the existing Prime Shares from which they are derived. Any capital gains tax deferral relief obtained on subscription of the existing Prime Shares will not, therefore, be crystallised for payment, but will be transferred to the New Shares.
For Prime Shareholders holding (together with their associates) more than 5 per cent. in the Prime Shares, clearance has been obtained from HMRC in terms of Section 138 of TCGA 1992 that the treatment described above for persons who (together with their associates) own less than 5 per cent. of the Prime Shares in issue will also apply to them.
The implementation of the Scheme will not affect the VCT status of the Company as a VCT or the reliefs obtained by Shareholders on subscription for existing Shares. Although the Company will be required to pay UK stamp duty or stamp duty reserve tax on the transfer to it of the assets and liabilities of Prime (which form part of the merger costs being allocated to both the Company and Prime), no UK stamp duty or stamp duty reserve tax will be payable directly by Shareholders as a result of the implementation of the Scheme.
Shareholders not resident in the UK should seek their own professional advice as to the consequences of making and holding an investment in a VCT as they may be subject to tax in other jurisdictions as well as in the UK.
To qualify as a VCT, a company must be approved as such by HMRC. To obtain such approval it must:
The term 'eligible shares' means ordinary shares which carry no preferential rights to voting, dividends and assets on a winding up and no rights to be redeemed or, for funds raised after 5 April 2011, shares which do not carry any rights to be redeemed or a preferential right to assets on a winding-up or dividends (in respect of the latter, where the right to the dividend is cumulative or, where the amount or dates of payment of the dividend may be varied by the company, a shareholder or any other person).
A Qualifying Investment consists of shares or securities first issued to the VCT (and held by it ever since) by a company satisfying the conditions set out in Chapters 3 and 4 of Part 6 of ITA 2007.
The conditions are detailed, but include that the company must be a Qualifying Company, have gross assets not exceeding £15 million immediately before and £16 million immediately after the investment, apply the money raised for the purposes of a qualifying trade within certain time periods, not be controlled by another company, have fewer than 250 full-time (equivalent) employees and at the time of investment not obtain more than £5 million of investment from state aided risk capital measures in any rolling 12 month period. In certain circumstances, an investment in a company by a VCT can be split into a part which is a qualifying holding and a part which is a non-qualifying holding.
A Qualifying Company must be unquoted (for VCT purposes this includes companies whose shares are traded on PLUS and AIM) and must carry on a qualifying trade. For this purpose certain activities are excluded (such as dealing in land or shares or providing financial services). The qualifying trade must either be carried on by, or be intended to be carried on by, the Qualifying Company or by a qualifying subsidiary at the time of the issue of shares or securities to the VCT (and at all times thereafter).
The company must have a permanent establishment in the UK, but the company need not be UK resident. A company intending to carry on a qualifying trade must begin to trade within two years of the issue of shares or securities to the VCT and continue it thereafter.
A Qualifying Company may have no subsidiaries other than qualifying subsidiaries which must, in most cases, be at least 51 per cent. owned.
A VCT must be approved at all times by HMRC. Approval has effect from the time specified in the approval.
A VCT cannot be approved unless the tests detailed above are met throughout the most recent complete accounting period of the VCT and HMRC is satisfied that they will be met in relation to the accounting period of the VCT which is current when the application is made. However, where a VCT raises further funds, VCTs are given grace periods to invest those funds before such further funds become subject to the tests.
However, to aid the launch of a VCT, HMRC may give provisional approval if satisfied that conditions (b), (c), (f) and (g) in paragraph 1 above will be met throughout the current or subsequent accounting period and condition (d) in paragraph 1 above will be met in relation to an accounting period commencing no later than three years after the date of provisional approval.
The Company has obtained approval as a VCT from HMRC.
Approval of a VCT (full or provisional) may be withdrawn by HMRC if the various tests set out above are not satisfied. The exemption from corporation tax on capital gains will not apply to any gain realised after the point at which VCT status is lost.
Withdrawal of approval generally has effect from the time when notice is given to the VCT but, in relation to capital gains of the VCT only, can be backdated to not earlier than the first day of the accounting period commencing immediately after the last accounting period of the VCT in which all of the tests were satisfied.
Withdrawal of provisional approval has effect as if provisional approval had never been given (including the requirement to pay corporation tax on prior gains).
2.8 There are no other shares or loan capital in the Company under option or agreed, conditionally or unconditionally, to be put under option.
2.9 The following resolutions were passed at the annual general meeting of the Company held on 18 July 2011:
and such authority shall expire 18 months from the date of this resolution, or at the conclusion of the annual general meeting, whichever is earlier, save that the Company may, before such expiry, make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of any such offer or agreement as if the power had not expired.
