Albion Enterprise VCT AGM 2019

[Gostevie]

Albion Enterprise VCT (AAEV) AGM 2019

This year’s Albion Enterprise VCT AGM was held on Tuesday 30th July 2019 at 12:00 at The Charterhouse, a fascinating and historic venue – http://www.thecharterhouse.org – close to Farringdon rail and tube station, Barbican tube station and Albion’s office in Benjamin Street, to where it recently relocated after 10 years at King’s Arms Yard. It was the first Albion AGM to be held at the new venue after several years of them being held at the City of London Club.

The Annual Report and Accounts for year ending 31st March 2019 can be found here:

https://www.albion.capital/sites/defaul ... 202019.pdf

The Interim Management Statement to 30th June 2019 was also released in the morning just before the AGM and reported NAV at 118.42p per share on June 30th, which was an increase of 0.66p per share (0.56%) since 31st March. After accounting for a dividend of 3.00p per share to be paid on 30th August the NAV will be 115.42p per share.

https://www.investegate.co.uk/albion-en ... 3139H4806/

Introduction

The meeting was opened by Chairman Maxwell Packe. All Directors were present except for Lady Balfour of Burleigh who had sent her apologies. The Chairman then introduced Albion’s Managing Partner Will Fraser-Allen who gave the Manager’s presentation, which summarised the highlights of the year.

Manager’s Presentation

The total return per share for the year was 14.3p, or 13.1%. The five year return has been 48.4% and the ten year return has been 80.4%. The Company has 46 investee companies employing over 2,000 people – something that is important as it confirms to the Treasury that the VCT is fulfilling its duty to fund growth companies and helps to justify the tax-breaks that we as investors enjoy.

As with the other Albion VCTs, there is a gradual movement away from asset-based companies towards growth companies. Diversification within the portfolio is achieved by having a mix of companies in terms of size and stage of development. Over half of the investee companies have over 100 employees.

There were £8.7m of exits during the year, compared with £1.9m in the previous year, predominantly down to the sale of Grapeshot to Oracle. £1.9m of investment was made in new companies and £4.9m in existing portfolio companies.

The investment strategy is focused on Seed to Series B and backing long term trends, with a preference for business to business software and technology enabled services. Albion is proud to have won two industry awards in 2018.

The Board is currently reviewing the management arrangements in place with Albion Capital LLP and will update shareholders when the evaluation is concluded.

Looking at future prospects, the focus is on long term growth trends with low exposure to discretionary consumer facing sectors. There is a strong pipeline of new and follow-on opportunities.

Q&A

(These are paraphrased from my scribbled notes, not a word-for-word account, except for words or phrases in “inverted commas” which are direct quotes.)

Q. Could you enlighten us on the write-downs, and are there any underlying themes?
A. There were no complete write-offs during the year, and the relatively small write-downs were mostly in historic investments.

Q. Fast growing tech companies sometimes need larger and larger fundraisings. Can you keep up with these or will you be diluted?
A. We have a range of options. There is plenty of capacity across Albion to co-invest if we choose. Our broader strategy is to run winners and not sell too soon.

Q. What is the strategy regarding your legacy asset-based investments?
A. We will exit them over time, but they are not treated any differently to any other investments. We will sell when the time is right and enjoy the dividends in the meantime.

Q. How do you value your investments, something that is topical at the moment [presumably a reference to the current Woodford woes] and do your auditors readily agree with your valuations?
A. [Answered by Maxwell Packe] No auditor dare just “rubber stamp” anything and they do challenge us but there have been no major disagreements over the years. Our valuations are “conservative but not over-conservative”.

Q. Your investment in the SVS Albion OLIM UK Equity Income Fund is not doing spectacularly well. Has its performance changed since the year end?
A. It is “somewhat better” since the year end. It produces a “sensible income” that is better than holding cash.

Q. Are most investments made across all six of the Albion funds?
A. Yes, proportionate to the cash available.

Formal AGM

All resolutions at the formal AGM were passed without dissent on the show of hands and by majorities of well over 90% by total votes cast.

Investee Company

http://www.locumsnest.co.uk

A presentation was given by Dr Ahmed Shahrabani, Co-Founder of investee company Locum’s Nest, which (to quote its Twitter profile) operates “an innovative software platform revolutionising the way locum staff will be recruited in healthcare organisations”.

Dr Shahrabani began by saying that only 55% of doctors are working full-time according to a recent BMA study and only 1 in 5 departments report safely-staffed wards. Agency staff have traditionally been deployed to temporarily patch-up any rota gaps but digital staff banks are now becoming the norm. Well thought-out collaborative staff banks can solve our workforce crisis enabling doctors to work across hospitals. Locum’s Nest empowers NHS Trusts and their clinicians to staff their hospitals using clever, intuitive technology. Its vision is to empower a collaboration between healthcare organisations across the NHS and beyond.

“We’ve saved the NHS over £30m over the past 2 years” and “our partner hospitals are performing 3 times better than the national average, and keep improving”. The Company has ambitious plans to consolidate its leading position in secondary care and build on its early successes in primary care. It plans to expand into Allied Healthcare Professionals and Nursing markets.

From the Q&A: Locum’s Nest currently employs 27 full-time and 8 part-time staff and has revenues of £600k per year although as a growth company it is not yet profitable. When fundraising it spoke to various venture capital houses but found it difficult to convince some of them of the problem within the healthcare sector that it is trying to solve. Albion, with medical doctors amongst its partners, was more responsive and understanding, and the current relationship with Albion is a mutually constructive one. Albion’s investment is entirely in shares, with no repayable loans.

Lunch

At around 13:10 the meeting was brought to a close, and a pleasant cold buffet lunch with soft drinks and wine was served. Those of us who might have been concerned that the hospitality at The Charterhouse might not have been as convivial as at the old venue needn’t have worried as the lunch and networking area was very comfortable and spacious with plenty of seats, and apparently we would also have had the use of the outside grassed courtyard had the weather been better. Directors of the Company and managers and staff from Albion stayed and were happy to answer any further questions that investors had. As a ‘save the date’, the annual Albion Shareholder Seminar will be held on Friday 8th November at Fishmongers’ Hall. Full details will be sent to shareholders in September.

[BusyBumbleBee]

Thank-you Steve : very helpful report

I for one will be sorry if/when they dispose of the 'Green Assets" :they provide a nice base to the portfolio and to paraphrase the Mark Twain Expression 'They don't allow them any more"

with kind regards - BBB

[BusyBumbleBee]

Sorry - forgot to say that I looked up Lady Balfour of Burleigh on Wikipedia https://en.wikipedia.org/wiki/Janet_Mor ... f_Burleigh

She must bring some interesting perspectives to board meetings - but cannot really see what relevance it would have to a VCT.

[Mainwaring]

Appreciate the report Gostevie, thank you.
Regrettably when they update us on the arrangements with the manager these arrangements will probably transfer money from us to them. I’m really really cross with with Albion’s complete disregard for shareholder views on the Albion Venture Capital Trust new arrangements. I hope this isn’t another reputation spoiled.

[barchid]

BBB
Having read from your link I suspect she is on the board as she is highly unlikely to complain about Albion Capital's redistribution of wealth from shareholders to managers ?

[BusyBumbleBee]

Good evening, (Capt?) Mainwaring

Have you read the Albion Venture (AAVC) 2018/19 results topic as all the Albion VCTs will go the same way - you could find a lot of answers and angst there including :

"It takes 20 years to build a reputation and ONE LETTER to ruin it. " to paraphrase.

regards - BBB