Under the Companies (Acquisition of Own Shares) (Treasury Shares) Regulations 2003 (the "Regulations"), Shares purchased by the Company out of distributable profits can be held as treasury shares, which may then be cancelled or sold for cash. The authority sought by this special resolution is intended to apply equally to shares to be held by the Company as treasury shares in accordance with the Regulations. These powers are intended to permit Directors to sell treasury shares at a price not less than that at which they were purchased.
and such authority shall expire 18 months from the date of this resolution, or at the conclusion of the Annual General Meeting, whichever is earlier, save that the Company may, before such expiry, make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of any such offer or agreement as if the power had not expired.
In this resolution, "rights issue" means an offer of equity securities open for acceptance for a period fixed by the Directors to holders on the register on a fixed record date in proportion as nearly as may be to their respective holdings, but subject to such exclusions or other arrangements as the Directors may deem necessary or expedient to deal with any fractional entitlements or legal or practical difficulties under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory.
This power applies in relation to a sale of shares which is an allotment of equity securities by virtue of section 560(2)(b) of CA 2006 as if in the first paragraph of the resolution the words "subject and conditional on the passing of the resolution at 2.10.1above were omitted.
(c) the maximum price, exclusive of any expenses, which may be paid for each Share is an amount equal to the higher of (a) 105 per cent. of the average of the middle market quotations for a Share, as derived from the London Stock Exchange Daily Official List, for the five business days immediately preceding the day on which the Share is purchased; and (b) the amount stipulated by Article 5(1) of the Buy-back and Stabilisation Regulation 2003;
(d) the authority hereby conferred shall, unless previously revoked or varied, expire at the end of the next annual general meeting, or eighteen months from the date of the passing of the resolution, whichever is earlier; and
Under the Companies (Acquisition of Own Shares) (Treasury Shares) Regulations 2003 (the "Regulations"), Ordinary shares purchased by the Company out of distributable profits can be held as treasury shares, which may then be cancelled or sold for cash. The authority sought by this special resolution is intended to apply equally to shares to be held by the Company as treasury shares in accordance with the Regulations. These powers are intended to permit Directors to sell treasury shares at a price not less than that at which they were purchased.
2.11.3That in addition to existing authorities, the directors of the Company be and hereby are empowered pursuant to Sections 570 and 573 of the Act to allot or make offers or agreements to allot equity securities (which expression shall have the meaning ascribed to it in Section 560(1) of the Act) for cash pursuant to the authority conferred or by way of a sale of treasury shares, as if Section 561(1) of the Act did not apply to such allotment, provided that the power provided by this resolution shall expire on the conclusion of the annual general meeting of the Company to be held in 2013 (unless renewed, varied or revoked by the Company in general meeting) and provided further that this power shall be limited to the allotment and issue of shares up to an aggregate nominal value representing 10 per cent. of the issued share capital of the Company from time to time, where the proceeds may in whole or part be used to purchase shares.
2.11.4That in addition to existing authorities, the Company be and hereby is empowered to make one or more market purchases within the meaning of Section 693(4) of the Act of its own shares (either for cancellation or for the retention as treasury shares for future re-issue or transfer) provided that:
In this paragraph 3, reference to 'Directors' means the directors of the Company from time to time, reference to the 'Board' means the board of directors of the Company from time to time and reference to 'Act' means CA 2006.
The Memorandum, which, by virtue of Section 28 of CA 2006, is now treated as being part of the Articles, provides that the Company's principal object and purpose is to carry on the business of a VCT. The objects of the Company are set out in full in clause 4 of the Memorandum.
The following is a summary of the current Articles. Pursuant to certain resolutions being proposed at the Annual General Meeting and the General Meeting, the Articles are subject to amendment as detailed accordingly in the summary below. Statutory references are subject to updates from time to time:
Under CA 2006, the objects clause and all other provisions which are currently contained in the Memorandum, are from 1 October 2009, deemed to be contained in the Articles. Pursuant to Resolution 1 to be proposed at the General Meeting, the authorised share capital is being removed in its entirety from the Articles. Consequently, the Company will no longer be restricted by an authorised share capital.
Subject to the provisions of the Statutes and to any special rights conferred on the holders of any other shares, any share may be issued with such rights and restrictions as the Company may decide by ordinary resolution or, where no resolution has been passed, as the Board may decide.
Subject to the provisions of the Statutes the Board may allot or grant rights to subscribe for new shares.
In connection with the issue of any shares the Company may exercise all powers of paying commission and brokerage conferred or permitted by the Statutes.
If, as a result of any consolidation of shares, any members would become entitled to fractions of a share, the Board may deal with such fractions as it thinks fit.
Subject to the provisions of the Statutes, the Company may issue shares which are liable to be redeemed at the option of the Company or the shareholder.
Subject to the provisions of the Statutes, the Company may purchase all or any of its shares of any class, including any redeemable shares and may hold such shares as treasury shares or cancel them.
Subject to the provisions of the Statutes and to any rights conferred on the holders of any class of shares, the Company may by special resolution reduce its share capital, capital redemption reserve, share premium account or other undistributable reserve in any way.
Subject to the terms of allotment, the Board may make calls on members for monies unpaid on any shares. If any call remains unpaid after the date for payment (being at least 14 clear days following the call) then the Board may, after giving not less than 7 clear days' notice, forfeit such share and sell or transfer such forfeited shares on such terms as the board may determine.
3.5.1 Right to transfer
Subject to the Articles, a member may transfer any of his shares in a manner which is permitted by the Statutes or in any other manner which is from time to time approved by the Board.
The transfer of a certificated share shall be in writing in the usual form or in any form permitted by the Statutes or approved by the Board. The instrument shall be executed by or on behalf of the transferor and (in the case of a transfer of a share which is not fully paid up) by or on behalf of the transferee.
Subject to the Articles, a member may transfer an uncertificated share by means of the relevant system or in any other manner which is permitted by the Statutes and is from time to time approved by the Board.
The Board may in its absolute discretion refuse to register any share transfer of a certificated share unless:
The Board may refuse to register any transfer of an uncertificated share where permitted by The Uncertificated Securities Regulations 2001 (SI 2001 No 3755) ("Regulations").
The transferor shall be deemed to remain the holder of the shares transferred until the name of the transferee is entered in the register in respect of those shares.
If any shareholder, or any other person appearing to be interested in any share, has been served with a notice under Section 793 CA 2006 in respect of such shares (or any further shares which are issued in respect of such default shares) ("default shares") and is in default for a period of 14 days from the date of service of the notice in supplying to the Company the information thereby required, then the following restrictions shall apply to the default shares for a period specified by the Board (being a period ending not later than 7 days after the earliest of compliance with the notice or receipt by the Company of notice that the shareholding has been sold to a third party pursuant to any arm's length transfer):
(a) the holder of the default shares shall not be entitled to attend or vote on any question, either in person or by proxy, at any general meeting of the Company; and
(b) If the default shares represent at least 0.25 per cent. of the issued shares of the same class the holder of the default shares shall not be entitled to receive any dividend (including shares issued in lieu of dividend) or to transfer any of the shares (other than by way of an arm's length transfer).
3.8.1 Convening of general meetings
The Board shall convene annual general meetings and may convene other general meetings whenever it thinks fit. A general meeting shall also be convened on such requisition or in default may be convened by such requisitions as provided by the Statutes. In respect of such meetings the Board shall comply with the Statutes in respect of the circulation of notices of the resolutions and matters proposed or business to be dealt with. The Board may make arrangements to ensure the orderly conduct of general meetings and to preserve the security of attendees.
The accidental omission to send a notice of meeting or, in cases where it is intended that it be sent out with the notice, an instrument of proxy or any other document, to, or the non-receipt of either by, any person entitled to receive the same shall not invalidate the proceedings at that meeting.
At any general meeting a resolution put to a vote of the meeting shall be decided on a show of hands unless (before or immediately after the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is duly demanded. Subject to the provisions of the Act, a poll may be demanded by:
Subject to the provisions of the Articles and to any special voting rights or restrictions as to voting for the time being attached to any shares:
Unless otherwise determined by an ordinary resolution the minimum number of directors shall be two with no maximum.
3.9.3.1 At every annual general meeting, there shall retire from office:
3.9.3.2 A retiring director shall be eligible for re-appointment. A director retiring at a meeting shall, if he is not re-appointed at such meeting, retain office until the meeting appoints someone in his place, or if it does not do so, until the conclusion of such meeting.
A director may be removed from office by:
Each director may appoint as an alternate director any other willing person (subject to the appointment as an alternate director of any person who is not himself a director, being approved by majority decision or a resolution of the Board) and terminate such appointment.
The directors (excluding those holding executive employment with the Company or one of its subsidiaries) shall be entitled to be paid fees for their services as directors, but not exceeding £100,000 (or such larger amount as the Company may determine by ordinary resolution) per annum. The Board may grant special remuneration to any director who performs any special or extra services to or at the request of the Company.
Subject as provided in the Articles and Statutes, the Board may exercise all the powers of the Company.
3.10.2.3"Money borrowed means:
any benefit which he receives as a member or director of, or holder of any other office or place of profit under, or his other interest in, that company.
a contract, he shall also be deemed to be materially interested in that contract
(b) save as otherwise determined by the Non-Conflicted Directors at the time when they authorise the matter, not be accountable to the Company for any benefit which he derives from such matter (excluding a benefit conferred on the director by a third party by reason of his being a director of the Company or by reason of his doing or not doing anything as a director of the Company).
3.11.2.7 Any confidential information which a Conflicted Director has received from the Company or in his capacity as a director of the Company shall not be disclosed by him to any third party except insofar as permitted by the Non-Conflicted Directors.
Questions arising at board meetings are decided by a majority vote. In the event of a tie, the chairman shall have a second or casting vote.
3.13.1 Declaration of dividends by the Company
The Company may by ordinary resolution declare that a dividend be paid to members according to their respective rights and interests in the profits of the Company, and may fix the time for payment, but no dividend shall exceed the amount recommended by the Board.
The Board may pay such interim dividends as appear justifiable by the Company's financial position, and pay any dividend at a fixed rate at intervals agreed by the Board whenever the financial position justifies payment in the Board's opinion.
The board may with the sanction of an ordinary resolution of the Company offer members the right to elect to receive shares credited as fully paid up in lieu of a cash dividend.
At any time when the Company has given notice in the prescribed form (which has not been revoked) to the registrar of companies of its intention to carry on business as an investment company (a "Relevant Period") distribution of the Company's capital profits (within the meaning of Section 833 of the Act) shall be prohibited. The Board shall establish a reserve to be called the capital reserve. During a Relevant Period all surpluses arising from the realisation or revaluation of investments and all other monies realised on or derived from the realisation, payment off of or other dealing with any capital asset in excess of the book value thereof and all other monies which are considered by the Board to be in the nature of accretion to capital shall be credited to the capital reserve. Subject to the Act, the Board may determine whether any amount received by the Company is to be dealt with as income or capital or partly one way and partly the other. During a Relevant Period, any loss realised on the realisation or payment off of or other dealing with any investments or other capital assets and, subject to the Act, any expenses, loss or liability (or provision thereof) which the Board considers to relate to a capital item or which the Board otherwise considers appropriate to be debited to the capital reserve shall be carried to the debit of the capital reserve. During a Relevant Period, all sums carried and standing to the credit of the capital reserve may be applied for any of the purposes for which sums standing to any revenue reserve are applicable except and provided that notwithstanding any other provision of these Articles during a Relevant Period no part of the capital reserve or any other money in the nature of accretion to capital shall be transferred to the revenue reserves of the Company or be regarded or treated as profits of the Company available for distribution (as per Section 830(2) of the Act) or be applied in paying dividends on any shares in the Company. In periods other than a Relevant Period any amount standing to the credit of the capital reserve may be transferred to the revenue reserves of the Company or be regarded or treated as profits of the Company available for distribution or be applied in paying dividends on any shares in the Company.
3.14.1 Powers to distribute
If the Company is in liquidation, the liquidator may, with the sanction of a special resolution of the Company and the Statutes, divide among the Company is shareholders the whole or any part of the Company's assets or vest them in trustees upon such trusts for the benefit of members as the liquidator shall think fit.
The Company shall indemnify the directors to the extent permitted by law and may take out and maintain insurance for the benefit of the directors.
| Shares | Company % of issued voting share capital |
Prime Shares | Prime % of issued Prime voting share capital |
|
|---|---|---|---|---|
| David Watkins | 10,000 | 0.03 | – | – |
| John Kerr | 13,109 | 0.04 | – | – |
| Jonathan Rounce | 6,637 | 0.02 | 4,892 | 0.02 |
| Jeff Warren | 20,000 | 0.05 | – | – |
| Martin Bralsford | – | – | 30,000 | 0.14 |
| Ebbe Dinesen | 1,883 | 0.01 | 11,250 | 0.05 |
| Modwenna Rees-Mogg | – | – | 5,000 | 0.02 |
| Patrick Reeve | 23,666 | 0.06 | 21,777 | 0.10 |
| Date of | Year to | |||
|---|---|---|---|---|
| Date of | appointment | Annual | 31 March 2012 | |
| Director | appointment | letter* | remuneration** | remuneration*** |
| David Watkins | 9 February 1996 | 9 February 1996 | £20,000 | £20,000 |
| John Kerr | 9 February 1996 | 9 February 1996 | £20,000 | £20,000 |
| Jonathan Rounce | 21 June 2010 | 21 June 2010 | £20,000 | £20,000 |
| Jeff Warren | 2 October 2007 | 20 October 2007 | £20,000 | £20,000 |
* The Directors have been appointed pursuant to appointment letters which do not require either party to give any form of notice before termination of the appointment (respectively).
** No arrangements have been entered into by the Company entitling the Directors to compensation for loss of office nor have any amounts been set aside to provide pension, retirement or similar benefits.
*** Exclusive of applicable employers National Insurance Contributions.
Assuming the merger is effected, the Proposed Director will be appointed pursuant to an appointment letter on the same terms as the other Directors, with an annual remuneration of £20,000.
Albion Income & Growth VCT plc Dilbey Limited Albion Venture Capital Trust plc Farley House Limited
Albion Venture Capital Trust plc Orbel Health Limited Citysocialising Ltd
| Raiseuk.com Limited* |
|---|
| Albion Venture Capital Trust plc | Petersham Group Limited |
|---|---|
| Betavale Limited | Petersham Racing Ltd |
| Life Unlimited Foundation |
Albion Venture Capital Trust plc
BWC Malson Developments Limited Limited C.P. Cotterill Developments Limited Mr Oblong Developments Limited Cameron Business Developments Limited Mr S.C. Hadley Developments Limited Carole Ann Chambers Developments Mrs D Ball Developments Limited Unlimited (Dissolved)* Mrs E Trent Developments Limited Catherine Hitchcock Developments Limited Mrs J M Spruytenburg Developments Limited Cedar Developments (CGT) Limited Limited CGT Developments II Limited Limited CGT Developments XII Limited Limited CGT Developments XV Limited Limited CGT Developments XXIII Limited Limited CGT Developments XXVII Limited Mrs M.D. Hadley Developments Limited Chalwaye Property Developments Limited Mrs P Thompson Developments Limited Cleebronn Developments Limited Muirhead Developments Limited Cleobury Developments Limited Murray Cowan Developments Limited Cobra Bournemouth Developments Limited Narcoossee Developments Limited Coltman property Developments Limited Netta Appleton Developments Limited Colyer Developments Limited Norden Hill Developments Limited Coniston Way Developments Limited O & J Developments Limited Copeland Property Developments Limited Paddock End Developments Limited Croy Road Developments Limited Panilodge Limited (Dissolved)* D Huckerby Developments Limited Paul Development (Dissolved)* D. Nockels Developments Limited PBEA 1 Developments Limited D.J. Coral Developments Limited PBEA 2 Developments Limited DAK Developments Limited PBEA 3 Developments Limited David Yates Developments Limited PBEA 4 Developments Limited DJ & EM Rooke Property Developments PBEA 5 Developments Limited Limited Peggy & Barbara Development Limited Doreen Hanna Developments Limited Peggy & Harry Development Limited Drayton Estates Limited Peggy & Peter Development Limited E.E. Wilcox First Developments Limited Peggy & Thomas Development Limited E.E. Wilcox Second Developments Limited Penny Developments Limited E.J. Drake Developments Limited. Perrins (DMN) Developments Limited Effie Developments Limited Perrins (DMN) Developments Limited Elizabeth Hilditch Developments Limited Perrins (GAH) Developments Limited Excelsior Developments Limited Peteheat Developments Limited Fingrith Developments Limited Peter Edward Goodland Developments Florence Mary Holgate Crowe Developments (Dissolved)* Limited (Dissolved)* Peter Heaney 1 Developments Limited Forbes Andrew Developments Limited Peter Heaney 2 Developments Limited Forrest Glen Developments Limited Peter Heaney 3 Developments Limited Frances Scorah Developments Limited Peter Heaney 4 Developments Limited G.M. Tillyard Developments Limited Peter Heaney 5 Developments Limited Gale Park Developments Limited Peter Heaney 6 Developments Limited Garnell Property Developments Limited Peter Heaney 7 Developments Limited (Dissolved)* Peter Heaney 8 Developments Limited Gaynor Developments Limited Peter Heaney 9 Developments Limited George Bennet Developments Limited Peter Heaney 10 Developments Limited Gertrude Commercial Developments Limited Pettitt Developments Limited
Budenberg Developments Limited Mr J Johnston No.5 Commercial Developments CB Casbolt Developments Limited Mrs M Johnston No.1 Commercial Developments CGT Developments Limited Mrs M Johnston No.2 Commercial Developments CGT Developments IV Limited Mrs M Johnston No.3 Commercial Developments CGT Developments XIV Limited Mrs M Johnston No.4 Commercial Developments CGT Developments XIX Limited Mrs M Johnston No.5 Commercial Developments E.E. Wilcox Third Developments Limited Perrins (CGH) Developments Limited (Dissolved)* Enid Krygier Developments Limited Perrins (MBH) Developments Limited (Dissolved)* Eric Hutchinson Development Limited Perrins (PJM) Developments Limited (Dissolved)* Giles Kingswood Developments (Dissolved)* Phyllis Mary Pilkington Developments Limited
Glenister Estates Developments Limited PRMC Developments Limited Gray Property Developments Limited Public House Developments Limited Grey Alders Developments Limited Pusey CCS Developments Limited Hames Developments Limited Pussinboots Developments Limited Harewood Drive Developments Limited Pyemont Developments Limited Harry Hodgson Developments Limited R & M Speldhurst Developments Limited Harry Rogers Developments Limited R L Bauer – CTC 1 Developments Limited Hawkswick Developments Limited R Walker Developments Limited Hazel O'Flynn One Developments Limited R. Danning Developments Limited Hazel O'Flynn Three Developments Limited R.D.B.B. Developments Limited Hazel O'Flynn Two Developments Limited R.W. & M. Fawcett Developments Limited Heather Walsh One Developments Limited Raleigh Park Developments Limited Heather Walsh Two Developments Limited Raymond T Walker Developments Limited Heron Developments Limited RBH Developments Limited High Meadow Developments Limited Renaude Limited HJ Norman Developments Limited Rhoda Developments Limited (Dissolved)* HMJ 19 Developments Limited Richard P Gammidge Developments Limited Holly Doreen Lewis Developments Limited Richmond C L Developments Limited Hornbeam Developments Limited Richmond E L Developments Limited Hutchinson Developments Limited Ripper Developments Limited Idaho Developments Limited Rita Wilkinson Developments Limited J P Merrett Developments Limited (Dissolved)* Ritchie Developments Limited J.B. Foster Developments Limited Robert Graham Price Developments Limited J.H. Lane No.1 Developments Limited Robert Rainey Five Developments Limited J.H. Lane No.2 Developments Limited Robert Rainey Four Developments Limited J.H. Lane No.3 Developments Limited Robert Rainey One Developments Limited J.J.M.B. Developments Limited Robert Rainey Six Developments Limited J.W.P. Estates Developments Limited Robert Rainey Three Developments Limited Jack & Barbara Development Limited Robert Rainey Two Developments Limited Jack & Harry Development Limited Rod Stanley Developments Limited Jack & Peter Development Limited Rosalie Developments Limited Jack & Thomas Development Limited Rose Mount Property Developments Limited Jamie Grace Developments Limited Rosemason Developments Limited Jane Kimberley Developments Limited Roundacre Developments Limited JDH Developments Limited Rudsdale Developments Limited Jean Barrow 1 Developments Limited S & E Skinner Developments Limited (Dissolved)* S M Byfield Developments Limited Jean Barrow 2 Developments Limited S. Pritt Developments (Cumbria) Limited (Dissolved)* S.C. (Highgate) Developments Limited Jean Barrow 4 Developments Limited S.M.E.F. Property Developments Limited (Dissolved)* Seamark Developments Limited Jean Barrow 5 Developments Limited Scorah Property Developments Limited (Dissolved)* Sephrin Developments Limited Jean Barrow 6 Developments Limited SGB 2007 Developments Limited (Dissolved)* SGP Developments Limited Jean Barrow 7 Developments Limited Shabrash Developments Limited (Dissolved)* Shangri-la Developments Limited Jean Martin Developments Limited SHC 1 Developments Limited Jean Murray Developments Limited SHC 2 Developments Limited John Edmund Gooland Developments Limited Sheelagh Ann Aird Property Developments (Dissolved)* Limited Joycey Developments Limited Sheila Coomes Developments Limited Julier One Developments Limited Shirley Turney Developments Limited K.E.R. Developments Limited Sinar 1 Developments Limited K.P.W.B. Developments Limited Sinar 2 Developments Limited K+J E Davison Developments Limited Sladen (No. 1) Developments Limited
Jean Barrow 3 Developments Limited S.G.Y Property (No. 1) Developments Limited Julier Two Developments Limited Simpson (Much Wenlock) Developments Limited
Keith Platts Developments Limited Sladen (No. 2) Developments Limited Kit Symons Developments Limited Sladen (No. 3) Developments Limited L & E O'Hare Developments Limited Sladen (No. 4) Developments Limited L Mackinnon Developments Limited Sladen (No. 5) Developments Limited Liam Egerton Developments Limited Springfield Property Developments Limited Libman Developments Limited Stal Developments Limited Linda Billington Developments Limited Susan Kimberley Developments Limited* Liz Smith Developments Limited Sweatman Developments Limited Lohneis Developments Limited Tanya Grace Developments Limited Lonsdale Lindley Developments Limited Tendele Developments Limited Limited Limited Limited TMD Abergavenny Developments Limited M & R Weston Developments Limited Tom Drake Developments Limited M I Strachan Developments Limited Treetops (1) Developments Limited M McFarland Commercial Developments Treetops (2) Developments Limited Limited Trudy Hawes Developments Limited M.D Bear Developments Limited (Dissolved)* Trudy Hawes Developments Limited M.E. Chambers Four Developments Limited Twerne Limited M.G. Clubbs Developments Limited Value Added Limited M.J.C. Commercial Developments Limited Vicars Cross Developments Limited M.W.M.P. Developments Limited W.E.F. Property Developments Limited Macfarlane Road Developments Limited W.M. Connor 1 Developments Limited Major Mincoff (1) Developments Limited W.M. Connor 2 Developments Limited Malann Developments Limited W.M. Connor 3 Developments Limited Margaret Penn Developments Limited W.M. Connor 4 Developments Limited Margheat Developments Limited W.M. Rodber Developments Limited Marriot 1 Developments Limited Warne Developments Limited Marriot 2 Developments Limited Whielden Developments Limited Marriot 3 Developments Limited Wickenden Developments Limited Marriot 4 Developments Limited Wilkins Developments Limited Martin Brown Developments Limited William Stonebridge Developments Limited Mary Goldfinch Developments Limited Worthy Trading Limited Maudlin Developments Limited WVSH Developments Limited McKenna (No.1) Developments Limited McKenna (No.2) Developments Limited McLuskie Developments Limited Mills Developments Limited Miss Ickliss Developments Limited Miss Ruth Betts Developments Limited
Lorna Lindsey/Barnaby Sharp Developments The Second Potteron Property Developments Lorna Lindsey/Hannah Sharp Developments The SGV Milligan Benefit Developments Limited
Albion Prime VCT plc
Welland Inns VCT Limited* Welland Inns VCT (Hotels) Limited*
4.11 There have been no official public incriminations and/or sanctions of any Director or the Proposed Director by statutory or regulatory authorities (including designated professional bodies) and no Director or the Proposed Director has ever been disqualified by a court from acting as a member of the administrative, management or supervisory bodies of a company or from acting in the management or conduct of the affairs of any company during the previous five years.
The normal annual running costs of the Company (including investment management and administration fees due to Albion, directors' remuneration, registrars' fees, stockbrokers' fees, company secretarial fees, auditors fees and irrecoverable VAT but excluding any exceptional items) are capped at an amount equivalent to 3.5 per cent. of net assets of the Company, with any excess being paid by Albion or refunded by a reduction in Albion's above management and administration fees.
Albion's appointment is terminable on 12 months' notice, subject to earlier termination by the Company if: the Company fails to become, or ceases to be, a VCT for tax purposes or Albion commits a material breach of the agreement. The appointment will be automatically terminated if, inter alia, (i) either party has a receiver, administrator or liquidator appointed, (ii) Albion ceases to be authorised by the FSA or (iii) Albion commits an act of fraud.
The agreement contains provisions indemnifying Albion against any liability not due to its default, gross negligence, fraud or breach of the FSMA.
Albion will continue to provide investment management and administration services to the Company following the merger on the same basis as above, save that the Company and Albion have agreed that the management fee shall, from the Effective Date, be reduced to an amount equivalent to 1.9 per cent. of the enlarged net assets.
The Board consists solely of non-executive Directors. Since all Directors are non-executive and dayto-day management responsibilities are sub-contracted to Albion, the Company does not have a Chief Executive Officer.
David Watkins is the chairman of the Company and Jeff Warren is the senior independent director.
The Board has an independent chairman, David Watkins, and Jonathan Rounce and Jeff Warren are also considered to be independent. John Kerr is not an independent Director as he is also a director of Albion Income & Growth VCT PLC (until 30 September 2012), a fund managed by Albion and a member of the Investment Committee of Albion.
David Watkins and John Kerr have both been Directors of the Company for more than nine years and, in accordance with the recommendations of the AIC code, are subject to annual re-election. The Board does not have a policy of limiting the tenure of any Director as the Board does not consider that a Director's length of service reduces his ability to act independently of Albion.
The Directors have a range of business and financial skills which are relevant to the Company; these are described in the Board of Directors section in Part II of this document. Directors are provided with key information on the Company's activities, including regulatory and statutory requirements, and internal controls, by Albion. The Board has direct access to secretarial advice and compliance services by Albion, which is responsible for ensuring that Board procedures are followed and applicable procedures complied with. All Directors are able to take independent professional advice in furtherance of their duties if necessary. In accordance with the Code, the Company has in place Directors' & Officers' Liability Insurance.
The Board met six times during the year ended 31 March 2012 as part of its regular programme of Board meetings. All of the Directors attended each meeting. In addition further Board or subcommittee meetings were held during the year, comprising at least two Directors, to allot shares issued under the dividend reinvestment scheme and the Albion managed VCTs linked top up offers and to approve the terms and contents of the offer documents under the Albion managed VCTs linked top up offer.
The Chairman ensures that all Directors receive, in a timely manner, all relevant management, regulatory and financial information. The Board receives and considers reports regularly from Albion and other key advisers, and ad hoc reports and information are supplied to the Board as required. The Board has a formal schedule of matters reserved for it and the agreement between the Company and Albion sets out the matters over which Albion has authority and limits beyond which Board approval must be sought.
Albion has authority over the management of the investment portfolio, the organisation of custodial, accounting, secretarial and administrative services. The main issues reserved for the Board include:
Performance of the Board and the Directors is assessed on the following bases:
The Board believes that it has the right balance of independence, skills, experience and knowledge for the effective governance of the Company. The Board considers any skills gaps in existence and takes action to remedy these where necessary.
Directors are offered training, both at the time of joining the Board and on other occasions where required. The Board also undertakes a proper and thorough evaluation of its committees on an annual basis.
Since the Company has no executive directors, the detailed Directors' remuneration disclosure requirements set out in the Listing Rules are not considered relevant.
The Audit Committee consists of all Directors. John Kerr is Audit Committee Chairman. In accordance with the Code, all members of the Audit Committee have recent and relevant financial experience.
Written terms of reference have been constituted for the Audit Committee as follows:
During the year ended 31 March 2012, the Audit Committee discharged the responsibilities described above. Its activities included:
The Audit Committee reviews the performance and continued suitability of the Company's external auditor on an annual basis. They assess the external auditor's independence, qualification, extent of relevant experience, effectiveness of audit procedures as well as the robustness of their quality assurance procedures. In advance of each audit, the Audit Committee obtains confirmation from the external auditor that they are independent and of the level of non-audit fees earned by them and their affiliates. There were no non-audit fees charged to the Company during the year.
The Nomination Committee consists of all Directors, with David Watkins as chairman. The terms of reference of the Nomination Committee are to evaluate the balance of skills, experience and time commitment of the current Board members and make recommendations to the Board as and when a particular appointment arises.
In accordance with principles of the Code, the Board has an established process for identifying, evaluating and managing the significant risks faced by the Company. This process is in place throughout each financial year and continues to be subject to regular review by the Board in accordance with the Internal Control Guidance for Directors in the Code published in September 1999 and updated in 2005 (the "Turnbull guidance"). The Board is responsible for the Company's system of internal control and for reviewing its effectiveness. However, such a system is designed to manage, rather than eliminate, the risks of failure to achieve the Company's business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss.
The Board's monitoring covers all controls, including financial, operational and compliance controls, and risk management. The Board receives each year from Albion a formal report, which details the steps taken to monitor the areas of risk, including those that are not directly the responsibility of Albion, and which reports the details of any known internal control failures. Steps are, and continue to be, taken to embed the system of internal control and risk management into the operations and culture of the Company and its key suppliers, and to deal with areas of improvement which come to Albion's and the Board's attention.
The main features of the internal control system with respect to financial reporting, implemented throughout each year are:
The Directors may temporarily suspend the calculation of the NAV if, as a result of political, economic, military or monetary events or there is a breakdown of the means of communication normally employed in determining the calculation of the NAV or any such circumstance, in the opinion of the Board, the NAV cannot be fairly calculated. Any such suspension would be notified through an RNS as soon as practicable after it occurs.
8.2 Taxation of dividends under current law, no tax will be withheld by the Company when it pays a dividend.
8.3 Stamp duty and stamp duty reserve tax the Company has been advised that no stamp duty or stamp duty reserve tax will be payable on the issue of the New Shares to be issued pursuant to the merger. The Company has been advised that the transfer of New Shares will, subject to any applicable exemptions, be liable to ad valorem stamp duty at the rate of 0.5 per cent. of the consideration paid. An unconditional agreement to transfer such New Shares if not completed by a duly stamped stock transfer will be subject to stamp duty reserve tax generally at the rate of 50p per £100 (or part thereof) of the consideration paid.
Save for the fees paid to the Directors (as detailed in paragraph 4.4 above) and the fees paid to Albion in respect of its management and administration arrangements (as detailed in paragraph 6.1. above), and promotion arrangements of £nil, £3,450, £6,740 and £nil in the years ended 31 March 2010, 2011 and 2012 and to the date of this document in the current financial year, there were no related party transactions or fees paid by the Company during the years ended 31 March 2010, 2011 and 2012 or to the date of this document in the current financial year.
10.1 The Company is of the opinion that its working capital is sufficient for its present requirements, that is for at least the twelve month period from the date of this document.
| Shareholders' Equity | £'000 |
|---|---|
| Called-up Share Capital Share premium account |
19,733 1,005 |
| Other reserves | 7,648 |
| Total | 28,386 |
10.6 There has been no significant change in the financial or trading position of Prime since 31 March 2012, the date of the Prime Annual Report, to the date of this document.
10.7 There have been no important events so far as the Company and the Directors (and the Proposed Director) are aware relating to the development of the Company or its business.
10.18.2 the Company will not control the companies in which it invests in such a way as to render them subsidiary undertakings.
10.19 The Company and its Shareholders are subject to the provisions of the City Code on Takeovers and Mergers and CA 2006, which require shares to be acquired/transferred in certain circumstances.
Copies of the following documents will be available for inspection during normal business hours on any day (Saturdays, Sundays and public holidays excepted) from the date of this document until the Effective Date at the offices of SGH Martineau LLP, One America Square, Crosswall, London EC3N 2SG and also at the registered office of the Company:
27 July 2012
Perivan Financial Print 225954
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